section_id,title_number,title_name,chapter,subchapter,part_number,part_name,subpart,subpart_name,section_number,section_heading,agency,authority,source_citation,amendment_citations,full_text 10:10:5.0.2.5.14.0.12.1,10,Energy,III,,760,PART 760—DOMESTIC URANIUM PROGRAM,,,,"§ 760.1 Uranium leases on lands controlled by DOE. (Domestic Uranium Program Circular No. 760.1, formerly (AEC) Domestic Uranium Program Circular 8, 10 CFR 60.8).",DOE,,,"[41 FR 56783, Dec. 30, 1976]","(a) What this section does. This section sets forth regulations governing the issuance of leases to permit the exploration for and mining of deposits containing uranium in public lands withdrawn from entry and location under the general mining laws for use of DOE, and in certain other lands under DOE control. (b) Statutory authority. The Atomic Energy Act of 1954, as amended (68 Stat. 919, 42 U.S.C. 2011 et seq. ) is the authority for this section. (c) Who may hold leases. Only parties who are (1) citizens of the United States; (2) associations of such citizens; or (3) corporations organized under the laws of the United States or territories thereof, are eligible lessees under this section. Persons under 21 years of age or employees of DOE are not eligible. (d) Issuance of leases through competitive bidding. Except under special circumstances as provided in paragraph (u) of this section, each lease will be offered through competitive bidding and, except as otherwise provided in this paragraph (d), will be issued to the acceptable bidder offering the highest bid. The bid may be on a cash bonus, royalty bonus, or other basis as specified in the invitation to bid. Invitations to bid on some of the lands may be limited to small business concerns as defined by the Small Business Administration, and such invitations may limit the number of leases to be awarded to each bidder. In such cases DOE will accept those bids which, in relation to other bids received pursuant to the invitation, are most advantageous to the Government. Before any lease is awarded, DOE may require high bidders to submit a detailed statement of the facts as to such matters as their experience, organization, and financial resources. DOE reserves the right to reject any and all bids. (e) Solicitation of bids. Announcements of the availability of invitations to bid for a lease will be publicly posted and published. Copies of such announcements will also be mailed to parties who submit to DOE's Grand Junction, Colorado, Office subsequent to publication in the Federal Register of this (DOE) Domestic Uranium Program Circular 760.1, written requests that their names be placed on a mailing list for receipt of such announcements. The invitations containing information for preparation and submission of bids will be available at the Grand Junction Office, and will be mailed only on specific written request, following announcement of their availability. Invitations will specify the land to be leased, the basis on which bids are to be submitted, the amount of the monetary deposit which must be transmitted with the bid, the place and time the bids will be publicly opened, the term, royalty and other payments, performance requirements, and other payments, performance requirements, and other conditions which will become a part of the lease. In addition, data which have been assembled pertaining to the lands to be leased will be available for public inspection at the Grand Junction Office; copies will also be available for purchase. (f) Bidding requirements; deposits. All bids must be filed at the place and prior to the time set forth in the invitation. Each bid must be sealed and accompanied by a deposit, in the form of a certified check, cashier's check, or bank draft, in an amount as specified in the invitation to bid. Deposits of unsuccessful bidders will be returned. If the bidder is an individual, he must submit with his bid a statement of his citizenship and age. If the bidder is an association (including a partnership), the bid shall be accompanied by a certified copy of the articles of association together with a statement as to the citizenship and age of its members. If the bidder is a corporation, evidence that the officer signing the bid had authority to do so and a statement as to the State of incorporation shall also be submitted. (g) Awarding of lease. Following public opening of the bids, DOE, subject to the right to reject any and all bids, will determine the successful bidder. In the event the highest acceptable bids are tie bids, a public drawing will be held by DOE to determine the successful bidder. After notice of award and within the time period prescribed in the invitation, the successful bidder shall execute and return to DOE three (3) copies of the lease and shall remit payments due as prescribed in the invitation. Should the successful bidder fail to execute the lease, or make payments as required, in accordance with the terms of the invitation, or fail to otherwise comply with applicable regulations, he may be required to forfeit any payments previously made, and lose any further right or interest in the lease. In such event, DOE may offer the lease to the next highest acceptable bidder, reoffer the lease for bidding, or take such other action as appropriate. If the awarded lease is executed by the bidder through an agent, evidence of authorization must be submitted. (h) Dating of lease. A lease issued under this section will ordinarily be effective as of the date it is signed on behalf of DOE. (i) Term of lease. A lease shall be for the period specified in the invitation to bid. When deemed desirable by DOE, the lease will provide that the lease term may be extended at the option of the lessee for a specified period and upon stipulated conditions. (j) Payments to DOE under lease. Royalty payments shall be specified in the invitation to bid; base royalty, minimum royalty, advance royalty, and rental payments, or a combination thereof may be required. (k) Title to unshipped ore. DOE, unless it approves otherwise, reserves all right and title to property in and to all ores and other uranium- or vanadium-bearing material not removed from the leased premises within 60 days after expiration or other termination of the lease. Unless DOE approves otherwise, all material mined from the leased premises and not marketed by the lessee shall remain on the leased premises. (l) Environmental controls. Each lease will contain such provisions as may be deemed necessary by DOE with respect to the lessee's use of the leased lands. DOE may require periodic submission of plans for exploration and mining activities including provisions for control of environmental impact. The lessee will be required to conduct operations so as to minimize adverse environmental effects, to comply with all applicable State and Federal statutes and regulations and to the extent stipulated in the lease agreement, will be held responsible for maintenance or rehabilitation of affected areas in accordance with plans submitted to and approved by DOE. (m) Performance requirements. A lease shall require that exploration, development, and mining activities, as appropriate, be conducted on the leased premises with reasonable diligence, skill, and care as required to achieve and maintain production of uranium ore at rates consistent with good and safe mining practice and with market conditions. (n) Health and safety requirements. A lease (1) shall require that exploration, development, and mining activities, as appropriate, be conducted on the leased premises with due regard for the health and safety of those involved, and (2) shall include appropriate measures for the control of radiation exposure in the mines. (o) Lessee's records. Leases shall provide that the lessee keep and make available to DOE such records as DOE deems necessary for the administration of the lease and its leasing program. (p) Rights of DOE. DOE reserves the right to enter upon the leased property and into all parts of the mine for inspection and other purposes. DOE also reserves the right to grant to other persons easements or rights of way upon, through, or in the leased premises. DOE and the Comptroller General of the United States or any of his duly authorized representatives shall, until the expiration of 3 years after termination or expiration of lease, have access to and the right to examine any directly pertinent books, papers, and records of the lessee involving transactions related to the lease. (q) Relinquishment of leases. A lease may be surrendered by the lessee upon filing with and approval by DOE of a written application for relinquishment. Approval of the application shall be contingent upon the delivery of the leased premises to DOE in a condition determined to be satisfactory to DOE. The lessee shall continue to be liable for the payment of all royalty and other debts due DOE. (r) Assignment of leases. Any transfer of a lease or any interest therein or claim thereunder, will not be recognized unless and until approved by DOE in writing. Ordinarily, DOE will not approve any transfer of a lease which involves overriding royalties or deferred payments of any kind to the transferor. (s) Cancellation. Any lease may be cancelled by DOE whenever the lessee fails to comply with the provisions of the lease. Failure of DOE to exercise its right to cancel shall not be deemed a waiver thereof. (t) Form of lease. Leases will be issued on forms prescribed by DOE. (u) Noncompetitive leases. Under special circumstances, where DOE believes it to be in the best interest of the Government, DOE at its discretion may award or extend leases on the basis of negotiation. (v) DOE decisions. All matters connected with the issuance and administration of leases will be determined by DOE whose decisions shall be final and conclusive. (w) Definitions. DOE as used in this section means the United States Department of Energy or its duly authorized representative or representatives. (x) Multiple use of land. Leases issued under this section shall provide that operations under them will be conducted so as not to interfere with the lawful operations of any third party having a lease, permit, easement, or other right or interest in the premises. (y) Compliance with State and Federal regulations. Every lease shall provide that the lessee is required to comply with all applicable State and Federal statutes and regulations." 15:15:3.1.1.1.10.0.1.1,15,Commerce and Foreign Trade,VII,C,760,PART 760—RESTRICTIVE TRADE PRACTICES OR BOYCOTTS,,,,§ 760.1 Definitions.,BIS,,,"[61 FR 12862, Mar. 25, 1996, as amended at 65 FR 34945, June 1, 2000; 73 FR 68327, Nov. 18, 2008; 73 FR 74349, Dec. 8, 2008]","In this part, references to the EAR are references to 15 CFR chapter VII, subchapter C. (a) Definition of person. For purposes of this part, the term person means any individual, or any association or organization, public or private, which is organized, permanently established, resident, or registered to do business, in the United States or any foreign country. This definition of person includes both the singular and plural and, in addition, includes: (1) Any partnership, corporation, company, branch, or other form of association or organization, whether organized for profit or non-profit purposes; (2) Any government, or any department, agency, or commission of any government; (3) Any trade association, chamber of commerce, or labor union; (4) Any charitable or fraternal organization; and (5) Any other association or organization not specifically listed in paragraphs (a)(1) through (4) of this section. (b) Definition of “United States person”. (1) This part applies to United States persons. For purposes of this part, the term United States person means any person who is a United States resident or national, including individuals, domestic concerns, and “controlled in fact” foreign subsidiaries, affiliates, or other permanent foreign establishments of domestic concerns. This definition of United States person includes both the singular and plural and, in addition, includes: (i) The government of the United States or any department, agency, or commission thereof; (ii) The government of any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any subdivision, department, agency, or commission of any such government; (iii) Any partnership, corporation, company, association, or other entity organized under the laws of paragraph (b)(1)(i) or (ii) of this section; (iv) Any foreign concern's subsidiary, partnership, affiliate, branch, office, or other permanent establishment in any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession of the United States; and (v) Any domestic concern's foreign subsidiary, partnership, affiliate, branch, office, or other permanent foreign establishment which is controlled in fact by such domestic concern. (See paragraph (c) of this section on “Definition of ‘Controlled in Fact’.”) (2) The term domestic concern means any partnership, corporation, company, association, or other entity of, or organized under the laws of, any jurisdiction named in paragraph (b)(1) (i) or (ii) of this section, or any permanent domestic establishment of a foreign concern. (3) The term foreign concern means any partnership, corporation, company, association, or other entity of, or organized under the laws of, any jurisdiction other than those named in paragraph (b)(1)(i) or (ii) of this section. (4) The term United States person does not include an individual United States national who is resident outside the United States and who is either employed permanently or temporarily by a non-United States person or assigned to work as an employee for, and under the direction and control of, a non-United States person. Examples of “United States Person” The following examples are intended to give guidance in determining whether a person is a “United States person.” They are illustrative, not comprehensive. (i) U.S. bank A has a branch office in foreign country P. Such branch office is a United States person, because it is a permanent foreign establishment of a domestic concern. (ii) Ten foreign nationals establish a manufacturing plant, A, in the United States, incorporating the plant under New York law. A is a United States person, because it is a corporation organized under the laws of one of the states of the United States. (iii) A, a foreign corporation, opens an office in the United States for purposes of soliciting U.S. orders. The office is not separately incorporated. A's U.S. office is a United States person, because it is a permanent establishment, in the United States, of a foreign concern. (iv) A, a U.S. individual, owns stock in foreign corporation B. A is a United States person. However, A is not a “domestic concern,” because the term “domestic concern” does not include individuals. (v) A, a foreign national resident in the United States, is employed by B, a foreign corporation. A is a United States person, because he is resident in the United States. (vi) A, a foreign national, who is resident in a foreign country and is employed by a foreign corporation, makes occasional visits to the United States, for purposes of exploring business opportunities. A is not a United States person, because he is not a United States resident or national. (vii) A is an association of U.S. firms organized under the laws of Pennsylvania for the purpose of expanding trade. A is a United States person, because it is an association organized under the laws of one of the states of the United States. (viii) At the request of country Y, A, an individual employed by U.S. company B, is assigned to company C as an employee. C is a foreign company owned and controlled by country Y. A, a U.S. national who will reside in Y, has agreed to the assignment provided he is able to retain his insurance, pension, and other benefits. Accordingly, company B has agreed to keep A as an employee in order to protect his employee benefits, and company C has agreed to pay for A's salary. At all times while he works for C, A will be under C's direction and control. A is not a United States person while under C's direction and control, because he will be resident outside the United States and assigned as an employee to a non-United States person. The arrangement designed to protect A's insurance, pension, and other benefits does not destroy his status as an employee of C so long as he is under the direction and control of C. (ix) A, a U.S. citizen, has resided in Europe for three years, where he is a self-employed consultant for United States and foreign companies in the communications industry. A is a United States person, because he is a U.S. national and because he is not a resident outside the United States who is employed by other than a United States person. The following examples are intended to give guidance in determining whether a person is a “United States person.” They are illustrative, not comprehensive. (i) U.S. bank A has a branch office in foreign country P. Such branch office is a United States person, because it is a permanent foreign establishment of a domestic concern. (ii) Ten foreign nationals establish a manufacturing plant, A, in the United States, incorporating the plant under New York law. A is a United States person, because it is a corporation organized under the laws of one of the states of the United States. (iii) A, a foreign corporation, opens an office in the United States for purposes of soliciting U.S. orders. The office is not separately incorporated. A's U.S. office is a United States person, because it is a permanent establishment, in the United States, of a foreign concern. (iv) A, a U.S. individual, owns stock in foreign corporation B. A is a United States person. However, A is not a “domestic concern,” because the term “domestic concern” does not include individuals. (v) A, a foreign national resident in the United States, is employed by B, a foreign corporation. A is a United States person, because he is resident in the United States. (vi) A, a foreign national, who is resident in a foreign country and is employed by a foreign corporation, makes occasional visits to the United States, for purposes of exploring business opportunities. A is not a United States person, because he is not a United States resident or national. (vii) A is an association of U.S. firms organized under the laws of Pennsylvania for the purpose of expanding trade. A is a United States person, because it is an association organized under the laws of one of the states of the United States. (viii) At the request of country Y, A, an individual employed by U.S. company B, is assigned to company C as an employee. C is a foreign company owned and controlled by country Y. A, a U.S. national who will reside in Y, has agreed to the assignment provided he is able to retain his insurance, pension, and other benefits. Accordingly, company B has agreed to keep A as an employee in order to protect his employee benefits, and company C has agreed to pay for A's salary. At all times while he works for C, A will be under C's direction and control. A is not a United States person while under C's direction and control, because he will be resident outside the United States and assigned as an employee to a non-United States person. The arrangement designed to protect A's insurance, pension, and other benefits does not destroy his status as an employee of C so long as he is under the direction and control of C. (ix) A, a U.S. citizen, has resided in Europe for three years, where he is a self-employed consultant for United States and foreign companies in the communications industry. A is a United States person, because he is a U.S. national and because he is not a resident outside the United States who is employed by other than a United States person. (c) Definition of “Controlled in Fact”. (1) This part applies to any domestic concern's foreign subsidiary, partnership, affiliate, branch, office, or other permanent foreign establishment which is controlled in fact by such domestic concern. Control in fact consists of the authority or ability of a domestic concern to establish the general policies or to control day-to-day operations of its foreign subsidiary, partnership, affiliate, branch, office, or other permanent foreign establishment. (2) A foreign subsidiary or affiliate of a domestic concern will be presumed to be controlled in fact by that domestic concern, subject to rebuttal by competent evidence, when: (i) The domestic concern beneficially owns or controls (whether directly or indirectly) more than 50 percent of the outstanding voting securities of the foreign subsidiary or affiliate; (ii) The domestic concern beneficially owns or controls (whether directly or indirectly) 25 percent or more of the voting securities of the foreign subsidiary or affiliate, if no other person owns or controls (whether directly or indirectly) an equal or larger percentage; (iii) The foreign subsidiary or affiliate is operated by the domestic concern pursuant to the provisions of an exclusive management contract; (iv) A majority of the members of the board of directors of the foreign subsidiary or affiliate are also members of the comparable governing body of the domestic concern; (v) The domestic concern has authority to appoint the majority of the members of the board of directors of the foreign subsidiary or affiliate; or (vi) The domestic concern has authority to appoint the chief operating officer of the foreign subsidiary or affiliate. (3) A brokerage firm or other person which holds simple record ownership of securities for the convenience of clients will not be deemed to control the securities. (4) A domestic concern which owns, directly or indirectly, securities that are immediately convertible at the option of the holder or owner into voting securities is presumed to own or control those voting securities. (5) A domestic concern's foreign branch office or other unincorporated permanent foreign establishment is deemed to be controlled in fact by such domestic concern under all circumstances. Examples of “Controlled in Fact” The following examples are intended to give guidance in determining the circumstances in which a foreign subsidiary, affiliate, or other permanent foreign establishment of a domestic concern is “controlled in fact.” They are illustrative, not comprehensive. (i) Company A is incorporated in a foreign country. Fifty-one percent of the voting stock of A is owned by U.S. company B. A is presumed to be controlled in fact by B. This presumption may be rebutted by competent evidence showing that control does not, in fact, lie with B. (ii) Company A is incorporated in a foreign country. Ten percent of the voting stock of A is owned by U.S. company B. A has an exclusive management contract with B pursuant to which A is operated by B. As long as such contract is in effect, A is presumed to be controlled in fact by B. This presumption may be rebutted by competent evidence showing that control does not, in fact, lie with B. (iii) Company A is incorporated in a foreign country. Ten percent of the voting stock of A is owned by U.S. company B. A has 10 persons on its board of directors. Six of those persons are also members of the board of directors of U.S. company B. A is presumed to be controlled in fact by B. This presumption may be rebutted by competent evidence showing that control does not, in fact, lie with B. (iv) Company A is incorporated in a foreign country. Thirty percent of the voting securities of A is owned by U.S. company B and no other person owns or controls an equal or larger share. A is presumed to be controlled in fact by B. This presumption may be rebutted by competent evidence showing that control does not, in fact, lie with B. (v) Company A is incorporated in a foreign country. In A's articles of incorporation, U.S. company B has been given authority to appoint A's board of directors. A is presumed to be controlled in fact by B. This presumption may be rebutted by competent evidence showing that control does not, in fact, lie with B. (vi) Company A is a joint venture established in a foreign country, with equal participation by U.S. company B and foreign company C. U.S. Company B has authority to appoint A's chief operating officer. A is presumed to be controlled in fact by B. This presumption may be rebutted by competent evidence showing that control does not, in fact, lie with B. (vii) Same as (vi), except that B has no authority to appoint A's chief operating officer. B is not presumed to control A, absent other facts giving rise to a presumption of control. (viii) Company A is incorporated in a foreign country. U.S. companies B, C, and D each own 20 percent of A's voting securities and regularly cast their votes in concert. A is presumed to be controlled in fact by B, C, and D, because these companies are acting in concert to control A. (ix) U.S. bank B located in the United States has a branch office, A, in a foreign country. A is not separately incorporated. A is deemed to be controlled in fact by B, because A is a branch office of a domestic concern. (x) Company A is incorporated in a foreign country. Fifty-one percent of the voting stock of A is owned by company B, which is incorporated in another foreign country. Fifty-one percent of the voting stock of B is owned by C, a U.S. company. Both A and B are presumed to be controlled in fact by C. The presumption of C's control over B may be rebutted by competent evidence showing that control over B does not, in fact, lie with C. The presumption of B's control over A (and thus C's control over A) may be rebutted by competent evidence showing that control over A does not, in fact, lie with B. (xi) B, a U.S. individual, owns 51 percent of the voting securities of A, a manufacturing company incorporated and located in a foreign country. A is not “controlled in fact” under this part, because it is not controlled by a “domestic concern.” The following examples are intended to give guidance in determining the circumstances in which a foreign subsidiary, affiliate, or other permanent foreign establishment of a domestic concern is “controlled in fact.” They are illustrative, not comprehensive. (i) Company A is incorporated in a foreign country. Fifty-one percent of the voting stock of A is owned by U.S. company B. A is presumed to be controlled in fact by B. This presumption may be rebutted by competent evidence showing that control does not, in fact, lie with B. (ii) Company A is incorporated in a foreign country. Ten percent of the voting stock of A is owned by U.S. company B. A has an exclusive management contract with B pursuant to which A is operated by B. As long as such contract is in effect, A is presumed to be controlled in fact by B. This presumption may be rebutted by competent evidence showing that control does not, in fact, lie with B. (iii) Company A is incorporated in a foreign country. Ten percent of the voting stock of A is owned by U.S. company B. A has 10 persons on its board of directors. Six of those persons are also members of the board of directors of U.S. company B. A is presumed to be controlled in fact by B. This presumption may be rebutted by competent evidence showing that control does not, in fact, lie with B. (iv) Company A is incorporated in a foreign country. Thirty percent of the voting securities of A is owned by U.S. company B and no other person owns or controls an equal or larger share. A is presumed to be controlled in fact by B. This presumption may be rebutted by competent evidence showing that control does not, in fact, lie with B. (v) Company A is incorporated in a foreign country. In A's articles of incorporation, U.S. company B has been given authority to appoint A's board of directors. A is presumed to be controlled in fact by B. This presumption may be rebutted by competent evidence showing that control does not, in fact, lie with B. (vi) Company A is a joint venture established in a foreign country, with equal participation by U.S. company B and foreign company C. U.S. Company B has authority to appoint A's chief operating officer. A is presumed to be controlled in fact by B. This presumption may be rebutted by competent evidence showing that control does not, in fact, lie with B. (vii) Same as (vi), except that B has no authority to appoint A's chief operating officer. B is not presumed to control A, absent other facts giving rise to a presumption of control. (viii) Company A is incorporated in a foreign country. U.S. companies B, C, and D each own 20 percent of A's voting securities and regularly cast their votes in concert. A is presumed to be controlled in fact by B, C, and D, because these companies are acting in concert to control A. (ix) U.S. bank B located in the United States has a branch office, A, in a foreign country. A is not separately incorporated. A is deemed to be controlled in fact by B, because A is a branch office of a domestic concern. (x) Company A is incorporated in a foreign country. Fifty-one percent of the voting stock of A is owned by company B, which is incorporated in another foreign country. Fifty-one percent of the voting stock of B is owned by C, a U.S. company. Both A and B are presumed to be controlled in fact by C. The presumption of C's control over B may be rebutted by competent evidence showing that control over B does not, in fact, lie with C. The presumption of B's control over A (and thus C's control over A) may be rebutted by competent evidence showing that control over A does not, in fact, lie with B. (xi) B, a U.S. individual, owns 51 percent of the voting securities of A, a manufacturing company incorporated and located in a foreign country. A is not “controlled in fact” under this part, because it is not controlled by a “domestic concern.” (d) Definition of “Activities in the Interstate or Foreign Commerce of the United States”. Activities Involving United States Persons Located in the United States (1) For purposes of this part, the activities of a United States person located in the United States are in the interstate or foreign commerce of the United States if they involve the sale, purchase, or transfer of goods or services (including information) between: (i) Two or more of the several States (including the District of Columbia); (ii) Any State (including the District of Columbia) and any territory or possession of the United States; (iii) Two or more of the territories or possessions of the United States; or (iv) A State (including the District of Columbia), territory or possession of the United States and any foreign country. (2) For purposes of this part, the export of goods or services from the United States and the import of goods or services into the United States are activities in United States commerce. In addition, the action of a domestic concern in specifically directing the activities of its controlled in fact foreign subsidiary, affiliate, or other permanent foreign establishment is an activity in United States commerce. (3) Activities of a United States person located in the United States may be in United States commerce even if they are part of or ancillary to activities outside United States commerce. However, the fact that an ancillary activity is in United States commerce does not, in and of itself, mean that the underlying or related activity is in United States commerce. (4) Hence, the action of a United States bank located in the United States in providing financing from the United States for a foreign transaction that is not in United States commerce is nonetheless itself in United States commerce. However, the fact that the financing is in United States commerce does not, in and of itself, make the underlying foreign transaction an activity in United States commerce, even if the underlying transaction involves a foreign company that is a United States person within the meaning of this part. (5) Similarly, the action of a United States person located in the United States in providing financial, accounting, legal, t ransportation, or other ancillary services to its controlled in fact foreign subsidiary, affiliate, or other permanent foreign establishment in connection with a foreign transaction is in United States commerce. But the provision of such ancillary services will not, in and of itself, bring the foreign transaction of such subsidiary, affiliate, or permanent foreign establishment into United States commerce. Activities of Controlled in Fact Foreign Subsidiaries, Affiliates, and Other Permanent Foreign Establishments (6) Any transaction between a controlled in fact foreign subsidiary, affiliate, or other permanent foreign establishment of a domestic concern and a person located in the United States is an activity in United States commerce. (7) Whether a transaction between such a foreign subsidiary, affiliate, or other permanent foreign establishment and a person located outside the United States is an activity in United States commerce is governed by the following rules. Activities in United States Commerce (8) A transaction between a domestic concern's controlled in fact foreign subsidiary, affiliate, or other permanent foreign establishment and a person outside the United States, involving goods or services (including information but not including ancillary services) acquired from a person in the United States is in United States commerce under any of the following circumstances— (i) If the goods or services were acquired for the purpose of filling an order from a person outside the United States; (ii) If the goods or services were acquired for incorporation into, refining into, reprocessing into, or manufacture of another product for the purpose of filling an order from a person outside the United States; (iii) If the goods or services were acquired for the purpose of fulfilling or engaging in any other transaction with a person outside the United States; or (iv) If the goods were acquired and are ultimately used, without substantial alteration or modification, in filling an order from, or fulfilling or engaging in any other transaction with, a person outside the United States (whether or not the goods were originally acquired for that purpose). If the goods are indistinguishable as to origin from similar foreign-trade goods with which they have been mingled in a stockpile or inventory, the subsequent transaction involving the goods is presumed to be in United States commerce unless, at the time of filling the order, the foreign-origin inventory on hand was sufficient to fill the order. (9) For purposes of this section, goods or services are considered to be acquired for the purpose of filling an order from or engaging in any other transaction with a person outside the United States where: (i) They are purchased by the foreign subsidiary, affiliate, or other permanent foreign establishment upon the receipt of an order from or on behalf of a customer with the intention that the goods or services are to go to the customer; (ii) They are purchased by the foreign subsidiary, affiliate, or other permanent foreign establishment to meet the needs of specified customers pursuant to understandings with those customers, although not for immediate delivery; or (iii) They are purchased by the foreign subsidiary, affiliate, or other permanent foreign establishment based on the anticipated needs of specified customers. (10) If any non-ancillary part of a transaction between a domestic concern's controlled foreign subsidiary, affiliate, or other permanent foreign establishment and a person outside the United States is in United States commerce, the entire transaction is in United States commerce. For example, if such a foreign subsidiary is engaged in filling an order from a non-United States customer both with goods acquired from the United States and with goods acquired elsewhere, the entire transaction with that customer is in United States commerce. Activities Outside United States Commerce (11) A transaction between a domestic concern's controlled foreign subsidiary, affiliate, or other permanent foreign establishment and a person outside the United States, not involving the purchase, sale, or transfer of goods or services (including information) to or from a person in the United States, is not an activity in United States commerce. (12) The activities of a domestic concern's controlled foreign subsidiary, affiliate, or other permanent foreign establishment with respect to goods acquired from a person in the United States are not in United States commerce where: (i) They were acquired without reference to a specific order from or transaction with a person outside the United States; and (ii) They were further manufactured, incorporated into, refined into, or reprocessed into another product. (13) The activities of a domestic concern's controlled foreign subsidiary, affiliate, or other permanent foreign establishment with respect to services acquired from a person in the United States are not in United States commerce where: (i) They were acquired without reference to a specific order from or transaction with a person outside the United States; or (ii) They are ancillary to the transaction with the person outside the United States. (14) For purposes of this section, services are ancillary services if they are provided to a controlled foreign subsidiary, affiliate, or other permanent foreign establishment primarily for its own use rather than for the use of a third person. These typically include financial, accounting, legal,transportation, and other services, whether provided by a domestic concern or an unrelated entity. (15) Thus, the provision of the project financing by a United States bank located in the United States to a controlled foreign subsidiary unrelated to the bank is an ancillary service which will not cause the underlying transaction to be in United States commerce. By contrast, where a domestic concern, on behalf of its controlled foreign subsidiary, gives a guaranty of performance to a foreign country customer, that is a service provided to the customer and, as such, brings that subsidiary's transaction with the customer into United States commerce. Similarly, architectural or engineering services provided by a domestic concern in connection with its controlled foreign subsidiary's construction project in a third country are services passed through to the subsidiary's customer and, as such, bring that subsidiary's foreign transaction into United States commerce. General (16) Regardless of whether the subsequent disposition of goods or services from the United States is in United States commerce, the original acquisition of goods or services from a person in the United States is an activity in United States commerce subject to this part. Thus, if a domestic concern's controlled foreign subsidiary engages in a prohibited refusal to do business in stocking its inventory with goods from the United States, that action is subject to this part whether or not subsequent sales from that inventory are. (17) In all the above, goods and services will be considered to have been acquired from a person in the United States whether they were acquired directly or indirectly through a third party, where the person acquiring the goods or services knows or expects, at the time he places the order, that they will be delivered from the United States. Letters of Credit (18) Implementation of a letter of credit in the United States by a United States person located in the United States, including a permanent United States establishment of a foreign concern, is an activity in United States commerce. (19) Implementation of a letter of credit outside the United States by a United States person located outside the United States is in United States commerce where the letter of credit (a) specifies a United States address for the beneficiary, (b) calls for documents indicating shipment from the United States, or (c) calls for documents indicating that the goods are of United States origin. (20) See § 760.2(f) of this part on “Letters of Credit” to determine the circumstances in which paying, honoring, confirming, or otherwise implementing a letter of credit is covered by this part. Examples of Activities in the Interstate or Foreign Commerce of the United States The following examples are intended to give guidance in determining the circumstances in which an activity is in the interstate or foreign commerce of the United States. They are illustrative, not comprehensive. United States Person Located in the United States (i) U.S. company A exports goods from the United States to a foreign country. A's activity is in U.S. commerce, because A is exporting goods from the United States. (ii) U.S. company A imports goods into the United States from a foreign country. A's activity is in U.S. commerce, because A is importing goods into the United States. (iii) U.S. engineering company A supplies consulting services to its controlled foreign subsidiary, B. A's activity is in U.S. commerce, because A is exporting services from the United States. (iv) U.S. company A supplies consulting services to foreign company B. B is unrelated to A or any other U.S. person. A's activity is in U.S. commerce even though B, a foreign-owned company located outside the United States, is not subject to this part, because A is exporting services from the United States. (v) Same as (iv), except A is a bank located in the United States and provides a construction loan to B. A's activity is in U.S. commerce even though B is not subject to this part, because A is exporting financial services from the United States. (vi) U.S. company A issues policy directives from time to time to its controlled foreign subsidiary, B, governing the conduct of B's activities with boycotting countries. A's activity in directing the activities of its foreign subsidiary, B, is an activity in U.S. commerce. Foreign Subsidiaries, Affiliates, and Other Permanent Foreign Establishments of Domestic Concerns (i) A, a controlled foreign subsidiary of U.S. company B, purchases goods from the United States. A's purchase of goods from the United States is in U.S. commerce, because A is importing goods from the United States. Whether A's subsequent disposition of these goods is in U.S. commerce is irrelevant. Similarly, the fact that A purchased goods from the United States does not, in and of itself, make any subsequent disposition of those goods an activity in U.S. commerce. (ii) A, a controlled foreign subsidiary of U.S. company B, receives an order from boycotting country Y for construction materials. A places an order with U.S. company B for the materials. A's transaction with Y is an activity in U.S. commerce, because the materials are purchased from the United States for the purpose of filling the order from Y. (iii) A, a controlled foreign subsidiary of U.S. company B, receives an order from boycotting country Y for construction materials. A places an order with U.S. company B for some of the materials, and with U.S. company C, an unrelated company, for the rest of the materials. A's transaction with Y is an activity in U.S. commerce, because the materials are purchased from the United States for the purpose of filling the order from Y. It makes no difference whether the materials are ordered from B or C. (iv) A, a controlled foreign subsidiary of U.S. company B, is in the wholesale and retail appliance sales business. A purchases finished air conditioning units from the United States from time to time in order to stock its inventory. A's inventory is also stocked with air conditioning units purchased outside the United States. A receives an order for air conditioning units from Y, a boycotting country. The order is filled with U.S.-origin units in A's inventory. A's transaction with Y is in U.S. commerce, because its U.S.-origin goods are resold without substantial alteration. (v) Same as (iv), except that A is in the chemicals distribution business. Its U.S.-origin goods are mingled in inventory with foreign-origin goods. A's sale to Y of unaltered goods from its general inventory is presumed to be in U.S. commerce unless A can show that at the time of the sale the foreign-origin inventory on hand was sufficient to cover the shipment to Y. (vi) A, a foreign subsidiary of U.S. company B, receives an order from boycotting country Y for computers. A places an order with U.S. company B for some of the components; with U.S. company C, an unrelated company, for other components; and with foreign company D for the rest of the components. A then assembles the computers and ships them to Y. A's transaction with Y is an activity in U.S. commerce, because some of the components are acquired from the United States for purposes of filling an order from Y. (vii) Same as (vi), except A purchases all the components from non-U.S.sources. A's transaction with Y is not an activity in U.S. commerce, because it involves no export of goods from the United States. It makes no difference whether the technology A uses to manufacture computers was originally acquired from its U.S. parent. (viii) A, a controlled foreign subsidiary of U.S. company B, manufactures computers. A stocks its general components and parts inventory with purchases made at times from the United States and at times from foreign sources. A receives an order from Y, a boycotting country, for computers. A fills that order by manufacturing the computers using materials from its general inventory. A's transaction with Y is not in U.S. commerce, because the U.S.-origin components are not acquired for the purpose of meeting the anticipated needs of specified customers in Y. It is irrelevant that A's operations may be based on U.S.-origin technology. (ix) Same as (viii), except that in anticipation of the order from Y, A orders and receives the necessary materials from the United States. A's transaction with Y is in U.S. commerce, because the U.S.-origin goods were acquired for the purpose of filling an anticipated order from Y. (x) A, a controlled foreign subsidiary of U.S. company B, manufactures typewriters. It buys typewriter components both from the United States and from foreign sources. A sells its output in various places throughout the world, including boycotting country Y. Its sales to Y vary from year to year, but have averaged approximately 20 percent of sales for the past five years. A expects that its sales to Y will remain at approximately that level in the years ahead although it has no contracts or orders from Y on hand. A's sales of typewriters to Y are not in U.S. commerce, because the U.S. components are not acquired for the purpose of filling an order from Y. A general expectancy of future sales is not an “order” within the meaning of this section. (xi) U.S. company A's corporate counsel provides legal advice to B, its controlled foreign subsidiary, on the applicability of this Part to B's transactions. While provision of this legal advice is itself an activity in U.S. commerce, it does not, in and of itself, bring B's activities into U.S. commerce. (xii) A, a controlled foreign subsidiary of U.S. company B, is in the general construction business. A enters into a contract with boycotting country Y to construct a power plant in Y. In preparing engineering drawings and specifications, A uses the advice and assistance of B. A's transaction with Y is in U.S. commerce, because B's services are used for purposes of fulfilling the contract with Y. B's services are not ancillary services, because the engineering services in connection with construction of the power plant are part of the services ultimately provided to Y by A. (xiii) Same as (xii), except that A gets no engineering advice or assistance from B. However, B's corporate counsel provides legal advice to A regarding the structure of the transaction. In addition, B's corporate counsel draws up the contract documents. A's transaction with Y is not in U.S. commerce. The legal services provided to A are ancillary services, because they are not part of the services provided to Y by A in fulfillment of its contract with Y. (xiv) A, a controlled foreign subsidiary of U.S. company B, enters into a contract to construct an apartment complex in boycotting country Y. A will fulfill its contract completely with goods and services from outside the United States. Pursuant to a provision in the contract, B guarantees A's performance of the contract. A's transaction with Y is in U.S. commerce, because B's guaranty of A's performance involves the acquisition of services from the United States for purposes of fulfilling the transaction with Y, and those services are part of the services ultimately provided to Y. (xv) Same as (xiv), except that the guaranty of A's performance is supplied by C, a non-U.S. person located outside the United States. However, unrelated to any particular transaction, B from time to time provides general financial, legal, and technical services to A. A's transaction with Y is not in U.S. commerce, because the services acquired from the United States are not acquired for purposes of fulfilling the contract with Y. (xvi) A, a foreign subsidiary of U.S. company B, has a contract with boycotting country Y to conduct oil drilling operations in that country. In conducting these operations, A from time to time seeks certain technical advice from B regarding the operation of the drilling rigs. A's contract with Y is in U.S. commerce, because B's services are sought for purposes of fulfilling the contract with Y and are part of the services ultimately provided to Y. (xvii) A, a controlled foreign subsidiary of U.S. company B, enters into a contract to sell typewriters to boycotting country Y. A is located in non-boycotting country P. None of the components are acquired from the United States. A engages C, a U.S. shipping company, to transport the typewriters from P to Y. A's sales to Y are not in U.S. commerce, because in carrying A's goods, C is providing an ancillary service to A and not a service to Y. (xviii) Same as (xvii), except that A's contract with Y calls for title to pass to Y in P. In addition, the contract calls for A to engage a carrier to make delivery to Y. A's sales to Y are in U.S. commerce, because in carrying Y's goods, C is providing a service to A which is ultimately provided to Y. (xix) A, a controlled foreign subsidiary of U.S. company B, has general product liability insurance with U.S. company C. Foreign-origin goods sold from time to time by A to boycotting country Y are covered by the insurance policy. A's sales to Y are not in U.S. commerce, because the insurance provided by C is an ancillary service provided to A which is not ultimately provided to Y. (xx) A, a controlled foreign subsidiary of U.S. company B, manufactures automobiles abroad under a license agreement with B. From time to time, A sells such goods to boycotting country Y. A's sales to Y are not in U.S. commerce, because the rights conveyed by the license are not acquired for the specific purpose of engaging in transactions with Y. (1) For purposes of this part, the activities of a United States person located in the United States are in the interstate or foreign commerce of the United States if they involve the sale, purchase, or transfer of goods or services (including information) between: (i) Two or more of the several States (including the District of Columbia); (ii) Any State (including the District of Columbia) and any territory or possession of the United States; (iii) Two or more of the territories or possessions of the United States; or (iv) A State (including the District of Columbia), territory or possession of the United States and any foreign country. (2) For purposes of this part, the export of goods or services from the United States and the import of goods or services into the United States are activities in United States commerce. In addition, the action of a domestic concern in specifically directing the activities of its controlled in fact foreign subsidiary, affiliate, or other permanent foreign establishment is an activity in United States commerce. (3) Activities of a United States person located in the United States may be in United States commerce even if they are part of or ancillary to activities outside United States commerce. However, the fact that an ancillary activity is in United States commerce does not, in and of itself, mean that the underlying or related activity is in United States commerce. (4) Hence, the action of a United States bank located in the United States in providing financing from the United States for a foreign transaction that is not in United States commerce is nonetheless itself in United States commerce. However, the fact that the financing is in United States commerce does not, in and of itself, make the underlying foreign transaction an activity in United States commerce, even if the underlying transaction involves a foreign company that is a United States person within the meaning of this part. (5) Similarly, the action of a United States person located in the United States in providing financial, accounting, legal, t ransportation, or other ancillary services to its controlled in fact foreign subsidiary, affiliate, or other permanent foreign establishment in connection with a foreign transaction is in United States commerce. But the provision of such ancillary services will not, in and of itself, bring the foreign transaction of such subsidiary, affiliate, or permanent foreign establishment into United States commerce. (6) Any transaction between a controlled in fact foreign subsidiary, affiliate, or other permanent foreign establishment of a domestic concern and a person located in the United States is an activity in United States commerce. (7) Whether a transaction between such a foreign subsidiary, affiliate, or other permanent foreign establishment and a person located outside the United States is an activity in United States commerce is governed by the following rules. (8) A transaction between a domestic concern's controlled in fact foreign subsidiary, affiliate, or other permanent foreign establishment and a person outside the United States, involving goods or services (including information but not including ancillary services) acquired from a person in the United States is in United States commerce under any of the following circumstances— (i) If the goods or services were acquired for the purpose of filling an order from a person outside the United States; (ii) If the goods or services were acquired for incorporation into, refining into, reprocessing into, or manufacture of another product for the purpose of filling an order from a person outside the United States; (iii) If the goods or services were acquired for the purpose of fulfilling or engaging in any other transaction with a person outside the United States; or (iv) If the goods were acquired and are ultimately used, without substantial alteration or modification, in filling an order from, or fulfilling or engaging in any other transaction with, a person outside the United States (whether or not the goods were originally acquired for that purpose). If the goods are indistinguishable as to origin from similar foreign-trade goods with which they have been mingled in a stockpile or inventory, the subsequent transaction involving the goods is presumed to be in United States commerce unless, at the time of filling the order, the foreign-origin inventory on hand was sufficient to fill the order. (9) For purposes of this section, goods or services are considered to be acquired for the purpose of filling an order from or engaging in any other transaction with a person outside the United States where: (i) They are purchased by the foreign subsidiary, affiliate, or other permanent foreign establishment upon the receipt of an order from or on behalf of a customer with the intention that the goods or services are to go to the customer; (ii) They are purchased by the foreign subsidiary, affiliate, or other permanent foreign establishment to meet the needs of specified customers pursuant to understandings with those customers, although not for immediate delivery; or (iii) They are purchased by the foreign subsidiary, affiliate, or other permanent foreign establishment based on the anticipated needs of specified customers. (10) If any non-ancillary part of a transaction between a domestic concern's controlled foreign subsidiary, affiliate, or other permanent foreign establishment and a person outside the United States is in United States commerce, the entire transaction is in United States commerce. For example, if such a foreign subsidiary is engaged in filling an order from a non-United States customer both with goods acquired from the United States and with goods acquired elsewhere, the entire transaction with that customer is in United States commerce. (11) A transaction between a domestic concern's controlled foreign subsidiary, affiliate, or other permanent foreign establishment and a person outside the United States, not involving the purchase, sale, or transfer of goods or services (including information) to or from a person in the United States, is not an activity in United States commerce. (12) The activities of a domestic concern's controlled foreign subsidiary, affiliate, or other permanent foreign establishment with respect to goods acquired from a person in the United States are not in United States commerce where: (i) They were acquired without reference to a specific order from or transaction with a person outside the United States; and (ii) They were further manufactured, incorporated into, refined into, or reprocessed into another product. (13) The activities of a domestic concern's controlled foreign subsidiary, affiliate, or other permanent foreign establishment with respect to services acquired from a person in the United States are not in United States commerce where: (i) They were acquired without reference to a specific order from or transaction with a person outside the United States; or (ii) They are ancillary to the transaction with the person outside the United States. (14) For purposes of this section, services are ancillary services if they are provided to a controlled foreign subsidiary, affiliate, or other permanent foreign establishment primarily for its own use rather than for the use of a third person. These typically include financial, accounting, legal,transportation, and other services, whether provided by a domestic concern or an unrelated entity. (15) Thus, the provision of the project financing by a United States bank located in the United States to a controlled foreign subsidiary unrelated to the bank is an ancillary service which will not cause the underlying transaction to be in United States commerce. By contrast, where a domestic concern, on behalf of its controlled foreign subsidiary, gives a guaranty of performance to a foreign country customer, that is a service provided to the customer and, as such, brings that subsidiary's transaction with the customer into United States commerce. Similarly, architectural or engineering services provided by a domestic concern in connection with its controlled foreign subsidiary's construction project in a third country are services passed through to the subsidiary's customer and, as such, bring that subsidiary's foreign transaction into United States commerce. (16) Regardless of whether the subsequent disposition of goods or services from the United States is in United States commerce, the original acquisition of goods or services from a person in the United States is an activity in United States commerce subject to this part. Thus, if a domestic concern's controlled foreign subsidiary engages in a prohibited refusal to do business in stocking its inventory with goods from the United States, that action is subject to this part whether or not subsequent sales from that inventory are. (17) In all the above, goods and services will be considered to have been acquired from a person in the United States whether they were acquired directly or indirectly through a third party, where the person acquiring the goods or services knows or expects, at the time he places the order, that they will be delivered from the United States. (18) Implementation of a letter of credit in the United States by a United States person located in the United States, including a permanent United States establishment of a foreign concern, is an activity in United States commerce. (19) Implementation of a letter of credit outside the United States by a United States person located outside the United States is in United States commerce where the letter of credit (a) specifies a United States address for the beneficiary, (b) calls for documents indicating shipment from the United States, or (c) calls for documents indicating that the goods are of United States origin. (20) See § 760.2(f) of this part on “Letters of Credit” to determine the circumstances in which paying, honoring, confirming, or otherwise implementing a letter of credit is covered by this part. The following examples are intended to give guidance in determining the circumstances in which an activity is in the interstate or foreign commerce of the United States. They are illustrative, not comprehensive. (i) U.S. company A exports goods from the United States to a foreign country. A's activity is in U.S. commerce, because A is exporting goods from the United States. (ii) U.S. company A imports goods into the United States from a foreign country. A's activity is in U.S. commerce, because A is importing goods into the United States. (iii) U.S. engineering company A supplies consulting services to its controlled foreign subsidiary, B. A's activity is in U.S. commerce, because A is exporting services from the United States. (iv) U.S. company A supplies consulting services to foreign company B. B is unrelated to A or any other U.S. person. A's activity is in U.S. commerce even though B, a foreign-owned company located outside the United States, is not subject to this part, because A is exporting services from the United States. (v) Same as (iv), except A is a bank located in the United States and provides a construction loan to B. A's activity is in U.S. commerce even though B is not subject to this part, because A is exporting financial services from the United States. (vi) U.S. company A issues policy directives from time to time to its controlled foreign subsidiary, B, governing the conduct of B's activities with boycotting countries. A's activity in directing the activities of its foreign subsidiary, B, is an activity in U.S. commerce. (i) A, a controlled foreign subsidiary of U.S. company B, purchases goods from the United States. A's purchase of goods from the United States is in U.S. commerce, because A is importing goods from the United States. Whether A's subsequent disposition of these goods is in U.S. commerce is irrelevant. Similarly, the fact that A purchased goods from the United States does not, in and of itself, make any subsequent disposition of those goods an activity in U.S. commerce. (ii) A, a controlled foreign subsidiary of U.S. company B, receives an order from boycotting country Y for construction materials. A places an order with U.S. company B for the materials. A's transaction with Y is an activity in U.S. commerce, because the materials are purchased from the United States for the purpose of filling the order from Y. (iii) A, a controlled foreign subsidiary of U.S. company B, receives an order from boycotting country Y for construction materials. A places an order with U.S. company B for some of the materials, and with U.S. company C, an unrelated company, for the rest of the materials. A's transaction with Y is an activity in U.S. commerce, because the materials are purchased from the United States for the purpose of filling the order from Y. It makes no difference whether the materials are ordered from B or C. (iv) A, a controlled foreign subsidiary of U.S. company B, is in the wholesale and retail appliance sales business. A purchases finished air conditioning units from the United States from time to time in order to stock its inventory. A's inventory is also stocked with air conditioning units purchased outside the United States. A receives an order for air conditioning units from Y, a boycotting country. The order is filled with U.S.-origin units in A's inventory. A's transaction with Y is in U.S. commerce, because its U.S.-origin goods are resold without substantial alteration. (v) Same as (iv), except that A is in the chemicals distribution business. Its U.S.-origin goods are mingled in inventory with foreign-origin goods. A's sale to Y of unaltered goods from its general inventory is presumed to be in U.S. commerce unless A can show that at the time of the sale the foreign-origin inventory on hand was sufficient to cover the shipment to Y. (vi) A, a foreign subsidiary of U.S. company B, receives an order from boycotting country Y for computers. A places an order with U.S. company B for some of the components; with U.S. company C, an unrelated company, for other components; and with foreign company D for the rest of the components. A then assembles the computers and ships them to Y. A's transaction with Y is an activity in U.S. commerce, because some of the components are acquired from the United States for purposes of filling an order from Y. (vii) Same as (vi), except A purchases all the components from non-U.S.sources. A's transaction with Y is not an activity in U.S. commerce, because it involves no export of goods from the United States. It makes no difference whether the technology A uses to manufacture computers was originally acquired from its U.S. parent. (viii) A, a controlled foreign subsidiary of U.S. company B, manufactures computers. A stocks its general components and parts inventory with purchases made at times from the United States and at times from foreign sources. A receives an order from Y, a boycotting country, for computers. A fills that order by manufacturing the computers using materials from its general inventory. A's transaction with Y is not in U.S. commerce, because the U.S.-origin components are not acquired for the purpose of meeting the anticipated needs of specified customers in Y. It is irrelevant that A's operations may be based on U.S.-origin technology. (ix) Same as (viii), except that in anticipation of the order from Y, A orders and receives the necessary materials from the United States. A's transaction with Y is in U.S. commerce, because the U.S.-origin goods were acquired for the purpose of filling an anticipated order from Y. (x) A, a controlled foreign subsidiary of U.S. company B, manufactures typewriters. It buys typewriter components both from the United States and from foreign sources. A sells its output in various places throughout the world, including boycotting country Y. Its sales to Y vary from year to year, but have averaged approximately 20 percent of sales for the past five years. A expects that its sales to Y will remain at approximately that level in the years ahead although it has no contracts or orders from Y on hand. A's sales of typewriters to Y are not in U.S. commerce, because the U.S. components are not acquired for the purpose of filling an order from Y. A general expectancy of future sales is not an “order” within the meaning of this section. (xi) U.S. company A's corporate counsel provides legal advice to B, its controlled foreign subsidiary, on the applicability of this Part to B's transactions. While provision of this legal advice is itself an activity in U.S. commerce, it does not, in and of itself, bring B's activities into U.S. commerce. (xii) A, a controlled foreign subsidiary of U.S. company B, is in the general construction business. A enters into a contract with boycotting country Y to construct a power plant in Y. In preparing engineering drawings and specifications, A uses the advice and assistance of B. A's transaction with Y is in U.S. commerce, because B's services are used for purposes of fulfilling the contract with Y. B's services are not ancillary services, because the engineering services in connection with construction of the power plant are part of the services ultimately provided to Y by A. (xiii) Same as (xii), except that A gets no engineering advice or assistance from B. However, B's corporate counsel provides legal advice to A regarding the structure of the transaction. In addition, B's corporate counsel draws up the contract documents. A's transaction with Y is not in U.S. commerce. The legal services provided to A are ancillary services, because they are not part of the services provided to Y by A in fulfillment of its contract with Y. (xiv) A, a controlled foreign subsidiary of U.S. company B, enters into a contract to construct an apartment complex in boycotting country Y. A will fulfill its contract completely with goods and services from outside the United States. Pursuant to a provision in the contract, B guarantees A's performance of the contract. A's transaction with Y is in U.S. commerce, because B's guaranty of A's performance involves the acquisition of services from the United States for purposes of fulfilling the transaction with Y, and those services are part of the services ultimately provided to Y. (xv) Same as (xiv), except that the guaranty of A's performance is supplied by C, a non-U.S. person located outside the United States. However, unrelated to any particular transaction, B from time to time provides general financial, legal, and technical services to A. A's transaction with Y is not in U.S. commerce, because the services acquired from the United States are not acquired for purposes of fulfilling the contract with Y. (xvi) A, a foreign subsidiary of U.S. company B, has a contract with boycotting country Y to conduct oil drilling operations in that country. In conducting these operations, A from time to time seeks certain technical advice from B regarding the operation of the drilling rigs. A's contract with Y is in U.S. commerce, because B's services are sought for purposes of fulfilling the contract with Y and are part of the services ultimately provided to Y. (xvii) A, a controlled foreign subsidiary of U.S. company B, enters into a contract to sell typewriters to boycotting country Y. A is located in non-boycotting country P. None of the components are acquired from the United States. A engages C, a U.S. shipping company, to transport the typewriters from P to Y. A's sales to Y are not in U.S. commerce, because in carrying A's goods, C is providing an ancillary service to A and not a service to Y. (xviii) Same as (xvii), except that A's contract with Y calls for title to pass to Y in P. In addition, the contract calls for A to engage a carrier to make delivery to Y. A's sales to Y are in U.S. commerce, because in carrying Y's goods, C is providing a service to A which is ultimately provided to Y. (xix) A, a controlled foreign subsidiary of U.S. company B, has general product liability insurance with U.S. company C. Foreign-origin goods sold from time to time by A to boycotting country Y are covered by the insurance policy. A's sales to Y are not in U.S. commerce, because the insurance provided by C is an ancillary service provided to A which is not ultimately provided to Y. (xx) A, a controlled foreign subsidiary of U.S. company B, manufactures automobiles abroad under a license agreement with B. From time to time, A sells such goods to boycotting country Y. A's sales to Y are not in U.S. commerce, because the rights conveyed by the license are not acquired for the specific purpose of engaging in transactions with Y. (e) “Intent”. (1) This part prohibits a United States person from taking or knowingly agreeing to take certain specified actions with intent to comply with, further, or support an unsanctioned foreign boycott. (2) A United States person has the intent to comply with, further, or support an unsanctioned foreign boycott when such a boycott is at least one of the reasons for that person's decision whether to take a particular prohibited action. So long as that is at least one of the reasons for that person's action, a violation occurs regardless of whether the prohibited action is also taken for non-boycott reasons. Stated differently, the fact that such action was taken for legitimate business reasons does not remove that action from the scope of this part if compliance with an unsanctioned foreign boycott was also a reason for the action. (3) Intent is a necessary element of any violation of any of the prohibitions under § 760.2. It is not sufficient that one take action that is specifically prohibited by this part. It is essential that one take such action with intent to comply with, further,or support an unsanctioned foreign boycott. Accordingly, a person who inadvertently, without boycott intent, takes a prohibited action, does not commit any violation of this part. (4) Intent in this context means the reason or purpose for one's behavior. It does not mean that one has to agree with the boycott in question or desire that it succeed or that it be furthered or supported. But it does mean that the reason why a particular prohibited action was taken must be established. (5) Reason or purpose can be proved by circumstantial evidence. For example, if a person receives a request to supply certain boycott information, the furnishing of which is prohibited by this part, and he knowingly supplies that information in response, he clearly intends to comply with that boycott request. It is irrelevant that he may disagree with or object to the boycott itself. Information will be deemed to be furnished with the requisite intent if the person furnishing the information knows that it was sought for boycott purposes. On the other hand, if a person refuses to do business with someone who happens to be blacklisted, but the reason is because that person produces an inferior product, the requisite intent does not exist. (6) Actions will be deemed to be taken with intent to comply with an unsanctioned foreign boycott if the person taking such action knew that such action was required or requested for boycott reasons. On the other hand, the mere absence of a business relationship with a blacklisted person or with or in a boycotted country does not indicate the existence of the requisite intent. (7) In seeking to determine whether the requisite intent exists, all available evidence will be examined. Examples of “Intent” The following examples are intended to illustrate the factors which will be considered in determining whether the required intent exists. They are illustrative, not comprehensive. (i) U.S. person A does business in boycotting country Y. In selecting firms to supply goods for shipment to Y, A chooses supplier B because B's products are less expensive and of higher quality than the comparable products of supplier C. A knows that C is blacklisted, but that is not a reason for A's selection of B. A's choice of B rather than C is not action with intent to comply with Y's boycott, because C's blacklist status is not a reason for A's action. (ii) Same as (i), except that A chooses B rather than C in part because C is blacklisted by Y. Since C's blacklist status is a reason for A's choice, A's action is taken with intent to comply with Y's boycott. (iii) U.S. person A bids on a tender issued by boycotting country Y. A inadvertently fails to notice a prohibited certification which appears in the tender document. A's bid is accepted. A's action in bidding was not taken with intent to comply with Y's boycott, because the boycott was not a reason for A's action. (iv) U.S. bank A engages in letter of credit transactions, in favor of U.S. beneficiaries, involving the shipments of U.S. goods to boycotting country Y. As A knows, such letters of credit routinely contain conditions requiring prohibited certifications. A fails to take reasonable steps to prevent the implementation of such letters of credit. A receives for implementation a letter of credit which in fact contains a prohibited condition but does not examine the letter of credit to determine whether it contains such a condition. Although Y's boycott may not be a specific reason for A's action in implementing the letter of credit with a prohibited condition, all available evidence shows that A's action was taken with intent to comply with the boycott, because A knows or should know that its procedures result in compliance with the boycott. (v) U.S. bank A engages in letter of credit transactions, in favor of U.S. beneficiaries, involving the shipment of U.S. goods to boycotting country Y. As A knows, the documentation accompanying such letters of credit sometimes contains prohibited certifications. In accordance with standard banking practices applicable to A, it does not examine such accompanying documentation. A receives a letter of credit in favor of a U.S. beneficiary. The letter of credit itself contains no prohibited conditions. However, the accompanying documentation, which A does not examine, does contain such a condition. All available evidence shows that A's action in implementing the letter of credit was not taken with intent to comply with the boycott, because A has no affirmative obligation to go beyond applicable standard banking practices in implementing letters of credit. (vi) A, a U.S. company, is considering opening a manufacturing facility in boycotted country X. A already has such a facility in boycotting country Y. After exploring the possibilities in X, A concludes that the market does not justify the move. A is aware that if it did open a plant in X, Y might object because of Y's boycott of X. However Y's possible objection is not a reason for A's decision not to open a plant in X. A's decision not to proceed with the plant in X is not action with intent to comply with Y's boycott, because Y's boycott of X is not a reason for A's decision. (vii) Same as (vi), except that after exploring the business possibilities in X, A concludes that the market does justify the move to X. However, A does not open the plant because of Y's possible objections due to Y's boycott of X. A's decision not to proceed with the plant in X is action taken with intent to comply with Y's boycott, because Y's boycott is a reason for A's decision. (viii) A, a U.S. chemical manufacturer, receives a “boycott questionnaire” from boycotting country Y asking, among other things, whether A has any plants located in boycotted country X. A, which has never supported Y's boycott of X, responds to Y's questionnaire, indicating affirmatively that it does have plants in X and that it intends to continue to have plants in X. A's responding to Y's questionnaire is deemed to be action with intent to comply with Y's boycott because A knows that the questionnaire is boycott-related. It is irrelevant that A does not also wish to support Y's boycott. (ix) U.S. company A has a manufacturing facility in boycotted country X. A receives an invitation to bid on a construction project in boycotting country Y. The invitation states that all bidders must complete a boycott questionnaire and send it in with the bid. The questionnaire asks for information about A's business relationships with X. Regardless of whether A's bid is successful, A intends to continue its business in X undiminished and in fact is exploring and intends to continue exploring an expansion of its activities in X without regard to Y's boycott. A may not answer the questionnaire, because, despite A's intentions with regard to its business operations in X, Y's request for completion of the questionnaire is for boycott purposes and by responding, A's action would be taken with intent to comply with Y's boycott. The following examples are intended to illustrate the factors which will be considered in determining whether the required intent exists. They are illustrative, not comprehensive. (i) U.S. person A does business in boycotting country Y. In selecting firms to supply goods for shipment to Y, A chooses supplier B because B's products are less expensive and of higher quality than the comparable products of supplier C. A knows that C is blacklisted, but that is not a reason for A's selection of B. A's choice of B rather than C is not action with intent to comply with Y's boycott, because C's blacklist status is not a reason for A's action. (ii) Same as (i), except that A chooses B rather than C in part because C is blacklisted by Y. Since C's blacklist status is a reason for A's choice, A's action is taken with intent to comply with Y's boycott. (iii) U.S. person A bids on a tender issued by boycotting country Y. A inadvertently fails to notice a prohibited certification which appears in the tender document. A's bid is accepted. A's action in bidding was not taken with intent to comply with Y's boycott, because the boycott was not a reason for A's action. (iv) U.S. bank A engages in letter of credit transactions, in favor of U.S. beneficiaries, involving the shipments of U.S. goods to boycotting country Y. As A knows, such letters of credit routinely contain conditions requiring prohibited certifications. A fails to take reasonable steps to prevent the implementation of such letters of credit. A receives for implementation a letter of credit which in fact contains a prohibited condition but does not examine the letter of credit to determine whether it contains such a condition. Although Y's boycott may not be a specific reason for A's action in implementing the letter of credit with a prohibited condition, all available evidence shows that A's action was taken with intent to comply with the boycott, because A knows or should know that its procedures result in compliance with the boycott. (v) U.S. bank A engages in letter of credit transactions, in favor of U.S. beneficiaries, involving the shipment of U.S. goods to boycotting country Y. As A knows, the documentation accompanying such letters of credit sometimes contains prohibited certifications. In accordance with standard banking practices applicable to A, it does not examine such accompanying documentation. A receives a letter of credit in favor of a U.S. beneficiary. The letter of credit itself contains no prohibited conditions. However, the accompanying documentation, which A does not examine, does contain such a condition. All available evidence shows that A's action in implementing the letter of credit was not taken with intent to comply with the boycott, because A has no affirmative obligation to go beyond applicable standard banking practices in implementing letters of credit. (vi) A, a U.S. company, is considering opening a manufacturing facility in boycotted country X. A already has such a facility in boycotting country Y. After exploring the possibilities in X, A concludes that the market does not justify the move. A is aware that if it did open a plant in X, Y might object because of Y's boycott of X. However Y's possible objection is not a reason for A's decision not to open a plant in X. A's decision not to proceed with the plant in X is not action with intent to comply with Y's boycott, because Y's boycott of X is not a reason for A's decision. (vii) Same as (vi), except that after exploring the business possibilities in X, A concludes that the market does justify the move to X. However, A does not open the plant because of Y's possible objections due to Y's boycott of X. A's decision not to proceed with the plant in X is action taken with intent to comply with Y's boycott, because Y's boycott is a reason for A's decision. (viii) A, a U.S. chemical manufacturer, receives a “boycott questionnaire” from boycotting country Y asking, among other things, whether A has any plants located in boycotted country X. A, which has never supported Y's boycott of X, responds to Y's questionnaire, indicating affirmatively that it does have plants in X and that it intends to continue to have plants in X. A's responding to Y's questionnaire is deemed to be action with intent to comply with Y's boycott because A knows that the questionnaire is boycott-related. It is irrelevant that A does not also wish to support Y's boycott. (ix) U.S. company A has a manufacturing facility in boycotted country X. A receives an invitation to bid on a construction project in boycotting country Y. The invitation states that all bidders must complete a boycott questionnaire and send it in with the bid. The questionnaire asks for information about A's business relationships with X. Regardless of whether A's bid is successful, A intends to continue its business in X undiminished and in fact is exploring and intends to continue exploring an expansion of its activities in X without regard to Y's boycott. A may not answer the questionnaire, because, despite A's intentions with regard to its business operations in X, Y's request for completion of the questionnaire is for boycott purposes and by responding, A's action would be taken with intent to comply with Y's boycott." 15:15:3.1.1.1.10.0.1.2,15,Commerce and Foreign Trade,VII,C,760,PART 760—RESTRICTIVE TRADE PRACTICES OR BOYCOTTS,,,,§ 760.2 Prohibitions.,BIS,,,"[61 FR 12862, Mar. 25, 1996, as amended at 65 FR 34945, June 1, 2000]","(a) Refusals to do business. (1) No United States person may: refuse, knowingly agree to refuse, require any other person to refuse, or knowingly agree to require any other person to refuse, to do business with or in a boycotted country, with any business concern organized under the laws of a boycotted country, with any national or resident of a boycotted country, or with any other person, when such refusal is pursuant to an agreement with the boycotting country, or a requirement of the boycotting country, or a request from or on behalf of the boycotting country. (2) Generally, a refusal to do business under this section consists of action that excludes a person or country from a transaction for boycott reasons. This includes a situation in which a United States person chooses or selects one person over another on a boycott basis or takes action to carry out another person's boycott-based selection when he knows or has reason to know that the other person's selection is boycott-based. (3) Refusals to do business which are prohibited by this section include not only specific refusals, but also refusals implied by a course or pattern of conduct. There need not be a specific offer and refusal to constitute a refusal to do business; a refusal may occur when a United States person has a financial or commercial opportunity and declines for boycott reasons to consider or accept it. (4) A United States person's use of either a boycott-based list of persons with whom he will not deal (a so-called “blacklist”) or a boycott-based list of persons with whom he will deal (a so-called “whitelist”) constitutes a refusal to do business. (5) An agreement by a United States person to comply generally with the laws of the boycotting country with which it is doing business or an agreement that local laws of the boycotting country shall apply or govern is not, in and of itself, a refusal to do business. Nor, in and of itself, is use of a contractual clause explicitly requiring a person to assume the risk of loss of non-delivery of his products a refusal to do business with any person who will not or cannot comply with such a clause. (But see § 760.4 of this part on “Evasion.”) (6) If, for boycott reasons, a United States general manager chooses one supplier over another, or enters into a contract with one supplier over another, or advises its client to do so, then the general manager's actions constitute a refusal to do business under this section. However, it is not a refusal to do business under this section for a United States person to provide management, procurement, or other pre-award services for another person so long as the provision of such pre-award services is customary for that firm (or industry of which the firm is a part), without regard to the boycotting or non-boycotting character of the countries in which they are performed, and the United States person, in providing such services, does not act to exclude a person or country from the transaction for boycott reasons, or otherwise take actions that are boycott-based. For example, a United States person under contract to provide general management services in connection with a construction project in a boycotting country may compile lists of qualified bidders for the client if that service is a customary one and if persons who are qualified are not excluded from that list because they are blacklisted. (7) With respect to post-award services, if a client makes a boycott-based selection, actions taken by the United States general manager or contractor to carry out the client's choice are themselves refusals to do business if the United States contractor knows or has reason to know that the client's choice was boycott-based. (It is irrelevant whether the United States contractor also provided pre-award services.) Such actions include entering into a contract with the selected supplier, notifying the supplier of the client's choice, executing a contract on behalf of the client, arranging for inspection and shipment of the supplier's goods, or taking any other action to effect the client's choice. (But see § 760.3(d) on “Compliance with Unilateral Selection” as it may apply to post-award services.) (8) An agreement is not a prerequisite to a violation of this section since the prohibition extends to actions taken pursuant not only to agreements but also to requirements of, and requests from or on behalf of, a boycotting country. (9) Agreements under this section may be either express or implied by a course or pattern of conduct. There need not be a direct request from a boycotting country for action by a United States person to have been taken pursuant to an agreement with or requirement of a boycotting country. (10) This prohibition, like all others, applies only with respect to a United States person's activities in the interstate or foreign commerce of the United States and only when such activities are undertaken with intent to comply with, further, or support an unsanctioned foreign boycott. The mere absence of a business relationship with or in the boycotted country, with any business concern organized under the laws of the boycotted country, with national(s) or resident(s) of the boycotted country, or with any other person does not indicate the existence of the required intent. Examples of Refusals and Agreements To Refuse To Do Business The following examples are intended to give guidance in determining the circumstances in which, in a boycott situation, a refusal to do business or an agreement to refuse to do business is prohibited. They are illustrative, not comprehensive. Refusals To Do Business (i) A, a U.S. manufacturer, receives an order for its products from boycotting country Y. To fill that order, A solicits bids from U.S. companies B and C, manufacturers of components used in A's products. A does not, however, solicit bids from U.S. companies D or E, which also manufacture such components, because it knows that D and E are restricted from doing business in Y and that their products are, therefore, not importable into that country. Company A may not refuse to solicit bids from D and E for boycott reasons, because to do so would constitute a refusal to do business with those persons. (ii) A, a U.S. exporter, uses company B, a U.S. insurer, to insure the shipment of its goods to all its overseas customers. For the first time, A receives an order for its products from boycotting country Y. Knowing that B is on the blacklist of Y, A arranges with company C, a non-blacklisted U.S. insurer, to insure the shipment of its goods to Y. A's action constitutes a refusal to do business with B. (iii) A, a U.S. exporter, purchases all its liability insurance from company B, a U.S. company that does business in boycotted country X. A wishes to expand its operations into country Y, the boycotting country. Before doing so, A decides to switch from insurer B to insurer C in anticipation of a request from Y that A sever its relations with B as a condition of doing business in Y. A may not switch insurers for this reason, because doing so would constitute a refusal to do business with B. (iv) U.S. company A exports goods to boycotting country Y. In selecting vessels to transport the goods to Y, A chooses only from among carriers which call at ports in Y. A's action is not a refusal to do business with carriers which do not call at ports in Y. (v) A, a U.S. bank with a branch office in boycotting country Y, sends representatives to boycotted country X to discuss plans for opening a branch office in X. Upon learning of these discussions, an official of the local boycott office in Y advises A's local branch manager that if A opens an office in X it will no longer be allowed to do business in Y. As a result of this notification, A decides to abandon its plans to open a branch in X. Bank A may not abandon its plans to open a branch in X as a result of Y's notification, because doing so would constitute a refusal to do business in boycotted country X. (vi) A, a U.S. company that manufactures office equipment, has been restricted from doing business in boycotting country Y because of its business dealings with boycotted country X. In an effort to have itself removed from Y's blacklist, A ceases its business in X. A's action constitutes a refusal to do business in boycotted country X. (vii) A, a U.S. computer company, does business in boycotting country Y. A decides to explore business opportunities in boycotted country X. After careful analysis of possible business opportunities in X, A decides, solely for business reasons, not to market its products in X. A's decision not to proceed is not a refusal to do business, because it is not based on boycott considerations. A has no affirmative obligation to do business in X. (viii) A, a U.S. oil company with operations in boycotting country Y, has regularly purchased equipment from U.S. petroleum equipment suppliers B, C, and D, none of whom is on the blacklist of Y. Because of its satisfactory relationship with B, C, and D, A has not dealt with other suppliers, including supplier E, who is blacklisted by Y. A's failure affirmatively to seek or secure business with blacklisted supplier E is not a refusal to do business with E. (ix) Same as (viii), except U.S. petroleum equipment supplier E, a company on boycotting country Y's blacklist, offers to supply U.S. oil company A with goods comparable to those provided by U.S. suppliers B, C, and D. A, because it has satisfactorily, established relationships with suppliers B, C, and D, does not accept supplier E's offer. A's refusal of supplier E's offer is not a refusal to do business, because it is based solely on non-boycott considerations. A has no affirmative obligation to do business with E. (x) A, a U.S. construction company, enters into a contract to build an office complex in boycotting country Y. A receives bids from B and C, U.S. companies that are equally qualified suppliers of electrical cable for the project. A knows that B is blacklisted by Y and that C is not. A accepts C's bid, in part because C is as qualified as the other potential supplier and in part because C is not blacklisted. A's decision to select supplier C instead of blacklisted supplier B is a refusal to do business, because the boycott was one of the reasons for A's decision. (xi) A, a U.S. general contractor, has been retained to construct a highway in boycotting country Y. A circulates an invitation to bid to U.S. manufacturers of road-building equipment. One of the conditions listed in the invitation to bid is that, in order for A to obtain prompt service, suppliers will be required to maintain a supply of spare parts and a service facility in Y. A includes this condition solely for commercial reasons unrelated to the boycott. Because of this condition, however, those suppliers on Y's blacklist do not bid, since they would be unable to satisfy the parts and services requirements. A's action is not a refusal to do business, because the contractual condition was included solely for legitimate business reasons and was not boycott-based. (xii) Company A, a U.S. oil company, purchases drill bits from U.S. suppliers for export to boycotting country Y. In its purchase orders, A includes a provision requiring the supplier to make delivery to A's facilities in Y and providing that title to the goods does not pass until delivery has been made. As is customary under such an arrangement, the supplier bears all risks of loss, including loss from fire, theft, perils of the sea, and inability to clear customs, until title passes. Insistence on such an arrangement does not constitute a refusal to do business, because this requirement is imposed on all suppliers whether they are blacklisted or not. (But see § 760.4 on “Evasion”.) (xiii) A, a U.S. engineering and construction company, contracts with a government agency in boycotting country Y to perform a variety of services in connection with the construction of a large industrial facility in Y. Pursuant to this contract, A analyzes the market of prospective suppliers, compiles a suggested bidders list, analyzes the bids received, and makes recommendations to the client. The client independently selects and awards the contract to supplier C for boycott reasons. All of A's services are performed without regard to Y's blacklist or any other boycott considerations, and are the type of services A provides clients in both boycotting and non-boycotting countries. A's actions do not constitute a refusal to do business, because, in the provision of pre-award services, A has not excluded the other bidders and because A customarily provides such services to its clients. (xiv) Same as (xiii), except that in compiling a list of prospective suppliers, A deletes suppliers he knows his client will refuse to select because they are blacklisted. A knows that including the names of blacklisted suppliers will neither enhance their chances of being selected nor provide his client with a useful service, the function for which he has been retained. A's actions, which amount to furnishing a so-called “whitelist”, constitute refusals to do business, because A's pre-award services have not been furnished without regard to boycott considerations. (xv) A, a U.S. construction firm, provides its boycotting country client with a permissible list of prospective suppliers, B, C, D, and E. The client independently selects and awards the contract to C, for boycott reasons, and then requests A to advise C of his selection, negotiate the contract with C, arrange for the shipment, and inspect the goods upon arrival. A knows that C was chosen by the client for boycott reasons. A's action in complying with his client's direction is a refusal to do business, because A's post-award actions carry out his client's boycott-based decision. (Note: Whether A's action comes within the unilateral selection exception depends upon factors discussed in § 760.3(d) of this part). (xvi) Same as (xv), except that A is building the project on a turnkey basis and will retain title until completion. The client instructs A to contract only with C. A's action in contracting with C constitutes a refusal to do business, because it is action that excludes blacklisted persons from the transaction for boycott reasons. (Note: Whether A's action comes within the unilateral selection exception depends upon factors discussed in § 760.3(d) of this part). (xvii) A, a U.S. exporter of machine tools, receives an order for drill presses from boycotting country Y. The cover letter from Y's procurement official states that A was selected over other U.S. manufacturers in part because A is not on Y's blacklist. A's action in filling this order is not a refusal to do business, because A has not excluded anyone from the transaction. (xviii) A, a U.S. engineering firm under contract to construct a dam in boycotting country Y, compiles, on a non-boycott basis, a list of potential heavy equipment suppliers, including information on their qualifications and prior experience. A then solicits bids from the top three firms on its list—B, C, and D—because they are the best qualified. None of them happens to be blacklisted. A does not solicit bids from E, F, or G, the next three firms on the list, one of whom is on Y's blacklist. A's decision to solicit bids from only B, C, and D, is not a refusal to do business with any person, because the solicited bidders were not selected for boycott reasons. (xix) U.S. bank A receives a letter of credit in favor of U.S. beneficiary B. The letter of credit requires B to certify that he is not blacklisted. B meets all other conditions of the letter of credit but refuses to certify as to his blacklist status. A refuses to pay B on the letter of credit solely because B refuses to certify as to his blacklist status. A has refused to do business with another person pursuant to a boycott requirement or request. (xx) U.S. bank A receives a letter of credit in favor of U.S. beneficiary B. The letter of credit requires B to provide a certification from the steamship line that the vessel carrying the goods is not blacklisted. B seeks payment from A and meets all other conditions of the letter of credit but refuses or is unable to provide the certification from the steamship line about the vessel's blacklist status. A refuses to pay B on the letter of credit solely because B cannot or will not provide the certification. A has required another person to refuse to do business pursuant to a boycott requirement or request by insisting that B obtain such a certificate. (Either A or B may request an amendment to the letter of credit substituting a certificate of vessel eligibility, however. See Example (xxi) below). (xxi) U.S. bank A receives a letter of credit from a bank in boycotting country Y in favor of U.S. beneficiary B. The letter of credit requires B to provide a certification from the steamship line that the vessel carrying the goods is eligible to enter the ports in Y. B seeks payment from A and meets all other conditions of the letter of credit. A refuses to pay B solely because B cannot or will not provide the certification. A has neither refused, nor required another person to refuse, to do business with another person pursuant to a boycott requirement or request because a request for a vessel eligibility certificate to be furnished by the steamship line is not a prohibited condition. (See supplement no. 1 to this part, paragraph (I)(B), “Shipping Certificate”.) (xxii) U.S. bank A confirms a letter of credit in favor of U.S. beneficiary B. The letter of credit contains a requirement that B certify that he is not blacklisted. B presents the letter of credit to U.S. bank C, a correspondent of bank A. B does not present the certificate of blacklist status to bank C, but, in accordance with these rules, bank C pays B, and then presents the letter of credit and documentation to bank A for reimbursement. Bank A refuses to reimburse bank C because the blacklist certification of B is not included in the documentation. A has required another person to refuse to do business with a person pursuant to a boycott requirement or request by insisting that C obtain the certificate from B. (xxiii) U.S. bank A receives a letter of credit in favor of U.S. beneficiary B. The letter of credit requires B to certify that he is not blacklisted. B fails to provide such a certification when he presents the documents to A for payment. A notifies B that the certification has not been submitted. A has not refused to do business with another person pursuant to a boycott requirement by notifying B of the omitted certificate. A may not refuse to pay on the letter of credit, however, if B states that B will not provide such a certificate. (xxiv) U.S. bank A receives a letter of credit in favor of U.S. beneficiary B from the issuing bank for the purpose of confirmation, negotiation or payment. The letter of credit requires B to certify that he is not blacklisted. A notifies B that it is contrary to the policy of A to handle letters of credit containing this condition and that, unless an amendment is obtained deleting this condition, A will not implement the letter of credit. A has not refused to do business with another person pursuant to a boycott requirement, because A has indicated its policy against implementing the letter of credit containing the term without regard to B's ability or willingness to furnish such a certificate. Agreements To Refuse To Do Business (i) A, a U.S. construction firm, is retained by an agency of boycotting country Y to build a primary school. The proposed contract contains a clause stating that A “may not use goods or services in the project that are produced or provided by any person restricted from having a business relationship with country Y by reason of Y's boycott against country X”. A's action in entering into such a contract would constitute an agreement to refuse to do business, because it is an agreement to exclude blacklisted persons from the transaction. A may, however, renegotiate this clause so that it does not contain terms prohibited by this part. (ii) A, a U.S. manufacturer of commercial refrigerators and freezers, receives an invitation to bid from boycotting country Y. The tender states that the bidder must agree not to deal with companies on Y's blacklist. A does not know which companies are on the blacklist; however, A submits a bid without taking exception to the boycott conditions. A's bid makes no commitment regarding not dealing with certain companies. At the point when A submits its bid without taking exception to the boycott request in Y's tender, A has agreed to refuse to do business with blacklisted persons, because the terms of Y's tender require A to agree to refuse to do business. (iii) A, a U.S. construction firm, is offered a contract to perform engineering and construction services in connection with a project located in boycotting country Y. The contract contains a clause stating that, in the event of a contract dispute, the laws of Y will apply. A may enter into the contract. Agreement that the laws of boycotting country Y will control in resolving a contract dispute is not an agreement to refuse to do business. (iv) Same as (iii), except that the contract contains a clause that A and its employees will comply with the laws of boycotting country Y. A knows that Y has a number of boycott laws. Such an agreement is not, in and of itself, an agreement to refuse to do business. If, however, A subsequently refuses to do business with someone because of the laws of Y, A's action would be a refusal to do business. (v) Same as (iv), except that the contract contains a clause that A and its employees will comply with the laws of boycotting country Y, “including boycott laws.” A's agreeing, without qualification, to comply with local boycott laws constitutes an agreement to refuse to do business. (vi) Same as (v), except that A inserts a proviso “except insofar as Y's laws conflict with U.S. laws,” or words to that effect. Such an agreement is not an agreement to refuse to do business. (vii) A, a U.S. general contractor, is retained to construct a pipeline in boycotting country Y. A provision in the proposed contract stipulates that in purchasing equipment, supplies, and services A must give preference to companies located in host country Y. A may agree to this contract provision. Agreeing to a “buy local” contract provision is not an agreement to refuse to do business, because A's agreement is not made for boycott reasons. (viii) A, a U.S. exporter planning to sell retail goods to customers in boycotting country Y, enters into a contract to purchase goods wholesale from B, a U.S. appliance manufacturer. A's contract with B includes a provision stipulating that B may not use components or services of blacklisted companies in the manufacture of its appliances. A's contract constitutes a refusal to do business, because it would require another person, B, to refuse to do business with other persons for boycott reasons. B may not agree to such a contract, because it would be agreeing to refuse to do business with other persons for boycott reasons. (ix) Same as (viii), except that A and B reach an implicit understanding that B will not use components or services of blacklisted companies in the manufacture of goods to be exported to Y. In the manufacture of appliances to be sold to A for export to non-boycotting countries, B uses components manufactured by blacklisted companies. The actions of both A and B constitute agreement to refuse to do business. The agreement is implied by their pattern of conduct. (x) Boycotting country Y orders goods from U.S. company B. Y opens a letter of credit with foreign bank C in favor of B. The letter of credit specifies that negotiation of the letter of credit with a bank that appears on the country X boycott blacklist is prohibited. U.S. bank A, C's correspondent bank, advises B of the letter of credit. B presents documentation to bank A seeking to be paid on the letter of credit, without amending or otherwise taking exception to the boycott condition. B has agreed to refuse to do business with blacklisted banks because, by presenting the letter of credit for payment, B has accepted all of its terms and conditions. The following examples are intended to give guidance in determining the circumstances in which, in a boycott situation, a refusal to do business or an agreement to refuse to do business is prohibited. They are illustrative, not comprehensive. (i) A, a U.S. manufacturer, receives an order for its products from boycotting country Y. To fill that order, A solicits bids from U.S. companies B and C, manufacturers of components used in A's products. A does not, however, solicit bids from U.S. companies D or E, which also manufacture such components, because it knows that D and E are restricted from doing business in Y and that their products are, therefore, not importable into that country. Company A may not refuse to solicit bids from D and E for boycott reasons, because to do so would constitute a refusal to do business with those persons. (ii) A, a U.S. exporter, uses company B, a U.S. insurer, to insure the shipment of its goods to all its overseas customers. For the first time, A receives an order for its products from boycotting country Y. Knowing that B is on the blacklist of Y, A arranges with company C, a non-blacklisted U.S. insurer, to insure the shipment of its goods to Y. A's action constitutes a refusal to do business with B. (iii) A, a U.S. exporter, purchases all its liability insurance from company B, a U.S. company that does business in boycotted country X. A wishes to expand its operations into country Y, the boycotting country. Before doing so, A decides to switch from insurer B to insurer C in anticipation of a request from Y that A sever its relations with B as a condition of doing business in Y. A may not switch insurers for this reason, because doing so would constitute a refusal to do business with B. (iv) U.S. company A exports goods to boycotting country Y. In selecting vessels to transport the goods to Y, A chooses only from among carriers which call at ports in Y. A's action is not a refusal to do business with carriers which do not call at ports in Y. (v) A, a U.S. bank with a branch office in boycotting country Y, sends representatives to boycotted country X to discuss plans for opening a branch office in X. Upon learning of these discussions, an official of the local boycott office in Y advises A's local branch manager that if A opens an office in X it will no longer be allowed to do business in Y. As a result of this notification, A decides to abandon its plans to open a branch in X. Bank A may not abandon its plans to open a branch in X as a result of Y's notification, because doing so would constitute a refusal to do business in boycotted country X. (vi) A, a U.S. company that manufactures office equipment, has been restricted from doing business in boycotting country Y because of its business dealings with boycotted country X. In an effort to have itself removed from Y's blacklist, A ceases its business in X. A's action constitutes a refusal to do business in boycotted country X. (vii) A, a U.S. computer company, does business in boycotting country Y. A decides to explore business opportunities in boycotted country X. After careful analysis of possible business opportunities in X, A decides, solely for business reasons, not to market its products in X. A's decision not to proceed is not a refusal to do business, because it is not based on boycott considerations. A has no affirmative obligation to do business in X. (viii) A, a U.S. oil company with operations in boycotting country Y, has regularly purchased equipment from U.S. petroleum equipment suppliers B, C, and D, none of whom is on the blacklist of Y. Because of its satisfactory relationship with B, C, and D, A has not dealt with other suppliers, including supplier E, who is blacklisted by Y. A's failure affirmatively to seek or secure business with blacklisted supplier E is not a refusal to do business with E. (ix) Same as (viii), except U.S. petroleum equipment supplier E, a company on boycotting country Y's blacklist, offers to supply U.S. oil company A with goods comparable to those provided by U.S. suppliers B, C, and D. A, because it has satisfactorily, established relationships with suppliers B, C, and D, does not accept supplier E's offer. A's refusal of supplier E's offer is not a refusal to do business, because it is based solely on non-boycott considerations. A has no affirmative obligation to do business with E. (x) A, a U.S. construction company, enters into a contract to build an office complex in boycotting country Y. A receives bids from B and C, U.S. companies that are equally qualified suppliers of electrical cable for the project. A knows that B is blacklisted by Y and that C is not. A accepts C's bid, in part because C is as qualified as the other potential supplier and in part because C is not blacklisted. A's decision to select supplier C instead of blacklisted supplier B is a refusal to do business, because the boycott was one of the reasons for A's decision. (xi) A, a U.S. general contractor, has been retained to construct a highway in boycotting country Y. A circulates an invitation to bid to U.S. manufacturers of road-building equipment. One of the conditions listed in the invitation to bid is that, in order for A to obtain prompt service, suppliers will be required to maintain a supply of spare parts and a service facility in Y. A includes this condition solely for commercial reasons unrelated to the boycott. Because of this condition, however, those suppliers on Y's blacklist do not bid, since they would be unable to satisfy the parts and services requirements. A's action is not a refusal to do business, because the contractual condition was included solely for legitimate business reasons and was not boycott-based. (xii) Company A, a U.S. oil company, purchases drill bits from U.S. suppliers for export to boycotting country Y. In its purchase orders, A includes a provision requiring the supplier to make delivery to A's facilities in Y and providing that title to the goods does not pass until delivery has been made. As is customary under such an arrangement, the supplier bears all risks of loss, including loss from fire, theft, perils of the sea, and inability to clear customs, until title passes. Insistence on such an arrangement does not constitute a refusal to do business, because this requirement is imposed on all suppliers whether they are blacklisted or not. (But see § 760.4 on “Evasion”.) (xiii) A, a U.S. engineering and construction company, contracts with a government agency in boycotting country Y to perform a variety of services in connection with the construction of a large industrial facility in Y. Pursuant to this contract, A analyzes the market of prospective suppliers, compiles a suggested bidders list, analyzes the bids received, and makes recommendations to the client. The client independently selects and awards the contract to supplier C for boycott reasons. All of A's services are performed without regard to Y's blacklist or any other boycott considerations, and are the type of services A provides clients in both boycotting and non-boycotting countries. A's actions do not constitute a refusal to do business, because, in the provision of pre-award services, A has not excluded the other bidders and because A customarily provides such services to its clients. (xiv) Same as (xiii), except that in compiling a list of prospective suppliers, A deletes suppliers he knows his client will refuse to select because they are blacklisted. A knows that including the names of blacklisted suppliers will neither enhance their chances of being selected nor provide his client with a useful service, the function for which he has been retained. A's actions, which amount to furnishing a so-called “whitelist”, constitute refusals to do business, because A's pre-award services have not been furnished without regard to boycott considerations. (xv) A, a U.S. construction firm, provides its boycotting country client with a permissible list of prospective suppliers, B, C, D, and E. The client independently selects and awards the contract to C, for boycott reasons, and then requests A to advise C of his selection, negotiate the contract with C, arrange for the shipment, and inspect the goods upon arrival. A knows that C was chosen by the client for boycott reasons. A's action in complying with his client's direction is a refusal to do business, because A's post-award actions carry out his client's boycott-based decision. (Note: Whether A's action comes within the unilateral selection exception depends upon factors discussed in § 760.3(d) of this part). (xvi) Same as (xv), except that A is building the project on a turnkey basis and will retain title until completion. The client instructs A to contract only with C. A's action in contracting with C constitutes a refusal to do business, because it is action that excludes blacklisted persons from the transaction for boycott reasons. (Note: Whether A's action comes within the unilateral selection exception depends upon factors discussed in § 760.3(d) of this part). (xvii) A, a U.S. exporter of machine tools, receives an order for drill presses from boycotting country Y. The cover letter from Y's procurement official states that A was selected over other U.S. manufacturers in part because A is not on Y's blacklist. A's action in filling this order is not a refusal to do business, because A has not excluded anyone from the transaction. (xviii) A, a U.S. engineering firm under contract to construct a dam in boycotting country Y, compiles, on a non-boycott basis, a list of potential heavy equipment suppliers, including information on their qualifications and prior experience. A then solicits bids from the top three firms on its list—B, C, and D—because they are the best qualified. None of them happens to be blacklisted. A does not solicit bids from E, F, or G, the next three firms on the list, one of whom is on Y's blacklist. A's decision to solicit bids from only B, C, and D, is not a refusal to do business with any person, because the solicited bidders were not selected for boycott reasons. (xix) U.S. bank A receives a letter of credit in favor of U.S. beneficiary B. The letter of credit requires B to certify that he is not blacklisted. B meets all other conditions of the letter of credit but refuses to certify as to his blacklist status. A refuses to pay B on the letter of credit solely because B refuses to certify as to his blacklist status. A has refused to do business with another person pursuant to a boycott requirement or request. (xx) U.S. bank A receives a letter of credit in favor of U.S. beneficiary B. The letter of credit requires B to provide a certification from the steamship line that the vessel carrying the goods is not blacklisted. B seeks payment from A and meets all other conditions of the letter of credit but refuses or is unable to provide the certification from the steamship line about the vessel's blacklist status. A refuses to pay B on the letter of credit solely because B cannot or will not provide the certification. A has required another person to refuse to do business pursuant to a boycott requirement or request by insisting that B obtain such a certificate. (Either A or B may request an amendment to the letter of credit substituting a certificate of vessel eligibility, however. See Example (xxi) below). (xxi) U.S. bank A receives a letter of credit from a bank in boycotting country Y in favor of U.S. beneficiary B. The letter of credit requires B to provide a certification from the steamship line that the vessel carrying the goods is eligible to enter the ports in Y. B seeks payment from A and meets all other conditions of the letter of credit. A refuses to pay B solely because B cannot or will not provide the certification. A has neither refused, nor required another person to refuse, to do business with another person pursuant to a boycott requirement or request because a request for a vessel eligibility certificate to be furnished by the steamship line is not a prohibited condition. (See supplement no. 1 to this part, paragraph (I)(B), “Shipping Certificate”.) (xxii) U.S. bank A confirms a letter of credit in favor of U.S. beneficiary B. The letter of credit contains a requirement that B certify that he is not blacklisted. B presents the letter of credit to U.S. bank C, a correspondent of bank A. B does not present the certificate of blacklist status to bank C, but, in accordance with these rules, bank C pays B, and then presents the letter of credit and documentation to bank A for reimbursement. Bank A refuses to reimburse bank C because the blacklist certification of B is not included in the documentation. A has required another person to refuse to do business with a person pursuant to a boycott requirement or request by insisting that C obtain the certificate from B. (xxiii) U.S. bank A receives a letter of credit in favor of U.S. beneficiary B. The letter of credit requires B to certify that he is not blacklisted. B fails to provide such a certification when he presents the documents to A for payment. A notifies B that the certification has not been submitted. A has not refused to do business with another person pursuant to a boycott requirement by notifying B of the omitted certificate. A may not refuse to pay on the letter of credit, however, if B states that B will not provide such a certificate. (xxiv) U.S. bank A receives a letter of credit in favor of U.S. beneficiary B from the issuing bank for the purpose of confirmation, negotiation or payment. The letter of credit requires B to certify that he is not blacklisted. A notifies B that it is contrary to the policy of A to handle letters of credit containing this condition and that, unless an amendment is obtained deleting this condition, A will not implement the letter of credit. A has not refused to do business with another person pursuant to a boycott requirement, because A has indicated its policy against implementing the letter of credit containing the term without regard to B's ability or willingness to furnish such a certificate. (i) A, a U.S. construction firm, is retained by an agency of boycotting country Y to build a primary school. The proposed contract contains a clause stating that A “may not use goods or services in the project that are produced or provided by any person restricted from having a business relationship with country Y by reason of Y's boycott against country X”. A's action in entering into such a contract would constitute an agreement to refuse to do business, because it is an agreement to exclude blacklisted persons from the transaction. A may, however, renegotiate this clause so that it does not contain terms prohibited by this part. (ii) A, a U.S. manufacturer of commercial refrigerators and freezers, receives an invitation to bid from boycotting country Y. The tender states that the bidder must agree not to deal with companies on Y's blacklist. A does not know which companies are on the blacklist; however, A submits a bid without taking exception to the boycott conditions. A's bid makes no commitment regarding not dealing with certain companies. At the point when A submits its bid without taking exception to the boycott request in Y's tender, A has agreed to refuse to do business with blacklisted persons, because the terms of Y's tender require A to agree to refuse to do business. (iii) A, a U.S. construction firm, is offered a contract to perform engineering and construction services in connection with a project located in boycotting country Y. The contract contains a clause stating that, in the event of a contract dispute, the laws of Y will apply. A may enter into the contract. Agreement that the laws of boycotting country Y will control in resolving a contract dispute is not an agreement to refuse to do business. (iv) Same as (iii), except that the contract contains a clause that A and its employees will comply with the laws of boycotting country Y. A knows that Y has a number of boycott laws. Such an agreement is not, in and of itself, an agreement to refuse to do business. If, however, A subsequently refuses to do business with someone because of the laws of Y, A's action would be a refusal to do business. (v) Same as (iv), except that the contract contains a clause that A and its employees will comply with the laws of boycotting country Y, “including boycott laws.” A's agreeing, without qualification, to comply with local boycott laws constitutes an agreement to refuse to do business. (vi) Same as (v), except that A inserts a proviso “except insofar as Y's laws conflict with U.S. laws,” or words to that effect. Such an agreement is not an agreement to refuse to do business. (vii) A, a U.S. general contractor, is retained to construct a pipeline in boycotting country Y. A provision in the proposed contract stipulates that in purchasing equipment, supplies, and services A must give preference to companies located in host country Y. A may agree to this contract provision. Agreeing to a “buy local” contract provision is not an agreement to refuse to do business, because A's agreement is not made for boycott reasons. (viii) A, a U.S. exporter planning to sell retail goods to customers in boycotting country Y, enters into a contract to purchase goods wholesale from B, a U.S. appliance manufacturer. A's contract with B includes a provision stipulating that B may not use components or services of blacklisted companies in the manufacture of its appliances. A's contract constitutes a refusal to do business, because it would require another person, B, to refuse to do business with other persons for boycott reasons. B may not agree to such a contract, because it would be agreeing to refuse to do business with other persons for boycott reasons. (ix) Same as (viii), except that A and B reach an implicit understanding that B will not use components or services of blacklisted companies in the manufacture of goods to be exported to Y. In the manufacture of appliances to be sold to A for export to non-boycotting countries, B uses components manufactured by blacklisted companies. The actions of both A and B constitute agreement to refuse to do business. The agreement is implied by their pattern of conduct. (x) Boycotting country Y orders goods from U.S. company B. Y opens a letter of credit with foreign bank C in favor of B. The letter of credit specifies that negotiation of the letter of credit with a bank that appears on the country X boycott blacklist is prohibited. U.S. bank A, C's correspondent bank, advises B of the letter of credit. B presents documentation to bank A seeking to be paid on the letter of credit, without amending or otherwise taking exception to the boycott condition. B has agreed to refuse to do business with blacklisted banks because, by presenting the letter of credit for payment, B has accepted all of its terms and conditions. (b) Discriminatory actions. (1) No United States person may: (i) Refuse to employ or otherwise discriminate against any individual who is a United States person on the basis of race, religion, sex, or national origin; (ii) Discriminate against any corporation or other organization which is a United States person on the basis of the race, religion, sex, or national origin of any owner, officer, director, or employee of such corporation or organization; (iii) Knowingly agree to take any of the actions described in paragraph (b)(1)(i) and (ii) of this section; or (iv) Require or knowingly agree to require any other person to take any of the actions described in paragraph (b)(1)(i) and (ii) of this section. (2) This prohibition shall apply whether the discriminatory action is taken by a United States person on its own or in response to an agreement with, request from, or requirement of a boycotting country. This prohibition, like all others, applies only with respect to a United States person's activities in the interstate or foreign commerce of the United States and only when such activities are undertaken with intent to comply with, further, or support an unsanctioned foreign boycott. (3) The section does not supersede or limit the operation of the civil rights laws of the United States. Examples of Discriminatory Actions The following examples are intended to give guidance in determining the circumstances in which the taking of particular discriminatory actions is prohibited. They are illustrative, not comprehensive. (i) U.S. construction company A is awarded a contract to build an office complex in boycotting country Y. A, believing that employees of a particular religion will not be permitted to work in Y because of Y's boycott against country X, excludes U.S. persons of that religion from consideration for employment on the project. A's refusal to consider qualified U.S. persons of a particular religion for work on the project in Y constitutes a prohibited boycott-based discriminatory action against U.S. persons on the basis of religion. (ii) Same as (i), except that a clause in the contract provides that “no persons of country X origin are to work on this project.” A's agreement constitutes a prohibited boycott-based agreement to discriminate against U.S. persons, among others, on the basis of national origin. (iii) Same as (i), except that a clause in the contract provides that “no persons who are citizens, residents, or nationals of country X are to work on this project.” A's agreement does not constitute a boycott-based agreement to discriminate against U.S. persons on the basis of race, religion, sex, or national origin, because the clause requires exclusion on the basis of citizenship, residency, and nationality only. (iv) U.S. construction company A enters into a contract to build a school in boycotting country Y. Y's representative orally tells A that no persons of country X origin are to work on the project. A may not comply, because to do so would constitute discrimination on the basis of national origin. It makes no difference that A learned of Y's requirement orally. It makes no difference how A learns about Y's discriminatory requirement. (v) Boycotting country Y tenders an invitation to bid on a construction project in Y. The tender requires that the successful bidder's personnel will be interviewed and that persons of a particular religious faith will not be permitted to work on the project. Y's requirement is based on its boycott of country X, the majority of whose citizens are of that particular faith. Agreement to this provision in the tender document by a U.S. person would constitute a prohibited agreement to engage in boycott-based discrimination against U.S. persons of a particular religion. (vi) Same as (v), except that the tender specifies that “women will not be allowed to work on this project.” Agreement to this provision in the tender by a U.S. person does not constitute a prohibited agreement to engage in boycott-based discrimination, because the restriction against employment of women is not boycott-based. Such an agreement may, however, constitute a violation of U.S. civil rights laws. (vii) A is a U.S. investment banking firm. As a condition of participating in an underwriting of securities to be issued by boycotting country Y, A is required to exclude investment banks owned by persons of a particular faith from participation in the underwriting. Y's requirement is based on its boycott of country X, the majority of whose citizens are of that particular faith. A's agreement to such a provision constitutes a prohibited agreement to engage in boycott-based discrimination against U.S. persons on the basis of religion. Further, if A requires others to agree to such a condition, A would be acting to require another person to engage in such discrimination. (viii) U.S. company A is asked by boycotting country Y to certify that A will not use a six-pointed star on the packaging of its products to be imported into Y. The requirement is part of the enforcement effort by Y of its boycott against country X. A may not so certify. The six-pointed star is a religious symbol, and the certification by A that it will not use such a symbol constitutes a statement that A will not ship products made or handled by persons of that religion. (ix) Same as (viii), except that A is asked to certify that no symbol of boycotted country X will appear on the packaging of its products imported into Y. Such a certification conveys no statement about any person's religion and, thus, does not come within this prohibition. The following examples are intended to give guidance in determining the circumstances in which the taking of particular discriminatory actions is prohibited. They are illustrative, not comprehensive. (i) U.S. construction company A is awarded a contract to build an office complex in boycotting country Y. A, believing that employees of a particular religion will not be permitted to work in Y because of Y's boycott against country X, excludes U.S. persons of that religion from consideration for employment on the project. A's refusal to consider qualified U.S. persons of a particular religion for work on the project in Y constitutes a prohibited boycott-based discriminatory action against U.S. persons on the basis of religion. (ii) Same as (i), except that a clause in the contract provides that “no persons of country X origin are to work on this project.” A's agreement constitutes a prohibited boycott-based agreement to discriminate against U.S. persons, among others, on the basis of national origin. (iii) Same as (i), except that a clause in the contract provides that “no persons who are citizens, residents, or nationals of country X are to work on this project.” A's agreement does not constitute a boycott-based agreement to discriminate against U.S. persons on the basis of race, religion, sex, or national origin, because the clause requires exclusion on the basis of citizenship, residency, and nationality only. (iv) U.S. construction company A enters into a contract to build a school in boycotting country Y. Y's representative orally tells A that no persons of country X origin are to work on the project. A may not comply, because to do so would constitute discrimination on the basis of national origin. It makes no difference that A learned of Y's requirement orally. It makes no difference how A learns about Y's discriminatory requirement. (v) Boycotting country Y tenders an invitation to bid on a construction project in Y. The tender requires that the successful bidder's personnel will be interviewed and that persons of a particular religious faith will not be permitted to work on the project. Y's requirement is based on its boycott of country X, the majority of whose citizens are of that particular faith. Agreement to this provision in the tender document by a U.S. person would constitute a prohibited agreement to engage in boycott-based discrimination against U.S. persons of a particular religion. (vi) Same as (v), except that the tender specifies that “women will not be allowed to work on this project.” Agreement to this provision in the tender by a U.S. person does not constitute a prohibited agreement to engage in boycott-based discrimination, because the restriction against employment of women is not boycott-based. Such an agreement may, however, constitute a violation of U.S. civil rights laws. (vii) A is a U.S. investment banking firm. As a condition of participating in an underwriting of securities to be issued by boycotting country Y, A is required to exclude investment banks owned by persons of a particular faith from participation in the underwriting. Y's requirement is based on its boycott of country X, the majority of whose citizens are of that particular faith. A's agreement to such a provision constitutes a prohibited agreement to engage in boycott-based discrimination against U.S. persons on the basis of religion. Further, if A requires others to agree to such a condition, A would be acting to require another person to engage in such discrimination. (viii) U.S. company A is asked by boycotting country Y to certify that A will not use a six-pointed star on the packaging of its products to be imported into Y. The requirement is part of the enforcement effort by Y of its boycott against country X. A may not so certify. The six-pointed star is a religious symbol, and the certification by A that it will not use such a symbol constitutes a statement that A will not ship products made or handled by persons of that religion. (ix) Same as (viii), except that A is asked to certify that no symbol of boycotted country X will appear on the packaging of its products imported into Y. Such a certification conveys no statement about any person's religion and, thus, does not come within this prohibition. (c) Furnishing information about race, religion, sex, or national origin. (1) No United States person may: (i) Furnish information about the race, religion, sex, or national origin of any United States person; (ii) Furnish information about the race, religion, sex, or national origin of any owner, officer, director, or employee of any corporation or other organization which is a United States person; (iii) Knowingly agree to furnish information about the race, religion, sex, or national origin of any United States person; or (iv) Knowingly agree to furnish information about the race, religion, sex, or national origin of any owner, officer, director, or employee of any corporation or other organization which is a United States person. (2) This prohibition shall apply whether the information is specifically requested or is offered voluntarily by the United States person. It shall also apply whether the information requested or volunteered is stated in the affirmative or the negative. (3) Information about the place of birth of or the nationality of the parents of a United States person comes within this prohibition, as does information in the form of code words or symbols which could identify a United States person's race, religion, sex, or national origin. (4) This prohibition, like all others, applies only with respect to a United States person's activities in the interstate or foreign commerce of the United States and only when such activities are undertaken with intent to comply with, further, or support an unsanctioned foreign boycott. Examples of the Prohibition Against Furnishing Discriminatory Information The following examples are intended to give guidance in determining the circumstances in which the furnishing of discriminatory information is prohibited. They are illustrative, not comprehensive. (i) U.S. company A receives a boycott questionnaire from boycotting country Y asking whether it is owned or controlled by persons of a particular faith, whether it has any persons on its board of directors who are of that faith, and what the national origin of its president is. The information is sought for purposes of enforcing Y's boycott against country X, and A knows or has reason to know that the information is sought for that reason. A may not answer the questionnaire, because A would be furnishing information about the religion and national origin of U.S. persons for purposes of complying with or supporting Y's boycott against X. (ii) U.S. company A, located in the United States, is asked by boycotting country Y to certify that A has no persons of a particular national origin on its board of directors. A knows that Y's purpose in asking for the certification is to enforce its boycott against country X. A may not make such a certification, because A would be furnishing information about the national origin of U.S. persons for purposes of complying with or supporting Y's boycott against X. (iii) U.S. company A believes that boycotting country Y will select A's bid over those of other bidders if A volunteers that it has no shareholders, officers, or directors of a particular national origin. A's belief is based on its knowledge that Y generally refuses, as part of its boycott against country X, to do business with companies owned, controlled, or managed by persons of this particular national origin. A may not volunteer this information, because it would be furnishing information about the national origin of U.S. persons for purposes of complying with or supporting Y's boycott against X. (iv) U.S. company A has a contract to construct an airport in boycotting country Y. Before A begins work, A is asked by Y to identify the national origin of its employees who will work on the site. A knows or has reason to know that Y is seeking this information in order to enforce its boycott against X. A may not furnish this information, because A would be providing information about the national origin of U.S. persons for purposes of complying with or supporting Y's boycott against X. (v) Same as (iv), except that in order to assemble its work force on site in Y, A sends visa forms to its employees and asks that the forms be returned to A for transmittal to Y's consulate or embassy. A, itself, furnishes no information about its employees, but merely transmits the visa forms back and forth. In performing the ministerial function of transmitting visa forms, A is not furnishing information about any U.S. person's race, religion, sex, or national origin. (vi) Same as (iv), except that A is asked by Y to certify that none of its employees in Y will be women, because Y's laws prohibit women from working. Such a certification does not constitute a prohibited furnishing of information about any U.S. person's sex, since the reason the information is sought has nothing to do with Y's boycott of X. (vii) U.S. company A is considering establishing an office in boycotting country Y. In order to register to do business in Y, A is asked to furnish information concerning the nationalities of its corporate officers and board of directors. A may furnish the information about the nationalities of its officers and directors, because in so doing A would not be furnishing information about the race, religion, sex, or national origin of any U.S. person. The following examples are intended to give guidance in determining the circumstances in which the furnishing of discriminatory information is prohibited. They are illustrative, not comprehensive. (i) U.S. company A receives a boycott questionnaire from boycotting country Y asking whether it is owned or controlled by persons of a particular faith, whether it has any persons on its board of directors who are of that faith, and what the national origin of its president is. The information is sought for purposes of enforcing Y's boycott against country X, and A knows or has reason to know that the information is sought for that reason. A may not answer the questionnaire, because A would be furnishing information about the religion and national origin of U.S. persons for purposes of complying with or supporting Y's boycott against X. (ii) U.S. company A, located in the United States, is asked by boycotting country Y to certify that A has no persons of a particular national origin on its board of directors. A knows that Y's purpose in asking for the certification is to enforce its boycott against country X. A may not make such a certification, because A would be furnishing information about the national origin of U.S. persons for purposes of complying with or supporting Y's boycott against X. (iii) U.S. company A believes that boycotting country Y will select A's bid over those of other bidders if A volunteers that it has no shareholders, officers, or directors of a particular national origin. A's belief is based on its knowledge that Y generally refuses, as part of its boycott against country X, to do business with companies owned, controlled, or managed by persons of this particular national origin. A may not volunteer this information, because it would be furnishing information about the national origin of U.S. persons for purposes of complying with or supporting Y's boycott against X. (iv) U.S. company A has a contract to construct an airport in boycotting country Y. Before A begins work, A is asked by Y to identify the national origin of its employees who will work on the site. A knows or has reason to know that Y is seeking this information in order to enforce its boycott against X. A may not furnish this information, because A would be providing information about the national origin of U.S. persons for purposes of complying with or supporting Y's boycott against X. (v) Same as (iv), except that in order to assemble its work force on site in Y, A sends visa forms to its employees and asks that the forms be returned to A for transmittal to Y's consulate or embassy. A, itself, furnishes no information about its employees, but merely transmits the visa forms back and forth. In performing the ministerial function of transmitting visa forms, A is not furnishing information about any U.S. person's race, religion, sex, or national origin. (vi) Same as (iv), except that A is asked by Y to certify that none of its employees in Y will be women, because Y's laws prohibit women from working. Such a certification does not constitute a prohibited furnishing of information about any U.S. person's sex, since the reason the information is sought has nothing to do with Y's boycott of X. (vii) U.S. company A is considering establishing an office in boycotting country Y. In order to register to do business in Y, A is asked to furnish information concerning the nationalities of its corporate officers and board of directors. A may furnish the information about the nationalities of its officers and directors, because in so doing A would not be furnishing information about the race, religion, sex, or national origin of any U.S. person. (d) Furnishing information about business relationships with boycotted countries or blacklisted persons. (1) No United States person may furnish or knowingly agree to furnish information concerning his or any other person's past, present or proposed business relationships: (i) With or in a boycotted country; (ii) With any business concern organized under the laws of a boycotted country; (iii) With any national or resident of a boycotted country; or (iv) With any other person who is known or believed to be restricted from having any business relationship with or in a boycotting country. (2) This prohibition shall apply: (i) Whether the information pertains to a business relationship involving a sale, purchase, or supply transaction; legal or commercial representation; shipping or other transportation transaction; insurance; investment; or any other type of business transaction or relationship; and (ii) Whether the information is directly or indirectly requested or is furnished on the initiative of the United States person. (3) This prohibition does not apply to the furnishing of normal business information in a commercial context. Normal business information may relate to factors such as financial fitness, technical competence, or professional experience, and may be found in documents normally available to the public such as annual reports, disclosure statements concerning securities, catalogs, promotional brochures, and trade and business handbooks. Such information may also appear in specifications or statements of experience and qualifications. (4) Normal business information furnished in a commercial context does not cease to be such simply because the party soliciting the information may be a boycotting country or a national or resident thereof. If the information is of a type which is generally sought for a legitimate business purpose (such as determining financial fitness, technical competence, or professional experience), the information may be furnished even if the information could be used, or without the knowledge of the person supplying the information is intended to be used, for boycott purposes. However, no information about business relationships with blacklisted persons or boycotted countries, their residents or nationals, may be furnished in response to a boycott request, even if the information is publicly available. Requests for such information from a boycott office will be presumed to be boycott-based. (5) This prohibition, like all others, applies only with respect to a United States person's activities in the interstate or foreign commerce of the United States and only when such activities are undertaken with intent to comply with, further, or support an unsanctioned foreign boycott. Examples Concerning Furnishing of Information The following examples are intended to give guidance in determining the circumstances in which the furnishing of information is prohibited. They are illustrative, not comprehensive. (i) U.S. contractor A is considering bidding for a contract to build a dam in boycotting country Y. The invitation to bid, which appears in a trade journal, specifies that each bidder must state that he does not have any offices in boycotted country X. A knows or has reason to know that the requirement is boycott-based. A may not make this statement, because it constitutes information about A's business relationships with X. (ii) U.S. contractor A is considering bidding for a contract to construct a school in boycotting country Y. Each bidder is required to submit copies of its annual report with its bid. Since A's annual report describes A's worldwide operations, including the countries in which it does business, it necessarily discloses whether A has business relations with boycotted country X. A has no reason to know that its report is being sought for boycott purposes. A, in furnishing its annual report, is supplying ordinary business information in a commercial context. (iii) Same as (ii), except that accompanying the invitation to bid is a questionnaire from country Y's boycott office asking each bidder to supply a copy of its annual report. A may not furnish the annual report despite its public availability, because it would be furnishing information in response to a questionnaire from a boycott office. (iv) U.S. company A is on boycotting country Y's blacklist. For reasons unrelated to the boycott, A terminates its business relationships with boycotted country X. In exploring other marketing areas, A determines that boycotting country Y offers great potential. A is requested to complete a questionnaire from a central boycott office which inquires about A's business relations with X. A may not furnish the information, because it is information about A's business relationships with a boycotted country. (v) U.S. exporter A is seeking to sell its products to boycotting country Y. A is informed by Y that, as a condition of sale, A must certify that it has no salesmen in boycotted country X. A knows or has reason to know that the condition is boycott-based. A may not furnish the certification, because it is information about A's business relationships in a boycotted country. (vi) U.S. engineering company A receives an invitation to bid on the construction of a dam in boycotting country Y. As a condition of the bid, A is asked to certify that it does not have any offices in boycotted country X. A is also asked to furnish plans for other dams it has designed. A may not certify that it has no office in X, because this is information about its business relationships in a boycotted country. A may submit plans for other dams it has designed, because this is furnishing normal business information, in a commercial context, relating to A's technical competence and professional experience. (vii) U.S. company A, in seeking to expand its exports to boycotting country Y, sends a sales representative to Y for a one week trip. During a meeting in Y with trade association representatives, A's representative desires to explain that neither A nor any companies with which A deals has any business relationship with boycotted country X. The purpose of supplying such information is to ensure that A does not get blacklisted. A's representative may not volunteer this information even though A, for reasons unrelated to the boycott, does not deal with X, because A's representative would be volunteering information about A's business relationships with X for boycott reasons. (viii) U.S. company A is asked by boycotting country Y to furnish information concerning its business relationships with boycotted country X. A, knowing that Y is seeking the information for boycott purposes, refuses to furnish the information asked for directly, but proposes to respond by supplying a copy of its annual report which lists the countries with which A is presently doing business. A does not happen to be doing business with X. A may not respond to Y's request by supplying its annual report, because A knows that it would be responding to a boycott-based request for information about its business relationships with X. (ix) U.S. company A receives a letter from a central boycott office asking A to “clarify” A's operations in boycotted country X. A intends to continue its operations in X, but fears that not responding to the request will result in its being placed on boycotting country Y's blacklist. A knows or has reason to know that the information is sought for boycott reasons. A may not respond to this request, because the information concerns its business relationships with a boycotted country. (x) U.S. company A, in the course of negotiating a sale of its goods to a buyer in boycotting country Y, is asked to certify that its supplier is not on Y's blacklist. A may not furnish the information about its supplier's blacklist status, because this is information about A's business relationships with another person who is believed to be restricted from having any business relationship with or in a boycotting country. (xi) U.S. company A has a manufacturing plant in boycotted country X and is on boycotting country Y's blacklist. A is seeking to establish operations in Y, while expanding its operations in X. A applies to Y to be removed from Y's blacklist. A is asked, in response, to indicate whether it has manufacturing facilities in X. A may not supply the requested information, because A would be furnishing information about its business relationships in a boycotted country. (xii) U.S. bank A plans to open a branch office in boycotting country Y. In order to do so, A is required to furnish certain information about its business operations, including the location of its other branch offices. Such information is normally sought in other countries where A has opened a branch office, and A does not have reason to know that Y is seeking the information for boycott reasons. A may furnish this information, even though in furnishing it A would disclose information about its business relationships in a boycotted country, because it is being furnished in a normal business context and A does not have reason to know that it is sought for boycott reasons. (xiii) U.S. architectural firm A responds to an invitation to submit designs for an office complex in boycotting country Y. The invitation states that all bidders must include information concerning similar types of buildings they have designed. A has not designed such buildings in boycotted country X. Clients frequently seek information of this type before engaging an architect. A may furnish this information, because this is furnishing normal business information, in a commercial context, relating to A's technical competence and professional experience. (xiv) U.S. oil company A distributes to potential customers promotional brochures and catalogs which give background information on A's past projects. A does not have business dealings with boycotted country X. The brochures, which are identical to those which A uses throughout the world, list those countries in which A does or has done business. In soliciting potential customers in boycotting country Y, A desires to distribute copies of its brochures. A may do so, because this is furnishing normal business information, in a commercial context, relating to professional experience. (xv) U.S. company A is interested in doing business with boycotting country Y. A wants to ask Y's Ministry of Trade whether, and if so why, A is on Y's blacklist or is otherwise restricted for boycott reasons from doing business with Y. A may make this limited inquiry, because it does not constitute furnishing information. (xvi) U.S. company A is asked by boycotting country Y to certify that it is not owned by subjects or nationals of boycotted country X and that it is not resident in boycotted country X. A may not furnish the certification, because it is information about A's business relationships with or in a boycotted country, or with nationals of a boycotted country. (xvii) U.S. company A, a manufacturer of certain patented products, desires to register its patents in boycotting country Y. A receives a power of attorney form required to register its patents. The form contains a question regarding A's business relationships with or in boycotted country X. A has no business relationships with X and knows or has reason to know that the information is sought for boycott reasons. A may not answer the question, because A would be furnishing information about its business relationships with or in a boycotted country. (xviii) U.S. company A is asked by boycotting country Y to certify that it is not the mother company, sister company, subsidiary, or branch of any blacklisted company, and that it is not in any way affiliated with any blacklisted company. A may not furnish the certification, because it is information about whether A has a business relationship with another person who is known or believed to be restricted from having any business relationship with or in a boycotting country. The following examples are intended to give guidance in determining the circumstances in which the furnishing of information is prohibited. They are illustrative, not comprehensive. (i) U.S. contractor A is considering bidding for a contract to build a dam in boycotting country Y. The invitation to bid, which appears in a trade journal, specifies that each bidder must state that he does not have any offices in boycotted country X. A knows or has reason to know that the requirement is boycott-based. A may not make this statement, because it constitutes information about A's business relationships with X. (ii) U.S. contractor A is considering bidding for a contract to construct a school in boycotting country Y. Each bidder is required to submit copies of its annual report with its bid. Since A's annual report describes A's worldwide operations, including the countries in which it does business, it necessarily discloses whether A has business relations with boycotted country X. A has no reason to know that its report is being sought for boycott purposes. A, in furnishing its annual report, is supplying ordinary business information in a commercial context. (iii) Same as (ii), except that accompanying the invitation to bid is a questionnaire from country Y's boycott office asking each bidder to supply a copy of its annual report. A may not furnish the annual report despite its public availability, because it would be furnishing information in response to a questionnaire from a boycott office. (iv) U.S. company A is on boycotting country Y's blacklist. For reasons unrelated to the boycott, A terminates its business relationships with boycotted country X. In exploring other marketing areas, A determines that boycotting country Y offers great potential. A is requested to complete a questionnaire from a central boycott office which inquires about A's business relations with X. A may not furnish the information, because it is information about A's business relationships with a boycotted country. (v) U.S. exporter A is seeking to sell its products to boycotting country Y. A is informed by Y that, as a condition of sale, A must certify that it has no salesmen in boycotted country X. A knows or has reason to know that the condition is boycott-based. A may not furnish the certification, because it is information about A's business relationships in a boycotted country. (vi) U.S. engineering company A receives an invitation to bid on the construction of a dam in boycotting country Y. As a condition of the bid, A is asked to certify that it does not have any offices in boycotted country X. A is also asked to furnish plans for other dams it has designed. A may not certify that it has no office in X, because this is information about its business relationships in a boycotted country. A may submit plans for other dams it has designed, because this is furnishing normal business information, in a commercial context, relating to A's technical competence and professional experience. (vii) U.S. company A, in seeking to expand its exports to boycotting country Y, sends a sales representative to Y for a one week trip. During a meeting in Y with trade association representatives, A's representative desires to explain that neither A nor any companies with which A deals has any business relationship with boycotted country X. The purpose of supplying such information is to ensure that A does not get blacklisted. A's representative may not volunteer this information even though A, for reasons unrelated to the boycott, does not deal with X, because A's representative would be volunteering information about A's business relationships with X for boycott reasons. (viii) U.S. company A is asked by boycotting country Y to furnish information concerning its business relationships with boycotted country X. A, knowing that Y is seeking the information for boycott purposes, refuses to furnish the information asked for directly, but proposes to respond by supplying a copy of its annual report which lists the countries with which A is presently doing business. A does not happen to be doing business with X. A may not respond to Y's request by supplying its annual report, because A knows that it would be responding to a boycott-based request for information about its business relationships with X. (ix) U.S. company A receives a letter from a central boycott office asking A to “clarify” A's operations in boycotted country X. A intends to continue its operations in X, but fears that not responding to the request will result in its being placed on boycotting country Y's blacklist. A knows or has reason to know that the information is sought for boycott reasons. A may not respond to this request, because the information concerns its business relationships with a boycotted country. (x) U.S. company A, in the course of negotiating a sale of its goods to a buyer in boycotting country Y, is asked to certify that its supplier is not on Y's blacklist. A may not furnish the information about its supplier's blacklist status, because this is information about A's business relationships with another person who is believed to be restricted from having any business relationship with or in a boycotting country. (xi) U.S. company A has a manufacturing plant in boycotted country X and is on boycotting country Y's blacklist. A is seeking to establish operations in Y, while expanding its operations in X. A applies to Y to be removed from Y's blacklist. A is asked, in response, to indicate whether it has manufacturing facilities in X. A may not supply the requested information, because A would be furnishing information about its business relationships in a boycotted country. (xii) U.S. bank A plans to open a branch office in boycotting country Y. In order to do so, A is required to furnish certain information about its business operations, including the location of its other branch offices. Such information is normally sought in other countries where A has opened a branch office, and A does not have reason to know that Y is seeking the information for boycott reasons. A may furnish this information, even though in furnishing it A would disclose information about its business relationships in a boycotted country, because it is being furnished in a normal business context and A does not have reason to know that it is sought for boycott reasons. (xiii) U.S. architectural firm A responds to an invitation to submit designs for an office complex in boycotting country Y. The invitation states that all bidders must include information concerning similar types of buildings they have designed. A has not designed such buildings in boycotted country X. Clients frequently seek information of this type before engaging an architect. A may furnish this information, because this is furnishing normal business information, in a commercial context, relating to A's technical competence and professional experience. (xiv) U.S. oil company A distributes to potential customers promotional brochures and catalogs which give background information on A's past projects. A does not have business dealings with boycotted country X. The brochures, which are identical to those which A uses throughout the world, list those countries in which A does or has done business. In soliciting potential customers in boycotting country Y, A desires to distribute copies of its brochures. A may do so, because this is furnishing normal business information, in a commercial context, relating to professional experience. (xv) U.S. company A is interested in doing business with boycotting country Y. A wants to ask Y's Ministry of Trade whether, and if so why, A is on Y's blacklist or is otherwise restricted for boycott reasons from doing business with Y. A may make this limited inquiry, because it does not constitute furnishing information. (xvi) U.S. company A is asked by boycotting country Y to certify that it is not owned by subjects or nationals of boycotted country X and that it is not resident in boycotted country X. A may not furnish the certification, because it is information about A's business relationships with or in a boycotted country, or with nationals of a boycotted country. (xvii) U.S. company A, a manufacturer of certain patented products, desires to register its patents in boycotting country Y. A receives a power of attorney form required to register its patents. The form contains a question regarding A's business relationships with or in boycotted country X. A has no business relationships with X and knows or has reason to know that the information is sought for boycott reasons. A may not answer the question, because A would be furnishing information about its business relationships with or in a boycotted country. (xviii) U.S. company A is asked by boycotting country Y to certify that it is not the mother company, sister company, subsidiary, or branch of any blacklisted company, and that it is not in any way affiliated with any blacklisted company. A may not furnish the certification, because it is information about whether A has a business relationship with another person who is known or believed to be restricted from having any business relationship with or in a boycotting country. (e) Information concerning association with charitable and fraternal organizations. (1) No United States person may furnish or knowingly agree to furnish information about whether any person is a member of, has made contributions to, or is otherwise associated with or involved in the activities of any charitable or fraternal organization which supports a boycotted country. (2) This prohibition shall apply whether: (i) The information concerns association with or involvement in any charitable or fraternal organization which (a) has, as one of its stated purposes, the support of a boycotted country through financial contributions or other means, or (b) undertakes, as a major organizational activity, to offer financial or other support to a boycotted country; (ii) The information is directly or indirectly requested or is furnished on the initiative of the United States person; or (iii) The information requested or volunteered concerns membership in, financial contributions to, or any other type of association with or involvement in the activities of such charitable or fraternal organization. (3) This prohibition does not prohibit the furnishing of normal business information in a commercial context as defined in paragraph (d) of this section. (4) This prohibition, like all others, applies only with respect to a United States person's activities in the interstate or foreign commerce of the United States and only when such activities are undertaken with intent to comply with, further, or support an unsanctioned foreign boycott. Examples of Prohibition Against Furnishing Information About Associations With Charitable or Fraternal Organizations The following examples are intended to give guidance in determining the circumstances in which the furnishing of information concerning associations with charitable or fraternal organizations is prohibited. They are illustrative, not comprehensive. (i) U.S. engineering firm A receives an invitation to bid from boycotting country Y. The invitation includes a request to supply information concerning any association which A's officers have with charitable organization B, an organization which is known by A to contribute financial support to boycotted country X. A knows or has reason to know that the information is sought for boycott reasons. A may not furnish the information. (ii) U.S. construction company A, in an effort to establish business dealings with boycotting country Y, proposes to furnish information to Y showing that no members of its board of directors are in any way associated with charitable organizations which support boycotted country X. A's purpose is to avoid any possibility of its being blacklisted by Y. A may not furnish the information, because A's purpose in doing so is boycott-based. It makes no difference that no specific request for the information has been made by Y. (iii) A, a citizen of the United States, is applying for a teaching position in a school in boycotting country Y. In connection with his application, A furnishes a resume which happens to disclose his affiliation with charitable organizations. A does so completely without reference to Y's boycott and without knowledge of any boycott requirement of Y that pertains to A's application for employment. The furnishing of a resume by A is not a boycott-related furnishing of information about his association with charitable organizations which support boycotted country X. The following examples are intended to give guidance in determining the circumstances in which the furnishing of information concerning associations with charitable or fraternal organizations is prohibited. They are illustrative, not comprehensive. (i) U.S. engineering firm A receives an invitation to bid from boycotting country Y. The invitation includes a request to supply information concerning any association which A's officers have with charitable organization B, an organization which is known by A to contribute financial support to boycotted country X. A knows or has reason to know that the information is sought for boycott reasons. A may not furnish the information. (ii) U.S. construction company A, in an effort to establish business dealings with boycotting country Y, proposes to furnish information to Y showing that no members of its board of directors are in any way associated with charitable organizations which support boycotted country X. A's purpose is to avoid any possibility of its being blacklisted by Y. A may not furnish the information, because A's purpose in doing so is boycott-based. It makes no difference that no specific request for the information has been made by Y. (iii) A, a citizen of the United States, is applying for a teaching position in a school in boycotting country Y. In connection with his application, A furnishes a resume which happens to disclose his affiliation with charitable organizations. A does so completely without reference to Y's boycott and without knowledge of any boycott requirement of Y that pertains to A's application for employment. The furnishing of a resume by A is not a boycott-related furnishing of information about his association with charitable organizations which support boycotted country X. (f) Letters of credit. (1) No United States person may pay, honor, confirm, or otherwise implement a letter of credit which contains a condition or requirement compliance with which is prohibited by this part, nor shall any United States person, as a result of the application of this section, be obligated to pay, honor or otherwise implement such a letter of credit. (2) For purposes of this section, “implementing” a letter of credit includes: (i) Issuing or opening a letter of credit at the request of a customer; (ii) Honoring, by accepting as being a valid instrument of credit, any letter of credit; (iii) Paying, under a letter of credit, a draft or other demand for payment by the beneficiary; (iv) Confirming a letter of credit by agreeing to be responsible for payment to the beneficiary in response to a request by the issuer; (v) Negotiating a letter of credit by voluntarily purchasing a draft from a beneficiary and presenting such draft for reimbursement to the issuer or the confirmer of the letter of credit; and (vi) Taking any other action to implement a letter of credit. (3) In the standard international letter of credit transaction facilitating payment for the export of goods from the United States, a bank in a foreign country may be requested by its customer to issue a revocable or irrevocable letter of credit in favor of the United States exporter. The customer usually requires, and the letter of credit provides, that the issuing (or a confirming) bank will make payment to the beneficiary against the bank's receipt of the documentation specified in the letter of credit. Such documentation usually includes commercial and consular invoices, a bill of lading, and evidence of insurance, but it may also include other required certifications or documentary assurances such as the origin of the goods and information relating to the carrier or insurer of the shipment. Banks usually will not accept drafts for payment unless the documents submitted therewith comply with the terms and conditions of the letter of credit. (4) A United States person is not prohibited under this section from advising a beneficiary of the existence of a letter of credit in his favor, or from taking ministerial actions to dispose of a letter of credit which it is prohibited from implementing. (5) Compliance with this section shall provide an absolute defense in any action brought to compel payment of, honoring of, or other implementation of a letter of credit, or for damages resulting from failure to pay or otherwise honor or implement the letter of credit. This section shall not otherwise relieve any person from any obligations or other liabilities he may incur under other laws or regulations, except as may be explicitly provided in this section. (6) This prohibition, like all others, applies only with respect to a United States person's activities taken with intent to comply with, further, or support an unsanctioned foreign boycott. In addition, it applies only when the transaction to which the letter of credit applies is in United States commerce and the beneficiary is a United States person. (7) A letter of credit implemented in the United States by a United States person located in the United States, including a permanent United States establishment of a foreign bank, will be presumed to apply to a transaction in United States commerce and to be in favor of a United States beneficiary where the letter of credit specifies a United States address for the beneficiary. These presumptions may be rebutted by facts which could reasonably lead the bank to conclude that the beneficiary is not a United States person or that the underlying transaction is not in United States commerce. (8) Where a letter of credit implemented in the United States by a United States person located in the United States does not specify a United States address for the beneficiary, the beneficiary will be presumed to be other than a United States person. This presumption may be rebutted by facts which could reasonably lead the bank to conclude that the beneficiary is a United States person despite the foreign address. (9) A letter of credit implemented outside the United States by a United States person located outside the United States will be presumed to apply to a transaction in United States commerce and to be in favor of a United States beneficiary where the letter of credit specifies a United States address for the beneficiary and calls for documents indicating shipment from the United States or otherwise indicating that the goods are of United States origin. These presumptions may be rebutted by facts which could reasonably lead the bank to conclude that the beneficiary is not a United States person or that the underlying transaction is not in United States commerce. (10) Where a letter of credit implemented outside the United States by a United States person located outside the United States does not specify a United States address for the beneficiary, the beneficiary will be presumed to be other than a United States person. In addition, where such a letter of credit does not call for documents indicating shipment from the United States or otherwise indicating that the goods are of United States origin, the transaction to which it applies will be presumed to be outside United States commerce. The presumption that the beneficiary is other than a United States person may be rebutted by facts which could reasonably lead the bank to conclude that the beneficiary is a United States person. The presumption that the transaction to which the letter of credit applies is outside United States commerce may be rebutted by facts which could reasonably lead the bank to conclude that the underlying transaction is in United States commerce. Examples of the Prohibition Against Implementing Letters of Credit The following examples are intended to give guidance in determining the circumstances in which this section applies to the implementation of a letter of credit and in which such implementation is prohibited. They are illustrative, not comprehensive. Implementation of Letters of Credit in United States Commerce (i) A, a U.S. bank located in the United States, opens a letter of credit in the United States in favor of B, a foreign company located outside the United States. The letter of credit specifies a non-U.S. address for the beneficiary. The beneficiary is presumed to be other than a U.S. person, because it does not have a U.S. address. The presumption may be rebutted by facts showing that A could reasonably conclude that the beneficiary is a U.S. person despite the foreign address. (ii) A, a branch of a foreign bank located in the United States, opens a letter of credit in favor of B, a foreign company located outside the United States. The letter of credit specifies a non-U.S. address for the beneficiary. The beneficiary is presumed to be other than a U.S.person, because it does not have a U.S. address. The presumption may be rebutted by facts showing that A could reasonably conclude that the beneficiary is a U.S. person despite the foreign address. (iii) A, a U.S. bank branch located outside the United States, opens a letter of credit in favor of B, a person with a U.S. address. The letter of credit calls for documents indicating shipment of goods from the United States. The letter of credit is presumed to apply to a transaction in U.S. commerce and to be in favor of a U.S. beneficiary because the letter of credit specifies a U.S. address for the beneficiary and calls for documents indicating that the goods will be shipped from the United States. These presumptions may be rebutted by facts showing that A could reasonably conclude that the beneficiary is not a U.S. person or that the underlying transaction is not in U.S. commerce. (iv) A, a U.S. bank branch located outside the United States, opens a letter of credit which specifies a beneficiary, B, with an address outside the United States and calls for documents indicating that the goods are of U.S.-origin. A knows or has reason to know that although B has an address outside the United States, B is a U.S. person. The letter of credit is presumed to apply to a transaction in U.S. commerce, because the letter of credit calls for shipment of U.S.-origin goods. In addition, the letter of credit is presumed to be in favor of a beneficiary who is a U.S. person, because A knows or has reason to know that the beneficiary is a U.S. person despite the foreign address. (v) A, a U.S. bank branch located outside the United States, opens a letter of credit which specifies a beneficiary with a U.S. address. The letter of credit calls for documents indicating shipment of foreign-origin goods. The letter of credit is presumed to be in favor of a U.S. beneficiary but to apply to a transaction outside U.S. commerce, because it calls for documents indicating shipment of foreign-origin goods. The presumption of non-U.S. commerce may be rebutted by facts showing that A could reasonably conclude that the underlying transaction involves shipment of U.S.-origin goods or goods from the United States. Prohibition Against Implementing Letters of Credit (i) Boycotting country Y orders goods from U.S. company B. Y opens a letter of credit with foreign bank C in favor of B. The letter of credit specifies as a condition of payment that B certify that it does not do business with boycotted country X. Foreign bank C forwards the letter of credit it has opened to U.S. bank A for confirmation. A may not confirm or otherwise implement this letter of credit, because it contains a condition with which a U.S. person may not comply. (ii) Same as (i), except U.S. bank A desires to advise the beneficiary, U.S. company B, of the letter of credit. A may do so, because advising the beneficiary of the letter of credit (including the term which prevents A from implementing it) is not implementation of the letter of credit. (iii) Same as (i), except foreign bank C sends a telegram to U.S. bank A stating the major terms and conditions of the letter of credit. The telegram does not reflect the boycott provision. Subsequently, C mails to A documents setting forth the terms and conditions of the letter of credit, including the prohibited boycott condition. A may not further implement the letter of credit after it receives the documents, because they reflect the prohibited boycott condition in the letter of credit. A may advise the beneficiary and C of the existence of the letter of credit (including the boycott term), and may perform any essentially ministerial acts necessary to dispose of the letter of credit. (iv) Same as (iii), except that U.S. company B, based in part on information received from U.S. bank A, desires to obtain an amendment to the letter of credit which would eliminate or nullify the language in the letter of credit which prevents A from paying or otherwise implementing it. Either company B or bank A may undertake, and the other may cooperate and assist in, this endeavor. A could then pay or otherwise implement the revised letter of credit, so long as the original prohibited boycott condition is of no force or effect. (v) Boycotting country Y requests a foreign bank in Y to open a letter of credit to effect payment for goods to be shipped by U.S. supplier B, the beneficiary of the letter of credit. The letter of credit contains prohibited boycott clauses. The foreign bank forwards a copy of the letter of credit to its branch office A, in the United States. A may advise the beneficiary but may not implement the letter of credit, because it contains prohibited boycott conditions. (vi) Boycotting country Y orders goods from U.S. company B. U.S. bank A is asked to implement, for the benefit of B, a letter of credit which contains a clause requiring documentation that the goods shipped are not of boycotted country X origin. A may not implement the letter of credit with a prohibited condition, and may accept only a positive certificate of origin as satisfactory documentation. (See § 760.3(c) on “Import and Shipping Document Requirements.”) (vii) [Reserved] (viii) B is a foreign bank located outside the United States. B maintains an account with U.S. bank A, located in the United States. A letter of credit issued by B in favor of a U.S. beneficiary provides that any negotiating bank may obtain reimbursement from A by certifying that all the terms and conditions of the letter of credit have been met and then drawing against B's account. B notifies A by cable of the issuance of a letter of credit and the existence of reimbursement authorization; A does not receive a copy of the letter of credit. A may reimburse any negotiating bank, even when the underlying letter of credit contains a prohibited boycott condition, because A does not know or have reason to know that the letter of credit contains a prohibited boycott condition. (ix) Same as (viii), except that foreign bank B forwards a copy of the letter of credit to U.S. bank A, which then becomes aware of the prohibited boycott clause. A may not thereafter reimburse a negotiating bank or in any way further implement the letter of credit, because it knows of the prohibited boycott condition. (x) Boycotting country Y orders goods from U.S. exporter B and requests a foreign bank in Y to open a letter of credit in favor of B to cover the cost. The letter of credit contains a prohibited boycott clause. The foreign bank asks U.S. bank A to advise and confirm the letter of credit. Through inadvertence, A does not notice the prohibited clause and confirms the letter of credit. A thereafter notices the clause and then refuses to honor B's draft against the letter of credit. B sues bank A for payment. A has an absolute defense against the obligation to make payment under this letter of credit. (Note: Examples (ix) and (x) do not alter any other obligations or liabilities of the parties under appropriate law.) (xi) [Reserved] (xii) Boycotting country Y orders goods from U.S. company B. A letter of credit which contains a prohibited boycott clause is opened in favor of B by a foreign bank in Y. The foreign bank asks U.S. bank A to advise and confirm the letter of credit, which it forwards to A. A may advise B that it has received the letter of credit (including the boycott term), but may not confirm the letter of credit with the prohibited clause. (xiii) Same as (xii), except U.S. bank A fails to tell B that it cannot process the letter of credit. B requests payment. A may not pay. If the prohibited language is eliminated or nullified as the result of renegotiation, A may then pay or otherwise implement the revised letter of credit. (xiv) U.S. bank A receives a letter of credit in favor of U.S. beneficiary B. The letter of credit requires B to certify that he is not blacklisted. A may implement such a letter of credit, but it may not insist that the certification be furnished, because by so insisting it would be refusing to do business with a blacklisted person in compliance with a boycott. (xv) A, a U.S. bank located in the U.S. opens a letter of credit in favor of U.S. beneficiary B for B's sale of goods to boycotting country Y. The letter of credit contains no boycott conditions, but A knows that Y customarily requires the seller of goods to certify that it has dealt with no blacklisted supplier. A, therefore, instructs B that it will not make payment under the letter of credit unless B makes such a certification. A's action in requiring the certification from B constitutes action to require another person to refuse to do business with blacklisted persons. (xvi) A, a U.S. bank located in the U.S., opens a letter of credit in favor of U.S. beneficiary B for B's sale of goods to boycotting country Y. The letter of credit contains no boycott conditions, but A has actual knowledge that B has agreed to supply a certification to Y that it has not dealt with blacklisted firms, as a condition of receiving the letter of credit in its favor. A may not implement the letter of credit, because it knows that an implicit condition of the credit is a condition with which B may not legally comply. (xvii) Boycotting country Y orders goods from U.S. company B. Y opens a letter of credit with foreign bank C in favor of B. The letter of credit includes the statement, “Do not negotiate with blacklisted banks.” C forwards the letter of credit it has opened to U.S. bank A for confirmation. A may not confirm or otherwise implement this letter of credit, because it contains a condition with which a U.S. person may not comply. The following examples are intended to give guidance in determining the circumstances in which this section applies to the implementation of a letter of credit and in which such implementation is prohibited. They are illustrative, not comprehensive. (i) A, a U.S. bank located in the United States, opens a letter of credit in the United States in favor of B, a foreign company located outside the United States. The letter of credit specifies a non-U.S. address for the beneficiary. The beneficiary is presumed to be other than a U.S. person, because it does not have a U.S. address. The presumption may be rebutted by facts showing that A could reasonably conclude that the beneficiary is a U.S. person despite the foreign address. (ii) A, a branch of a foreign bank located in the United States, opens a letter of credit in favor of B, a foreign company located outside the United States. The letter of credit specifies a non-U.S. address for the beneficiary. The beneficiary is presumed to be other than a U.S.person, because it does not have a U.S. address. The presumption may be rebutted by facts showing that A could reasonably conclude that the beneficiary is a U.S. person despite the foreign address. (iii) A, a U.S. bank branch located outside the United States, opens a letter of credit in favor of B, a person with a U.S. address. The letter of credit calls for documents indicating shipment of goods from the United States. The letter of credit is presumed to apply to a transaction in U.S. commerce and to be in favor of a U.S. beneficiary because the letter of credit specifies a U.S. address for the beneficiary and calls for documents indicating that the goods will be shipped from the United States. These presumptions may be rebutted by facts showing that A could reasonably conclude that the beneficiary is not a U.S. person or that the underlying transaction is not in U.S. commerce. (iv) A, a U.S. bank branch located outside the United States, opens a letter of credit which specifies a beneficiary, B, with an address outside the United States and calls for documents indicating that the goods are of U.S.-origin. A knows or has reason to know that although B has an address outside the United States, B is a U.S. person. The letter of credit is presumed to apply to a transaction in U.S. commerce, because the letter of credit calls for shipment of U.S.-origin goods. In addition, the letter of credit is presumed to be in favor of a beneficiary who is a U.S. person, because A knows or has reason to know that the beneficiary is a U.S. person despite the foreign address. (v) A, a U.S. bank branch located outside the United States, opens a letter of credit which specifies a beneficiary with a U.S. address. The letter of credit calls for documents indicating shipment of foreign-origin goods. The letter of credit is presumed to be in favor of a U.S. beneficiary but to apply to a transaction outside U.S. commerce, because it calls for documents indicating shipment of foreign-origin goods. The presumption of non-U.S. commerce may be rebutted by facts showing that A could reasonably conclude that the underlying transaction involves shipment of U.S.-origin goods or goods from the United States. (i) Boycotting country Y orders goods from U.S. company B. Y opens a letter of credit with foreign bank C in favor of B. The letter of credit specifies as a condition of payment that B certify that it does not do business with boycotted country X. Foreign bank C forwards the letter of credit it has opened to U.S. bank A for confirmation. A may not confirm or otherwise implement this letter of credit, because it contains a condition with which a U.S. person may not comply. (ii) Same as (i), except U.S. bank A desires to advise the beneficiary, U.S. company B, of the letter of credit. A may do so, because advising the beneficiary of the letter of credit (including the term which prevents A from implementing it) is not implementation of the letter of credit. (iii) Same as (i), except foreign bank C sends a telegram to U.S. bank A stating the major terms and conditions of the letter of credit. The telegram does not reflect the boycott provision. Subsequently, C mails to A documents setting forth the terms and conditions of the letter of credit, including the prohibited boycott condition. A may not further implement the letter of credit after it receives the documents, because they reflect the prohibited boycott condition in the letter of credit. A may advise the beneficiary and C of the existence of the letter of credit (including the boycott term), and may perform any essentially ministerial acts necessary to dispose of the letter of credit. (iv) Same as (iii), except that U.S. company B, based in part on information received from U.S. bank A, desires to obtain an amendment to the letter of credit which would eliminate or nullify the language in the letter of credit which prevents A from paying or otherwise implementing it. Either company B or bank A may undertake, and the other may cooperate and assist in, this endeavor. A could then pay or otherwise implement the revised letter of credit, so long as the original prohibited boycott condition is of no force or effect. (v) Boycotting country Y requests a foreign bank in Y to open a letter of credit to effect payment for goods to be shipped by U.S. supplier B, the beneficiary of the letter of credit. The letter of credit contains prohibited boycott clauses. The foreign bank forwards a copy of the letter of credit to its branch office A, in the United States. A may advise the beneficiary but may not implement the letter of credit, because it contains prohibited boycott conditions. (vi) Boycotting country Y orders goods from U.S. company B. U.S. bank A is asked to implement, for the benefit of B, a letter of credit which contains a clause requiring documentation that the goods shipped are not of boycotted country X origin. A may not implement the letter of credit with a prohibited condition, and may accept only a positive certificate of origin as satisfactory documentation. (See § 760.3(c) on “Import and Shipping Document Requirements.”) (vii) [Reserved] (viii) B is a foreign bank located outside the United States. B maintains an account with U.S. bank A, located in the United States. A letter of credit issued by B in favor of a U.S. beneficiary provides that any negotiating bank may obtain reimbursement from A by certifying that all the terms and conditions of the letter of credit have been met and then drawing against B's account. B notifies A by cable of the issuance of a letter of credit and the existence of reimbursement authorization; A does not receive a copy of the letter of credit. A may reimburse any negotiating bank, even when the underlying letter of credit contains a prohibited boycott condition, because A does not know or have reason to know that the letter of credit contains a prohibited boycott condition. (ix) Same as (viii), except that foreign bank B forwards a copy of the letter of credit to U.S. bank A, which then becomes aware of the prohibited boycott clause. A may not thereafter reimburse a negotiating bank or in any way further implement the letter of credit, because it knows of the prohibited boycott condition. (x) Boycotting country Y orders goods from U.S. exporter B and requests a foreign bank in Y to open a letter of credit in favor of B to cover the cost. The letter of credit contains a prohibited boycott clause. The foreign bank asks U.S. bank A to advise and confirm the letter of credit. Through inadvertence, A does not notice the prohibited clause and confirms the letter of credit. A thereafter notices the clause and then refuses to honor B's draft against the letter of credit. B sues bank A for payment. A has an absolute defense against the obligation to make payment under this letter of credit. (Note: Examples (ix) and (x) do not alter any other obligations or liabilities of the parties under appropriate law.) (xi) [Reserved] (xii) Boycotting country Y orders goods from U.S. company B. A letter of credit which contains a prohibited boycott clause is opened in favor of B by a foreign bank in Y. The foreign bank asks U.S. bank A to advise and confirm the letter of credit, which it forwards to A. A may advise B that it has received the letter of credit (including the boycott term), but may not confirm the letter of credit with the prohibited clause. (xiii) Same as (xii), except U.S. bank A fails to tell B that it cannot process the letter of credit. B requests payment. A may not pay. If the prohibited language is eliminated or nullified as the result of renegotiation, A may then pay or otherwise implement the revised letter of credit. (xiv) U.S. bank A receives a letter of credit in favor of U.S. beneficiary B. The letter of credit requires B to certify that he is not blacklisted. A may implement such a letter of credit, but it may not insist that the certification be furnished, because by so insisting it would be refusing to do business with a blacklisted person in compliance with a boycott. (xv) A, a U.S. bank located in the U.S. opens a letter of credit in favor of U.S. beneficiary B for B's sale of goods to boycotting country Y. The letter of credit contains no boycott conditions, but A knows that Y customarily requires the seller of goods to certify that it has dealt with no blacklisted supplier. A, therefore, instructs B that it will not make payment under the letter of credit unless B makes such a certification. A's action in requiring the certification from B constitutes action to require another person to refuse to do business with blacklisted persons. (xvi) A, a U.S. bank located in the U.S., opens a letter of credit in favor of U.S. beneficiary B for B's sale of goods to boycotting country Y. The letter of credit contains no boycott conditions, but A has actual knowledge that B has agreed to supply a certification to Y that it has not dealt with blacklisted firms, as a condition of receiving the letter of credit in its favor. A may not implement the letter of credit, because it knows that an implicit condition of the credit is a condition with which B may not legally comply. (xvii) Boycotting country Y orders goods from U.S. company B. Y opens a letter of credit with foreign bank C in favor of B. The letter of credit includes the statement, “Do not negotiate with blacklisted banks.” C forwards the letter of credit it has opened to U.S. bank A for confirmation. A may not confirm or otherwise implement this letter of credit, because it contains a condition with which a U.S. person may not comply." 15:15:3.1.1.1.10.0.1.3,15,Commerce and Foreign Trade,VII,C,760,PART 760—RESTRICTIVE TRADE PRACTICES OR BOYCOTTS,,,,§ 760.3 Exceptions to prohibitions.,BIS,,,"[61 FR 12862, Mar. 25, 1996, as amended at 65 FR 34946, June 1, 2000; 73 FR 68327, Nov. 18, 2008]","(a) Import requirements of a boycotting country. (1) A United States person, in supplying goods or services to a boycotting country, or to a national or resident of a boycotting country, may comply or agree to comply with requirements of such boycotting country which prohibit the import of: (i) Goods or services from the boycotted country; (ii) Goods produced or services provided by any business concern organized under the laws of the boycotted country; or (iii) Goods produced or services provided by nationals or residents of the boycotted country. (2) A United States person may comply or agree to comply with such import requirements whether or not he has received a specific request to comply. By its terms, this exception applies only to transactions involving imports into a boycotting country. A United States person may not, under this exception, refuse on an across-the-board basis to do business with a boycotted country or a national or resident of a boycotted country. (3) In taking action within the scope of this exception, a United States person is limited in the types of boycott-related information he can supply. (See § 760.2(d) of this part on “Furnishing Information About Business Relationships with Boycotted Countries or Blacklisted Persons” and paragraph (c) of this section on “Import and Shipping Document Requirements.”) Examples of Compliance With Import Requirements of a Boycotting Country The following examples are intended to give guidance in determining the circumstances in which compliance with the import requirements of a boycotting country is permissible. They are illustrative, not comprehensive. (i) A, a U.S. manufacturer, receives an order from boycotting country Y for its products. Country X is boycotted by country Y, and the import laws of Y prohibit the importation of goods produced or manufactured in X. In filling this type of order, A would usually include some component parts produced in X. For the purpose of filling this order, A may substitute comparable component parts in place of parts produced in X, because the import laws of Y prohibit the importation of goods manufactured in X. (ii) Same as (i), except that A's contract with Y expressly provides that in fulfilling the contract A “may not include parts or components produced or manufactured in boycotted country X.” A may agree to and comply with this contract provision, because Y prohibits the importation of goods from X. However, A may not furnish negative certifications regarding the origin of components in response to import and shipping document requirements. (iii) A, a U.S. building contractor, is awarded a contract to construct a plant in boycotting country Y. A accepts bids on goods required under the contract, and the lowest bid is made by B, a business concern organized under the laws of X, a country boycotted by Y. Y prohibits the import of goods produced by companies organized under the laws of X. For purposes of this contract, A may reject B's bid and accept another, because B's goods would be refused entry into Y because of Y's boycott against X. (iv) Same as (iii), except that A also rejects the low bid by B for work on a construction project in country M, a country not boycotted by Y. This exception does not apply, because A's action is not taken in order to comply with Y's requirements prohibiting the import of products from boycotted country X. (v) A, a U.S. management consulting firm, contracts to provide services to boycotting country Y. Y requests that A not employ residents or nationals of boycotted country X to provide those services. A may agree, as a condition of the contract, not to have services furnished by nationals or residents of X, because importation of such services is prohibited by Y. (vi) A, a U.S. company, is negotiating a contract to supply machine tools to boycotting country Y. Y insists that the contract contain a provision whereby A agrees that none of the machine tools will be produced by any business concern owned by nationals of boycotted country X, even if the business concern is organized under the laws of a non-boycotted country. A may not agree to this provision, because it is a restriction on the import of goods produced by business concerns owned by nationals of a boycotted country even if the business concerns themselves are organized under the laws of a non-boycotted country. The following examples are intended to give guidance in determining the circumstances in which compliance with the import requirements of a boycotting country is permissible. They are illustrative, not comprehensive. (i) A, a U.S. manufacturer, receives an order from boycotting country Y for its products. Country X is boycotted by country Y, and the import laws of Y prohibit the importation of goods produced or manufactured in X. In filling this type of order, A would usually include some component parts produced in X. For the purpose of filling this order, A may substitute comparable component parts in place of parts produced in X, because the import laws of Y prohibit the importation of goods manufactured in X. (ii) Same as (i), except that A's contract with Y expressly provides that in fulfilling the contract A “may not include parts or components produced or manufactured in boycotted country X.” A may agree to and comply with this contract provision, because Y prohibits the importation of goods from X. However, A may not furnish negative certifications regarding the origin of components in response to import and shipping document requirements. (iii) A, a U.S. building contractor, is awarded a contract to construct a plant in boycotting country Y. A accepts bids on goods required under the contract, and the lowest bid is made by B, a business concern organized under the laws of X, a country boycotted by Y. Y prohibits the import of goods produced by companies organized under the laws of X. For purposes of this contract, A may reject B's bid and accept another, because B's goods would be refused entry into Y because of Y's boycott against X. (iv) Same as (iii), except that A also rejects the low bid by B for work on a construction project in country M, a country not boycotted by Y. This exception does not apply, because A's action is not taken in order to comply with Y's requirements prohibiting the import of products from boycotted country X. (v) A, a U.S. management consulting firm, contracts to provide services to boycotting country Y. Y requests that A not employ residents or nationals of boycotted country X to provide those services. A may agree, as a condition of the contract, not to have services furnished by nationals or residents of X, because importation of such services is prohibited by Y. (vi) A, a U.S. company, is negotiating a contract to supply machine tools to boycotting country Y. Y insists that the contract contain a provision whereby A agrees that none of the machine tools will be produced by any business concern owned by nationals of boycotted country X, even if the business concern is organized under the laws of a non-boycotted country. A may not agree to this provision, because it is a restriction on the import of goods produced by business concerns owned by nationals of a boycotted country even if the business concerns themselves are organized under the laws of a non-boycotted country. (b) Shipment of goods to a boycotting country. (1) A United States person, in shipping goods to a boycotting country, may comply or agree to comply with requirements of that country which prohibit the shipment of goods: (i) On a carrier of the boycotted country; or (ii) By a route other than that prescribed by the boycotting country or the recipient of the shipment. (2) A specific request that a United States person comply or agree to comply with requirements concerning the use of carriers of a boycotted country is not necessary if the United States person knows, or has reason to know, that the use of such carriers for shipping goods to the boycotting country is prohibited by requirements of the boycotting country. This exception applies whether a boycotting country or the purchaser of the shipment: (i) Explicitly states that the shipment should not pass through a port of the boycotted country; or (ii) Affirmatively describes a route of shipment that does not include a port in the boycotted country. (3) For purposes of this exception, the term carrier of a boycotted country means a carrier which flies the flag of a boycotted country or which is owned, chartered, leased, or operated by a boycotted country or by nationals or residents of a boycotted country. Examples of Compliance With the Shipping Requirements of a Boycotting Country The following examples are intended to give guidance in determining the circumstances in which compliance with import and shipping document requirements of a boycotting country is permissible. They are illustrative, not comprehensive. (i) A is a U.S. exporter from whom boycotting country Y is importing goods. Y directs that the goods not pass through a port of boycotted country X. A may comply with Y's shipping instructions, because they pertain to the route of shipment of goods being shipped to Y. (ii) A, a U.S. fertilizer manufacturer, receives an order from boycotting country Y for fertilizer. Y specifies in the order that A may not ship the fertilizer on a carrier of boycotted country X. A may comply with this request, because it pertains to the carrier of a boycotted country. (iii) B, a resident of boycotting country Y, orders textile goods from A, a U.S. distributor, specifying that the shipment must not be made on a carrier owned or leased by nationals of boycotted country X and that the carrier must not pass through a port of country X enroute to Y. A may comply or agree to comply with these requests, because they pertain to the shipment of goods to Y on a carrier of a boycotted country and the route such shipment will take. (iv) Boycotting country Y orders goods from A, a U.S. retail merchant. The order specifies that the goods shipped by A “may not be shipped on a carrier registered in or owned by boycotted country X.” A may agree to this contract provision, because it pertains to the carrier of a boycotted country. (v) Boycotting country Y orders goods from A, a U.S. pharmaceutical company, and requests that the shipment not pass through a port of country P, which is not a country boycotted by Y. This exception does not apply in a non-boycotting situation. A may comply with the shipping instructions of Y, because in doing so he would not violate any prohibition of this part. (vi) Boycotting country Y orders goods from A, a U.S. manufacturer. The order specifies that goods shipped by A “must not be shipped on vessels blacklisted by country Y”. A may not agree to comply with this condition because it is not a restriction limited to the use of carriers of the boycotted country. The following examples are intended to give guidance in determining the circumstances in which compliance with import and shipping document requirements of a boycotting country is permissible. They are illustrative, not comprehensive. (i) A is a U.S. exporter from whom boycotting country Y is importing goods. Y directs that the goods not pass through a port of boycotted country X. A may comply with Y's shipping instructions, because they pertain to the route of shipment of goods being shipped to Y. (ii) A, a U.S. fertilizer manufacturer, receives an order from boycotting country Y for fertilizer. Y specifies in the order that A may not ship the fertilizer on a carrier of boycotted country X. A may comply with this request, because it pertains to the carrier of a boycotted country. (iii) B, a resident of boycotting country Y, orders textile goods from A, a U.S. distributor, specifying that the shipment must not be made on a carrier owned or leased by nationals of boycotted country X and that the carrier must not pass through a port of country X enroute to Y. A may comply or agree to comply with these requests, because they pertain to the shipment of goods to Y on a carrier of a boycotted country and the route such shipment will take. (iv) Boycotting country Y orders goods from A, a U.S. retail merchant. The order specifies that the goods shipped by A “may not be shipped on a carrier registered in or owned by boycotted country X.” A may agree to this contract provision, because it pertains to the carrier of a boycotted country. (v) Boycotting country Y orders goods from A, a U.S. pharmaceutical company, and requests that the shipment not pass through a port of country P, which is not a country boycotted by Y. This exception does not apply in a non-boycotting situation. A may comply with the shipping instructions of Y, because in doing so he would not violate any prohibition of this part. (vi) Boycotting country Y orders goods from A, a U.S. manufacturer. The order specifies that goods shipped by A “must not be shipped on vessels blacklisted by country Y”. A may not agree to comply with this condition because it is not a restriction limited to the use of carriers of the boycotted country. (c) Import and shipping document requirements. (1) A United States person, in shipping goods to a boycotting country, may comply or agree to comply with import and shipping document requirements of that country, with respect to: (i) The country or origin of the goods; (ii) The name and nationality of the carrier; (iii) The route of the shipment; (iv) The name, residence, or address of the supplier of the shipment; (v) The name, residence, or address of the provider of other services. (2) Such information must be stated in positive, non-blacklisting, non-exclusionary terms except for information with respect to the names or nationalities of carriers or routes of shipment, which may continue to be stated in negative terms in conjunction with shipments to a boycotting country, in order to comply with precautionary requirements protecting against war risks or confiscation. Examples of Compliance With Import and Shipping Document Requirements The following examples are intended to give guidance in determining the circumstances in which compliance with the import requirements of a boycotting country is permissible. They are illustrative, not comprehensive. (i) Boycotting country Y contracts with A, a U.S. petroleum equipment manufacturer, for certain equipment. Y requires that goods being imported into Y must be accompanied by a certification that the goods being supplied did not originate in boycotted country X. A may not supply such a certification in negative terms but may identify instead the country of origin of the goods in positive terms only. (ii) Same as (i), except that Y requires that the shipping documentation accompanying the goods specify the country of origin of the goods. A may furnish the information. (iii) [Reserved] (iv) A, a U.S. apparel manufacturer, has contracted to sell certain of its products to B, a national of boycotting country Y. The form that must be submitted to customs officials of Y requires the shipper to certify that the goods contained in the shipment have not been supplied by “blacklisted” persons. A may not furnish the information in negative terms but may certify, in positive terms only, the name of the supplier of the goods. (v) Same as (iv), except the customs form requires certification that the insurer and freight forwarder used are not “blacklisted.” A may not comply with the request but may supply a certification stating, in positive terms only, the names of the insurer and freight forwarder. (vi) A, a U.S. petrochemical manufacturer, executes a sales contract with B, a resident of boycotting country Y. A provision of A's contract with B requires that the bill of lading and other shipping documents contain certifications that the goods have not been shipped on a “blacklisted” carrier. A may not agree to supply a certification that the carrier is not “blacklisted” but may certify the name of the carrier in positive terms only. (vii) Same as (vi), except that the contract requires certification that the goods will not be shipped on a carrier which flies the flag of, or is owned, chartered, leased, or operated by boycotted country X, or by nationals or residents of X. Such a certification, which is a reasonable requirement to protect against war risks or confiscation, may be furnished at any time. (viii) Same as (vi), except that the contract requires that the shipping documents certify the name of the carrier being used. A may, at any time, supply or agree to supply the requested documentation regarding the name of the carrier, either in negative or positive terms. (ix) Same as (vi), except that the contract requires a certification that the carrier will not call at a port in boycotted country X before making delivery in Y. Such a certification, which is a reasonable requirement to protect against war risks or confiscation, may be furnished at any time. (x) Same as (vi), except that the contract requires that the shipping documents indicate the name of the insurer and freight forwarder. A may comply at any time, because the statement is not required to be made in negative or blacklisting terms. (xi) A, a U.S. exporter, is negotiating a contract to sell bicycles to boycotting country Y. Y insists that A agree to certify that the goods will not be shipped on a vessel which has ever called at a port in boycotted country X. As distinguished from a certification that goods will not be shipped on a vessel which will call enroute at a port of boycotted country X, such a certification is not a reasonable requirement to protect against war risks or confiscation, and, hence, may not be supplied. (xii) Same as (xi), except that Y insists that A agree to certify that the goods will not be shipped on a carrier that is ineligible to enter Y's waters. Such a certification, which is not a reasonable requirement to protect against war risks or confiscation may not be supplied. The following examples are intended to give guidance in determining the circumstances in which compliance with the import requirements of a boycotting country is permissible. They are illustrative, not comprehensive. (i) Boycotting country Y contracts with A, a U.S. petroleum equipment manufacturer, for certain equipment. Y requires that goods being imported into Y must be accompanied by a certification that the goods being supplied did not originate in boycotted country X. A may not supply such a certification in negative terms but may identify instead the country of origin of the goods in positive terms only. (ii) Same as (i), except that Y requires that the shipping documentation accompanying the goods specify the country of origin of the goods. A may furnish the information. (iii) [Reserved] (iv) A, a U.S. apparel manufacturer, has contracted to sell certain of its products to B, a national of boycotting country Y. The form that must be submitted to customs officials of Y requires the shipper to certify that the goods contained in the shipment have not been supplied by “blacklisted” persons. A may not furnish the information in negative terms but may certify, in positive terms only, the name of the supplier of the goods. (v) Same as (iv), except the customs form requires certification that the insurer and freight forwarder used are not “blacklisted.” A may not comply with the request but may supply a certification stating, in positive terms only, the names of the insurer and freight forwarder. (vi) A, a U.S. petrochemical manufacturer, executes a sales contract with B, a resident of boycotting country Y. A provision of A's contract with B requires that the bill of lading and other shipping documents contain certifications that the goods have not been shipped on a “blacklisted” carrier. A may not agree to supply a certification that the carrier is not “blacklisted” but may certify the name of the carrier in positive terms only. (vii) Same as (vi), except that the contract requires certification that the goods will not be shipped on a carrier which flies the flag of, or is owned, chartered, leased, or operated by boycotted country X, or by nationals or residents of X. Such a certification, which is a reasonable requirement to protect against war risks or confiscation, may be furnished at any time. (viii) Same as (vi), except that the contract requires that the shipping documents certify the name of the carrier being used. A may, at any time, supply or agree to supply the requested documentation regarding the name of the carrier, either in negative or positive terms. (ix) Same as (vi), except that the contract requires a certification that the carrier will not call at a port in boycotted country X before making delivery in Y. Such a certification, which is a reasonable requirement to protect against war risks or confiscation, may be furnished at any time. (x) Same as (vi), except that the contract requires that the shipping documents indicate the name of the insurer and freight forwarder. A may comply at any time, because the statement is not required to be made in negative or blacklisting terms. (xi) A, a U.S. exporter, is negotiating a contract to sell bicycles to boycotting country Y. Y insists that A agree to certify that the goods will not be shipped on a vessel which has ever called at a port in boycotted country X. As distinguished from a certification that goods will not be shipped on a vessel which will call enroute at a port of boycotted country X, such a certification is not a reasonable requirement to protect against war risks or confiscation, and, hence, may not be supplied. (xii) Same as (xi), except that Y insists that A agree to certify that the goods will not be shipped on a carrier that is ineligible to enter Y's waters. Such a certification, which is not a reasonable requirement to protect against war risks or confiscation may not be supplied. (d) Unilateral and specific selection. (1) A United States person may comply or agree to comply in the normal course of business with the unilateral and specific selection by a boycotting country, a national of a boycotting country, or a resident of a boycotting country (including a United States person who is a bona fide resident of a boycotting country) of carriers, insurers, suppliers of services to be performed within the boycotting country, or specific goods, provided that with respect to services, it is necessary and customary that a not insignificant part of the services be performed within the boycotting country. With respect to goods, the items, in the normal course of business, must be identifiable as to their source or origin at the time of their entry into the boycotting country by (a) uniqueness of design or appearance or (b) trademark, trade name, or other identification normally on the items themselves, including their packaging. (2) This exception pertains to what is permissible for a United States person who is the recipient of a unilateral and specific selection of goods or services to be furnished by a third person. It does not pertain to whether the act of making such a selection is permitted; that question is covered, with respect to United States persons, in paragraph (g) of this section on “Compliance with Local Law.” Nor does it pertain to the United States person who is the recipient of an order to supply its own goods or services. Nothing in this part prohibits or restricts a United States person from filling an order himself, even if he is selected by the buyer on a boycott basis (e.g., because he is not blacklisted), so long as he does not himself take any action prohibited by this part. (3) In order for this exception to apply, the selection with which a United States person wishes to comply must be unilateral and specific. (4) A “specific” selection is one which is stated in the affirmative and which specifies a particular supplier of goods or services. (5) A “unilateral” selection is one in which the discretion in making the selection is exercised by the boycotting country buyer. If the United States person who receives a unilateral selection has provided the buyer with any boycott-based assistance (including information for purposes of helping the buyer select someone on a boycott basis), then the buyer's selection is not unilateral, and compliance with that selection by a United States person does not come within this exception. (6) The provision of so-called “pre-selection” or “pre-award” services, such as providing lists of qualified suppliers, subcontractors, or bidders, does not, in and of itself, destroy the unilateral character of a selection, provided such services are not boycott-based. Lists of qualified suppliers, for example, must not exclude anyone because he is blacklisted. Moreover, such services must be of the type customarily provided in similar transactions by the firm (or industry of which the firm is a part) as measured by the practice in non-boycotting as well as boycotting countries. If such services are not customarily provided in similar transactions or such services are provided in such a way as to exclude blacklisted persons from participating in a transaction or diminish their opportunity for such participation, then the services may not be provided without destroying the unilateral character of any subsequent selection. (7) In order for this exception to be available, the unilateral and specific selection must have been made by a boycotting country, or by a national or resident of a boycotting country. Such a resident may be a United States person. For purposes of this exception, a United States person will be considered a resident of a boycotting country only if he is a bona fide resident. A United States person may be a bona fide resident of a boycotting country even if such person's residency is temporary. (8) Factors that will be considered in determining whether a United States person is a bona fide resident of a boycotting country include: (i) Physical presence in the country; (ii) Whether residence is needed for legitimate business reasons; (iii) Continuity of the residency; (iv) Intent to maintain the residency; (v) Prior residence in the country; (vi) Size and nature of presence in the country; (vii) Whether the person is registered to do business or incorporated in the country; (viii) Whether the person has a valid work visa; and (ix) Whether the person has a similar presence in both boycotting and non-boycotting foreign countries in connection with similar business activities. No one of the factors is dispositive. All the circumstances will be examined closely to ascertain whether there is, in fact, a bona fide residency. Residency established solely for purposes of avoidance of the application of this part, unrelated to legitimate business needs, does not constitute bona fide residency. (9) The boycotting country resident must be the one actually making the selection. If a selection is made by a non-resident agent, parent, subsidiary, affiliate, home office or branch office of a boycotting country resident, it is not a selection by a resident within the meaning of this exception. (10) A selection made solely by a bona fide resident and merely transmitted by another person to a United States person for execution is a selection by a bona fide resident within the meaning of this exception. (11) If a United States person receives, from another person located in the United States, what may be a unilateral selection by a boycotting country customer, and knows or has reason to know that the selection is made for boycott reasons, he has a duty to inquire of the transmitting person to determine who actually made the selection. If he knows or has reason to know that the selection was made by other than a boycotting country, or a national or resident of a boycotting country, he may not comply. A course or pattern of conduct which a United States person recognizes or should recognize as consistent with boycott restrictions will create a duty to inquire. (12) If the United States person does not know or have reason to know that the selection it receives is boycott-based, its compliance with such a selection does not offend any prohibition and this exception is not needed. (13) This exception applies only to compliance with selections of certain types of suppliers of services-carriers, insurers, and suppliers of services to be performed “within the boycotting country.” Services to be performed wholly within the United States or wholly within any country other than the boycotting country are not covered. (14) For purposes of this part, services are to be performed “within the boycotting country” only if they are of a type which would customarily be performed by suppliers of those services within the country of the recipient of those services, and if the part of the services performed within the boycotting country is a necessary and not insignificant part of the total services performed. (15) What is “customary and necessary” for these purposes depends on the usual practice of the supplier of the services (or the industry of which he is a part) as measured by the practice in non-boycotting as well as boycotting countries, except where such practices are instituted to accommodate this part. (16) This exception applies only to compliance with selections of certain types of goods—goods that, in the normal course of business, are identifiable as to their source or origin at the time of their entry into the boycotting country. The definition of “specifically identifiable goods” is the same under this section as it is in paragraph (g) of this section on “Compliance with Local Law.” (17) Goods “specifically identifiable” in the normal course of business are those items which at the time of their entry into a boycotting country are identifiable as to source or origin by uniqueness of design or appearance; or trademark, trade name, or other identification normally on the items themselves, including their packaging. Goods are “specifically identifiable” in the normal course of business if their source or origin is ascertainable by inspection of the items themselves, including their packaging, regardless of whether inspection takes place. Goods are not considered to be “specifically identifiable” in the normal course of business if a trademark, trade name, or other form of identification not normally present is added to the items themselves, including their packaging, to accommodate this part. (18) If a unilateral selection meets the conditions described in paragraph (d) of this section, the United States person receiving the unilateral selection may comply or agree to comply, even if he knows or has reason to know that the selection was boycott-based. However, no United States person may comply or agree to comply with any unilateral selection if he knows or has reason to know that the purpose of the selection is to effect discrimination against any United States person on the basis of race, religion, sex, or national origin. Examples of Compliance With a Unilateral Selection The following examples are intended to give guidance in determining what constitutes a unilateral selection and the circumstances in which compliance with such a selection is permissible. They are illustrative, not comprehensive. Specific and Unilateral Selection (i) A, a U.S. manufacturer of road-grading equipment, is asked by boycotting country Y to ship goods to Y on U.S. vessel B, a carrier which is not blacklisted by Y. A knows or has reason to know that Y's selection of B is boycott-based. A may comply with Y's request, or may agree to comply as a condition of the contract, because the selection is specific and unilateral. (ii) A, a U.S. contractor building an industrial facility in boycotting country Y is asked by B, a resident of Y, to use C as the supplier of air conditioning equipment to be used in the facility. C is not blacklisted by country Y. A knows or has reason to know that B's request is boycott-based. A may comply with B's request, or may agree to comply as a condition of the contract, because the selection of C is specific and unilateral. (iii) A, a U.S. manufacturer of automotive equipment, is asked by boycotting country Y not to ship its goods to Y on U.S. carriers, B, C, or D. Carriers B, C, and D are blacklisted by boycotting country Y. A knows or has reason to know that Y's request is boycott-based. A may not comply or agree to comply with Y's request, because no specific selection of any particular carrier has been made. (iv) A, a U.S. exporter shipping goods ordered by boycotting country Y, is provided by Y with a list of eligible U.S. insurers from which A may choose in insuring the shipment of its goods. A knows or has reason to know that the list was compiled on a boycott basis. A may not comply or agree to comply with Y's request that A choose from among the eligible insurers, because no specific selection of any particular insurer has been made. (v) A, a U.S. aircraft manufacturer, is negotiating to sell aircraft to boycotting country Y. During the negotiations, Y asks A to identify the company which normally manufactures the engines for the aircraft. A responds that they are normally manufactured by U.S. engine manufacturer B. B is blacklisted by Y. In making the purchase, Y specifies that the engines for the aircraft should be supplied by U.S. engine manufacturer C. A may comply or agree to comply with Y's selection of C, because Y's selection is unilateral and specific. (vi) A, a U.S. construction firm, is retained by an agency of boycotting country Y to build a pipeline. Y requests A to suggest qualified engineering firms to be used on-site in the construction of the pipeline. It is customary for A, regardless of where it conducts its operations, to identify qualified engineering firms to its customers so that its customers may make their own selection of the firm to be engaged. Choice of engineering firm is customarily a prerogative of the customer. A provides a list of five engineering firms, B-F, excluding no firm because it may be blacklisted, and then confers with and gives its recommendations to Y. A recommends C, because C is the best qualified. Y then selects B, because C is blacklisted. A may comply with Y's selection of B, because the boycott-based decision is made by Y and is unilateral and specific. Since A's pre-award services are of the kind customarily provided in these situations, and since they are provided without reference to the boycott, they do not destroy the unilateral character of Y's selection. (vii) A, a U.S. aircraft manufacturer, has an order to supply a certain number of planes to boycotting country Y. In connection with the order, Y asks A to supply it with a list of qualified aircraft tire manufacturers so that Y can select the tires to be placed on the planes. This is a highly unusual request, since, in A's worldwide business operations, choice of tires is customarily made by the manufacturer, not the customer. Nonetheless, A supplies a list of tire manufacturers, B, C, D, and E. Y chooses tire manufacturer B because B is not blacklisted. Had A, as is customary, selected the tires, company C would have been chosen. C happens to be blacklisted, and A knows that C's blacklist status was the reason for Y's selection of B. A's provision of a list of tire manufacturers for Y to choose from destroys the unilateral character of Y's selection, because such a pre-selection service is not customary in A's worldwide business operations. (viii) A, a U.S. aircraft manufacturer, receives an order from U.S. company C, which is located in the United States, for the sale of aircraft to company D, a U.S. affiliate of C. D is a bona fide resident of boycotting country Y. C instructs A that “in order to avoid boycott problems,” A must use engines that are manufactured by company B, a company that is not blacklisted by Y. Engines built by B are unique in design and also bear B's trade name. Since A has reason to know that the selection is boycott-based, he must inquire of C whether the selection was in fact made by D. If C informs A that the selection was made by D, A may comply. (ix) Same as (viii), except that C initially states that the designation was unilaterally and specifically made by D. A may accept C's statement without further investigation and may comply with the selection, because C merely transmitted D's unilateral and specific selection. (x) Same as (ix), except that C informs A that it, C, has selected B on behalf of or as an agent of its affiliated company resident in the boycotting country. A may not comply with this selection, because the decision was not made by a resident of the boycotting country. (xi) A, a U.S. management consulting firm, is advising boycotting country Y on the selection of a contracting firm to construct a plant for the manufacture of agricultural chemicals. As is customary in its business, A compiles a list of potential contractors on the basis of its evaluation of the capabilities of the respective candidates to perform the job. A has knowledge that company B is blacklisted, but provides Y with the names of companies B, C, D, and E, listing them in order of their qualifications. Y instructs A to negotiate with C. A may comply with Y's instruction, because Y's selection is unilateral and specific. (xii) A, a U.S. exporter, is asked by boycotting country Y not to ship goods on carriers B, C, or D, which are owned by nationals of and are registered in country P, a country not boycotted by Y. A may comply or agree to comply with Y's request even though the selection is not specific, because A does not know or have reason to know that the request is boycott-based. (Note: In example (xii), A has violated no prohibition, because it does not know or have reason to know that Y's instruction is boycott-based. Therefore, A could not act with the requisite intent to comply with the boycott.) (xiii) A, a U.S. construction company, receives a contract to construct a hotel in boycotting country Y. As part of the contract, A is required to furnish Y with lists of qualified suppliers of various specifically identifiable items. A compiles lists of various qualified suppliers wholly without reference to the boycott, and thereafter Y instructs A to negotiate with, enter into contracts with, and arrange for delivery from each of the suppliers which Y designates. A knows that Y's choices are made on a boycott basis. A may comply with Y's selections and carry out these post-award services for Y, because Y's selections were unilateral and specific and A's pre-award services were provided without reference to Y's boycott. Examples of Boycotting Country Buyer (The factors in determining whether a United States person is a “bona fide resident” of a boycotting country are the same as in paragraph (g) of this section on “Compliance with Local Law.” See also the examples in that section.) (i) A, a U.S. exporter, is asked by B, a U.S. person who is a bona fide resident of boycotting country Y, to ship goods on U.S. carrier C. C is not blacklisted by Y, and A knows that B has chosen on a boycott basis in order to comply with Y's boycott laws. A may comply or agree to comply with B's request, because B is a bona fide resident of Y. (ii) A is a U.S. computer company whose subsidiary, B, is a bona fide resident of boycotting country Y. A receives an order from B for specific, identifiable products manufactured by company C in connection with a computer which B is installing in Y. A may comply or agree to comply with B's unilateral and specific selection, so long as the discretion was in fact exercised by B, not A. (Note: Unilateral selection transactions involving related United States persons will be scrutinized carefully to ensure that the selection was in fact made by the bona fide resident of the boycotting country.) (iii) A, a U.S. engineering firm, has chief engineer B as its resident engineer on a dam construction site in boycotting country Y. B's presence at the site is necessary in order to ensure proper supervision of the project. In order to comply with local law, B selects equipment supplier C rather than D, who is blacklisted, and directs A to purchase certain specific equipment from C for use in the project. A may comply with this unilateral selection, because the decision was made by a bona fide resident of Y. (As noted above, unilateral selections involving related United States persons will be scrutinized carefully to ensure that the selection was in fact made by the bona fide resident of the boycotting country.) (iv) B, a branch of U.S. bank A, is located in boycotting country Y. B is in need of office supplies and asks the home office in New York to make the necessary purchases. A contacts C, a U.S. company in the office supply business, and instructs C to purchase various items from certain specific companies and ship them directly to B. In order to avoid any difficulties for B with respect to Y's boycott laws, A is careful to specify only non-blacklisted companies or suppliers. C knows that that was A's purpose. C may not comply with A's instruction, because the selection of suppliers was not made by a resident of a boycotting country. (v) Same as (iv), except that A has given standing instructions to B that whenever it needs office supplies, it should specify certain suppliers designated by A. To avoid running afoul of Y's boycott laws, A's designations consist exclusively of non-blacklisted firms. A receives an order from B with the suppliers designated in accordance with A's instructions. A may not comply with B's selection, because the selection was not in fact made by a bona fide resident of the boycotting country, but by a person located in the United States. Examples of Suppliers of Services (i) A, a U.S. manufacturer, is asked by boycotting country Y to ship goods to Y on U.S. vessel B, a carrier which is not blacklisted by Y. A may comply or agree to comply with Y's request, because compliance with the unilateral and specific selection of carriers is expressly permitted under this exception. (ii) A, a U.S. exporter shipping goods ordered by C, a national of boycotting country Y, is asked by C to insure the shipment through U.S. insurer B. A may comply or agree to comply with C's request, because compliance with the unilateral and specific selection of an insurer is expressly permitted under this exception. (iii) A, a U.S. construction company, is hired by C, an agency of the government of boycotting country Y, to build a power plant in Y. C specifies that A should subcontract the foundation work to U.S. contractor B. Part of the foundation design work will be done by B in the United States. A may comply or agree to comply with Y's designation, because a necessary and not insignificant part of B's services are to be performed within the boycotting country, and such services are customarily performed on-site. (iv) A, a U.S. contractor, is engaged by boycotting country Y to build a power plant. Y specifies that U.S. architectural firm B should be retained by A to design the plant. In order to design the plant, it is essential that B's personnel visit and become familiar with the site, although the bulk of the design and drawing work will be done in the United States. A may comply or agree to comply with Y's unilateral and specific selection of architectural firm B, because a necessary and not insignificant part of B's services are to be performed within Y, and such on-site work is customarily involved in the provision of architectural services. The fact that the bulk of the actual work may be performed in the United States is irrelevant since the part to be performed within Y is necessary to B's effective performance. (v) Same as (iv), except that Y specifies that the turbine for the power plant should be designed by U.S. engineer C. It is neither customary nor necessary for C to visit the site in order to do any of his work, but C has informed A that he would probably want to visit the site in Y if he were selected for the job. A may not comply or agree to comply with Y's request, because, in the normal course of business, it is neither customary nor necessary for engineer C's services to be performed in Y. (vi) A, a U.S. aircraft manufacturer, receives a contract from boycotting country Y to manufacture jet engines for Y's use. Y specifies that the engines should be designed by U.S. industrial engineering firm B. A may not comply or agree to comply with Y's request, because, in the normal course of business, the services will not be performed in Y. (vii) U.S. company A has a contract to supply specially designed road graders to boycotting country Y. Y has instructed A that it should engage engineering firm B in the design work rather than engineering firm C, which A normally uses, because C is blacklisted. When A contacts B, B informs A that one of B's personnel customarily visits the location in which any equipment B designs is used after it is in use, in order to determine how good a design job B has done. Such visits are necessary from B's point of view to provide a check on the quality of its work, and they are necessary from Y's point of view because they make it possible for Y to discuss possible design changes should deficiencies be detected. A may not comply with Y's selection of B, because the services which B would perform in Y are an insignificant part of the total services to be performed by B. Examples of Specifically Identifiable Goods (The test of what constitutes “specifically identifiable goods” under this exception also applies to the term “specifically identifiable goods” as used in paragraph (g) of this section on “Compliance with Local Law.”) (i) A, a U.S. contractor, is constructing an apartment complex, on a turnkey basis, for boycotting country Y. Y instructs A to use only kitchen appliances manufactured by U.S. company B in completing the project. The appliances normally bear the manufacturer's name and trademark. A may comply with Y's selection of B, because Y's unilateral and specific selection is of goods identifiable as to source or origin in the normal course of business at the time of their entry into Y. (ii) Same as (i), except that Y directs A to use lumber manufactured only by U.S. company C. In the normal course of business, C neither stamps its name on the lumber nor identifies itself as the manufacturer on the packaging. In addition, normal export packaging does not identify the manufacturer. A may not comply with Y's selection, because the goods selected are not identifiable by source or origin in the normal course of business at the time of their entry into Y. (iii) B, a U.S. contractor who is a bona fide resident of boycotting country Y, is engaged in building roads. B retains the services of A, a U.S. engineering firm, to assist it in procuring construction equipment. B directs A to purchase road graders only from manufacturer C because other road grader manufacturers which A might use are blacklisted. C's road graders normally bear C's insignia. A may comply with B's selection of C, because the goods selected are identifiable by source or origin in the normal course of business at the time of their entry into Y. (iv) A, a U.S. company, manufactures computer-operated machine tools. The computers are mounted on a separate bracket on the side of the equipment and are readily identifiable by brand name imprinted on the equipment. There are five or six U.S. manufacturers of such computers which will function interchangeably to operate the machine tools manufactured by A. B, a resident of boycotting country Y, contracts to buy the machine tools manufactured by A on the condition that A incorporate, as the computer drive, a computer manufactured by U.S. company C. B's designation of C is made to avoid boycott problems which could be caused if computers manufactured by some other company were used. A may comply with B's designation of C, because the goods selected are identifiable by source or origin in the normal course of business at the time of their entry into Y. (v) A, a U.S. wholesaler of electronic equipment, receives an order from B, a U.S. manufacturer of radio equipment, who is a bona fide resident of boycotting country Y. B orders a variety of electrical components and specifies that all transistors must be purchased from company C, which is not blacklisted by Y. The transistors requested by B do not normally bear the name of the manufacturer; however, they are typically shipped in cartons, and C's name and logo appear on the cartons. A may comply with B's selection, because the goods selected by B are identifiable as to source or origin in the normal course of business at the time of their entry into Y by virtue of the containers or packaging used. (vi) A, a U.S. computer manufacturer, receives an order for a computer from B, a university in boycotting country Y. B specifies that certain integrated circuits incorporated in the computer must be supplied by U.S. electronics company C. These circuits are incorporated into the computer and are not visible without disassembling the computer. A may not comply or agree to comply with B's specific selection of these components, because they are not identifiable as to their source or origin in the normal course of business at the time of their entry into Y. (vii) A, a U.S. clothing manufacturer, receives an order for shirts from B, a retailer resident in boycotting country Y. B specifies that the shirts are to be manufactured from cotton produced by U.S. farming cooperative C. Such shirts will not identify C or the source of the cotton. A may not comply or agree to comply with B's designation, because the cotton is not identifiable as to source or origin in the normal course of business at the time of entry into Y. (viii) A, a U.S. contractor, is retained by B, a construction firm located in and wholly-owned by boycotting country Y, to assist B in procuring construction materials. B directs A to purchase a range of materials, including hardware, tools, and trucks, all of which bear the name of the manufacturer stamped on the item. In addition, B directs A to purchase steel beams manufactured by U.S. company C. The name of manufacturer C normally does not appear on the steel itself or on its export packaging. A may comply with B's selection of the hardware, tools, and trucks, because they are identifiable as to source or origin in the normal course of business at the time of entry into Y. A may not comply with B's selection of steel beams, because the goods are not identifiable as to source or origin by trade name, trademark, uniqueness or packaging at the time of their entry into Y. Example of Discrimination on Basis of Race, Religion, Sex, or National Origin (i) A, a U.S. paper manufacturer, is asked by boycotting country Y to ship goods to Y on U.S. vessel B. Y states that the reason for its choice of B is that, unlike U.S. vessel C, B is not owned by persons of a particular faith. A may not comply or agree to comply with Y's request, because A has reason to know that the purpose of the selection is to effect religious discrimination against a United States person. The following examples are intended to give guidance in determining what constitutes a unilateral selection and the circumstances in which compliance with such a selection is permissible. They are illustrative, not comprehensive. (i) A, a U.S. manufacturer of road-grading equipment, is asked by boycotting country Y to ship goods to Y on U.S. vessel B, a carrier which is not blacklisted by Y. A knows or has reason to know that Y's selection of B is boycott-based. A may comply with Y's request, or may agree to comply as a condition of the contract, because the selection is specific and unilateral. (ii) A, a U.S. contractor building an industrial facility in boycotting country Y is asked by B, a resident of Y, to use C as the supplier of air conditioning equipment to be used in the facility. C is not blacklisted by country Y. A knows or has reason to know that B's request is boycott-based. A may comply with B's request, or may agree to comply as a condition of the contract, because the selection of C is specific and unilateral. (iii) A, a U.S. manufacturer of automotive equipment, is asked by boycotting country Y not to ship its goods to Y on U.S. carriers, B, C, or D. Carriers B, C, and D are blacklisted by boycotting country Y. A knows or has reason to know that Y's request is boycott-based. A may not comply or agree to comply with Y's request, because no specific selection of any particular carrier has been made. (iv) A, a U.S. exporter shipping goods ordered by boycotting country Y, is provided by Y with a list of eligible U.S. insurers from which A may choose in insuring the shipment of its goods. A knows or has reason to know that the list was compiled on a boycott basis. A may not comply or agree to comply with Y's request that A choose from among the eligible insurers, because no specific selection of any particular insurer has been made. (v) A, a U.S. aircraft manufacturer, is negotiating to sell aircraft to boycotting country Y. During the negotiations, Y asks A to identify the company which normally manufactures the engines for the aircraft. A responds that they are normally manufactured by U.S. engine manufacturer B. B is blacklisted by Y. In making the purchase, Y specifies that the engines for the aircraft should be supplied by U.S. engine manufacturer C. A may comply or agree to comply with Y's selection of C, because Y's selection is unilateral and specific. (vi) A, a U.S. construction firm, is retained by an agency of boycotting country Y to build a pipeline. Y requests A to suggest qualified engineering firms to be used on-site in the construction of the pipeline. It is customary for A, regardless of where it conducts its operations, to identify qualified engineering firms to its customers so that its customers may make their own selection of the firm to be engaged. Choice of engineering firm is customarily a prerogative of the customer. A provides a list of five engineering firms, B-F, excluding no firm because it may be blacklisted, and then confers with and gives its recommendations to Y. A recommends C, because C is the best qualified. Y then selects B, because C is blacklisted. A may comply with Y's selection of B, because the boycott-based decision is made by Y and is unilateral and specific. Since A's pre-award services are of the kind customarily provided in these situations, and since they are provided without reference to the boycott, they do not destroy the unilateral character of Y's selection. (vii) A, a U.S. aircraft manufacturer, has an order to supply a certain number of planes to boycotting country Y. In connection with the order, Y asks A to supply it with a list of qualified aircraft tire manufacturers so that Y can select the tires to be placed on the planes. This is a highly unusual request, since, in A's worldwide business operations, choice of tires is customarily made by the manufacturer, not the customer. Nonetheless, A supplies a list of tire manufacturers, B, C, D, and E. Y chooses tire manufacturer B because B is not blacklisted. Had A, as is customary, selected the tires, company C would have been chosen. C happens to be blacklisted, and A knows that C's blacklist status was the reason for Y's selection of B. A's provision of a list of tire manufacturers for Y to choose from destroys the unilateral character of Y's selection, because such a pre-selection service is not customary in A's worldwide business operations. (viii) A, a U.S. aircraft manufacturer, receives an order from U.S. company C, which is located in the United States, for the sale of aircraft to company D, a U.S. affiliate of C. D is a bona fide resident of boycotting country Y. C instructs A that “in order to avoid boycott problems,” A must use engines that are manufactured by company B, a company that is not blacklisted by Y. Engines built by B are unique in design and also bear B's trade name. Since A has reason to know that the selection is boycott-based, he must inquire of C whether the selection was in fact made by D. If C informs A that the selection was made by D, A may comply. (ix) Same as (viii), except that C initially states that the designation was unilaterally and specifically made by D. A may accept C's statement without further investigation and may comply with the selection, because C merely transmitted D's unilateral and specific selection. (x) Same as (ix), except that C informs A that it, C, has selected B on behalf of or as an agent of its affiliated company resident in the boycotting country. A may not comply with this selection, because the decision was not made by a resident of the boycotting country. (xi) A, a U.S. management consulting firm, is advising boycotting country Y on the selection of a contracting firm to construct a plant for the manufacture of agricultural chemicals. As is customary in its business, A compiles a list of potential contractors on the basis of its evaluation of the capabilities of the respective candidates to perform the job. A has knowledge that company B is blacklisted, but provides Y with the names of companies B, C, D, and E, listing them in order of their qualifications. Y instructs A to negotiate with C. A may comply with Y's instruction, because Y's selection is unilateral and specific. (xii) A, a U.S. exporter, is asked by boycotting country Y not to ship goods on carriers B, C, or D, which are owned by nationals of and are registered in country P, a country not boycotted by Y. A may comply or agree to comply with Y's request even though the selection is not specific, because A does not know or have reason to know that the request is boycott-based. In example (xii), A has violated no prohibition, because it does not know or have reason to know that Y's instruction is boycott-based. Therefore, A could not act with the requisite intent to comply with the boycott.) (xiii) A, a U.S. construction company, receives a contract to construct a hotel in boycotting country Y. As part of the contract, A is required to furnish Y with lists of qualified suppliers of various specifically identifiable items. A compiles lists of various qualified suppliers wholly without reference to the boycott, and thereafter Y instructs A to negotiate with, enter into contracts with, and arrange for delivery from each of the suppliers which Y designates. A knows that Y's choices are made on a boycott basis. A may comply with Y's selections and carry out these post-award services for Y, because Y's selections were unilateral and specific and A's pre-award services were provided without reference to Y's boycott. (The factors in determining whether a United States person is a “bona fide resident” of a boycotting country are the same as in paragraph (g) of this section on “Compliance with Local Law.” See also the examples in that section.) (i) A, a U.S. exporter, is asked by B, a U.S. person who is a bona fide resident of boycotting country Y, to ship goods on U.S. carrier C. C is not blacklisted by Y, and A knows that B has chosen on a boycott basis in order to comply with Y's boycott laws. A may comply or agree to comply with B's request, because B is a bona fide resident of Y. (ii) A is a U.S. computer company whose subsidiary, B, is a bona fide resident of boycotting country Y. A receives an order from B for specific, identifiable products manufactured by company C in connection with a computer which B is installing in Y. A may comply or agree to comply with B's unilateral and specific selection, so long as the discretion was in fact exercised by B, not A. Unilateral selection transactions involving related United States persons will be scrutinized carefully to ensure that the selection was in fact made by the bona fide resident of the boycotting country.) (iii) A, a U.S. engineering firm, has chief engineer B as its resident engineer on a dam construction site in boycotting country Y. B's presence at the site is necessary in order to ensure proper supervision of the project. In order to comply with local law, B selects equipment supplier C rather than D, who is blacklisted, and directs A to purchase certain specific equipment from C for use in the project. A may comply with this unilateral selection, because the decision was made by a bona fide resident of Y. (As noted above, unilateral selections involving related United States persons will be scrutinized carefully to ensure that the selection was in fact made by the bona fide resident of the boycotting country.) (iv) B, a branch of U.S. bank A, is located in boycotting country Y. B is in need of office supplies and asks the home office in New York to make the necessary purchases. A contacts C, a U.S. company in the office supply business, and instructs C to purchase various items from certain specific companies and ship them directly to B. In order to avoid any difficulties for B with respect to Y's boycott laws, A is careful to specify only non-blacklisted companies or suppliers. C knows that that was A's purpose. C may not comply with A's instruction, because the selection of suppliers was not made by a resident of a boycotting country. (v) Same as (iv), except that A has given standing instructions to B that whenever it needs office supplies, it should specify certain suppliers designated by A. To avoid running afoul of Y's boycott laws, A's designations consist exclusively of non-blacklisted firms. A receives an order from B with the suppliers designated in accordance with A's instructions. A may not comply with B's selection, because the selection was not in fact made by a bona fide resident of the boycotting country, but by a person located in the United States. (i) A, a U.S. manufacturer, is asked by boycotting country Y to ship goods to Y on U.S. vessel B, a carrier which is not blacklisted by Y. A may comply or agree to comply with Y's request, because compliance with the unilateral and specific selection of carriers is expressly permitted under this exception. (ii) A, a U.S. exporter shipping goods ordered by C, a national of boycotting country Y, is asked by C to insure the shipment through U.S. insurer B. A may comply or agree to comply with C's request, because compliance with the unilateral and specific selection of an insurer is expressly permitted under this exception. (iii) A, a U.S. construction company, is hired by C, an agency of the government of boycotting country Y, to build a power plant in Y. C specifies that A should subcontract the foundation work to U.S. contractor B. Part of the foundation design work will be done by B in the United States. A may comply or agree to comply with Y's designation, because a necessary and not insignificant part of B's services are to be performed within the boycotting country, and such services are customarily performed on-site. (iv) A, a U.S. contractor, is engaged by boycotting country Y to build a power plant. Y specifies that U.S. architectural firm B should be retained by A to design the plant. In order to design the plant, it is essential that B's personnel visit and become familiar with the site, although the bulk of the design and drawing work will be done in the United States. A may comply or agree to comply with Y's unilateral and specific selection of architectural firm B, because a necessary and not insignificant part of B's services are to be performed within Y, and such on-site work is customarily involved in the provision of architectural services. The fact that the bulk of the actual work may be performed in the United States is irrelevant since the part to be performed within Y is necessary to B's effective performance. (v) Same as (iv), except that Y specifies that the turbine for the power plant should be designed by U.S. engineer C. It is neither customary nor necessary for C to visit the site in order to do any of his work, but C has informed A that he would probably want to visit the site in Y if he were selected for the job. A may not comply or agree to comply with Y's request, because, in the normal course of business, it is neither customary nor necessary for engineer C's services to be performed in Y. (vi) A, a U.S. aircraft manufacturer, receives a contract from boycotting country Y to manufacture jet engines for Y's use. Y specifies that the engines should be designed by U.S. industrial engineering firm B. A may not comply or agree to comply with Y's request, because, in the normal course of business, the services will not be performed in Y. (vii) U.S. company A has a contract to supply specially designed road graders to boycotting country Y. Y has instructed A that it should engage engineering firm B in the design work rather than engineering firm C, which A normally uses, because C is blacklisted. When A contacts B, B informs A that one of B's personnel customarily visits the location in which any equipment B designs is used after it is in use, in order to determine how good a design job B has done. Such visits are necessary from B's point of view to provide a check on the quality of its work, and they are necessary from Y's point of view because they make it possible for Y to discuss possible design changes should deficiencies be detected. A may not comply with Y's selection of B, because the services which B would perform in Y are an insignificant part of the total services to be performed by B. (The test of what constitutes “specifically identifiable goods” under this exception also applies to the term “specifically identifiable goods” as used in paragraph (g) of this section on “Compliance with Local Law.”) (i) A, a U.S. contractor, is constructing an apartment complex, on a turnkey basis, for boycotting country Y. Y instructs A to use only kitchen appliances manufactured by U.S. company B in completing the project. The appliances normally bear the manufacturer's name and trademark. A may comply with Y's selection of B, because Y's unilateral and specific selection is of goods identifiable as to source or origin in the normal course of business at the time of their entry into Y. (ii) Same as (i), except that Y directs A to use lumber manufactured only by U.S. company C. In the normal course of business, C neither stamps its name on the lumber nor identifies itself as the manufacturer on the packaging. In addition, normal export packaging does not identify the manufacturer. A may not comply with Y's selection, because the goods selected are not identifiable by source or origin in the normal course of business at the time of their entry into Y. (iii) B, a U.S. contractor who is a bona fide resident of boycotting country Y, is engaged in building roads. B retains the services of A, a U.S. engineering firm, to assist it in procuring construction equipment. B directs A to purchase road graders only from manufacturer C because other road grader manufacturers which A might use are blacklisted. C's road graders normally bear C's insignia. A may comply with B's selection of C, because the goods selected are identifiable by source or origin in the normal course of business at the time of their entry into Y. (iv) A, a U.S. company, manufactures computer-operated machine tools. The computers are mounted on a separate bracket on the side of the equipment and are readily identifiable by brand name imprinted on the equipment. There are five or six U.S. manufacturers of such computers which will function interchangeably to operate the machine tools manufactured by A. B, a resident of boycotting country Y, contracts to buy the machine tools manufactured by A on the condition that A incorporate, as the computer drive, a computer manufactured by U.S. company C. B's designation of C is made to avoid boycott problems which could be caused if computers manufactured by some other company were used. A may comply with B's designation of C, because the goods selected are identifiable by source or origin in the normal course of business at the time of their entry into Y. (v) A, a U.S. wholesaler of electronic equipment, receives an order from B, a U.S. manufacturer of radio equipment, who is a bona fide resident of boycotting country Y. B orders a variety of electrical components and specifies that all transistors must be purchased from company C, which is not blacklisted by Y. The transistors requested by B do not normally bear the name of the manufacturer; however, they are typically shipped in cartons, and C's name and logo appear on the cartons. A may comply with B's selection, because the goods selected by B are identifiable as to source or origin in the normal course of business at the time of their entry into Y by virtue of the containers or packaging used. (vi) A, a U.S. computer manufacturer, receives an order for a computer from B, a university in boycotting country Y. B specifies that certain integrated circuits incorporated in the computer must be supplied by U.S. electronics company C. These circuits are incorporated into the computer and are not visible without disassembling the computer. A may not comply or agree to comply with B's specific selection of these components, because they are not identifiable as to their source or origin in the normal course of business at the time of their entry into Y. (vii) A, a U.S. clothing manufacturer, receives an order for shirts from B, a retailer resident in boycotting country Y. B specifies that the shirts are to be manufactured from cotton produced by U.S. farming cooperative C. Such shirts will not identify C or the source of the cotton. A may not comply or agree to comply with B's designation, because the cotton is not identifiable as to source or origin in the normal course of business at the time of entry into Y. (viii) A, a U.S. contractor, is retained by B, a construction firm located in and wholly-owned by boycotting country Y, to assist B in procuring construction materials. B directs A to purchase a range of materials, including hardware, tools, and trucks, all of which bear the name of the manufacturer stamped on the item. In addition, B directs A to purchase steel beams manufactured by U.S. company C. The name of manufacturer C normally does not appear on the steel itself or on its export packaging. A may comply with B's selection of the hardware, tools, and trucks, because they are identifiable as to source or origin in the normal course of business at the time of entry into Y. A may not comply with B's selection of steel beams, because the goods are not identifiable as to source or origin by trade name, trademark, uniqueness or packaging at the time of their entry into Y. (i) A, a U.S. paper manufacturer, is asked by boycotting country Y to ship goods to Y on U.S. vessel B. Y states that the reason for its choice of B is that, unlike U.S. vessel C, B is not owned by persons of a particular faith. A may not comply or agree to comply with Y's request, because A has reason to know that the purpose of the selection is to effect religious discrimination against a United States person. (e) Shipment and transshipment of exports pursuant to a boycotting country's requirements. (1) A United States person may comply or agree to comply with the export requirements of a boycotting country with respect to shipments or transshipments of exports to: (i) A boycotted country; (ii) Any business concern of a boycotted country; (iii) Any business concern organized under the laws of a boycotted country; or (iv) Any national or resident of a boycotted country. (2) This exception permits compliance with restrictions which a boycotting country may place on direct exports to a boycotted country; on indirect exports to a boycotted country (i.e., those that pass via third parties); and on exports to residents, nationals, or business concerns of, or organized under the laws of, a boycotted country, including those located in third countries. (3) This exception also permits compliance with restrictions which a boycotting country may place on the route of export shipments when the restrictions are reasonably related to preventing the export shipments from coming into contact with or under the jurisdiction of the boycotted country. This exception applies whether a boycotting country or the vendor of the shipment: (i) Explicitly states that the shipment should not pass through the boycotted country enroute to its final destination; or (ii) Affirmatively describes a route of shipment that does not include the boycotted country. (4) A United States person may not, under this exception, refuse on an across-the-board basis to do business with a boycotted country or a national or resident of a boycotted country. Examples of Compliance With a Boycotting Country's Requirements Regarding Shipment or Transshipment of Exports The following examples are intended to give guidance in determining the circumstances in which compliance with the export requirements of a boycotting country is permissible. They are illustrative, not comprehensive. (i) A, a U.S. petroleum company, exports petroleum products to 20 countries, including the United States, from boycotting country Y. Country Y's export regulations require that products not be exported from Y to boycotted country X. A may agree to and comply with Y's regulations with respect to the export of goods from Y to X. (ii) Same as (i), except that Y's export regulations require that goods not be exported from boycotting country Y to any business concern organized under the laws of boycotted country X. A may agree to and comply with Y's regulations with respect to the export of goods from Y to a business concern organized under the laws of X, even if such concern is located in a country not involved in Y's boycott of X. (iii) B, the operator of a storage facility in country M, contracts with A, a U.S. carrier, for the shipment of certain goods manufactured in boycotting country Y. A's contract with B contains a provision stating that the goods to be transported may not be shipped or transshipped to boycotted country X. B informs A that this provision is a requirement of C, the manufacturer of goods who is a resident of boycotting country Y. Country M is not boycotted by Y. A may agree to and comply with this provision, because such a provision is required by the export regulations of boycotting country Y in order to prevent shipment of Y-origin goods to a country boycotted by Y. (iv) A, a U.S. petroleum refiner located in the United States, purchases crude oil from boycotting country Y. A has a branch operation in boycotted country X. Y requires, as a condition of sale, that A agree not to ship or transship the crude oil or products refined in Y to A's branch in X. A may agree to and comply with these requirements, because they are export requirements of Y designed to prevent Y-origin products from being shipped to a boycotted country. (v) A, a U.S. company, has a petrochemical plant in boycotting country Y. As a condition of securing an export license from Y, A must agree that it will not ship or permit transshipment of any of its output from the plant in Y to any companies which Y lists as being owned by nationals of boycotted country X. A may agree to this condition, because it is a restriction designed to prevent Y-origin products from being exported to a business concern of boycotted country X or to nationals of boycotted country X. (vi) Same as (v), except that the condition imposed on A is that Y-origin goods may not be shipped or permitted to be transshipped to any companies which Y lists as being owned by persons whose national origin is X. A may not agree to this condition, because it is a restriction designed to prevent Y-origin goods from being exported to persons of a particular national origin rather than to residents or nationals of a particular boycotted country. (vii) A, a U.S. petroleum company, exports petroleum products to 20 countries, including the United States, from boycotting country Y. Y requires, as a condition of sale, that A not ship the products to be exported from Y to or through boycotted country X. A may agree to and comply with this requirement because it is an export requirement of Y designed to prevent Y-origin products from coming into contact with or under the jurisdiction of a boycotted country. (viii) Same as (vii), except that boycotting country Y's export regulations require that products to be exported from Y not pass through a port of boycotted country X. A may agree to and comply with Y's regulations prohibiting Y-origin exports from passing through a port at boycotted country X, because they are export requirements of Y designed to prevent Y-origin products from coming into contact with or under the jurisdiction of a boycotted country. (ix) Same as (vii), except that Y's export regulations require that A not transship the exported products “in or at” boycotted country X. A may agree to and comply with Y's regulations with respect to the transshipment of goods “in or at” X, because they are export requirements of Y designed to prevent Y-origin products from coming into contact with or under the jurisdiction of a boycotted country. The following examples are intended to give guidance in determining the circumstances in which compliance with the export requirements of a boycotting country is permissible. They are illustrative, not comprehensive. (i) A, a U.S. petroleum company, exports petroleum products to 20 countries, including the United States, from boycotting country Y. Country Y's export regulations require that products not be exported from Y to boycotted country X. A may agree to and comply with Y's regulations with respect to the export of goods from Y to X. (ii) Same as (i), except that Y's export regulations require that goods not be exported from boycotting country Y to any business concern organized under the laws of boycotted country X. A may agree to and comply with Y's regulations with respect to the export of goods from Y to a business concern organized under the laws of X, even if such concern is located in a country not involved in Y's boycott of X. (iii) B, the operator of a storage facility in country M, contracts with A, a U.S. carrier, for the shipment of certain goods manufactured in boycotting country Y. A's contract with B contains a provision stating that the goods to be transported may not be shipped or transshipped to boycotted country X. B informs A that this provision is a requirement of C, the manufacturer of goods who is a resident of boycotting country Y. Country M is not boycotted by Y. A may agree to and comply with this provision, because such a provision is required by the export regulations of boycotting country Y in order to prevent shipment of Y-origin goods to a country boycotted by Y. (iv) A, a U.S. petroleum refiner located in the United States, purchases crude oil from boycotting country Y. A has a branch operation in boycotted country X. Y requires, as a condition of sale, that A agree not to ship or transship the crude oil or products refined in Y to A's branch in X. A may agree to and comply with these requirements, because they are export requirements of Y designed to prevent Y-origin products from being shipped to a boycotted country. (v) A, a U.S. company, has a petrochemical plant in boycotting country Y. As a condition of securing an export license from Y, A must agree that it will not ship or permit transshipment of any of its output from the plant in Y to any companies which Y lists as being owned by nationals of boycotted country X. A may agree to this condition, because it is a restriction designed to prevent Y-origin products from being exported to a business concern of boycotted country X or to nationals of boycotted country X. (vi) Same as (v), except that the condition imposed on A is that Y-origin goods may not be shipped or permitted to be transshipped to any companies which Y lists as being owned by persons whose national origin is X. A may not agree to this condition, because it is a restriction designed to prevent Y-origin goods from being exported to persons of a particular national origin rather than to residents or nationals of a particular boycotted country. (vii) A, a U.S. petroleum company, exports petroleum products to 20 countries, including the United States, from boycotting country Y. Y requires, as a condition of sale, that A not ship the products to be exported from Y to or through boycotted country X. A may agree to and comply with this requirement because it is an export requirement of Y designed to prevent Y-origin products from coming into contact with or under the jurisdiction of a boycotted country. (viii) Same as (vii), except that boycotting country Y's export regulations require that products to be exported from Y not pass through a port of boycotted country X. A may agree to and comply with Y's regulations prohibiting Y-origin exports from passing through a port at boycotted country X, because they are export requirements of Y designed to prevent Y-origin products from coming into contact with or under the jurisdiction of a boycotted country. (ix) Same as (vii), except that Y's export regulations require that A not transship the exported products “in or at” boycotted country X. A may agree to and comply with Y's regulations with respect to the transshipment of goods “in or at” X, because they are export requirements of Y designed to prevent Y-origin products from coming into contact with or under the jurisdiction of a boycotted country. (f) Immigration, passport, visa, or employment requirements of a boycotting country. (1) A United States individual may comply or agree to comply with the immigration, passport, visa, or employment requirements of a boycotting country, and with requests for information from a boycotting country made to ascertain whether such individual meets requirements for employment within the boycotting country, provided that he furnishes information only about himself or a member of his family, and not about any other United States individual, including his employees, employers, or co-workers. (2) For purposes of this section, a United States individual means a person who is a resident or national of the United States. Family means immediate family members, including parents, siblings, spouse, children, and other dependents living in the individual's home. (3) A United States person may not furnish information about its employees or executives, but may allow any individual to respond on his own to any request for information relating to immigration, passport, visa, or employment requirements. A United States person may also perform any ministerial acts to expedite processing of applications by individuals. These include informing employees of boycotting country visa requirements at an appropriate time; typing, translation, messenger and similar services; and assisting in or arranging for the expeditious processing of applications. All such actions must be undertaken on a non-discriminatory basis. (4) A United States person may proceed with a project in a boycotting country even if certain of its employees or other prospective participants in a transaction are denied entry for boycott reasons. But no employees or other participants may be selected in advance in a manner designed to comply with a boycott. Examples of Compliance With Immigration, Passport, Visa, or Employment Requirements of a Boycotting Country The following examples are intended to give guidance in determining the circumstances in which compliance with immigration, passport, visa, or employment requirements is permissible. They are illustrative, not comprehensive. (i) A, a U.S. individual employed by B, a U.S. manufacturer of sporting goods with a plant in boycotting country Y, wishes to obtain a work visa so that he may be assigned to the plant in Y. Country Y's immigration laws specify that anyone wishing to enter the country or obtain a visa to work in the country must supply information about his religion. This information is required for boycott purposes. A may furnish such information, because it is required by Y's immigration laws. (ii) Same as (i), except that A is asked to supply such information about other employees of B. A may not supply this information, because it is not information about himself or his family. (iii) A, a U.S. building contractor, has been awarded a construction contract to be performed in boycotting country Y. Y's immigration laws require that individuals applying for visas must indicate race, religion, and place of birth. The information is sought for boycott purposes. To avoid repeated rejections of applications for work visas by A's employees, A desires to furnish to country Y a list of its prospective and current employees and required information about each so that Y can make an initial screening. A may not furnish such a list, because A would be furnishing information about the race, religion, and national origin of its employees. (iv) Same as (iii), except that A selects for work on the project those of its current employees whom it believes will be granted work visas from boycotting country Y. A may not make a selection from among its employees in a manner designed to comply with the boycott-based visa requirements of Y, but must allow all eligible employees to apply for visas. A may later substitute an employee who obtains the necessary visa for one who has had his application rejected. (v) Same as (iii), except that A selects employees for the project and then allows each employee individually to apply for his own visa. Two employees' applications are rejected, and A then substitutes two other employees who, in turn, submit their own visa applications. A may take such action, because in so doing A is not acting in contravention of any prohibition of this part. (vi) Same as (v), except that A arranges for the translation, typing and processing of its employees' applications, and transmits all the applications to the consulate of boycotting country Y. A may take such ministerial actions, because in so doing A is not itself furnishing information with respect to race, religion, sex, or national origin, but is merely transmitting information furnished by its individual employees. (vii) A, a U.S. contractor, selects U.S. subcontractor B to perform certain engineering services in connection with A's project in boycotting country Y. The work visa application submitted by the employee whom B has proposed as chief engineer of this project is rejected by Y because his national origin is of boycotted country X. Subcontractor B thereupon withdraws. A may continue with the project and select another subcontractor, because A is not acting in contravention of any prohibition of this part. The following examples are intended to give guidance in determining the circumstances in which compliance with immigration, passport, visa, or employment requirements is permissible. They are illustrative, not comprehensive. (i) A, a U.S. individual employed by B, a U.S. manufacturer of sporting goods with a plant in boycotting country Y, wishes to obtain a work visa so that he may be assigned to the plant in Y. Country Y's immigration laws specify that anyone wishing to enter the country or obtain a visa to work in the country must supply information about his religion. This information is required for boycott purposes. A may furnish such information, because it is required by Y's immigration laws. (ii) Same as (i), except that A is asked to supply such information about other employees of B. A may not supply this information, because it is not information about himself or his family. (iii) A, a U.S. building contractor, has been awarded a construction contract to be performed in boycotting country Y. Y's immigration laws require that individuals applying for visas must indicate race, religion, and place of birth. The information is sought for boycott purposes. To avoid repeated rejections of applications for work visas by A's employees, A desires to furnish to country Y a list of its prospective and current employees and required information about each so that Y can make an initial screening. A may not furnish such a list, because A would be furnishing information about the race, religion, and national origin of its employees. (iv) Same as (iii), except that A selects for work on the project those of its current employees whom it believes will be granted work visas from boycotting country Y. A may not make a selection from among its employees in a manner designed to comply with the boycott-based visa requirements of Y, but must allow all eligible employees to apply for visas. A may later substitute an employee who obtains the necessary visa for one who has had his application rejected. (v) Same as (iii), except that A selects employees for the project and then allows each employee individually to apply for his own visa. Two employees' applications are rejected, and A then substitutes two other employees who, in turn, submit their own visa applications. A may take such action, because in so doing A is not acting in contravention of any prohibition of this part. (vi) Same as (v), except that A arranges for the translation, typing and processing of its employees' applications, and transmits all the applications to the consulate of boycotting country Y. A may take such ministerial actions, because in so doing A is not itself furnishing information with respect to race, religion, sex, or national origin, but is merely transmitting information furnished by its individual employees. (vii) A, a U.S. contractor, selects U.S. subcontractor B to perform certain engineering services in connection with A's project in boycotting country Y. The work visa application submitted by the employee whom B has proposed as chief engineer of this project is rejected by Y because his national origin is of boycotted country X. Subcontractor B thereupon withdraws. A may continue with the project and select another subcontractor, because A is not acting in contravention of any prohibition of this part. (g) Compliance with local law. (1) This exception contains two parts. The first covers compliance with local law with respect to a United States person's activities exclusively within a foreign country; the second covers compliance with local import laws by United States persons resident in a foreign country. Under both parts of this exception, local laws are laws of the host country, whether derived from statutes, regulations, decrees, or other official sources having the effect of law in the host country. This exception is not available for compliance with presumed policies or understandings of policies unless those policies are reflected in official sources having the effect of law. (2) Both parts of this exception apply only to United States persons resident in a foreign country. For purposes of this exception, a United States person will be considered to be a resident of a foreign country only if he is a bona fide resident. A United States person may be a bona fide resident of a foreign country even if such person's residency is temporary. (3)(i) Factors that will be considered in determining whether a United States person is a bona fide resident of a foreign country include: (A) Physical presence in the country; (B) Whether residence is needed for legitimate business reasons; (C) Continuity of the residency; (D) Intent to maintain the residency; (E) Prior residence in the country; (F) Size and nature of presence in the country; (G) Whether the person is registered to do business or incorporated in the country; (H) Whether the person has a valid work visa; and (I) Whether the person has a similar presence in both boycotting and non-boycotting foreign countries in connection with similar business activities. (ii) No one of the factors in paragraph (g)(3) of this section is dispositive. All the circumstances involved will be closely examined to ascertain whether there is, in fact, bona fide residency. Residency established solely for purposes of avoidance of the application of this part, unrelated to legitimate business needs, does not constitute bona fide residency. Examples of Bona Fide Residency The following examples are intended to give guidance in determining the circumstances in which a United States person may be a bona fide resident of a foreign country. For purposes of illustration, each example discusses only one or two factors, instead of all relevant factors. They are illustrative, not comprehensive. (i) A, a U.S. radio manufacturer located in the United States, receives a tender to bid on a contract to supply radios for a hotel to be built in boycotting country Y. After examining the proposal, A sends a bid from its New York office to Y. A is not a resident of Y, because it is not physically present in Y. (ii) Same as (i), except that after receiving the tender, A sends its sales representative to Y. A does not usually have sales representatives in countries when it bids from the United States, and this particular person's presence in Y is not necessary to enable A to make the bid. A is not a bona fide resident of Y, because it has no legitimate business reasons for having its sales representative resident in Y. (iii) A, a U.S. bank, wishes to establish a branch office in boycotting country Y. In pursuit of that objective, A's personnel visit Y to make the necessary arrangements. A intends to establish a permanent branch office in Y after the necessary arrangements are made. A's personnel in Y are not bona fide residents of Y, because A does not yet have a permanent business operation in Y. (iv) Same as (iii), except A's personnel are required by Y's laws to furnish certain non-discriminatory boycott information in order to establish a branch in Y. In these limited circumstances, A's personnel may furnish the non-discriminatory boycott information necessary to establish residency to the same extent a U.S. person who is a bona fide resident in that country could. If this information could not be furnished in such limited circumstances, the exception would be available only to firms resident in a boycotting country before January 18, 1978. (v) A, a U.S. construction company, receives an invitation to build a power plant in boycotting country Y. After receipt of the invitation, A's personnel visit Y in order to survey the site and make necessary analyses in preparation for submitting a bid. The invitation requires that otherwise prohibited boycott information be furnished with the bid. A's personnel in Y are not bona fide residents of Y, because A has no permanent business operation in Y. Therefore, A's personnel may not furnish the prohibited information. (vi) Same as (v), except that A is considering establishing an office in boycotting country Y. A's personnel visit Y in order to register A to do business in that country. A intends to establish ongoing construction operations in Y. A's personnel are required by Y's laws to furnish certain non-discriminatory boycott information in order to register A to do business or incorporate a subsidiary in Y. In these limited circumstances, A's personnel may furnish non-discriminatory boycott information necessary to establish residency to the same extent a U.S. person who is a bona fide resident in that country could. If this information could not be furnished in such limited circumstances, the exception would be available only to firms resident in a boycotting country before January 18, 1978. (vii) A, a subsidiary of U.S. oil company B, is located in boycotting country Y. A has been engaged in oil explorations in Y for a number of years. A is a bona fide resident of Y, because of its pre-existing continuous presence in Y for legitimate business reasons. (viii) Same as (vii), except that A has just been established in Y and has not yet begun operations. A is a bona fide resident of Y, because it is present in Y for legitimate business reasons and it intends to reside continuously. (ix) U.S. company A is a manufacturer of prefabricated homes. A builds a plant in boycotting country Y for purposes of assembling components made by A in the United States and shipped to Y. A's personnel in Y are bona fide residents of Y, because A's plant in Y is established for legitimate business reasons, and it intends to reside continuously. (x) U.S. company A has its principal place of business in the United States. A's sales agent visits boycotting country Y from time to time for purposes of soliciting orders. A's sales agent is not a bona fide resident of Y, because such periodic visits to Y are insufficient to establish a bona fide residency. (xi) A, a branch office of U.S. construction company B, is located in boycotting country Y. The branch office has been in existence for a number of years and has been performing various management services in connection with B's construction operations in Y. A is a bona fide resident of Y, because of its longstanding presence in Y and its conduct of ongoing operations in Y. (xii) U.S. construction company A has never done any business in boycotting country Y. It is awarded a contract to construct a hospital in Y, and preparatory to beginning construction, sends its personnel to Y to set up operations. A's personnel are bona fide residents of Y, because they are present in Y for the purposes of carrying out A's legitimate business purposes; they intend to reside continuously; and residency is necessary to conduct their business. (xiii) U.S. company A manufactures furniture. All its sales in foreign countries are conducted from its offices in the United States. From time to time A has considered opening sales offices abroad, but it has concluded that it is more efficient to conduct sales operations from the United States. Shortly after the effective date of this part, A sends a sales representative to boycotting country Y to open an office in and solicit orders from Y. It is more costly to conduct operations from that office than to sell directly from the United States, but A believes that if it establishes a residence in Y, it will be in a better position to avoid conflicts with U.S. law in its sales to Y. A's sales representative is not a bona fide resident of Y, because the residency was established to avoid the application of this part and not for legitimate business reasons. (xiv) Same as (xiii), except that it is in fact more efficient to have a sales office in Y. In fact, without a sales office in Y, A would find it difficult to explore business opportunities in Y. A is aware, however, that residency in Y would permit its sales representative to comply with Y's boycott laws. A's sales representative is a bona fide resident of Y, because A has a legitimate business reason for establishing a sales office in Y. (xv) U.S. company B is a computer manufacturer. B sells computers and related programming services tailored to the needs of individual clients. Because of the complex nature of the product, B must have sales representatives in any country where sales are made. B has a sales representative, A, in boycotting country Y. A spends two months of the year in Y, and the rest of the year in other countries. B has a permanent sales office from which A operates while in Y, and the sales office is stocked with brochures and other sales materials. A is a bona fide resident of Y, because his presence in Y is necessary to carry out B's legitimate business purposes; B maintains a permanent office in Y; and B intends to continue doing business in Y in the future. (xvi) A, a U.S. construction engineering company, is engaged by B, a U.S. general contracting company, to provide services in connection with B's contract to construct a hospital complex in boycotting country Y. In order to perform those services, A's engineers set up a temporary office in a trailer on the construction site in Y. A's work is expected to be completed within six months. A's personnel in Y are bona fide residents of Y, because A's on-site office is necessary to the performance of its services for B, and because A's personnel are continuously there. (xvii) A, a U.S. company, sends one of its representatives to boycotting country Y to explore new sales possibilities for its line of transistor radios. After spending several weeks in Y, A's representative rents a post office box in Y, to which all persons interested in A's products are directed to make inquiry. A is not a bona fide resident of Y, because rental of a post office box is not a sufficient presence in Y to constitute residency. (xviii) A, a U.S. computer company, has a patent and trademark registered in the United States. In order to obtain registration of its patent and trademark in boycotting country Y, A is required to furnish certain non-discriminatory boycott information. A may not furnish the information, because A is not a bona fide resident of Y. The following examples are intended to give guidance in determining the circumstances in which a United States person may be a bona fide resident of a foreign country. For purposes of illustration, each example discusses only one or two factors, instead of all relevant factors. They are illustrative, not comprehensive. (i) A, a U.S. radio manufacturer located in the United States, receives a tender to bid on a contract to supply radios for a hotel to be built in boycotting country Y. After examining the proposal, A sends a bid from its New York office to Y. A is not a resident of Y, because it is not physically present in Y. (ii) Same as (i), except that after receiving the tender, A sends its sales representative to Y. A does not usually have sales representatives in countries when it bids from the United States, and this particular person's presence in Y is not necessary to enable A to make the bid. A is not a bona fide resident of Y, because it has no legitimate business reasons for having its sales representative resident in Y. (iii) A, a U.S. bank, wishes to establish a branch office in boycotting country Y. In pursuit of that objective, A's personnel visit Y to make the necessary arrangements. A intends to establish a permanent branch office in Y after the necessary arrangements are made. A's personnel in Y are not bona fide residents of Y, because A does not yet have a permanent business operation in Y. (iv) Same as (iii), except A's personnel are required by Y's laws to furnish certain non-discriminatory boycott information in order to establish a branch in Y. In these limited circumstances, A's personnel may furnish the non-discriminatory boycott information necessary to establish residency to the same extent a U.S. person who is a bona fide resident in that country could. If this information could not be furnished in such limited circumstances, the exception would be available only to firms resident in a boycotting country before January 18, 1978. (v) A, a U.S. construction company, receives an invitation to build a power plant in boycotting country Y. After receipt of the invitation, A's personnel visit Y in order to survey the site and make necessary analyses in preparation for submitting a bid. The invitation requires that otherwise prohibited boycott information be furnished with the bid. A's personnel in Y are not bona fide residents of Y, because A has no permanent business operation in Y. Therefore, A's personnel may not furnish the prohibited information. (vi) Same as (v), except that A is considering establishing an office in boycotting country Y. A's personnel visit Y in order to register A to do business in that country. A intends to establish ongoing construction operations in Y. A's personnel are required by Y's laws to furnish certain non-discriminatory boycott information in order to register A to do business or incorporate a subsidiary in Y. In these limited circumstances, A's personnel may furnish non-discriminatory boycott information necessary to establish residency to the same extent a U.S. person who is a bona fide resident in that country could. If this information could not be furnished in such limited circumstances, the exception would be available only to firms resident in a boycotting country before January 18, 1978. (vii) A, a subsidiary of U.S. oil company B, is located in boycotting country Y. A has been engaged in oil explorations in Y for a number of years. A is a bona fide resident of Y, because of its pre-existing continuous presence in Y for legitimate business reasons. (viii) Same as (vii), except that A has just been established in Y and has not yet begun operations. A is a bona fide resident of Y, because it is present in Y for legitimate business reasons and it intends to reside continuously. (ix) U.S. company A is a manufacturer of prefabricated homes. A builds a plant in boycotting country Y for purposes of assembling components made by A in the United States and shipped to Y. A's personnel in Y are bona fide residents of Y, because A's plant in Y is established for legitimate business reasons, and it intends to reside continuously. (x) U.S. company A has its principal place of business in the United States. A's sales agent visits boycotting country Y from time to time for purposes of soliciting orders. A's sales agent is not a bona fide resident of Y, because such periodic visits to Y are insufficient to establish a bona fide residency. (xi) A, a branch office of U.S. construction company B, is located in boycotting country Y. The branch office has been in existence for a number of years and has been performing various management services in connection with B's construction operations in Y. A is a bona fide resident of Y, because of its longstanding presence in Y and its conduct of ongoing operations in Y. (xii) U.S. construction company A has never done any business in boycotting country Y. It is awarded a contract to construct a hospital in Y, and preparatory to beginning construction, sends its personnel to Y to set up operations. A's personnel are bona fide residents of Y, because they are present in Y for the purposes of carrying out A's legitimate business purposes; they intend to reside continuously; and residency is necessary to conduct their business. (xiii) U.S. company A manufactures furniture. All its sales in foreign countries are conducted from its offices in the United States. From time to time A has considered opening sales offices abroad, but it has concluded that it is more efficient to conduct sales operations from the United States. Shortly after the effective date of this part, A sends a sales representative to boycotting country Y to open an office in and solicit orders from Y. It is more costly to conduct operations from that office than to sell directly from the United States, but A believes that if it establishes a residence in Y, it will be in a better position to avoid conflicts with U.S. law in its sales to Y. A's sales representative is not a bona fide resident of Y, because the residency was established to avoid the application of this part and not for legitimate business reasons. (xiv) Same as (xiii), except that it is in fact more efficient to have a sales office in Y. In fact, without a sales office in Y, A would find it difficult to explore business opportunities in Y. A is aware, however, that residency in Y would permit its sales representative to comply with Y's boycott laws. A's sales representative is a bona fide resident of Y, because A has a legitimate business reason for establishing a sales office in Y. (xv) U.S. company B is a computer manufacturer. B sells computers and related programming services tailored to the needs of individual clients. Because of the complex nature of the product, B must have sales representatives in any country where sales are made. B has a sales representative, A, in boycotting country Y. A spends two months of the year in Y, and the rest of the year in other countries. B has a permanent sales office from which A operates while in Y, and the sales office is stocked with brochures and other sales materials. A is a bona fide resident of Y, because his presence in Y is necessary to carry out B's legitimate business purposes; B maintains a permanent office in Y; and B intends to continue doing business in Y in the future. (xvi) A, a U.S. construction engineering company, is engaged by B, a U.S. general contracting company, to provide services in connection with B's contract to construct a hospital complex in boycotting country Y. In order to perform those services, A's engineers set up a temporary office in a trailer on the construction site in Y. A's work is expected to be completed within six months. A's personnel in Y are bona fide residents of Y, because A's on-site office is necessary to the performance of its services for B, and because A's personnel are continuously there. (xvii) A, a U.S. company, sends one of its representatives to boycotting country Y to explore new sales possibilities for its line of transistor radios. After spending several weeks in Y, A's representative rents a post office box in Y, to which all persons interested in A's products are directed to make inquiry. A is not a bona fide resident of Y, because rental of a post office box is not a sufficient presence in Y to constitute residency. (xviii) A, a U.S. computer company, has a patent and trademark registered in the United States. In order to obtain registration of its patent and trademark in boycotting country Y, A is required to furnish certain non-discriminatory boycott information. A may not furnish the information, because A is not a bona fide resident of Y. (h) Activities exclusively within a foreign country. (1) Any United States person who is a bona fide resident of a foreign country, including a boycotting country, may comply or agree to comply with the laws of that country with respect to his activities exclusively within that country. These activities include: (i) Entering into contracts which provide that local law applies or governs, or that the parties will comply with such laws; (ii) Employing residents of the host country; (iii) Retaining local contractors to perform work within the host country; (iv) Purchasing or selling goods or services from or to residents of the host country; and (v) Furnishing information within the host country. (2) Activities exclusively within the country do not include importing goods or services from outside the host country, and, therefore, this part of the exception does not apply to compliance with import laws in connection with importing goods or services. Examples of Permissible Compliance With Local Law With Respect to Activities Exclusively Within a Foreign Country The following examples are intended to give guidance in determining the circumstances in which compliance with local law is permissible. They are illustrative, not comprehensive. Activities Exclusively Within a Foreign Country (i) U.S. construction company A, a bona fide resident of boycotting country Y, has a contract to build a school complex in Y. Pursuant to Y's boycott laws, the contract requires A to refuse to purchase supplies from certain local merchants. While Y permits such merchants to operate within Y, their freedom of action in Y is constrained because of their relationship with boycotted country X. A may enter into the contract, because dealings with local merchants are activities exclusively within Y. (ii) A, a banking subsidiary of U.S. bank B, is a bona fide resident of boycotting country Y. From time to time, A purchases office supplies from the United States. A's purchase of office supplies is not an activity exclusively within Y, because it involves the import of goods from abroad. (iii) A, a branch of U.S. bank B, is a bona fide resident of boycotting country Y. Under Y's boycott laws, A is required to supply information about whether A has any dealings with boycotted country X. A compiles and furnishes the information within Y and does so of its own knowledge. A may comply with that requirement, because in compiling and furnishing the information within Y, based on its own knowledge, A is engaging in an activity exclusively within Y. (iv) Same as (iii), except that A is required to supply information about B's dealings with X. From its own knowledge and without making any inquiry of B, A compiles and furnishes the information. A may comply with that requirement, because in compiling and furnishing the information within Y, based on its own knowledge, A is engaging in an activity exclusively within Y. (v) Same as (iv), except that in making its responses, A asks B to compile some of the information. A may not comply, because the gathering of the necessary information takes place partially outside Y. (vi) U.S. company A has applied for a license to establish a permanent manufacturing facility in boycotting country Y. Under Y's boycott law, A must agree, as a condition of the license, that it will not sell any of its output to blacklisted foreign firms. A may not comply, because the agreement would govern activities of A which are not exclusively within Y. Discrimination Against United States Persons (i) A, a subsidiary of U.S. company B, is a bona fide resident of boycotting country Y. A manufactures air conditioners in its plant in Y. Under Y's boycott laws, A must agree not to hire nationals of boycotted country X. A may agree to the restriction and may abide by it with respect to its recruitment of individuals within Y, because the recruitment of such individuals is an activity exclusively within Y. However, A cannot abide by this restriction with respect to its recruitment of individuals outside Y, because this is not an activity exclusively within Y. (ii) Same as (i), except that pursuant to Y's boycott laws, A must agree not to hire anyone who is of a designated religion. A may not agree to this restriction, because the agreement calls for discrimination against U.S. persons on the basis of religion. It makes no difference whether the recruitment of the U.S. persons occurs within or without Y. (Note: The exception for compliance with local law does not apply to boycott-based refusals to employ U.S. persons on the basis of race, religion, sex, or national origin even if the activity is exclusively within the boycotting country.) The following examples are intended to give guidance in determining the circumstances in which compliance with local law is permissible. They are illustrative, not comprehensive. (i) U.S. construction company A, a bona fide resident of boycotting country Y, has a contract to build a school complex in Y. Pursuant to Y's boycott laws, the contract requires A to refuse to purchase supplies from certain local merchants. While Y permits such merchants to operate within Y, their freedom of action in Y is constrained because of their relationship with boycotted country X. A may enter into the contract, because dealings with local merchants are activities exclusively within Y. (ii) A, a banking subsidiary of U.S. bank B, is a bona fide resident of boycotting country Y. From time to time, A purchases office supplies from the United States. A's purchase of office supplies is not an activity exclusively within Y, because it involves the import of goods from abroad. (iii) A, a branch of U.S. bank B, is a bona fide resident of boycotting country Y. Under Y's boycott laws, A is required to supply information about whether A has any dealings with boycotted country X. A compiles and furnishes the information within Y and does so of its own knowledge. A may comply with that requirement, because in compiling and furnishing the information within Y, based on its own knowledge, A is engaging in an activity exclusively within Y. (iv) Same as (iii), except that A is required to supply information about B's dealings with X. From its own knowledge and without making any inquiry of B, A compiles and furnishes the information. A may comply with that requirement, because in compiling and furnishing the information within Y, based on its own knowledge, A is engaging in an activity exclusively within Y. (v) Same as (iv), except that in making its responses, A asks B to compile some of the information. A may not comply, because the gathering of the necessary information takes place partially outside Y. (vi) U.S. company A has applied for a license to establish a permanent manufacturing facility in boycotting country Y. Under Y's boycott law, A must agree, as a condition of the license, that it will not sell any of its output to blacklisted foreign firms. A may not comply, because the agreement would govern activities of A which are not exclusively within Y. (i) A, a subsidiary of U.S. company B, is a bona fide resident of boycotting country Y. A manufactures air conditioners in its plant in Y. Under Y's boycott laws, A must agree not to hire nationals of boycotted country X. A may agree to the restriction and may abide by it with respect to its recruitment of individuals within Y, because the recruitment of such individuals is an activity exclusively within Y. However, A cannot abide by this restriction with respect to its recruitment of individuals outside Y, because this is not an activity exclusively within Y. (ii) Same as (i), except that pursuant to Y's boycott laws, A must agree not to hire anyone who is of a designated religion. A may not agree to this restriction, because the agreement calls for discrimination against U.S. persons on the basis of religion. It makes no difference whether the recruitment of the U.S. persons occurs within or without Y. The exception for compliance with local law does not apply to boycott-based refusals to employ U.S. persons on the basis of race, religion, sex, or national origin even if the activity is exclusively within the boycotting country.) (i) Compliance with local import law. (1) Any United States person who is a bona fide resident of a foreign country, including a boycotting country, may, in importing goods, materials or components into that country, comply or agree to comply with the import laws of that country, provided that: (i) The items are for his own use or for his use in performing contractual services within that country; and (ii) In the normal course of business, the items are identifiable as to their source or origin at the time of their entry into the foreign country by: (a) Uniqueness of design or appearance; or (b) Trademark, trade name, or other identification normally on the items themselves, including their packaging. (2) The factors that will be considered in determining whether a United States person is a bona fide resident of a foreign country are those set forth in paragraph (g) of this section. Bona fide residence of a United States company's subsidiary, affiliate, or other permanent establishment in a foreign country does not confer such residence on such United States company. Likewise, bona fide residence of a United States company's employee in a foreign country does not confer such residence on the entire company. (3) A United States person who is a bona fide resident of a foreign country may take action under this exception through an agent outside the country, but the agent must act at the direction of the resident and not exercise his own discretion. Therefore, if a United States person resident in a boycotting country takes action to comply with a boycotting country's import law with respect to the importation of qualified goods, he may direct his agent in the United States on the action to be taken, but the United States agent himself may not exercise any discretion. (4) For purposes of this exception, the test that governs whether goods or components of goods are specifically identifiable is identical to the test applied in paragraph (d) of this section on “Compliance With Unilateral and Specific Selection” to determine whether they are identifiable as to their source or origin in the normal course of business. (5) The availability of this exception for the import of goods depends on whether the goods are intended for the United States person's own use at the time they are imported. It does not depend upon who has title to the goods at the time of importation into a foreign country. (6) Goods are for the United States person's own use (including the performance of contractual services within the foreign country) if: (i) They are to be consumed by the United States person; (ii) They are to remain in the United States person's possession and to be used by that person; (iii) They are to be used by the United States person in performing contractual services for another; (iv) They are to be further manufactured, incorporated into, refined into, or reprocessed into another product to be manufactured for another; or (v) They are to be incorporated into, or permanently affixed as a functional part of, a project to be constructed for another. (7) Goods acquired to fill an order for such goods from another are not for the United States person's own use. Goods procured for another are not for one's own use, even if the furnishing of procurement services is the business in which the United States person is customarily engaged. Nor are goods obtained for simple resale acquired for one's own use, even if the United States person is engaged in the retail business. Likewise, goods obtained for inclusion in a turnkey project are not for one's own use if they are not customarily incorporated into, or do not customarily become permanently affixed as a functional part of the project. (8) This part of the local law exception does not apply to the import of services, even when the United States person importing such services is a bona fide resident of a boycotting country and is importing them for his own use. In addition, this exception is available for a United States person who is a bona fide resident of a foreign country only when the individual or entity actually present within that country takes action through the exercise of his own discretion. (9) Use of this exception will be monitored and continually reviewed to determine whether its continued availability is consistent with the national interest. Its availability may be limited or withdrawn as appropriate. In reviewing the continued availability of this exception, the effect that the inability to comply with local import laws would have on the economic and other relations of the United States with boycotting countries will be considered. (10) A United States person who is a bona fide resident of a foreign country may comply or agree to comply with the host country's import laws even if he knows or has reason to know that particular laws are boycott-related. However, no United States person may comply or agree to comply with any host country law which would require him to discriminate against any United States person on the basis of race, religion, sex, or national origin, or to supply information about any United States person's race, religion, sex, or national origin. Examples of Permissible Compliance With Local Import Law The following examples are intended to give guidance in determining the circumstances in which compliance with local import law is permissible. They are illustrative, not comprehensive. Compliance by a Bona Fide Resident (i) A, a subsidiary of U.S. company B, is a bona fide resident of boycotting country Y and is engaged in oil drilling operations in Y. In acquiring certain large, specifically identifiable products for carrying out its operations in Y, A chooses only from non-blacklisted firms because Y's import laws prohibit the importation of goods from blacklisted firms. However, with respect to smaller items, B makes the selection on behalf of A and sends them to A in Y. A may choose from non-blacklisted firms, because it is a U.S. person who is a bona fide resident in Y. However, because B is not resident in Y, B cannot make boycott-based selections to conform with Y's import laws prohibiting the importation of goods from blacklisted firms. (ii) Same as (i), except that after making its choices on the larger items, A directs B to carry out its instructions by entering into appropriate contracts and making necessary shipping arrangements. B may carry out A's instructions provided that A, a bona fide resident of Y, has in fact made the choice and B is exercising no discretion, but is acting only as A's agent. (Note: Such transactions between related companies will be scrutinized carefully. A must in fact exercise the discretion and make the selections. If the discretion is exercised by B, B would be in violation of this part.) (iii) U.S. construction company A has a contract to build a school in boycotting country Y. A's employees set up operations in Y for purposes of commencing construction. A's employees in Y advise A's headquarters in the United States that Y's import laws prohibit importation of goods manufactured by blacklisted firms. A's headquarters then issues invitations to bid only to non-blacklisted firms for certain specifically identifiable goods. A's headquarters' choice of non-blacklisted suppliers is not a choice made by a U.S. person who is a bona fide resident of Y, because the discretion in issuing the bids was exercised in the United States, not in Y. (iv) Same as (iii), except that A's employees in Y actually make the decision regarding to whom the bids should be issued. The choices made by A's employees are choices made by U.S. persons who are bona fide residents of Y, because the discretion in choosing was exercised solely in Y. (Note: Choices purportedly made by employees of U.S. companies who are resident in boycotting countries will be carefully scrutinized to ensure that the discretion was exercised entirely in the boycotting country.) Specifically Identifiable Goods The test and examples as to what constitutes specifically identifiable goods are identical to those applicable under paragraph (d) of this section on “Compliance With Unilateral Selection.” Imports for U.S. Person's Own Use Within Boycotting Country (i) A, a subsidiary of U.S. company B, is a bona fide resident of boycotting country Y. A plans to import computer operated machine tools to be installed in its automobile plant in boycotting country Y. The computers are mounted on a separate bracket on the side of the equipment and are readily identifiable by brand name. A orders the tools from U.S. supplier C and specifies that C must incorporate computers manufactured by D, a non-blacklisted company. A would have chosen computers manufactured by E, except that E is blacklisted, and Y's import laws prohibit the importation of goods manufactured by blacklisted firms. A may refuse to purchase E's computers, because A is importing the computers for its own use in its manufacturing operations in Y. (ii) A, a subsidiary of U.S. company B, is a bona fide resident of boycotting country Y. To meet the needs of its employees in Y, A imports certain specifically identifiable commissary items for sale, such as cosmetics; and canteen items, such as candy. In selecting such items for importation into Y, A chooses items made only by non-blacklisted firms, because Y's import laws prohibit importation of goods from blacklisted firms. A may import these items only from non-blacklisted firms, because the importation of goods for consumption by A's employees is an importation for A's own use. (iii) A, a U.S. construction company which is a bona fide resident of boycotting country Y, has a contract to build a hospital complex for the Ministry of Health in Y. Under the contract, A will be general manager of the project with discretion to choose all subcontractors and suppliers. The complex is to be built on a turnkey basis, with A retaining title to the property and bearing all financial risk until the complex is conveyed to Y. In choosing specifically identifiable goods for import, such as central air conditioning units and plate glass, A excludes blacklisted suppliers in order to comply with Y's import laws. These goods are customarily incorporated into, or permanently affixed as a functional part of, the project. A may refuse to deal with blacklisted suppliers of specifically identifiable goods, because importation of goods by a general contractor to be incorporated into a construction project in Y is an importation of goods for A's own use. (iv) Same as (iii), except that, in addition, in choosing U.S. architects and engineers to work on the project, A excludes blacklisted firms, because Y's import laws prohibit the use of services rendered by blacklisted persons. A may not refuse to deal with blacklisted architectural or engineering firms, because this exception does not apply to the import of services. It is irrelevant that, at some stage, the architectural or engineering drawings or plans may be brought to the site in Y. This factor is insufficient to transform such services into “goods” for purposes of this exception. (v) Same as (iii), except that the project is to be completed on a “cost plus” basis, with Y making progress payments to A at various stages of completion. A may refuse to deal with blacklisted suppliers of specifically identifiable goods, because the importation of goods by A to be incorporated in a project A is under contract to complete is an importation of goods for its own use. The terms of payment are irrelevant. (vi) A, a U.S. construction company which is a bona fide resident of boycotting country Y, has a contract for the construction of an office building in Y on a turnkey basis. In choosing goods to be used or included in the office complex, A orders wallboard, office partitions, and lighting fixtures from non-blacklisted manufacturers. A likewise orders desks, office chairs, typewriters, and office supplies from non-blacklisted manufacturers. Because they are customarily incorporated into or permanently affixed as a functional part of an office building, the wallboard, office partitions, and lighting fixtures are for A's own use, and A may select non-blacklisted suppliers of these goods in order to comply with Y's import laws. Because they are not customarily incorporated into or permanently affixed to the project, the desks, office chairs, typewriters, and office supplies are not for A's own use, and A may not make boycott-based selections of the suppliers of these goods. (vii) A, a U.S. company engaged in the business of selling automobiles, is a bona fide resident of boycotting country Y. In ordering automobiles from time to time for purposes of stocking its inventory, A purchases from U.S. manufacturer B, but not U.S. manufacturer C, because C is blacklisted. Retail sales are subsequently made from this inventory. A's import of automobiles from B is not an import for A's own use, because the importation of items for general inventory in a retail sales operation is not an importation for one's own use. (viii) A, a U.S. company engaged in the manufacture of pharmaceutical products, is a bona fide resident of boycotting country Y. In importing chemicals for incorporation into the pharmaceutical products, A purchases from U.S. supplier B, but not U.S. supplier C, because C is blacklisted. A may import chemicals from B rather than C, because the importation of specifically identifiable items for incorporation into another product is an importation for one's own use. (ix) A, a U.S. management company which is a bona fide resident of boycotting country Y, has a contract with the Ministry of Education in Y to purchase supplies for Y's school system. From time to time, A purchases goods from abroad for delivery to various schools in Y. A's purchase of goods for Y's school system does not constitute an importation of goods for A's own use, because A is acting as a procurement agent for another. A, therefore, cannot make boycott-based selections of suppliers of such school supplies. (x) A, a U.S. company which is a bona fide resident of boycotting country Y, has a contract to make purchases for Y in connection with a construction project in Y. A is not engaged in the construction of, or in any other activity in connection with, the project. A's role is merely to purchase goods for Y and arrange for their delivery to Y. A is not purchasing goods for its own use, because A is acting as a procurement agent for Y. A, therefore, cannot make boycott selections of suppliers of such goods. (xi) A, a U.S. company which is a bona fide resident of boycotting country Y, imports specifically identifiable goods into Y for exhibit by A at a trade fair in Y. In selecting goods for exhibit, A excludes items made by blacklisted firms. A's import of goods for its exhibit at a trade fair constitutes an import for A's own use. However, A may not sell in Y those goods it imported for exhibit. (xii) A is a bona fide resident of boycotting countries Y and Z. In compliance with Y's boycott laws, A chooses specifically identifiable goods for its oil drilling operations in Y and Z by excluding blacklisted suppliers. The goods are first imported into Y. Those purchased for A's use in Z are then transshipped to Z. In selecting those goods for importation into Y, A is making an import selection for its own use, even though A may use some of the imported goods in Z. Further, the subsequent shipment from Y to Z of those goods purchased for use in Z is an import into Z for A's own use. The following examples are intended to give guidance in determining the circumstances in which compliance with local import law is permissible. They are illustrative, not comprehensive. (i) A, a subsidiary of U.S. company B, is a bona fide resident of boycotting country Y and is engaged in oil drilling operations in Y. In acquiring certain large, specifically identifiable products for carrying out its operations in Y, A chooses only from non-blacklisted firms because Y's import laws prohibit the importation of goods from blacklisted firms. However, with respect to smaller items, B makes the selection on behalf of A and sends them to A in Y. A may choose from non-blacklisted firms, because it is a U.S. person who is a bona fide resident in Y. However, because B is not resident in Y, B cannot make boycott-based selections to conform with Y's import laws prohibiting the importation of goods from blacklisted firms. (ii) Same as (i), except that after making its choices on the larger items, A directs B to carry out its instructions by entering into appropriate contracts and making necessary shipping arrangements. B may carry out A's instructions provided that A, a bona fide resident of Y, has in fact made the choice and B is exercising no discretion, but is acting only as A's agent. Such transactions between related companies will be scrutinized carefully. A must in fact exercise the discretion and make the selections. If the discretion is exercised by B, B would be in violation of this part.) (iii) U.S. construction company A has a contract to build a school in boycotting country Y. A's employees set up operations in Y for purposes of commencing construction. A's employees in Y advise A's headquarters in the United States that Y's import laws prohibit importation of goods manufactured by blacklisted firms. A's headquarters then issues invitations to bid only to non-blacklisted firms for certain specifically identifiable goods. A's headquarters' choice of non-blacklisted suppliers is not a choice made by a U.S. person who is a bona fide resident of Y, because the discretion in issuing the bids was exercised in the United States, not in Y. (iv) Same as (iii), except that A's employees in Y actually make the decision regarding to whom the bids should be issued. The choices made by A's employees are choices made by U.S. persons who are bona fide residents of Y, because the discretion in choosing was exercised solely in Y. Choices purportedly made by employees of U.S. companies who are resident in boycotting countries will be carefully scrutinized to ensure that the discretion was exercised entirely in the boycotting country.) The test and examples as to what constitutes specifically identifiable goods are identical to those applicable under paragraph (d) of this section on “Compliance With Unilateral Selection.” (i) A, a subsidiary of U.S. company B, is a bona fide resident of boycotting country Y. A plans to import computer operated machine tools to be installed in its automobile plant in boycotting country Y. The computers are mounted on a separate bracket on the side of the equipment and are readily identifiable by brand name. A orders the tools from U.S. supplier C and specifies that C must incorporate computers manufactured by D, a non-blacklisted company. A would have chosen computers manufactured by E, except that E is blacklisted, and Y's import laws prohibit the importation of goods manufactured by blacklisted firms. A may refuse to purchase E's computers, because A is importing the computers for its own use in its manufacturing operations in Y. (ii) A, a subsidiary of U.S. company B, is a bona fide resident of boycotting country Y. To meet the needs of its employees in Y, A imports certain specifically identifiable commissary items for sale, such as cosmetics; and canteen items, such as candy. In selecting such items for importation into Y, A chooses items made only by non-blacklisted firms, because Y's import laws prohibit importation of goods from blacklisted firms. A may import these items only from non-blacklisted firms, because the importation of goods for consumption by A's employees is an importation for A's own use. (iii) A, a U.S. construction company which is a bona fide resident of boycotting country Y, has a contract to build a hospital complex for the Ministry of Health in Y. Under the contract, A will be general manager of the project with discretion to choose all subcontractors and suppliers. The complex is to be built on a turnkey basis, with A retaining title to the property and bearing all financial risk until the complex is conveyed to Y. In choosing specifically identifiable goods for import, such as central air conditioning units and plate glass, A excludes blacklisted suppliers in order to comply with Y's import laws. These goods are customarily incorporated into, or permanently affixed as a functional part of, the project. A may refuse to deal with blacklisted suppliers of specifically identifiable goods, because importation of goods by a general contractor to be incorporated into a construction project in Y is an importation of goods for A's own use. (iv) Same as (iii), except that, in addition, in choosing U.S. architects and engineers to work on the project, A excludes blacklisted firms, because Y's import laws prohibit the use of services rendered by blacklisted persons. A may not refuse to deal with blacklisted architectural or engineering firms, because this exception does not apply to the import of services. It is irrelevant that, at some stage, the architectural or engineering drawings or plans may be brought to the site in Y. This factor is insufficient to transform such services into “goods” for purposes of this exception. (v) Same as (iii), except that the project is to be completed on a “cost plus” basis, with Y making progress payments to A at various stages of completion. A may refuse to deal with blacklisted suppliers of specifically identifiable goods, because the importation of goods by A to be incorporated in a project A is under contract to complete is an importation of goods for its own use. The terms of payment are irrelevant. (vi) A, a U.S. construction company which is a bona fide resident of boycotting country Y, has a contract for the construction of an office building in Y on a turnkey basis. In choosing goods to be used or included in the office complex, A orders wallboard, office partitions, and lighting fixtures from non-blacklisted manufacturers. A likewise orders desks, office chairs, typewriters, and office supplies from non-blacklisted manufacturers. Because they are customarily incorporated into or permanently affixed as a functional part of an office building, the wallboard, office partitions, and lighting fixtures are for A's own use, and A may select non-blacklisted suppliers of these goods in order to comply with Y's import laws. Because they are not customarily incorporated into or permanently affixed to the project, the desks, office chairs, typewriters, and office supplies are not for A's own use, and A may not make boycott-based selections of the suppliers of these goods. (vii) A, a U.S. company engaged in the business of selling automobiles, is a bona fide resident of boycotting country Y. In ordering automobiles from time to time for purposes of stocking its inventory, A purchases from U.S. manufacturer B, but not U.S. manufacturer C, because C is blacklisted. Retail sales are subsequently made from this inventory. A's import of automobiles from B is not an import for A's own use, because the importation of items for general inventory in a retail sales operation is not an importation for one's own use. (viii) A, a U.S. company engaged in the manufacture of pharmaceutical products, is a bona fide resident of boycotting country Y. In importing chemicals for incorporation into the pharmaceutical products, A purchases from U.S. supplier B, but not U.S. supplier C, because C is blacklisted. A may import chemicals from B rather than C, because the importation of specifically identifiable items for incorporation into another product is an importation for one's own use. (ix) A, a U.S. management company which is a bona fide resident of boycotting country Y, has a contract with the Ministry of Education in Y to purchase supplies for Y's school system. From time to time, A purchases goods from abroad for delivery to various schools in Y. A's purchase of goods for Y's school system does not constitute an importation of goods for A's own use, because A is acting as a procurement agent for another. A, therefore, cannot make boycott-based selections of suppliers of such school supplies. (x) A, a U.S. company which is a bona fide resident of boycotting country Y, has a contract to make purchases for Y in connection with a construction project in Y. A is not engaged in the construction of, or in any other activity in connection with, the project. A's role is merely to purchase goods for Y and arrange for their delivery to Y. A is not purchasing goods for its own use, because A is acting as a procurement agent for Y. A, therefore, cannot make boycott selections of suppliers of such goods. (xi) A, a U.S. company which is a bona fide resident of boycotting country Y, imports specifically identifiable goods into Y for exhibit by A at a trade fair in Y. In selecting goods for exhibit, A excludes items made by blacklisted firms. A's import of goods for its exhibit at a trade fair constitutes an import for A's own use. However, A may not sell in Y those goods it imported for exhibit. (xii) A is a bona fide resident of boycotting countries Y and Z. In compliance with Y's boycott laws, A chooses specifically identifiable goods for its oil drilling operations in Y and Z by excluding blacklisted suppliers. The goods are first imported into Y. Those purchased for A's use in Z are then transshipped to Z. In selecting those goods for importation into Y, A is making an import selection for its own use, even though A may use some of the imported goods in Z. Further, the subsequent shipment from Y to Z of those goods purchased for use in Z is an import into Z for A's own use." 15:15:3.1.1.1.10.0.1.4,15,Commerce and Foreign Trade,VII,C,760,PART 760—RESTRICTIVE TRADE PRACTICES OR BOYCOTTS,,,,§ 760.4 Evasion.,BIS,,,"[61 FR 12862, Mar. 25, 1996, as amended at 65 FR 34947, June 1, 2000]","(a) No United States person may engage in any transaction or take any other action, either independently or through any other person, with intent to evade the provisions of this part. Nor may any United States person assist another United States person to violate or evade the provisions of this part. (b) The exceptions set forth in § 760.3(a) through (i) do not permit activities or agreements (express or implied by a course of conduct, including a pattern of responses) which are otherwise prohibited by this part and which are not within the intent of such exceptions. However, activities within the coverage and intent of the exceptions set forth in this part do not constitute evasion regardless of how often such exceptions are utilized. (c) Use of any artifice, device or scheme which is intended to place a person at a commercial disadvantage or impose on him special burdens because he is blacklisted or otherwise restricted for boycott reasons from having a business relationship with or in a boycotting country will be regarded as evasion for purposes of this part. (d) Unless permitted under one of the exceptions, use of risk of loss provisions that expressly impose a financial risk on another because of the import laws of a boycotting country may constitute evasion. If they are introduced after January 18, 1978, their use will be presumed to constitute evasion. This presumption may be rebutted by a showing that such a provision is in customary usage without distinction between boycotting and non-boycotting countries and that there is a legitimate non-boycott reason for its use. On the other hand, use of such a provision by a United States person subsequent to January 18, 1978 is presumed not to constitute evasion if the provision had been customarily used by that person prior to January 18, 1978. (e) Use of dummy corporations or other devices to mask prohibited activity will also be regarded as evasion. Similarly, it is evasion under this part to divert specific boycotting country orders from a United States parent to a foreign subsidiary for purposes of complying with prohibited boycott requirements. However, alteration of a person's structure or method of doing business will not constitute evasion so long as the alteration is based on legitimate business considerations and is not undertaken solely to avoid the application of the prohibitions of this part. The facts and circumstances of an arrangement or transaction will be carefully scrutinized to see whether appearances conform to reality. Examples The following examples are intended to give guidance to persons in determining circumstances in which this section will apply. They are illustrative, not comprehensive. (i) A, a U.S. insurance company, receives a request from boycotting country Y asking whether it does business in boycotted country X. Because furnishing such information is prohibited, A declines to answer and as a result is placed on Y's blacklist. The following year, A's annual report contains new information about A's worldwide operations, including a list of all countries in which A does business. A then mails a copy of its annual report, which has never before contained such information, to officials of the government of country Y. Absent some business justification unrelated to the boycott for changing the annual report in this fashion, A's action constitutes evasion of this part. (ii) A, a U.S. construction firm resident in boycotting country Y, orders lumber from U.S. company B. A unilaterally selects B in part because U.S. lumber producer C is blacklisted by Y and C's products are therefore not importable. In placing its order with B, A requests that B stamp its name or logo on the lumber so that A “can be certain that it is, in fact, receiving B's products.” B does not normally so stamp its lumber, and A's purpose in making the request is to appear to fit within the unilateral selection exception of this part. Absent additional facts justifying A's action, A's action constitutes evasion of this part. (iii) A, a U.S. company, has been selling sewing machines to boycotting country Y for a number of years. A receives a request for a negative certificate of origin from a new customer. A is aware that furnishing such certificates are prohibited; therefore, A arranges to have all future shipments run through a foreign corporation in a third country which will affix the necessary negative certificate before forwarding the machines on to Y. A's action constitutes evasion of this part, because it is a device to mask prohibited activity carried out on A's behalf. (iv) A, a U.S. company, has been selling calculators to distributor B in country C for a number of years and routinely supplies positive certificates of origin. A receives an order from country Y which requires negative certificates of origin. A arranges to make all future sales to distributor B in country C. A knows B will step in and make the sales to Y which A would otherwise have made directly. B will make the necessary negative certifications. A's warranty, which it will continue to honor, runs to the purchaser in Y. A's action constitutes evasion, because the diverting of orders to B is a device to mask prohibited activity carried out on A's behalf. (v) A, a U.S. company, is negotiating a long-term contract with boycotting country Y to meet all Y's medical supply needs. Y informs A that before such a contract can be concluded, A must complete Y's boycott questionnaire. A knows that it is prohibited from answering the questionnaire so it arranges for a local agent in Y to supply the necessary information. A's action constitutes evasion of this part, because it is a device to mask prohibited activity carried out on A's behalf. (vi) A, a U.S. contractor which has not previously dealt with boycotting country Y, is awarded a construction contract by Y. Because it is customary in the construction industry for a contractor to establish an on-site facility for the duration of the project, A establishes such an office, which satisfies the requirements for bona fide residency. Thereafter, A's office in Y takes a number of actions permitted under the compliance with local law exception. A's actions do not constitute evasion, because A's facility in Y was established for legitimate business reasons. (vii) A, a controlled foreign subsidiary of U.S. company B, is located in non-boycotting country M. A and B both make machine tools for sale in their respective marketing regions. B's marketing region includes boycotting country Y. After assessing the requirements of this part, B decides that it can no longer make machines for sale in Y. Instead, A decides to expand its facilities in M in order to service the Y market. The actions of A and B do not constitute evasion, because there is a legitimate business reason for their actions. It is irrelevant that the effect may be to place sales which would otherwise have been subject to this part beyond the reach of this part. (viii) A, a U.S. manufacturer, from time to time receives purchase orders from boycotting country Y which A fills from its plant in the United States. A knows that it is about to receive an order from Y which contains a request for a certification which A is prohibited from furnishing under this part. In order to permit the certification to be made, A diverts the purchase order to its foreign subsidiary. A's diversion of the purchase order constitutes evasion of this part, because it is a device to mask prohibited activity carried out on A's behalf. (ix) A, a U.S. company, is engaged in assembling drilling rigs for shipment to boycotting country Y. Because of potential difficulties in securing entry into Y of materials supplied by blacklisted firms, A insists that blacklisted firms take a 15 percent discount on all materials which they supply to A. As a result, no blacklisted firms are willing to transact with A. A's insistence on the discount for materials supplied by blacklisted firms constitutes evasion of this part, because it is a device or scheme which is intended to place a special burden on blacklisted firms because of Y's boycott. (x) Same as (ix), except that shortly after January 18, 1978, A, a U.S. company, insists that its suppliers sign contracts which provide that even after title passes from the supplier to A, the supplier will bear the risk of loss and indemnify A if goods which the supplier has furnished are denied entry into Y for boycott reasons. A's action constitutes evasion of this part, because it is a device or scheme which is intended to place a special burden on blacklisted persons because of Y's boycott. (xi) Same as (x), except that A customarily insisted on such an arrangement with its supplier prior to January 18, 1978. A's action is presumed not to constitute evasion, because use of this contractual arrangement was customary for A prior to January 18, 1978. (xii) A, a U.S. company, has a contract to supply automobile sub-assembly units to boycotting country Y. Shortly after January 18, 1978, A insists that its suppliers sign contracts which provide that even after title passes to A, the supplier will bear the risk of loss and indemnify A if goods which the supplier has furnished are denied entry into boycotting country Y for any reason. A's insistence on this arrangement is presumed to constitute evasion, because it is a device which is intended to place a special burden on blacklisted firms because of Y's boycott. The presumption may be rebutted by competent evidence showing that use of such an arrangement is customary without regard to the boycotting or non-boycotting character of the country to which it relates and that there is a legitimate non-boycott business reason for its use. (xiii) Same as (vii), except that A requires that all suppliers make in-country delivery. A's action does not constitute evasion, because it is an ordinary commercial practice to require in-country delivery of goods. (xiv) Same as (xii), except that A requires that title remain with the supplier until delivery in Y has been made. A's action does not constitute evasion, because it is ordinary commercial practice to require that title remain with the supplier until delivery has been made. This example is distinguishable from example (xii), because in example (xii) A had insisted on an extraordinary arrangement designed to require that the risk of loss remain with the supplier even after title had passed to A. (xv) U.S. bank A is contacted by U.S. company B to finance B's transaction with boycotting country Y. Payment will be effected through a letter of credit in favor of B at its U.S. address. A knows that the letter of credit will contain restrictive boycott conditions which would bar its implementation by A if the beneficiary were a U.S. person. A advises B of the boycott condition and suggests to B that the beneficiary should be changed to C, a shell corporation in non-boycotting country M. The beneficiary is changed accordingly. The actions of both A and B constitute evasion of this part, because the arrangement is a device to mask prohibited activities. (xvi) Same as (xv), except that U.S. company B, the beneficiary of the letter of credit, arranges to change the beneficiary to B's foreign subsidiary so that A can implement the letter of credit. A knows that this has been done. A's implementation of the letter of credit in the face of its knowledge of B's action constitutes evasion of this part, because A's action is part of a device to mask prohibited activity by both parties. (xvii) U.S. bank A, located in the United States, is contacted by foreign company B to finance B's transaction with boycotting country Y. B is a controlled subsidiary of a U.S. company. The transaction which is to be financed with a letter of credit payable to B at its foreign address, requires B to certify that none of its board members are of a particular religious faith. Since B cannot legally furnish the certificate, it asks A to convey the necessary information to Y through A's bank branch in Y. Such information would be furnished wholly outside the letter of credit transaction. A's action constitutes evasion of this part, because it is undertaken to assist B's violation of this part. (xviii) U.S. bank A is asked by foreign corporation B to implement a letter of credit in favor of B so that B might perform under its long-term contract with boycotting country Y. Under the terms of the letter of credit, B is required to certify that none of its suppliers is blacklisted. A knows that it cannot implement a letter of credit with this condition, so it tells B to negotiate the elimination of this requirement from the letter of credit and instead supply the certification to Y directly. A's suggestion to B that it provide the negative certification to Y directly constitutes evasion of this part, because A is taking an action through another person to mask prohibited activity on A's part. The following examples are intended to give guidance to persons in determining circumstances in which this section will apply. They are illustrative, not comprehensive. (i) A, a U.S. insurance company, receives a request from boycotting country Y asking whether it does business in boycotted country X. Because furnishing such information is prohibited, A declines to answer and as a result is placed on Y's blacklist. The following year, A's annual report contains new information about A's worldwide operations, including a list of all countries in which A does business. A then mails a copy of its annual report, which has never before contained such information, to officials of the government of country Y. Absent some business justification unrelated to the boycott for changing the annual report in this fashion, A's action constitutes evasion of this part. (ii) A, a U.S. construction firm resident in boycotting country Y, orders lumber from U.S. company B. A unilaterally selects B in part because U.S. lumber producer C is blacklisted by Y and C's products are therefore not importable. In placing its order with B, A requests that B stamp its name or logo on the lumber so that A “can be certain that it is, in fact, receiving B's products.” B does not normally so stamp its lumber, and A's purpose in making the request is to appear to fit within the unilateral selection exception of this part. Absent additional facts justifying A's action, A's action constitutes evasion of this part. (iii) A, a U.S. company, has been selling sewing machines to boycotting country Y for a number of years. A receives a request for a negative certificate of origin from a new customer. A is aware that furnishing such certificates are prohibited; therefore, A arranges to have all future shipments run through a foreign corporation in a third country which will affix the necessary negative certificate before forwarding the machines on to Y. A's action constitutes evasion of this part, because it is a device to mask prohibited activity carried out on A's behalf. (iv) A, a U.S. company, has been selling calculators to distributor B in country C for a number of years and routinely supplies positive certificates of origin. A receives an order from country Y which requires negative certificates of origin. A arranges to make all future sales to distributor B in country C. A knows B will step in and make the sales to Y which A would otherwise have made directly. B will make the necessary negative certifications. A's warranty, which it will continue to honor, runs to the purchaser in Y. A's action constitutes evasion, because the diverting of orders to B is a device to mask prohibited activity carried out on A's behalf. (v) A, a U.S. company, is negotiating a long-term contract with boycotting country Y to meet all Y's medical supply needs. Y informs A that before such a contract can be concluded, A must complete Y's boycott questionnaire. A knows that it is prohibited from answering the questionnaire so it arranges for a local agent in Y to supply the necessary information. A's action constitutes evasion of this part, because it is a device to mask prohibited activity carried out on A's behalf. (vi) A, a U.S. contractor which has not previously dealt with boycotting country Y, is awarded a construction contract by Y. Because it is customary in the construction industry for a contractor to establish an on-site facility for the duration of the project, A establishes such an office, which satisfies the requirements for bona fide residency. Thereafter, A's office in Y takes a number of actions permitted under the compliance with local law exception. A's actions do not constitute evasion, because A's facility in Y was established for legitimate business reasons. (vii) A, a controlled foreign subsidiary of U.S. company B, is located in non-boycotting country M. A and B both make machine tools for sale in their respective marketing regions. B's marketing region includes boycotting country Y. After assessing the requirements of this part, B decides that it can no longer make machines for sale in Y. Instead, A decides to expand its facilities in M in order to service the Y market. The actions of A and B do not constitute evasion, because there is a legitimate business reason for their actions. It is irrelevant that the effect may be to place sales which would otherwise have been subject to this part beyond the reach of this part. (viii) A, a U.S. manufacturer, from time to time receives purchase orders from boycotting country Y which A fills from its plant in the United States. A knows that it is about to receive an order from Y which contains a request for a certification which A is prohibited from furnishing under this part. In order to permit the certification to be made, A diverts the purchase order to its foreign subsidiary. A's diversion of the purchase order constitutes evasion of this part, because it is a device to mask prohibited activity carried out on A's behalf. (ix) A, a U.S. company, is engaged in assembling drilling rigs for shipment to boycotting country Y. Because of potential difficulties in securing entry into Y of materials supplied by blacklisted firms, A insists that blacklisted firms take a 15 percent discount on all materials which they supply to A. As a result, no blacklisted firms are willing to transact with A. A's insistence on the discount for materials supplied by blacklisted firms constitutes evasion of this part, because it is a device or scheme which is intended to place a special burden on blacklisted firms because of Y's boycott. (x) Same as (ix), except that shortly after January 18, 1978, A, a U.S. company, insists that its suppliers sign contracts which provide that even after title passes from the supplier to A, the supplier will bear the risk of loss and indemnify A if goods which the supplier has furnished are denied entry into Y for boycott reasons. A's action constitutes evasion of this part, because it is a device or scheme which is intended to place a special burden on blacklisted persons because of Y's boycott. (xi) Same as (x), except that A customarily insisted on such an arrangement with its supplier prior to January 18, 1978. A's action is presumed not to constitute evasion, because use of this contractual arrangement was customary for A prior to January 18, 1978. (xii) A, a U.S. company, has a contract to supply automobile sub-assembly units to boycotting country Y. Shortly after January 18, 1978, A insists that its suppliers sign contracts which provide that even after title passes to A, the supplier will bear the risk of loss and indemnify A if goods which the supplier has furnished are denied entry into boycotting country Y for any reason. A's insistence on this arrangement is presumed to constitute evasion, because it is a device which is intended to place a special burden on blacklisted firms because of Y's boycott. The presumption may be rebutted by competent evidence showing that use of such an arrangement is customary without regard to the boycotting or non-boycotting character of the country to which it relates and that there is a legitimate non-boycott business reason for its use. (xiii) Same as (vii), except that A requires that all suppliers make in-country delivery. A's action does not constitute evasion, because it is an ordinary commercial practice to require in-country delivery of goods. (xiv) Same as (xii), except that A requires that title remain with the supplier until delivery in Y has been made. A's action does not constitute evasion, because it is ordinary commercial practice to require that title remain with the supplier until delivery has been made. This example is distinguishable from example (xii), because in example (xii) A had insisted on an extraordinary arrangement designed to require that the risk of loss remain with the supplier even after title had passed to A. (xv) U.S. bank A is contacted by U.S. company B to finance B's transaction with boycotting country Y. Payment will be effected through a letter of credit in favor of B at its U.S. address. A knows that the letter of credit will contain restrictive boycott conditions which would bar its implementation by A if the beneficiary were a U.S. person. A advises B of the boycott condition and suggests to B that the beneficiary should be changed to C, a shell corporation in non-boycotting country M. The beneficiary is changed accordingly. The actions of both A and B constitute evasion of this part, because the arrangement is a device to mask prohibited activities. (xvi) Same as (xv), except that U.S. company B, the beneficiary of the letter of credit, arranges to change the beneficiary to B's foreign subsidiary so that A can implement the letter of credit. A knows that this has been done. A's implementation of the letter of credit in the face of its knowledge of B's action constitutes evasion of this part, because A's action is part of a device to mask prohibited activity by both parties. (xvii) U.S. bank A, located in the United States, is contacted by foreign company B to finance B's transaction with boycotting country Y. B is a controlled subsidiary of a U.S. company. The transaction which is to be financed with a letter of credit payable to B at its foreign address, requires B to certify that none of its board members are of a particular religious faith. Since B cannot legally furnish the certificate, it asks A to convey the necessary information to Y through A's bank branch in Y. Such information would be furnished wholly outside the letter of credit transaction. A's action constitutes evasion of this part, because it is undertaken to assist B's violation of this part. (xviii) U.S. bank A is asked by foreign corporation B to implement a letter of credit in favor of B so that B might perform under its long-term contract with boycotting country Y. Under the terms of the letter of credit, B is required to certify that none of its suppliers is blacklisted. A knows that it cannot implement a letter of credit with this condition, so it tells B to negotiate the elimination of this requirement from the letter of credit and instead supply the certification to Y directly. A's suggestion to B that it provide the negative certification to Y directly constitutes evasion of this part, because A is taking an action through another person to mask prohibited activity on A's part." 15:15:3.1.1.1.10.0.1.5,15,Commerce and Foreign Trade,VII,C,760,PART 760—RESTRICTIVE TRADE PRACTICES OR BOYCOTTS,,,,§ 760.5 Reporting requirements.,BIS,,,"[61 FR 12862, Mar. 25, 1996, as amended at 65 FR 34948, June 1, 2000; 81 FR 70934, Oct. 14, 2016]","(a) Scope of reporting requirements. (1) A United States person who receives a request to take any action which has the effect of furthering or supporting a restrictive trade practice or boycott fostered or imposed by a foreign country against a country friendly to the United States or against any United States person must report such request to the Department of Commerce in accordance with the requirements of this section. Such a request may be either written or oral and may include a request to furnish information or enter into or implement an agreement. It may also include a solicitation, directive, legend or instruction that asks for information or that asks that a United States person take or refrain from taking a particular action. Such a request shall be reported regardless of whether the action requested is prohibited or permissible under this part, except as otherwise provided by this section. (2) For purposes of this section, a request received by a United States person is reportable if he knows or has reason to know that the purpose of the request is to enforce, implement, or otherwise further, support, or secure compliance with an unsanctioned foreign boycott or restrictive trade practice. (i) A request received by a United States person located in the United States is reportable if it is received in connection with a transaction or activity in the interstate or foreign commerce of the United States, as determined under § 760.1(d)(1) through (5) and (18) of this part. (ii) A request received by a United States person located outside the United States (that is, a foreign subsidiary, partnership, affiliate, branch, office, or other permanent foreign establishment which is controlled in fact by any domestic concern, as determined under § 760.1(c) of this part) is reportable if it is received in connection with a transaction or activity in the interstate or foreign commerce of the United States, as determined under § 760.1(d)(6) through (17) and (19) of this part. (iii) A request such as a boycott questionnaire, unrelated to a particular transaction or activity, received by any United States person is reportable when such person has or anticipates a business relationship with or in a boycotting country involving the sale, purchase or transfer of goods or services (including information) in the interstate or foreign commerce of the United States, as determined under § 760.1(d) of this part. (3) These reporting requirements apply to all United States persons. They apply whether the United States person receiving the request is an exporter, bank or other financial institution, insurer, freight forwarder, manufacturer, or any other United States person subject to this part. (4) The acquisition of information about a boycotting country's boycott requirements through the receipt or review of books, pamphlets, legal texts, exporters' guidebooks and other similar publications does not constitute receipt of a reportable request for purposes of this section. In addition, a United States person who receives an unsolicited invitation to bid, or similar proposal, containing a boycott request has not received a reportable request for purposes of this section where he does not respond to the invitation to bid or other proposal. (5) Because of the use of certain terms for boycott and non-boycott purposes; because of Congressional mandates to provide clear and precise guidelines in areas of inherent uncertainty; and because of the Department's commitment to minimize paperwork and reduce the cost of reporting where it will not impair the Department's ability to continue to monitor foreign boycotts, the following specific requests are not reportable: (i) A request to refrain from shipping goods on a carrier which flies the flag of a particular country or which is owned, chartered, leased or operated by a particular country or by nationals or residents of a particular country, or a request to certify to that effect. (ii) A request to ship goods via a prescribed route, or a request to refrain from shipping goods via a proscribed route, or a request to certify to either effect. (iii) A request to supply an affirmative statement or certification regarding the country of origin of goods. (iv) A request to supply an affirmative statement or certification regarding the name of the supplier or manufacturer of the goods shipped or the name of the provider of services. (v) A request to comply with the laws of another country except where the request expressly requires compliance with that country's boycott laws. (vi) A request to an individual to supply information about himself or a member of his family for immigration, passport, visa, or employment purposes. (vii) A request to supply an affirmative statement or certification indicating the destination of exports or confirming or otherwise indicating that such cargo will be unloaded or discharged at a particular destination. (viii) A request to supply a certificate by the owner, master, charterer, or any employee thereof, that a vessel, aircraft, truck or any other mode of transportation is eligible, otherwise eligible, permitted, or allowed to enter, or not restricted from entering, a particular port, country, or group of countries pursuant to the laws, rules, or regulations of that port, country, or group of countries. (ix) A request to supply a certificate from an insurance company stating that the insurance company has a duly authorized agent or representative within a boycotting country and/or the name and address of such agent. (x) A request to comply with a term or condition of a transaction that provides that the vendor bear the risk of loss and indemnify the purchaser if the vendor's goods are denied entry into a country for any reason (“risk of loss clause”) if such clause was in use by the purchaser prior to January 18, 1978. (6) No United States person may engage in any transaction or take any other action, either independently or through any other person, with intent to evade the provisions of this part. (7) From time to time the Department will survey domestic concerns for purposes of determining the worldwide scope of boycott requests received by their controlled foreign subsidiaries and affiliates with respect to their activities outside United States commerce. This pertains to requests which would be reportable under this section but for the fact that the activities to which the requests relate are outside United States commerce. The information requested will include the number and nature of non-reportable boycott requests received, the action(s) requested, the actions(s) taken in response and the countries in which the requests originate. The results of such surveys, including the names of those surveyed, will be made public. (b) Manner of reporting. (1) Each reportable request must be reported. However, if more than one document (such as an invitation to bid, purchase order, or letter of credit) containing the same boycott request is received as part of the same transaction, only the first such request need be reported. Individual shipments against the same purchase order or letter of credit are to be treated as part of the same transaction. Each different boycott request associated with a given transaction must be reported, regardless of how or when the request is received. (2) Each United States person actually receiving a reportable request must report that request. However, such person may designate someone else to report on his behalf. For example, a United States company, if authorized, may report on behalf of its controlled foreign subsidiary or affiliates; a freight forwarder, if authorized, may report on behalf of the exporter; and a bank, if authorized, may report on behalf of the beneficiary of a letter of credit. If a person designated to report a request received by another receives an identical request directed to him in connection with the same transaction, he may file one report on behalf of himself and the other person. (3) Where a person is designated to report on behalf of another, the person receiving the request remains liable for any failure to report or for any representations made on his behalf. Further, anyone reporting on behalf of another is not relieved of his own responsibility for reporting any boycott request which he receives, even if it is an identical request in connection with the same transaction. (4) Reports may be submitted by mail or electronically. Mailed paper reports must be submitted in duplicate to: Report Processing Staff, Office of Antiboycott Compliance, U.S. Department of Commerce, Room 6098, Washington, DC 20230. Electronic reports must be submitted in duplicate, by following the prompts on the screen, through the Office of Antiboycott Compliance Web page of the BIS Web site, http://bis.doc.gov/index.php/enforcement/oac?id=300. Each submission, whether paper or electronic, must be made in accordance with the following requirements: (i) Where the person receiving the request is a United States person located in the United States, each report of requests must be postmarked or electronically date-stamped by the last day of the month following the calendar quarter in which the request was received ( e.g., April 30 for the quarter consisting of January, February, and March). (ii) Where the person receiving the request is a United States person located outside the United States, each report of requests must be postmarked or electronically date-stamped by the last day of the second month following the calendar quarter in which the request was received ( e.g., May 31 for the quarter consisting of January, February, and March). (5) Mailed paper reports may, at the reporting person's option, be submitted on either a single transaction form (Form BIS-621P, Report of Request for Restrictive Trade Practice or Boycott, Single Transaction, (revised 10-89)) or on a multiple transaction form (Form BIS-6051P, Report of Request for Restrictive Trade Practice or Boycott, Multiple Transactions, (revised 10-89)). Electronic reports may be submitted only on the single transaction form, which will electronically reproduce the reporting person's identifying information to facilitate reporting of multiple transactions. (6) Reports, whether submitted on the paper single transaction form or on the paper multiple transaction form, or submitted electronically, must contain entries for every applicable item on the form, including whether the reporting person intends to take or has taken the action requested. If the reporting person has not decided what action he will take by the time the report is required to be filed, he must later report the action he decides to take within 10 business days after deciding. In addition, anyone filing a report on behalf of another must so indicate and identify that other person. (7) Each report of a boycott request, whether submitted by mail or electronically, must be accompanied by two copies of the relevant page(s) of any document(s) in which the request appears ( see, paragraph (c)(2) of this section). For mail submissions, the relevant pages shall be attached in paper format to the report form; for electronic submissions, the relevant pages shall be attached in PDF format to the electronic submission. Reports, whether paper or electronic, may also be accompanied by any additional information relating to the request as the reporting person desires to provide concerning his response to the request. For electronic submissions, such additional information should be provided as a PDF attachment. (8) Records containing information relating to a reportable boycott request, including a copy of any document(s) in which the request appears, must be maintained by the recipient for a five-year period after receipt of the request. The Department may require that these materials be submitted to it or that it have access to them at any time within that period. (See part 762 of the EAR for additional recordkeeping requirements.) (c) Disclosure of information. (1) Reports of requests received on or after October 7, 1976, as well as any accompanying documents filed with the reports, have been and will continue to be made available for public inspection and copying, except for certain proprietary information. With respect to reports of requests received on or after August 1, 1978, if the person making the report certifies that a United States person to whom the report relates would be placed at a competitive disadvantage because of the disclosure of information regarding the quantity, description, or value of any articles, materials, and supplies, including related technical data and other information, whether contained in a report or in any accompanying document(s), such information will not be publicly disclosed except upon failure by the reporting entity to edit the public inspection copy of the accompanying document(s) as provided by paragraph (c)(2) of this section, unless the Secretary of Commerce determines that the disclosure would not place the United States person involved at a competitive disadvantage or that it would be contrary to the national interest to withhold the information. In the event the Secretary of Commerce considers making such a determination concerning competitive disadvantage, appropriate notice and an opportunity for comment will be given before any such proprietary information is publicly disclosed. In no event will requests of reporting persons to withhold any information contained in the report other than that specified in this paragraph be honored. (2) Because a copy of any document(s) accompanying the report will be made available for public inspection and copying, one copy must be submitted intact and another copy must be edited by the reporting entity to delete the same information which it certified in the report would place a United States person at a competitive disadvantage if disclosed. In addition, the reporting entity may delete from this copy information that is considered confidential and that is not required to be contained in the report (e.g., information related to foreign consignee). This copy should be conspicuously marked with the legend “Public Inspection Copy.” With respect to documents accompanying reports received by the Department on or after July 1, 1979, the public inspection copy will be made available as submitted whether or not it has been appropriately edited by the reporting entity as provided by this paragraph. (3) Reports and accompanying documents which are available to the public for inspection and copying are located in the BIS Freedom of Information Records Inspection Facility, Room 4525, Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230. Requests to inspect such documents should be addressed to that facility. (4) The Secretary of Commerce will periodically transmit summaries of the information contained in the reports to the Secretary of State for such action as the Secretary of State, in consultation with the Secretary of Commerce, may deem appropriate for carrying out the policies in section 8(b)(2) of the Export Administration Act of 1979. Examples The following examples are intended to give guidance in determining what is reportable. They are illustrative, not comprehensive. (i) A, a U.S. manufacturer, is shipping goods to boycotting country Y and is asked by Y to certify that it is not blacklisted by Y's boycott office. The request to A is reportable, because it is a request to A to comply with Y's boycott requirements. (ii) A, a U.S. manufacturing company, receives an order for tractors from boycotting country Y. Y's order specifies that the tires on the tractors be made by B, another U.S. company. A believes Y has specified B as the tire supplier because otherwise A would have used tires made by C, a blacklisted company, and Y will not take shipment of tractors containing tires made by blacklisted companies. A must report Y's request for tires made by B, because A has reason to know that B was chosen for boycott reasons. (iii) Same as (ii), except A knows that Y's request has nothing to do with the boycott but simply reflects Y's preference for tires made by B. Y's request is not reportable, because it is unrelated to Y's boycott. (iv) Same as (ii), except A neither knows nor has reason to know why Y has chosen B. Y's request is not reportable, because A neither knows nor has reason to know that Y's request is based on Y's boycott. (v) A, a controlled foreign subsidiary of U.S. company B, is a resident of boycotting country Y. A is a general contractor. After being supplied by A with a list of competent subcontractors, A's customer instructs A to use subcontractor C on the project. A believes that C was chosen because, among other things, the other listed subcontractors are blacklisted. The instruction to A by its customer that C be used on the project is reportable, because it is a request to comply with Y's boycott requirements. (vi) A, a controlled foreign subsidiary of U.S. company B, is located in non-boycotting country P. A receives an order for washing machines from boycotting country Y. Y instructs A that a negative certificate of origin must accompany the shipment. The washing machines are made wholly in P, without U.S. components. Y's instruction to A regarding the negative certificate of origin is not reportable, because the transaction to which it relates is not in U.S. commerce. (vii) Same as (vi), except that A obtains components from the United States for the purpose of filling the order from Y. Y's instruction to A regarding the negative certificate of origin is reportable, because the transaction to which it relates is in U.S. commerce. (viii) A, a U.S. construction company, receives in the mail an unsolicited invitation to bid on a construction project in boycotting country Y. The invitation to bid requires those who respond to certify that they do not have any plants or branch offices in boycotted country X. A does not respond. A's receipt of the unsolicited invitation to bid is not reportable, because the request does not relate to any present or anticipated business of A with or in Y. (ix) Same as (viii), except that A receives a boycott questionnaire from a central boycott office. A does not do business in any of the boycotting countries involved, and does not anticipate doing any business in those countries. A does not respond. A's receipt of the boycott questionnaire is not reportable, because it does not relate to any present or anticipated business by A with or in a boycotting country. (x) A, a U.S. manufacturer, is seeking markets in which to expand its exports. A sends a representative to boycotting country Y to explore Y's potential as a market for A's products. A's representative discusses its products but does not enter into any contracts on that trip. A does, however, hope that sales will materialize in the future. Subsequently, A receives a boycott questionnaire from Y. A's receipt of the boycott questionnaire is reportable, because the request relates to A's anticipated business with or in a boycotting country. For purposes of determining whether a report is required, it makes no difference whether A responds to the questionnaire, and it makes no difference that actual sales contracts are not in existence or do not materialize. (xi) Same as (x), except that A's representative enters into a contract to sell A's products to a buyer in boycotting country Y. Subsequently, A receives a boycott questionnaire from Y. A's receipt of the boycott questionnaire is reportable, because it relates to A's present business with or in a boycotting country. For purposes of determining whether a report is required, it makes no difference whether A responds to the questionnaire. (xii) A, a U.S. freight forwarder, purchases an exporter's guidebook which includes the import requirements of boycotting country Y. The guidebook contains descriptions of actions which U.S. exporters must take in order to make delivery of goods to Y. A's acquisition of the guidebook is not reportable, because he has not received a request from anyone. (xiii) A, a U.S. freight forwarder, is arranging for the shipment of goods to boycotting country Y at the request of B, a U.S. exporter. B asks A to assume responsibility to assure that the documentation accompanying the shipment is in compliance with Y's import requirements. A examines an exporters' guidebook, determines that Y's import regulations require a certification that the insurer of the goods is not blacklisted and asks U.S. insurer C for such a certification. B's request to A is reportable by A, because it constitutes a request to comply with Y's boycott as of the time A takes action to comply with Y's boycott requirements in response to the request. A's request to C is reportable by C. (xiv) A, a U.S. freight forwarder, is arranging for the shipment of U.S. goods to boycotting country Y. The manufacturer supplies A with all the necessary documentation to accompany the shipment. Among the documents supplied by the manufacturer is his certificate that he himself is not blacklisted. A transmits the documentation supplied by the manufacturer. A's action in merely transmitting documents received from the manufacturer is not reportable, because A has received no request to comply with Y's boycott. (xv) Same as (xiv), except that A is asked by U.S. exporter B to assume the responsibility to assure that the necessary documentation accompanies the shipment whatever that documentation might be. B forwards to A a letter of credit which requires that a negative certificate of origin accompany the bill of lading. A supplies a positive certificate of origin. Both A and B must report receipt of the letter of credit, because it contains a request to both of them to comply with Y's boycott. (xvi) Same as (xiv), except that the manufacturer fails to supply a required negative certificate of origin, and A is subsequently asked by a consular official of Y to see to it that the certificate is supplied. A supplies a positive certificate of origin. The consular official's request to A is reportable by A, because A was asked to comply with Y's boycott requirements by supplying the negative certificate of origin. (xvii) A, a U.S. manufacturer, is shipping goods to boycotting country Y. Arrangements have been made for freight forwarder B to handle the shipment and secure all necessary shipping certifications. B notes that the letter of credit requires that the manufacturer supply a negative certificate of origin and B asks A to do so. A supplies a positive certificate of origin. B's request to A is reportable by A, because A is asked to comply with Y's boycott requirements by providing the negative certificate. (xviii) A, a controlled foreign subsidiary of U.S. company B, is a resident of boycotting country Y. A is engaged in oil exploration and drilling operations in Y. In placing orders for drilling equipment to be shipped from the United States, A, in compliance with Y's laws, selects only those suppliers who are not blacklisted. A's action in choosing non-blacklisted suppliers is not reportable, because A has not received a request to comply with Y's boycott in making these selections. (xix) A, a controlled foreign subsidiary of U.S. company B, is seeking permission to do business in boycotting country Y. Before being granted such permission, A is asked to sign an agreement to comply with Y's boycott laws. The request to A is reportable, because it is a request that expressly requires compliance with Y's boycott law and is received in connection with A's anticipated business in Y. (xx) A, a U.S. bank, is asked by a firm in boycotting country Y to confirm a letter of credit in favor of B, a U.S. company. The letter of credit calls for a certificate from B that the goods to be supplied are not produced by a firm blacklisted by Y. A informs B of the letter of credit, including its certification condition, and sends B a copy. B must report the certification request contained in the letter of credit, and A must report the request to confirm the letter of credit containing the boycott condition, because both are being asked to comply with Y's boycott. (xxi) Same as (xx), except that the letter of credit calls for a certificate from the beneficiary that the goods will not be shipped on a vessel that will call at a port in boycotted country X before making delivery in Y. The request is not reportable, because it is a request of a type deemed by this section to be in common use for non-boycott purposes. (xxii) A, a U.S. company, receives a letter of credit from boycotting country Y stating that on no condition may a bank blacklisted by Y be permitted to negotiate the credit. A's receipt of the letter of credit is reportable, because it contains a request to A to comply with Y's boycott requirements. (xxiii) A, a U.S. bank, receives a demand draft from B, a U.S. company, in connection with B's shipment of goods to boycotting country Y. The draft contains a directive that it is valid in all countries except boycotted country X. A's receipt of the demand draft is reportable, because it contains a request to A to comply with Y's boycott requirements. (xxiv) A, a U.S. exporter, receives an order from boycotting country Y. On the order is a legend that A's goods, invoices, and packaging must not bear a six-pointed star or other symbol of boycotted country X. A's receipt of the order is reportable, because it contains a request to comply with Y's boycott requirements. (xxv) Same as (xxiv), except the order contains a statement that goods exported must not represent part of war reparations to boycotted country X. A's receipt of the order is reportable, because it contains a request to A to comply with Y's boycott requirements. (xxvi) A, a U.S. contractor, is negotiating with boycotting country Y to build a school in Y. During the course of the negotiations, Y suggests that one of the terms of the construction contract be that A agree not to import materials produced in boycotted country X. It is A's company policy not to agree to such a contractual clause, and A suggests that instead it agree that all of the necessary materials will be obtained from U.S. suppliers. Y agrees to A's suggestion and a contract is executed. A has received a reportable request, but, for purposes of reporting, the request is deemed to be received when the contract is executed. (xxvii) Same as (xxvi), except Y does not accept A's suggested alternative clause and negotiations break off. A's receipt of Y's request is reportable. For purposes of reporting, it makes no difference that A was not successful in the negotiations. The request is deemed to be received at the time the negotiations break off. (xxviii) A, a U.S. insurance company, is insuring the shipment of drilling equipment to boycotting country Y. The transaction is being financed by a letter of credit which requires that A certify that it is not blacklisted by Y. Freight forwarder B asks A to supply the certification in order to satisfy the requirements of the letter of credit. The request to A is reportable by A, because it is a request to comply with Y's boycott requirements. (xxix) A, a U.S. manufacturer, is engaged from time-to-time in supplying drilling rigs to company B in boycotting country Y. B insists that its suppliers sign contracts which provide that, even after title passes from the supplier to B, the supplier will bear the risk of loss and indemnify B if goods which the supplier has furnished are denied entry into Y for whatever reason. A knows or has reason to know that this contractual provision is required by B because of Y's boycott, and that B has been using the provision since 1977. A receives an order from B which contains such a clause. B's request is not reportable by A, because the request is deemed to be not reportable by these regulations if the provision was in use by B prior to January 18, 1978. (xxx) Same as (xxix), except that A does not know when B began using the provision. Unless A receives information from B that B introduced the term prior to January 18, 1978, A must report receipt of the request. (xxxi) A, a U.S. citizen, is a shipping clerk for B, a U.S. manufacturing company. In the course of his employment, A receives an order for goods from boycotting country Y. The order specifies that none of the components of the goods is to be furnished by blacklisted firms. B must report the request received by its employee, A, acting in the scope of his employment. Although A is a U.S. person, such an individual does not have a separate obligation to report requests received by him in his capacity as an employee of B. (xxxii) U.S. exporter A is negotiating a transaction with boycotting country Y. A knows that at the conclusion of the negotiations he will be asked by Y to supply certain boycott-related information and that such a request is reportable. In an effort to forestall the request and thereby avoid having to file a report, A supplies the information in advance. A is deemed to have received a reportable request. (xxxiii) A, a controlled foreign affiliate of U.S. company B, receives an order for computers from boycotting country Y and obtains components from the United States for the purpose of filling the order. Y instructs A that a negative certificate of origin must accompany the shipment. Y's instruction to A regarding the negative certificate of origin is reportable by A. Moreover, A may designate B or any other person to report on its behalf. However, A remains liable for any failure to report or for any representations made on its behalf. (xxxiv) U.S. exporter A, in shipping goods to boycotting country Y, receives a request from the customer in Y to state on the bill of lading that the vessel is allowed to enter Y's ports. The request further states that a certificate from the owner or master of the vessel to that effect is acceptable. The request A received from his customer in Y is not reportable because it is a request of a type deemed to be not reportable by these regulations. (A may not make such a statement on the bill of lading himself, if he knows or has reason to know it is requested for a boycott purpose.) (xxxv) U.S. exporter A, in shipping goods to boycotting country Y, receives a request from the customer in Y to furnish a certificate from the owner of the vessel that the vessel is permitted to call at Y's ports. The request A received from his customer in Y is not reportable because it is a request of a type deemed to be not reportable by these regulations. (xxxvi) U.S. exporter A, in shipping goods to boycotting country Y, receives a request from the customer in Y to furnish a certificate from the insurance company indicating that the company has a duly authorized representative in country Y and giving the name of that representative. The request A received from his customer in Y is not reportable if it was received after the effective date of these rules, because it is a request of a type deemed to be not reportable by these regulations. The following examples are intended to give guidance in determining what is reportable. They are illustrative, not comprehensive. (i) A, a U.S. manufacturer, is shipping goods to boycotting country Y and is asked by Y to certify that it is not blacklisted by Y's boycott office. The request to A is reportable, because it is a request to A to comply with Y's boycott requirements. (ii) A, a U.S. manufacturing company, receives an order for tractors from boycotting country Y. Y's order specifies that the tires on the tractors be made by B, another U.S. company. A believes Y has specified B as the tire supplier because otherwise A would have used tires made by C, a blacklisted company, and Y will not take shipment of tractors containing tires made by blacklisted companies. A must report Y's request for tires made by B, because A has reason to know that B was chosen for boycott reasons. (iii) Same as (ii), except A knows that Y's request has nothing to do with the boycott but simply reflects Y's preference for tires made by B. Y's request is not reportable, because it is unrelated to Y's boycott. (iv) Same as (ii), except A neither knows nor has reason to know why Y has chosen B. Y's request is not reportable, because A neither knows nor has reason to know that Y's request is based on Y's boycott. (v) A, a controlled foreign subsidiary of U.S. company B, is a resident of boycotting country Y. A is a general contractor. After being supplied by A with a list of competent subcontractors, A's customer instructs A to use subcontractor C on the project. A believes that C was chosen because, among other things, the other listed subcontractors are blacklisted. The instruction to A by its customer that C be used on the project is reportable, because it is a request to comply with Y's boycott requirements. (vi) A, a controlled foreign subsidiary of U.S. company B, is located in non-boycotting country P. A receives an order for washing machines from boycotting country Y. Y instructs A that a negative certificate of origin must accompany the shipment. The washing machines are made wholly in P, without U.S. components. Y's instruction to A regarding the negative certificate of origin is not reportable, because the transaction to which it relates is not in U.S. commerce. (vii) Same as (vi), except that A obtains components from the United States for the purpose of filling the order from Y. Y's instruction to A regarding the negative certificate of origin is reportable, because the transaction to which it relates is in U.S. commerce. (viii) A, a U.S. construction company, receives in the mail an unsolicited invitation to bid on a construction project in boycotting country Y. The invitation to bid requires those who respond to certify that they do not have any plants or branch offices in boycotted country X. A does not respond. A's receipt of the unsolicited invitation to bid is not reportable, because the request does not relate to any present or anticipated business of A with or in Y. (ix) Same as (viii), except that A receives a boycott questionnaire from a central boycott office. A does not do business in any of the boycotting countries involved, and does not anticipate doing any business in those countries. A does not respond. A's receipt of the boycott questionnaire is not reportable, because it does not relate to any present or anticipated business by A with or in a boycotting country. (x) A, a U.S. manufacturer, is seeking markets in which to expand its exports. A sends a representative to boycotting country Y to explore Y's potential as a market for A's products. A's representative discusses its products but does not enter into any contracts on that trip. A does, however, hope that sales will materialize in the future. Subsequently, A receives a boycott questionnaire from Y. A's receipt of the boycott questionnaire is reportable, because the request relates to A's anticipated business with or in a boycotting country. For purposes of determining whether a report is required, it makes no difference whether A responds to the questionnaire, and it makes no difference that actual sales contracts are not in existence or do not materialize. (xi) Same as (x), except that A's representative enters into a contract to sell A's products to a buyer in boycotting country Y. Subsequently, A receives a boycott questionnaire from Y. A's receipt of the boycott questionnaire is reportable, because it relates to A's present business with or in a boycotting country. For purposes of determining whether a report is required, it makes no difference whether A responds to the questionnaire. (xii) A, a U.S. freight forwarder, purchases an exporter's guidebook which includes the import requirements of boycotting country Y. The guidebook contains descriptions of actions which U.S. exporters must take in order to make delivery of goods to Y. A's acquisition of the guidebook is not reportable, because he has not received a request from anyone. (xiii) A, a U.S. freight forwarder, is arranging for the shipment of goods to boycotting country Y at the request of B, a U.S. exporter. B asks A to assume responsibility to assure that the documentation accompanying the shipment is in compliance with Y's import requirements. A examines an exporters' guidebook, determines that Y's import regulations require a certification that the insurer of the goods is not blacklisted and asks U.S. insurer C for such a certification. B's request to A is reportable by A, because it constitutes a request to comply with Y's boycott as of the time A takes action to comply with Y's boycott requirements in response to the request. A's request to C is reportable by C. (xiv) A, a U.S. freight forwarder, is arranging for the shipment of U.S. goods to boycotting country Y. The manufacturer supplies A with all the necessary documentation to accompany the shipment. Among the documents supplied by the manufacturer is his certificate that he himself is not blacklisted. A transmits the documentation supplied by the manufacturer. A's action in merely transmitting documents received from the manufacturer is not reportable, because A has received no request to comply with Y's boycott. (xv) Same as (xiv), except that A is asked by U.S. exporter B to assume the responsibility to assure that the necessary documentation accompanies the shipment whatever that documentation might be. B forwards to A a letter of credit which requires that a negative certificate of origin accompany the bill of lading. A supplies a positive certificate of origin. Both A and B must report receipt of the letter of credit, because it contains a request to both of them to comply with Y's boycott. (xvi) Same as (xiv), except that the manufacturer fails to supply a required negative certificate of origin, and A is subsequently asked by a consular official of Y to see to it that the certificate is supplied. A supplies a positive certificate of origin. The consular official's request to A is reportable by A, because A was asked to comply with Y's boycott requirements by supplying the negative certificate of origin. (xvii) A, a U.S. manufacturer, is shipping goods to boycotting country Y. Arrangements have been made for freight forwarder B to handle the shipment and secure all necessary shipping certifications. B notes that the letter of credit requires that the manufacturer supply a negative certificate of origin and B asks A to do so. A supplies a positive certificate of origin. B's request to A is reportable by A, because A is asked to comply with Y's boycott requirements by providing the negative certificate. (xviii) A, a controlled foreign subsidiary of U.S. company B, is a resident of boycotting country Y. A is engaged in oil exploration and drilling operations in Y. In placing orders for drilling equipment to be shipped from the United States, A, in compliance with Y's laws, selects only those suppliers who are not blacklisted. A's action in choosing non-blacklisted suppliers is not reportable, because A has not received a request to comply with Y's boycott in making these selections. (xix) A, a controlled foreign subsidiary of U.S. company B, is seeking permission to do business in boycotting country Y. Before being granted such permission, A is asked to sign an agreement to comply with Y's boycott laws. The request to A is reportable, because it is a request that expressly requires compliance with Y's boycott law and is received in connection with A's anticipated business in Y. (xx) A, a U.S. bank, is asked by a firm in boycotting country Y to confirm a letter of credit in favor of B, a U.S. company. The letter of credit calls for a certificate from B that the goods to be supplied are not produced by a firm blacklisted by Y. A informs B of the letter of credit, including its certification condition, and sends B a copy. B must report the certification request contained in the letter of credit, and A must report the request to confirm the letter of credit containing the boycott condition, because both are being asked to comply with Y's boycott. (xxi) Same as (xx), except that the letter of credit calls for a certificate from the beneficiary that the goods will not be shipped on a vessel that will call at a port in boycotted country X before making delivery in Y. The request is not reportable, because it is a request of a type deemed by this section to be in common use for non-boycott purposes. (xxii) A, a U.S. company, receives a letter of credit from boycotting country Y stating that on no condition may a bank blacklisted by Y be permitted to negotiate the credit. A's receipt of the letter of credit is reportable, because it contains a request to A to comply with Y's boycott requirements. (xxiii) A, a U.S. bank, receives a demand draft from B, a U.S. company, in connection with B's shipment of goods to boycotting country Y. The draft contains a directive that it is valid in all countries except boycotted country X. A's receipt of the demand draft is reportable, because it contains a request to A to comply with Y's boycott requirements. (xxiv) A, a U.S. exporter, receives an order from boycotting country Y. On the order is a legend that A's goods, invoices, and packaging must not bear a six-pointed star or other symbol of boycotted country X. A's receipt of the order is reportable, because it contains a request to comply with Y's boycott requirements. (xxv) Same as (xxiv), except the order contains a statement that goods exported must not represent part of war reparations to boycotted country X. A's receipt of the order is reportable, because it contains a request to A to comply with Y's boycott requirements. (xxvi) A, a U.S. contractor, is negotiating with boycotting country Y to build a school in Y. During the course of the negotiations, Y suggests that one of the terms of the construction contract be that A agree not to import materials produced in boycotted country X. It is A's company policy not to agree to such a contractual clause, and A suggests that instead it agree that all of the necessary materials will be obtained from U.S. suppliers. Y agrees to A's suggestion and a contract is executed. A has received a reportable request, but, for purposes of reporting, the request is deemed to be received when the contract is executed. (xxvii) Same as (xxvi), except Y does not accept A's suggested alternative clause and negotiations break off. A's receipt of Y's request is reportable. For purposes of reporting, it makes no difference that A was not successful in the negotiations. The request is deemed to be received at the time the negotiations break off. (xxviii) A, a U.S. insurance company, is insuring the shipment of drilling equipment to boycotting country Y. The transaction is being financed by a letter of credit which requires that A certify that it is not blacklisted by Y. Freight forwarder B asks A to supply the certification in order to satisfy the requirements of the letter of credit. The request to A is reportable by A, because it is a request to comply with Y's boycott requirements. (xxix) A, a U.S. manufacturer, is engaged from time-to-time in supplying drilling rigs to company B in boycotting country Y. B insists that its suppliers sign contracts which provide that, even after title passes from the supplier to B, the supplier will bear the risk of loss and indemnify B if goods which the supplier has furnished are denied entry into Y for whatever reason. A knows or has reason to know that this contractual provision is required by B because of Y's boycott, and that B has been using the provision since 1977. A receives an order from B which contains such a clause. B's request is not reportable by A, because the request is deemed to be not reportable by these regulations if the provision was in use by B prior to January 18, 1978. (xxx) Same as (xxix), except that A does not know when B began using the provision. Unless A receives information from B that B introduced the term prior to January 18, 1978, A must report receipt of the request. (xxxi) A, a U.S. citizen, is a shipping clerk for B, a U.S. manufacturing company. In the course of his employment, A receives an order for goods from boycotting country Y. The order specifies that none of the components of the goods is to be furnished by blacklisted firms. B must report the request received by its employee, A, acting in the scope of his employment. Although A is a U.S. person, such an individual does not have a separate obligation to report requests received by him in his capacity as an employee of B. (xxxii) U.S. exporter A is negotiating a transaction with boycotting country Y. A knows that at the conclusion of the negotiations he will be asked by Y to supply certain boycott-related information and that such a request is reportable. In an effort to forestall the request and thereby avoid having to file a report, A supplies the information in advance. A is deemed to have received a reportable request. (xxxiii) A, a controlled foreign affiliate of U.S. company B, receives an order for computers from boycotting country Y and obtains components from the United States for the purpose of filling the order. Y instructs A that a negative certificate of origin must accompany the shipment. Y's instruction to A regarding the negative certificate of origin is reportable by A. Moreover, A may designate B or any other person to report on its behalf. However, A remains liable for any failure to report or for any representations made on its behalf. (xxxiv) U.S. exporter A, in shipping goods to boycotting country Y, receives a request from the customer in Y to state on the bill of lading that the vessel is allowed to enter Y's ports. The request further states that a certificate from the owner or master of the vessel to that effect is acceptable. The request A received from his customer in Y is not reportable because it is a request of a type deemed to be not reportable by these regulations. (A may not make such a statement on the bill of lading himself, if he knows or has reason to know it is requested for a boycott purpose.) (xxxv) U.S. exporter A, in shipping goods to boycotting country Y, receives a request from the customer in Y to furnish a certificate from the owner of the vessel that the vessel is permitted to call at Y's ports. The request A received from his customer in Y is not reportable because it is a request of a type deemed to be not reportable by these regulations. (xxxvi) U.S. exporter A, in shipping goods to boycotting country Y, receives a request from the customer in Y to furnish a certificate from the insurance company indicating that the company has a duly authorized representative in country Y and giving the name of that representative. The request A received from his customer in Y is not reportable if it was received after the effective date of these rules, because it is a request of a type deemed to be not reportable by these regulations." 7:7:7.1.1.4.11.1.5.1,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.1 Administration.,FSA,,,,"This indemnity payment program will be carried out by FSA under the direction and supervision of the Deputy Administrator. In the field, the program will be administered by the State and county committees." 7:7:7.1.1.4.11.1.5.2,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.2 Definitions.,FSA,,,"[43 FR 10535, Mar. 14, 1978, as amended by Amdt. 1, 44 FR 36360, July 22, 1979; 52 FR 17935, May 13, 1987; 53 FR 44001, Nov. 1, 1988; 56 FR 1358, Jan. 14, 1991; 61 FR 18485, Apr. 26, 1996; 71 FR 27190, May 10, 2006; 84 FR 28176, June 18, 2019; 86 FR 70702, Dec. 13, 2021]","For purposes of this subject, the following terms shall have the meanings specified: Affected farmer means a person who produces whole milk which is removed from the commercial market any time from: (1) Pursuant to the direction of a public agency because of the detection of pesticide residues in such whole milk by tests made by a public agency or under a testing program deemed adequate for the purpose by a public agency, or (2) Pursuant to the direction of a public agency because of the detection of other residues of chemicals or toxic substances residues, or contamination from nuclear radiation or fallout in such whole milk by tests made by a public agency or under a testing program deemed adequate for the purpose by a public agency. Affected manufacturer means a person who manufactures dairy products which are removed from the commercial market pursuant to the direction of a public agency because of the detection of pesticide residue in such dairy products by tests made by a public agency or under a testing program deemed adequate for the purpose by a public agency. Application period means any period during which an affected farmer's whole milk is removed from the commercial market pursuant to direction of a public agency for a reason specified in paragraph (k) of this section and for which application for payment is made. Base period means the calendar month or 4-week period immediately preceding removal of milk from the market. Chemicals or Toxic Substances means any chemical substance or mixture as defined in the Toxic Substances Control Act (15 U.S.C. 2602). Commercial market means (1) the market to which the affected farmer normally delivers his whole milk and from which it was removed because of detection therein of a residue of a violating substance(s) or (2) the market to which the affected manufacturer normally delivers his dairy products and from which they were removed because of detection therein of pesticide residue. Contaminated milk means milk containing elevated levels of any violating substance that may affect public health based on tests made by the applicable public agency and resulting in the removal of the milk from the commercial market. County committee means the FSA county committee. Depopulation means, consistent with the American Veterinary Medical Association (AVMA) 1 definition, the rapid destruction of a population of cows with as much consideration given to the welfare of the animals as practicable. 1 The AVMA Guidelines for the Depopulation of Animals is available at: https://www.avma.org/sites/default/files/resources/AVMA-Guidelines-for-the-Depopulation-of-Animals.pdf. Deputy Administrator means the Deputy Administrator for Farm Programs, FSA. FSA means the Farm Service Agency, U.S. Department of Agriculture. Milk handler means the marketing agency to or through which the affected dairy farmer marketed his whole milk at the time he was directed by the public agency to remove his whole milk from the commercial market. Not marketable means no commercial market is available for affected cows to be slaughtered, processed, and marketed through the food chain system as determined by the Deputy Administrator. Nuclear Radiation or Fallout means contamination from nuclear radiation or fallout from any source. Pay period means (1) in the case of an affected farmer who markets his whole milk through a milk handler, the period used by the milk handler in settling with the affected farmer for his whole milk, usually biweekly or monthly, or (2) in the case of an affected farmer whose commercial market consists of direct retail sales to consumers, a calendar month. Payment subject to refund means a payment which is made by a milk handler to an affected farmer, and which such farmer is obligated to refund to the milk handler. Person means an individual, partnership, association, corporation, trust, estate, or other legal entity. Pesticide means an economic poison which was registered pursuant to the provisions of the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. 135 through 135k), and approved for use by the Federal Government. Public agency means any Federal, State or local public regulatory agency. Removed from the commercial market means (1) produced and destroyed or fed to livestock, (2) produced and delivered to a handler who destroyed it or disposed of it as salvage (such as separating whole milk, destroying the fat, and drying the skim milk), or (3) produced and otherwise diverted to other than the commercial market. Same loss means the event or trigger that caused the milk to be removed from the commercial market. For example, if milk is contaminated, the original cause of the contamination was the trigger and any loss related to that contamination would be considered the same loss. Secretary means the Secretary of Agriculture of the United States or any officer or employee of the U.S. Department of Agriculture to whom he has delegated, or to whom he may hereafter delegate, authority to act in his stead. State committee means the FSA State committee. Violating substance means one or more of the following, as defined in this section: Pesticide, chemicals or toxic substances, or nuclear radiation or fallout. Whole milk means milk as it is produced by cows." 7:7:7.1.1.4.11.1.6.10,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.10 Indemnity payments for cows.,FSA,,,"[86 FR 70703, Dec. 13, 2021]","(a) The Deputy Administrator for Farm Programs (DAFP) will determine eligibility for DIPP indemnification based on if the cows of the affected farmer are likely to be not marketable for 3 months or longer [from the date the affected farmer submits an application for cow indemnification per § 760.13]. The Deputy Administrator will review the following factors in making that determination: (1) Milk testing results; (2) Non marketability of affected cows through commercial marketing facilities; (3) Type and source of chemical residues impacting the milk and animal tissues; and (4) Projected duration for chemical residue reduction including the actions taken by the affected farmer to reduce the chemical residues to marketable levels since the affected cows were discovered. (b) See § 760.11 for indemnity payment eligibility for bred and open heifers. (c) Affected farmers applying for indemnification of cows, including heifers, must develop a removal plan both to permanently remove the affected cows by depopulating the cows. (1) The removal plan for affected cows for which an affected farmer applies for indemnification under DIPP must be approved by the applicable public agency where the cows are located and must be in accordance with any applicable Environmental Protection Agency (EPA) and public agency depopulation and animal disposal requirements and guidelines, including contaminant disposal requirements, in the State where the affected cows are located. (2) The approved removal plan must be submitted with the application for indemnification. (d) The amount of an indemnity payment for cows to an affected farmer who is determined by the Deputy Administrator to be eligible for indemnification and by the county committee to be in compliance with all the terms and conditions of this subpart will be based on the national average fair market value of the cows. DIPP cow indemnification will be based on the 100 percent value of the Livestock Indemnity Program (LIP) rates as applicable for the calendar year for milk indemnification established for dairy cows, per head. For example, for a 100-cow farm: 100 cows multiplied by $1,300 (2021 LIP rate based on 100 percent value of average cow) = $130,000 payment. (e) For any cow indemnification payment under this section or § 760.11, the affected farmer has the option to receive 50 percent of calculated payment in advance after application approval with the remaining fifty percent paid after the affected cows have been depopulated and removed. Otherwise, the affected farmer may choose to receive 100 percent of payment after cows have been depopulated and removed. Documented records of depopulation and removal of affected cows must be provided to FSA to the satisfaction of the county committee, before the final payment will be made. (f) Upon written request from an affected farmer on a form authorized by the Deputy Administrator, the Deputy Administrator may approve, at the Deputy Administrator's discretion, indemnification of additional affected cows as specified in paragraphs (f)(1) through (3) of this section. (1) The affected cows were depopulated or died above normal mortality rates for cows between approval of the affected farmer's application for the first month of milk indemnity and public agency approval of the affected farmer's removal plan for cow indemnification. Normal mortality rates established annually by the FSA State committee for their state for the following cow and heifer weight groups will be used: (i) Dairy, nonadult less than 400 pounds; (ii) Dairy, nonadult 400 pounds or more; and (iii) Dairy, adult cow. (2) This request may include both cows that were included in applications for milk indemnity and heifers that were affected from the same loss. (3) An affected farmer making such a request must submit the information specified in § 760.12(c). (g) Affected cows that are marketed as cull or for breeding are not eligible for indemnification." 7:7:7.1.1.4.11.1.6.11,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.11 Indemnity payments for bred and open heifers.,FSA,,,"[86 FR 70704, Dec. 13, 2021]","(a) Bred (young dairy female in gestation) and open (young dairy female not in gestation) heifers that contain elevated levels of chemical residues as the result of the same loss may be eligible for indemnification through DIPP. For affected bred and open heifers participating affected farmers may receive indemnification if the farmer's dairy cows were determined to be likely not marketable for three months or longer according to § 760.10(a) and the Deputy Administrator determines the bred and open heifers to be eligible under paragraph (b) of this section. Except as provided in this section or otherwise stated in this subpart, the provisions in this subpart for cow indemnity apply equally to bred and open heifers, for example the removal requirements in § 760.10(b). (b) The county committee will make the recommendation to the Deputy Administrator to determine if eligible bred and open heifers that have been affected by the same loss will likely be not marketable for 3 months or longer from the date the affected farmer submits an application for cow indemnification per § 760.13 because of elevated levels of chemical residues that will pass through milk once lactating. Affected farmers must provide the information specified in § 760.12(a) and (b) for the county committee to make a recommendation of eligibility to the Deputy Administrator. The Deputy Administrator will take into consideration the recommendation of the county committee in making its eligibility determination. (c) The amount of the cow indemnity for bred and open heifers will be based on the national average fair market value of the non-adult heifers. DIPP bred and open heifer indemnification will be based on the 100 percent value of the Livestock Indemnity Program (LIP) rates as applicable for the calendar year of milk indemnification established for non-adult dairy, by weight range, per head. For example, for an affected farmer with 40 bred or open heifers at different weight ranges: 10 bred heifers at 800 pounds or more multiplied by $986.13 ($9861.30), 10 bred or open heifers at 400 to 799 pounds multiplied by $650.00 ($6500.00), 10 open heifers at 250 to 399 pounds multiplied by $325.00 ($3250.00), and 10 open heifers 250 pounds or less multiplied by $57.65 ($576.50) = $20,187.80 payment." 7:7:7.1.1.4.11.1.6.12,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,"§ 760.12 Information to be furnished for payment on dairy cows, and bred and open heifers.",FSA,,,"[86 FR 70704, Dec. 13, 2021]","(a) To apply for DIPP for affected cows, the affected farmer must provide the county committee complete and accurate information to enable the Deputy Administrator to make the determinations required in this subpart in addition to providing the information requested in § 760.6(a), (b), (h), and (i), if not previously provided to FSA in a milk indemnity application. The information specified in this section must be submitted as part of the cow indemnity application and includes, but is not limited to, the following items: (1) An inventory of all dairy cows as of the date of application including lactating cows, bred heifers, and open heifers on the farm; (2) A detailed description and timeline of how, where, and when cows will be depopulated and permanently removed from the farm (the removal plan); (3) Documentation of public agency approval of the removal plan for cow depopulation and cow and contaminate disposal in accordance with any applicable EPA and public agency disposal requirements and guidelines; (4) Documentation from 2 separate commercial markets stating that such market declined to accept the affected cows through a cull cow market, slaughter facility, or processing facility due to elevated levels of chemical residues; (5) Documentation of any projected timelines for reducing chemical residues, any actions the affected farmer has taken to reduce chemical residues to marketable levels including any documents verifying steps undertaken, and any professional assistance obtained, including, discussion of strategy with the public agencies; and (6) Any other documentation that may support the determination that the affected cows or milk from such cows is likely to be not marketable for longer than 3 months; and other documentation as requested or determined to be necessary by the county committee or the Deputy Administrator. (b) To apply for DIPP for bred and open heifers the affected farmer must provide the information specified in paragraph (a) of this section and: veterinarian records, blood test results, and other testing information requested by the county committee for the recommendation specified in § 760.11(b) and eligibility for indemnification. (c) To request consideration for indemnification of affected cows and heifers under § 760.10(e), the affected farmer must submit the information specified in paragraphs (c)(1) and (2) of this section to provide an accounting of affected cows and heifers that were depopulated or died above normal mortality rates for cows between approval of the affected farmer's application for the first month of milk indemnity and the public agency approval of the affected farmer's removal plan for cow indemnification. (1) Herd health record documenting cow and heifer deaths; and (2) Farm inventory or other record identifying the loss of dairy cows and heifers. (d) The affected farmer certifies at application that once the cow indemnity application is approved, the affected farmer will dry off all lactating cows in a reasonable timeframe and discontinue milking." 7:7:7.1.1.4.11.1.6.13,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.13 Application for payment of cows.,FSA,,,"[86 FR 70705, Dec. 13, 2021]","(a) Any affected farmer may apply for cow indemnity under §§ 760.10 and 760.11. To apply for DIPP for affected cows, the affected farmer must sign and file an application for payment on a form that is approved for that purpose by the Deputy Administrator and provide the information described in § 760.12. (b) The form must be filed with the FSA county office for the county where the farm headquarters is located by December 31 following the fiscal year end in which the affected farmer's milk was removed from the commercial market, except that affected farmers that have received 3 months of milk indemnity payments prior to December 13, 2021, must file the form within 120 days after December 13, 2021. Upon written request from an affected farmer and at Deputy Administrator's discretion, the deadline for that affected farmer may be extended." 7:7:7.1.1.4.11.1.6.3,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.3 Indemnity payments on milk.,FSA,,,"[86 FR 70703, Dec. 13, 2021]","(a) The amount of an indemnity payment for milk, including, but not limited to organic milk, made to an affected farmer who is determined by the county committee to be in compliance with all the terms and conditions of this subpart will be in the amount of the fair market value of the farmer's normal marketings for the application period, as determined in accordance with §§ 760.4 and 760.5, less: (1) Any amount the affected farmer received for whole milk marketed during the application period; and (2) Any payment not subject to refund that the affected farmer received from a milk handler with respect to milk removed from the commercial market during the application period. (b) The eligible period for Dairy Indemnity Payment Program (DIPP) benefits for milk for the same loss is limited to 3 calendar months from when the first claim for milk benefits is approved. Upon written request from an affected farmer on the milk indemnity form authorized by the Deputy Administrator, the Deputy Administrator may authorize, at the Deputy Administrator's discretion, additional months of benefits for the affected farmer for milk due to extenuating circumstances, which may include allowing additional time for public agency approval of a removal plan for cow indemnification and confirmation of site disposal for affected cows. Additionally, the Deputy Administrator has discretion to approve additional months based on issues that are beyond the control of the affected farmer who is seeking cow indemnification, as well as when the affected farmer is following a plan to reduce chemical residues in milk, cows, and heifers to marketable levels." 7:7:7.1.1.4.11.1.6.4,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.4 Normal marketings of milk.,FSA,,,"[43 FR 10535, Mar. 14, 1978, as amended by Amdt. 1, 44 FR 36360, July 22, 1979]","(a) The county committee shall determine the affected farmer's normal marketings which, for the purposes of this subpart, shall be the sum of the quantities of whole milk which such farmer would have sold in the commercial market in each of the pay periods in the application period but for the removal of his whole milk from the commercial market because of the detection of a residue of a violating substance. (b) Normal marketings for each pay period are based on the average daily production during the base period. (c) Normal marketings determined in paragraph (b) of this section are adjusted for any change in the daily average number of cows milked during each pay period the milk is off the market compared with the average number of cows milked daily during the base period. (d) If only a portion of a pay period falls within the application period, normal marketings for such pay period shall be reduced so that they represent only that part of such pay period which is within the application period." 7:7:7.1.1.4.11.1.6.5,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.5 Fair market value of milk.,FSA,,,,"(a) The county committee shall determine the fair market value of the affected farmer's normal marketings, which, for the purposes of this subpart, shall be the sum of the net proceeds such farmer would have received for his normal marketings in each of the pay periods in the application period. (b) The county committee shall determine the net proceeds the affected farmer would have received in each of the pay periods in the application period (1) in the case of an affected farmer who markets his whole milk through a milk handler, by multiplying the affected farmer's normal marketings for each such pay period by the average net price per hundred-weight of whole milk paid during the pay period by such farmer's milk handler in the same area for whole milk similar in quality and butterfat test to that marketed by the affected farmer in the base period used to determine his normal marketings, or (2) in the case of an affected farmer whose commercial market consists of direct retail sales to consumers, by multiplying the affected farmer's normal marketings for each such pay period by the average net price per hundredweight of whole milk, as determined by the county committee, which other producers in the same area who marketed their whole milk through milk handlers received for whole milk similar in quality and butterfat test to that marketed by the affected farmer during the base period used to determine his normal marketings. (c) In determining the net price for whole milk, the county committee shall deduct from the gross price therefor any transportation, administrative, and other costs of marketing which it determines are normally incurred by the affected farmer but which were not incurred because of the removal of his whole milk from the commercial market." 7:7:7.1.1.4.11.1.6.6,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.6 Information to be furnished.,FSA,,,"[43 FR 10535, Mar. 14, 1978, as amended by Amdt. 1, 44 FR 36360, June 22, 1979; 86 FR 70703, Dec. 13, 2021]","The affected farmer shall furnish to the county committee complete and accurate information sufficient to enable the county committee or the Deputy Administrator to make the determinations required in this subpart. Such information shall include, but is not limited to: (a) A copy of the notice from, or other evidence of action by, the public agency which resulted in the removal of the affected farmer's whole milk from the commercial market. (b) The specific name of the violating substance causing the removal of his whole milk from the commercial market, if not included in the notice or other evidence of action furnished under paragraph (a) of this section. (c) The quantity and butterfat test of whole milk produced and marketed during the base period. This information must be a certified statement from the affected farmer's milk handler or any other evidence the county committee accepts as an accurate record of milk production and butterfat tests during the base period. (d) The average number of cows milked during the base period and during each pay period in the application. (e) If the affected farmer markets his whole milk through a milk handler, a statement from the milk handler showing, for each pay period in the application period, the average price per hundred-weight of whole milk similar in quality to that marketed by the affected farmer during the base period used to determine his normal marketings. If the milk handler has information as to the transportation, administrative, and other costs of marketing which are normally incurred by producers who market through the milk handler but which the affected farmer did not incur because of removal of his whole milk from the market, the average price stated by the milk handler shall be the average gross price paid producers less any such costs. If the milk handler does not have such information, the affected farmer shall furnish a statement setting forth such costs, if any. (f) The amount of proceeds, if any, received by the affected farmer from the marketing of whole milk produced during the application period. (g) The amount of any payments not subject to refund made to the affected farmer by the milk handler with respect to the whole milk produced during the application period and remove from the commercial market. (h) To the extent that such information is available to the affected farmer, the name of any pesticide, chemical, or toxic substance used on the farm within 24 months prior to the application period, the use made of the pesticide, chemical, or toxic substance, the approximate date of such use, and the name of the manufacturer and the registration number, if any, on the label on the container of the pesticide, chemical, or toxic substance. (i) To the extent possible, the source of the pesticide, chemical, or toxic substance that caused the contamination of the whole milk, the results of any laboratory tests on the feed supply, and the monthly milk testing results that detail the chemical residue levels. (j) Such other information as the county committee may request to enable the county committee or the Deputy Administrator to make the determinations required in this subpart." 7:7:7.1.1.4.11.1.6.7,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.7 Conditions required for milk or cow indemnity.,FSA,,,"[86 FR 70703, Dec. 13, 2021]","(a) An indemnity payment for milk or cows (dairy cows including, but not limited to, bred and open heifers) may be made under this subpart to an affected farmer under the conditions in this section. (b) If the pesticide, chemical, or toxic substance, in the contaminated milk was used by the affected farmer, the affected farmer must establish that each of the conditions in this section are met: (1) That the pesticide, chemical, or toxic substance, when used, was registered (if applicable) and approved for use as provided in § 760.2(f); (2) That the contaminated milk was not the result of the affected farmer's failure to use the pesticide, chemical, or toxic substance, according to the directions and limitations stated on the label; and (3) That the contaminated milk was not otherwise the affected farmer's fault. (c) If the violating substance in the contaminated milk was not used by the affected farmer, the affected farmer must establish that each of the conditions in this section are met: (1) The affected farmer did not know or have reason to believe that any purchased feed contained a violating substance; (2) None of the milk was produced by dairy cattle that the affected farmer knew, or had reason to know at the time they were acquired, had elevated levels of a violating substance; and (3) The contaminated milk was not otherwise the affected farmer's fault. (d) The affected farmer has adopted recommended practices and taken action to eliminate or reduce chemical residues of violating substances from the milk as soon as practicable following the initial discovery of the contaminated milk." 7:7:7.1.1.4.11.1.6.8,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.8 Application for payments for milk.,FSA,,,"[43 FR 10535, Mar. 14, 1978, as amended at 51 FR 12986, Apr. 17, 1986; 52 FR 17935, May 13, 1987]","The affected farmer or his legal representative, as provided in §§ 760.25 and 760.29, must sign and file an application for payment on a form which is approved for that purpose by the Deputy Administrator. The form must be filed with the county FSA office for the county where the farm headquarters are located no later than December 31 following the end of the fiscal year in which the loss occurred, or such later date as the Deputy Administrator may specify. The application for payment shall cover application periods of at least 28 days, except that, if the entire application period, or the last application period, is shorter than 28 days, applications for payment may be filed for such shorter period. The application for payment shall be accompanied by the information required by § 760.6 as well as any other information which will enable the county committee to determine whether the making of an indemnity payment is precluded for any of the reasons set forth in § 760.7. Such information shall be submitted on forms approved for the purpose by the Deputy Administrator." 7:7:7.1.1.4.11.1.6.9,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.9 Payments for the same loss.,FSA,,,"[Amdt. 1, 44 FR 36361, June 22, 1979, as amended at 84 FR 28176, June 18, 2019; 86 FR 70703, Dec. 13, 2021]","(a) No indemnity payment shall be made for contaminated milk resulting from residues of chemicals or toxic substances if, within 30 days after receiving a complete application, the Deputy Administrator determines that other legal recouse is available to the farmer. An application shall not be deemed complete unless it contains all information necessary to make a determination as to whether other legal recourse is available to the farmer. However, notwithstanding such a determination, the Deputy Administrator may reopen the case at a later date and make a new determination on the merits of the case as may be just and equitable. (b) In the event that a farmer receives an indemnity payment under this subpart, and such farmer is later compensated for the same loss by the person (or the representative or successor in interest of such person) responsible for such loss, the indemnity payment shall be refunded by the farmer to the Department of Agriculture: Provided, That the amount of such refund shall not exceed the amount of other compensation received by the farmer. (c) For any affected farmer that exceeded 3 months of milk indemnity payments before December 13, 2021 no further payments for milk indemnity will be made for the same loss except as provided in § 760.3(b) and the affected farmer may apply for cow indemnity as specified in this subpart. (d) An affected farmer that has an approved application for cow indemnity is no longer eligible for milk indemnity payments for the same loss. (e) Cows purchased or bred after the initial discovery of the milk contamination are not eligible for DIPP benefits due to the same loss." 7:7:7.1.1.4.11.1.7.14,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.20 Payments to manufacturers of dairy products.,FSA,,,"[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]","An indemnity payment may be made to the affected manufacturer who is determined by the Deputy Administrator to be in compliance with all the terms and conditions of this subpart in the amount of the fair market value of the product removed from the commercial market because of pesticide residues, less any amount the manufacturer receives for the product in the form of salvage. Manufacturers are not eligible for payment when dairy products are contaminated by chemicals, toxic substances (other than pesticides) or nuclear radiation or fallout." 7:7:7.1.1.4.11.1.7.15,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.21 Application for payments by manufacturers.,FSA,,,,"The affected manufacturer, or his legal representatives, shall file an application for payment with the Deputy Administrator, FSA, Washington, D.C., through the county office serving the county where the contaminated product is located. The application for payment may be in the form of a letter or memorandum. Such letter or memorandum, however, must be accompanied by acceptable documentation to support such application for payment." 7:7:7.1.1.4.11.1.7.16,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.22 Information to be furnished by manufacturer.,FSA,,,,"The affected manufacturer shall furnish the Deputy Administrator, through the county committee, complete and accurate information sufficient to enable him to make the determination as to the manufacturer's eligibility to receive an indemnity payment. Such information shall include, but is not limited to: (a) A copy of the notice or other evidence of action by the public agency which resulted in the product being removed from the commercial market. (b) The name of the pesticide causing the removal of the product from the commercial market and, to the extent possible, the source of the pesticide. (c) A record of the quantity of milk or butterfat used to produce the product for which an indemnity payment is requested. (d) The identity of any pesticide used by the affected manufacturer. (e) Such other information as the Deputy Administrator may request to enable him to make the determinations required in this subpart." 7:7:7.1.1.4.11.1.7.17,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.23 Other requirements for manufacturers.,FSA,,,"[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982; 51 FR 12987, Apr. 17, 1986; 52 FR 17935, May 13, 1987]","An indemnity payment may be made under this subpart to an affected manufacturer only under the following conditions: (a) If the pesticide contaminating the product was used by the affected manufacturer, he establishes each of the following: (1) That the pesticide, when used, was registered and recommended for such use as provided in § 760.2(f); (2) that the contamination of his product was not the result of his failure to use the pesticide in accordance with the directions and limitations stated on the label of the pesticide; and (3) that the contamination of his product was not otherwise his fault. (b) If the pesticide contaminating the product was not used by the affected manufacturer: (1) He did not know or have reason to believe that the milk from which the product was processed contained a harmful level of pesticide residue, and (2) the contamination of his product was not otherwise his fault. (c) In the event that a manufacturer receives an indemnity payment under this subpart, and such manufacturer is later compensated for the same loss by the person (or the representative or successor in interest of such person) responsible for such loss, the indemnity payment shall be refunded by the manufacturer to the Department of Agriculture: Provided, That the amount of such refund shall not exceed the amount of other compensation received by the manufacturer." 7:7:7.1.1.4.11.1.8.18,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.24 Limitation of authority.,FSA,,,,"(a) County executive directors and State and county committees do not have authority to modify or waive any of the provisions of the regulations in this subpart. (b) The State committee may take any action authorized or required by the regulations in this subpart to be taken by the county committee when such action has not been taken by the county committee. The State committee may also: (1) Correct, or require a county committee to correct, any action taken by such county committee which is not in accordance with the regulations in this subpart, or (2) require a county committee to withhold taking any action which is not in accordance with the regulations in this subpart. (c) No delegation herein to a State or county committee shall preclude the Deputy Administrator or his designee from determining any question arising under the regulations in this subpart or from reversing or modifying any determination made by a State or county committee." 7:7:7.1.1.4.11.1.8.19,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.25 Estates and trusts; minors.,FSA,,,,"(a) A receiver of an insolvent debtor's estate and the trustee of a trust estate shall, for the purpose of this subpart, be considered to represent an insolvent affected farmer or manufacturer and the beneficiaries of a trust, respectively, and the production of the receiver or trustee shall be considered to be the production of the person or manufacturer he represents. Program documents executed by any such person will be accepted only if they are legally valid and such person has the authority to sign the applicable documents. (b) An affected dairy farmer or manufacturer who is a minor shall be eligible for indemnity payments only if he meets one of the following requirements: (1) The right of majority has been conferred on him by court proceedings or by statute; (2) A guardian has been appointed to manage his property and the applicable program documents are signed by the guardian; or (3) A bond is furnished under which the surety guarantees any loss incurred for which the minor would be liable had he been an adult." 7:7:7.1.1.4.11.1.8.20,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.26 Appeals.,FSA,,,,"The appeal regulations issued by the Administrator, FSA, part 780 of this chapter, shall be applicable to appeals by dairy farmers or manufacturers from determinations made pursuant to the regulations in this subpart." 7:7:7.1.1.4.11.1.8.21,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.27 Setoffs.,FSA,,,,"(a) If the affected farmer or manufacturer is indebted to any agency of the United States and such indebtedness is listed on the county debt record, indemnity payments due the affected farmer or manufacturer under the regulations in this part shall be applied, as provided in the Secretary's setoff regulations, part 13 of this title, to such indebtedness. (b) Compliance with the provisions of this section shall not deprive the affected farmer or manufacturer of any right he would otherwise have to contest the justness of the indebtedness involved in the setoff action, either by administrative appeal or by legal action." 7:7:7.1.1.4.11.1.8.22,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.28 Overdisbursement.,FSA,,,,"If the indemnity payment disbursed to an affected farmer or to a manufacturer exceeds the amount authorized under the regulations in this subpart, the affected farmer or manufacturer shall be personally liable for repayment of the amount of such excess." 7:7:7.1.1.4.11.1.8.23,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,"§ 760.29 Death, incompetency, or disappearance.",FSA,,,"[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]","In the case of the death, incompetency, or disappearance of any affected farmer or manufacturer who would otherwise receive an indemnity payment, such payment may be made to the person or persons specified in the regulations contained in part 707 of this chapter. The person requesting such payment shall file Form FSA-325, “Application for Payment of Amounts Due Persons Who Have Died, Disappeared, or Have Been Declared Incompetent,” as provided in that part." 7:7:7.1.1.4.11.1.8.24,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.30 Records and inspection thereof.,FSA,,,,"(a) The affected farmer, as well as his milk handler and any other person who furnished information to such farmer or to the county committee for the purpose of enabling such farmer to receive a milk indemnity payment under this subpart, shall maintain any existing books, records, and accounts supporting any information so furnished for 3 years following the end of the year during which the application for payment was filed. The affected farmer, his milk handler, and any other person who furnishes such information to the affected farmer or to the county committee shall permit authorized representatives of the Department of Agriculture and the General Accounting Office, during regular business hours, to inspect, examine, and make copies of such books, records, and accounts. (b) The affected manufacturer or any other person who furnishes information to the Deputy Administrator for the purposes of enabling such manufacturer to receive an indemnity payment under this subpart shall maintain any books, records, and accounts supporting any information so furnished for 3 years following the end of the year during which the application for payment was filed. The affected manufacturer or any other person who furnishes such information to the Deputy Administrator shall permit authorized representatives of the Department of Agriculture and the General Accounting Office, during regular business hours, to inspect, examine, and make copies of such books, records, and accounts." 7:7:7.1.1.4.11.1.8.25,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.31 Assignment.,FSA,,,,No assignment shall be made of any indemnity payment due or to come due under the regulations in this subpart. Any assignment or attempted assignment of any indemnity payment due or to come due under this subpart shall be null and void. 7:7:7.1.1.4.11.1.8.26,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.32 Instructions and forms.,FSA,,,"[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]","The Deputy Administrator shall cause to be prepared such forms and instructions as are necessary for carrying out the regulations in this subpart. Affected farmers and manufacturers may obtain information necessary to make application for a dairy indemnity payment from the county FSA office. Form FSA-373—Application for Indemnity Payment, is available at the county ASC office." 7:7:7.1.1.4.11.1.8.27,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,A,Subpart A—Dairy Indemnity Payment Program,,§ 760.33 Availability of funds.,FSA,,,"[75 FR 41367, July 16, 2010]","(a) Payment of indemnity claims will be contingent upon the availability of FSA funds to pay such claims. Claims will be, to the extent practicable within funding limits, paid from available funds, on a first-come, first-paid basis, based on the date FSA approves the application, until funds available in that fiscal year have been expended. (b) DIPP claims received in a fiscal year after all available funds have been expended will not receive payment for such claims." 7:7:7.1.1.4.11.10.9.1,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2200 Applicability.,FSA,,,"[90 FR 30569, July 10, 2025, as amended at 90 FR 51977, Nov. 18, 2025]","(a) This subpart specifies the eligibility requirements and payment calculations for the Supplemental Disaster Relief Program (SDRP), which is authorized by Title I of the Disaster Relief Supplemental Appropriations Act, 2025 (Division B of the American Relief Act, 2025; Pub. L. 118-158). SDRP provides payments to producers who suffered eligible losses of crops, trees, bushes, and vines due to qualifying disaster events, which include wildfires, hurricanes, floods, derechos, excessive heat, tornadoes, winter storms, freeze (including a polar vortex), smoke exposure, excessive moisture, qualifying drought, and related conditions occurring in calendar years 2023 and 2024. (b) To be eligible for an SDRP payment, a participant must comply with all applicable provisions under this subpart. (c) SDRP Stage 1 provides assistance for eligible losses of eligible crops, trees, and vines for which a producer had crop insurance or NAP coverage and received an indemnity for the applicable crop year. (d) SDRP Stage 2 provides assistance for eligible losses of eligible crops, trees, bushes, and vines for which a producer: (1) Had Federal crop insurance or NAP coverage but did not receive a Federal crop insurance indemnity or NAP payment for the applicable crop year; or (2) Did not have Federal crop insurance or NAP coverage for the applicable crop year." 7:7:7.1.1.4.11.10.9.10,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2209 Quality loss percentage calculation.,FSA,,,"[90 FR 51982, Nov. 18, 2025]","(a) Stage 1 quality loss payments and some Stage 2 payment calculations are calculated using a quality loss percentage. The quality loss percentage is the percentage of loss calculated for a reduction in the total dollar value of the crop due to reduction in the physical condition of the crop indicated by an applicable grading factor or applicable nutrient factor for the crop. The quality loss percentage is based on the weighted quality reduction of impacted production compared to the total overall production and calculated separately for crops based on the crop type, intended use, certified organic or conventional status, county, and crop year. (b) For forage crops, a quality loss percentage will be established using the following steps: (1) FSA will determine: (i) Acceptable high and low nutritional values; and (ii) The range determined by subtracting the low nutritional value from the high nutritional value; (2) The producer will submit a verifiable test to FSA that indicates the nutritional value for the impacted production; (3) To calculate the quality loss, the producer will: (i) Calculate the quality loss by subtracting the nutritional value from the verifiable test from the high nutritional value determined by FSA; (ii) Calculate the percentage difference by dividing the quality loss by the range specified in paragraph (b)(1)(ii) of this section; and (iii) Calculate the quality loss percentage by taking 100 percent minus the percentage difference in paragraph (b)(3)(ii) of this section. (4) The quality loss percentage will be specific and weighted to the impacted production. If there is production that was not impacted by quality or impacted at a different level, the quality loss percentage must be weighted against the respective impacted production. The producer must calculate their weighted quality loss percentage as follows: (i) Calculate the percent production impacted by quality loss by dividing the impacted production by the total production; and (ii) Calculate the weighted quality loss percentage by multiplying the percent production impacted by quality loss by the quality loss percentage. (iii) If more than one quality loss percentage applies, calculate the total weighted quality loss percentage by adding the separate calculated weighted quality loss percentages determined in paragraph (b)(4)(ii) of this section. (c) For crops other than forage, the producer will calculate the quality loss percentage by: (1) Calculating the total reduction in value due to quality; and (2) Calculating the quality loss percentage by dividing total reduction in value due to quality by the expected price the producer would have received at the point of sale if not for the quality discounts. (d) For Stage 1 quality loss payments for crops insured under APH and yield-based plans, RMA will provide the total revenue to count that was used in the calculation of the Stage 1 payment in accordance with § 760.2208(c). RMA will provide the production to count before quality adjustments and the percentage loss that was used to determine the production to count adjusted for quality. The applicant will certify the percent SDRP quality loss on FSA-526Q as provided in this section. If the producer's certified SDRP quality loss percentage is: (1) Less than or equal to the RMA quality loss percentage, FSA will not issue a Stage 1 quality loss payment; or (2) Greater than the RMA quality loss percentage, FSA will calculate the difference between the two percentages, and apply that percentage to the total revenue to count provided by RMA. The resulting value will equal the Stage 1 quality loss payment. (e) For Stage 1 quality loss payments for NAP-covered yield-based crops, FSA will provide the total revenue to count that was used in the calculation for Stage 1 in accordance with § 760.2208(d). The applicant will certify the percent quality loss on the FSA-526Q as provided in this section. FSA will calculate the Stage 1 quality loss payment as follows: (1) FSA will multiply the revenue to count by the SDRP quality loss percentage; (2) The result of paragraph (d)(1) of this section will be multiplied by the producer's share, and then multiplied by 35 percent to stay within available funding. The resulting value will constitute the quality loss payment." 7:7:7.1.1.4.11.10.9.11,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§§ 760.2210 [Reserved],FSA,,,, 7:7:7.1.1.4.11.10.9.12,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2211 Eligible Stage 2 production.,FSA,,,"[90 FR 51983, Nov. 18, 2025]","(a) The production to count for a crop and unit is the net production, which includes harvested, appraised, and assigned production, after any applicable production and quality adjustments. For insured and NAP-covered crops, production to count is determined by the applicable Federal crop insurance policy or NAP provisions. Total harvested production of eligible crop acreage includes all the harvests in the crop year and is not limited to one harvest in a crop year. (b) If a crop is appraised and subsequently harvested for the intended use, the actual harvested production must be taken into account to determine payments. FSA will determine whether a participant's evidence of actual production represents all that could or would have been harvested. (c) For all crops eligible for loan deficiency payments or marketing assistance loans (see parts 1421 and 1434 of this title) with an intended use of grain but harvested for another use such as silage, ensilage, or hay the production will be converted to a whole grain equivalent based on conversion factors as previously established by FSA. This also applies to commodities that are cracked, rolled, or crimped. (d) If a participant does not receive compensation based upon the quantity of the commodity delivered to a purchaser but has an agreement or contract for guaranteed payment for production, the determination of the production will be the greater of the actual production or the guaranteed payment converted to production as determined by FSA. (e) The producer is responsible for identifying production that is commingled between crop years, units, ineligible and eligible acres, or different practices. If the producer cannot provide evidence that adequately identifies such production, FSA may deny the application for payment or prorate such production to each respective crop year, unit, type of acreage, or practice, respectively. Commingled production may be attributed to an applicable unit, if prior to commingling, the producer has documented the production by unit and does any of the following: (1) Provides copies of verifiable documents showing that production of the commodity was purchased, acquired, or otherwise obtained from beyond the unit; (2) Had the production measured in a manner approved by FSA; or (3) Had the crop year's production appraised in a manner approved by FSA. (f) FSA will assign production for the unit, except in cases where the applicant has indicated a quality loss percentage, when FSA determines that: (1) The participant has failed to provide adequate and acceptable production records; (2) The loss to the crop is because of a disaster condition not covered by this subpart, or circumstances other than natural disaster, and there has not otherwise been an accounting of this ineligible cause of loss; (3) The participant carries out a practice, such as multiple cropping, that generally results in lower yields than the established historic yields; (4) A crop was late-planted; (5) Unharvested acreage was not timely appraised; or (6) Other appropriate causes exist for such assignment as determined by FSA. (g) FSA will establish a county disaster yield that reflects the amount of production producers would have produced considering the eligible disaster events in the county or area for the same crop. The county disaster yield for the county or area will be expressed as either a percent of loss or yield per acre. The county disaster yield will apply when: (1) Unharvested acreage has not been appraised by FSA or a company reinsured by FCIC; or (2) Acceptable production records for harvested acres are not available from any source. (h) In no case will the production amount of any applicant be less than the producer's certified loss. (i) Under Stage 2, production for eligible adulterated wine grapes will be adjusted for quality deficiencies due to a qualifying disaster event. Wine grapes are eligible for production adjustment only if adulteration occurred prior to harvest and as a result of a qualifying disaster event or as a result of a related condition (such as application of fire retardant). Losses due to all other causes of adulteration (such as addition of artificial flavoring or chemicals for economic purposes) are not eligible for Stage 2. Production will be eligible for quality adjustment if, due to a qualifying disaster event, it has a value of less than 75 percent of the average market price of undamaged grapes of the same or similar variety. The value per ton of the qualifying damaged production and the average market price of undamaged grapes will be determined on the earlier of the date the damaged production is sold or the date of final inspection for the unit. Grape production that is eligible for quality adjustment will be reduced by: (1) Dividing the value per ton of the damaged grapes by the value per ton for undamaged grapes; and (2) Multiplying this result (not to exceed 1.000) by the number of tons of the eligible damaged grapes." 7:7:7.1.1.4.11.10.9.13,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2212 Stage 2 eligible acres.,FSA,,,"[90 FR 51983, Nov. 18, 2025]","(a) For eligible crops insured under an APH or yield-based plans and insured crops in Puerto Rico, the eligible acres for Stage 2 payment calculation will be the eligible acres as specified in the applicable insurance provisions. (b) For eligible crops other than those covered under an APH or yield-based plan or insured in Puerto Rico, eligible acres will be determined based on the following provisions: (1) Eligible acreage will be calculated using the lesser of the reported or determined acres shown to have been planted or prevented from being planted to a crop. (2) Initial crop acreage will be the acreage used to calculate payments under this subpart, unless the provisions for subsequent crops in this section are met. Subsequently planted or prevented planted acreage is considered acreage under this subpart only if the provisions of this section are met. All plantings of an annual or biennial crop are considered the same as a planting of an initial crop in tropical regions as defined in part 1437, subpart F, of this title. (3) In cases where there is double cropped acreage, each crop may be included in the acreage only if the specific crops are approved by FSA as eligible double cropping practices. (4) Except for insured crops, participants with double cropped acreage not meeting the criteria in paragraph (b)(3) of this section may have such acreage included in the acreage for more than one crop only if the participant submits verifiable records establishing a history of carrying out a successful double cropping practice on the specific crops for which payment is requested. (5) Participants having multiple plantings may receive payments for each planting only if the planting meets the requirements of part 1437 of this title. (c) For prevented planting, the provisions of parts 718 and 1437 of this title specifying what is considered prevented planting and how it must be documented and reported apply. Crops located in tropical regions are not eligible for prevented planting. (d) For SDRP Stage 2: (1) 2023, 2024, and 2025 crop year uninsured prevented planting acres are eligible acres if they meet all requirements of this subpart; and (2) 2023, 2024, and 2025 crop year insured and NAP-covered prevented planting acres are not eligible acres. (e) FSA will: (1) Use the most accurate data available when determining planted and prevented planted acres; and (2) Disregard acreage of a crop produced on land that is not eligible for Federal crop insurance or NAP. (f) In cases where crops were insured by an area plan, producers must provide the eligible acreage percentage to FSA for payment. This represents the percentage of eligible acreage of eligible crops compared to the total acreage insured under the respective Area Plan. It is determined by the producer based on a comparison of RMA acres provided on the FSA-504 and total acres reported for the eligible crop on the FSA-578. This percentage excludes acres of grazed crops covered by an Annual Forage policy. This percentage will also exclude acreage that was physically located in a county in Connecticut, Hawaii, Maine, or Massachusetts." 7:7:7.1.1.4.11.10.9.14,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,760.2213-760.2214 [Reserved],FSA,,,, 7:7:7.1.1.4.11.10.9.15,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2215 Payment limitation.,FSA,,,"[90 FR 30569, July 10, 2025, as amended at 90 FR 51984, Nov. 18, 2025]","(a) For each program year, a person or legal entity, other than a joint venture or general partnership, is eligible to receive, directly or indirectly, SDRP payments of not more than: (1) $125,000 for specialty and high value crops combined and $125,000 for other crops, if less than 75 percent of the person or legal entity's average adjusted gross income is average adjusted gross farm income; or (2) $900,000 for specialty and high value crops combined and $250,000 for other crops, if not less than 75 percent of the average adjusted gross income of the person or legal entity is average adjusted gross farm income. (b) To be eligible to receive payments based on the limitations in paragraph (a)(2) of this section, a producer must submit form FSA-510, including the certification from a certified public accountant or attorney that the person or legal entity has met the requirements to be eligible for the increased payment limitation, by the deadline announced by FSA. If a producer or member of a legal entity files FSA-510 and the accompanying certification after their SDRP payment is issued but before the deadline, FSA will recalculate the payment and issue the additional calculated amount. (c) If a producer requesting the increased payment limitations in paragraph (a)(2) of this section is a legal entity, all members of that entity must also complete FSA-510 and provide the required certification according to the direct attribution provisions in 7 CFR 1400.105. If a legal entity would be eligible for the increased payment limitations based on the legal entity's average adjusted gross farm income but a member of that legal entity either does not complete an FSA-510 and provide the required certification or is not eligible for the increased payment limitations, the payment to the legal entity will be reduced for the limitations applicable to the share of the SDRP payment attributed to that member. (d) [Reserved] (e) The payment limitation provisions of 7 CFR part 1400, subpart A, and §§ 1400.103 through 1400.106 apply to SDRP. (f) Payments made directly or indirectly to a person who is a minor child will not be combined with the earnings of the minor's parent or legal guardian. (g) If an individual or legal entity is not eligible to receive SDRP payments due to the individual or legal entity failing to satisfy payment eligibility provisions, the payment made either directly or indirectly to the individual or legal entity will be reduced to zero. The amount of the reduction for the direct payment to the producer will be commensurate with the direct or indirect ownership interest of the ineligible individual or ineligible legal entity." 7:7:7.1.1.4.11.10.9.16,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2216 Requirement to purchase crop insurance or NAP coverage.,FSA,,,"[90 FR 30569, July 10, 2025, as amended at 90 FR 51984, Nov. 18, 2025]","(a) A participant who receives payment under this subpart must obtain Federal crop insurance or NAP coverage for the next 2 available crop years after the date a producer receives an SDRP payment as described in this section. Participants must also file an acreage report and any other required reports or documentation needed to establish crop insurance or NAP coverage for the applicable crop years. (b) To meet the requirement in paragraph (a) of this section, a producer must obtain: (1) For an insurable crop, tree, or vine, Federal crop insurance with at least a 60 percent coverage level; or (2) For a NAP-eligible crop, NAP coverage with at least a 60 percent coverage level. (c) Participants who are required to obtain NAP coverage but exceed the average adjusted gross income limitation for NAP payment eligibility for the applicable crop year may meet the purchase requirement paragraph (a) of this section by purchasing WFRP coverage, if eligible, or paying the NAP service fee and premium even though the participant will not be eligible to receive a NAP payment. (d) Producers who receive an SDRP payment that was calculated based on an indemnity under a Pasture, Rangeland, and Forage policy; Annual Forage policy; or WFRP policy must purchase the same type of policy or a combination of individual policies for the crops that had covered losses under SDRP to meet the Federal crop insurance and NAP coverage requirement. (e) If both Federal crop insurance and NAP coverage are unavailable for a crop, the producer must obtain WFRP Federal crop insurance coverage, if eligible. (f) The Federal crop insurance and NAP coverage requirements are specific to the crop and county for which an SDRP payment is issued. For insured crops, the applicable county is the county where the crop is physically located. For NAP-covered crops, the applicable county is the administrative county. (g) Producers who are paid for a crop in a county, but do not plant that crop in that county in a year for which the Federal crop insurance and NAP coverage requirement applies, are not subject to the Federal crop insurance or NAP purchase requirement for that year. (h) If a producer fails to obtain Federal crop insurance or NAP coverage as required by this section, the producer must reimburse FSA for the full amount of SDRP payment plus interest from the date of disbursement that the producer received for that crop, tree, bush, or vine loss. A producer will only be considered to have obtained NAP coverage for the purposes of this section if the participant applied and paid the requisite NAP service fee and paid any applicable premium by the applicable deadline and completed all program requirements, including filing an acreage report as may be required under such coverage agreement." 7:7:7.1.1.4.11.10.9.17,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2217 Miscellaneous provisions.,FSA,,,"[90 FR 30569, July 10, 2025, as amended at 90 FR 51984, Nov. 18, 2025]","(a) In the event that an SDRP payment resulted from erroneous information reported by the producer, or any person acting on their behalf, or if the producer's data are updated after RMA or FSA calculates a producer's Stage 1 or Stage 2 payment, the SDRP payment will be recalculated and the producer must refund any excess payment to FSA, including interest to be calculated from the date of the disbursement to the producer. If FSA determines that the producer intentionally misrepresented information used to determine the producer's SDRP payment amount, the application will be disapproved and the producer must refund the full payment to FSA with interest from the date of disbursement. All persons with a financial interest in a legal entity receiving payments are jointly and severally liable for any refund, including related charges, which is determined to be due to FSA for any reason. (b) If FSA determines that the producer intentionally misrepresented information used to determine the producer's SDRP payment amount, the application will be disapproved and the producer must refund the full payment to FSA with interest from the date of disbursement. (c) Any required refunds must be resolved in accordance with debt settlement regulations in 7 CFR part 3. (d) Participants are required to retain documentation in support of their application for 3 years after the date of approval. Participants receiving SDRP payments or any other person who furnishes such information to USDA must permit authorized representatives of USDA or the Government Accountability Office, during regular business hours, to enter the agricultural operation and to inspect, examine, and to allow representatives to make copies of books, records, or other items for the purpose of confirming the accuracy of the information provided by the participant. (e) Any payment under SDRP will be made without regard to questions of title under State law and without regard to any claim or lien. The regulations governing offsets in 7 CFR part 3 apply to SDRP payments. (f) Participants are subject to laws against perjury and any penalties and prosecution resulting therefrom, with such laws including but not limited to 18 U.S.C. 1621. If a producer willfully makes and represents as true any verbal or written declaration, certification, statement, or verification that the producer knows or believes not to be true, in the course of either applying for or participating in SDRP, then the producer is guilty of perjury and, except as otherwise provided by law, may be fined, imprisoned for not more than 5 years, or both, regardless of whether the producer makes such verbal or written declaration, certification, statement, or verification within or outside the United States. (g) For the purposes of the effect of a lien on eligibility for Federal programs (28 U.S.C. 3201(e)), USDA waives the restriction on receipt of funds under SDRP but only as to beneficiaries who, as a condition of the waiver, agree to apply the SDRP payments to reduce the amount of the judgment lien. (h) In addition to any other Federal laws that apply to SDRP, the following laws apply: 15 U.S.C. 714; and 18 U.S.C. 286, 287, 371, and 1001. (i) Prompt pay interest is not applicable to payments under this subpart. (j) To ensure that SDRP payments do not exceed available funding, all calculated Stage 1 and Stage 2 payments are multiplied by a factor of 35 percent as provided in the payment calculations in this subpart. If funding remains available after SDRP payments are issued, FSA may issue additional SDRP payments under this subpart." 7:7:7.1.1.4.11.10.9.18,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2218 Stage 2 payment calculation for insured crops with APH and yield-based plans.,FSA,,,"[90 FR 51984, Nov. 18, 2025]","(a) Stage 2 payments for eligible crops and units that were insured under APH or yield-based plans but not indemnified for a loss will be calculated according to this section. (b) For the purpose of calculating payments under this section: (1) The quality loss percentage is the percentage determined according to § 760.2209(b) and (c), subject to any adjustment by FSA based on the documentation submitted by the producer; (2) The production is the share-adjusted producer-certified production entered on the FSA-504, subject to any adjustment by FSA based on the documentation submitted by the producer, unless share-adjusted production is pre-filled on FSA-504 and the producer does not enter producer-certified production; (3) The price is the price used by RMA to calculate the liability; and (4) The SDRP liability is the share-adjusted amount provided by RMA based on data already on file for Federal crop insurance purposes, which is equal to the expected crop value multiplied by the SDRP factor. (c) To calculate the Stage 2 payment, FSA will: (1) Determine the calculated loss by: (i) Converting the quality loss percentage to a decimal and subtracting that amount from 1; (ii) Multiplying the production by the result of paragraph (c)(1)(i) of this section, and then by the price; and (iii) Subtracting the result of paragraph (c)(1)(ii) of this section from the SDRP liability specified in paragraph (b)(4) of this section; (2) Determine the potential insured indemnity by: (i) Dividing the SDRP liability by the SDRP factor, and multiplying the result by the producer's coverage level under the APH or yield-based plan; (ii) Multiplying the production by the price, multiplied by the producer's price election under the APH or yield-based plan; and (iii) Subtracting the result of paragraph (c)(2)(ii) of this section from the insured liability, which is specified in paragraph (c)(1)(i) of this section; (3) If the amount of the calculated loss minus the potential insured indemnity is greater than zero, calculate the Stage 2 payment by: (i) Subtracting the potential insured indemnity from the calculated loss, and adding the premium and administrative fees for the crop and unit; and (ii) Multiplying the result of paragraph (c)(3)(i) of this section by 35 percent to stay within available funding; and (4) If the amount of the calculated loss minus the potential insured indemnity is equal to or less than zero, determine that the Stage 2 payment amount is zero. (d) If an applicant designates shares for SBIs on FSA-504, the payment amounts for the primary policy holder and SBIs will be multiplied by the applicable share." 7:7:7.1.1.4.11.10.9.19,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2219 Stage 2 payment calculation for insured crops with area-based plans.,FSA,,,"[90 FR 51984, Nov. 18, 2025]","(a) Stage 2 payments for eligible crops and units that were insured under area-based plans that were not indemnified for a loss or were disapproved under Stage 1 will be calculated according to this section. (b) For the purpose of calculating payments under this section: (1) The estimated SDRP payment is calculated by RMA in accordance with 760.2208 and provided to FSA; and (2) The percent of eligible acres is the percentage of the total acres of the crop in the unit that are eligible for SDRP Stage 2. (c) To calculate the Stage 2 payment, FSA will: (1) Multiply the estimated SDRP payment by the eligible acreage percentage; and (2) Multiply the result of paragraph (c)(1) of this section by 35 percent to remain within available funding. (d) If an applicant designates shares for SBIs on FSA-504, the payment amounts for the primary policy holder and SBIs will be multiplied by the applicable share." 7:7:7.1.1.4.11.10.9.2,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2201 Administration.,FSA,,,"[90 FR 51977, Nov. 18, 2025]","(a) The Supplemental Disaster Relief Program will be administered under the general supervision and direction of the FSA Administrator and will be carried out in the field by FSA State and county committees, respectively. (b) State and county committees, and representatives and their employees, do not have authority to modify or waive any of the provisions of the regulations set forth in this part. (c) The State committee will take any action required by the regulations of this subpart that the county committee has not taken. The State committee will also: (1) Correct, or require a county committee to correct, any action taken by such county committee that is not in accordance with the regulations of this subpart; or (2) Require a county committee to withhold taking any action that is not in accordance with this subpart. (d) No provision or delegation to an FSA State or county committee will preclude the FSA Administrator, the Deputy Administrator, or a designee, from determining any question arising under this subpart, or from reversing or modifying any determination made by an FSA State or county committee." 7:7:7.1.1.4.11.10.9.20,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2220 Stage 2 payment calculation for insured crops with dollar plans and other revenue plans.,FSA,,,"[90 FR 51984, Nov. 18, 2025]","(a) Stage 2 payments for eligible crops and units that were insured under a dollar plan or other revenue plans but were not indemnified for a loss will be calculated according to this section. (b) For the purpose of calculating payments under this section: (1) FSA will adjust the production if necessary to reflect the amount substantiated by the producer's documentation; (2) The SDRP liability is equal to the eligible acres, multiplied by the county expected yield, multiplied by the average market price, and multiplied by the applicable SDRP factor; and (3) The quality loss percentage is the percentage determined according to § 760.2209(b) and (c), subject to any adjustment by FSA based on documentation submitted by the producer. (c) To calculate a Stage 2 payment for an eligible crop and unit that was insured under a dollar plan or other revenue plan, FSA will: (1) Determine the calculated loss by: (i) Converting the quality loss percentage to a decimal and subtracting from 1; (ii) Multiplying the production by the result of the paragraph (c)(1)(i) of this section and then by the average market price; (iii) Multiplying the result of paragraph (c)(1)(ii) of this section by the unharvested payment factor; (iv) Multiplying the result of paragraph (c)(1)(iii) of this section by the producer's share; and (v) Subtracting the result of paragraph (c)(1)(iv) of this section from the SDRP liability; (2) Determine the potential insured indemnity by: (i) Dividing the SDRP liability by the SDRP factor, and multiplying the result by the producer's coverage level under the dollar based or other revenue insurance plan; (ii) Multiplying the production by the average market price; (iii) Multiplying the result from paragraph (c)(2)(ii) of this section by the producer's price election under the dollar based or other revenue insurance plan; (iv) Multiplying the result from paragraph (c)(2)(iii) of this section by the producer's share; and (v) Subtracting the result of paragraph (c)(2)(iv) of this section from the insured liability, which is specified in paragraph (c)(2)(i) of this section; (3) If the amount of the calculated loss minus the potential insured indemnity is greater than zero, determine the factored gross Stage 2 payment by: (i) Subtracting the potential insured indemnity from the calculated loss, and adding the premiums and administrative fees for the crop and unit; and (ii) Multiplying the result of paragraph (c)(3)(i) of this section by 35 percent to stay within available funding; and (4) If the calculated loss minus the potential insured indemnity is equal to or less than zero, determine that the Stage 2 payment amount is zero. (d) If an applicant designates shares for SBIs on FSA-504, the payment amounts for the primary policy holder and SBIs will be multiplied by the applicable share." 7:7:7.1.1.4.11.10.9.21,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2221 Stage 2 payment calculation for insured value loss crops.,FSA,,,"[90 FR 51984, Nov. 18, 2025]","(a) Stage 2 payments for eligible crops and units that were insured under a value loss crop plan but were not indemnified for a loss will be calculated according to this section. (b) To calculate a Stage 2 payment for an eligible crop and unit that was insured under a value loss policy, FSA will: (1) Determine the calculated loss by: (i) Multiplying the dollar value before the disaster by the SDRP factor; (ii) Subtracting the dollar value after the disaster from the result of paragraph (b)(1)(i) of this section and multiplying by the unharvested factor; (iii) Subtracting the salvage value from the result of paragraph (b)(1)(ii) of this section; and (iv) Multiplying the result of paragraph (b)(1)(iii) of this section by the producer's share; (2) Determine the potential insured indemnity by: (i) Multiplying the dollar value before the disaster by the producer's coverage level under their insurance plan, then subtracting the dollar value after the disaster, and then multiplying by the unharvested factor; (ii) Subtracting salvage value from the result of paragraph (b)(2)(i) of this section; and (iii) Multiplying the result of paragraph (b)(2)(ii) of this section by the producer's share; (3) If the amount of the calculated loss minus the potential insured indemnity is greater than zero, determine the factored gross Stage 2 payment by: (i) Subtracting the potential insured indemnity from the calculated loss, and adding the administrative fees and premiums for the crop and unit; and (ii) Multiplying the result of paragraph (b)(3)(i) of this section by 35 percent to stay within available funding; and (4) If the amount of the calculated loss minus the potential insured indemnity is equal to or less than zero, determine that the payment amount is zero. (c) If an applicant designates shares for SBIs on FSA-504, the payment amounts for the primary policy holder and SBIs will be multiplied by the applicable share." 7:7:7.1.1.4.11.10.9.22,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,"§ 760.2222 Stage 2 payment calculation for trees, bushes, and vines.",FSA,,,"[90 FR 51984, Nov. 18, 2025]","(a) Payments for tree, bush, and vine losses will be calculated separately based on the growth stage of the trees, bushes, or vines, as determined by FSA. (b) For the purpose of calculating payments under this section: (1) The price is determined by FSA based on the species of tree, bush, or vine and its growth stage; (2) The expected value of the tree, bush, or vine is determined by multiplying the total number of trees, bushes, or vines that were damaged or destroyed by a qualifying disaster event by the price; (3) The actual value is determined by: (i) Multiplying the number of trees, bushes, or vines damaged by a qualifying disaster event by the damage factor; (ii) Adding the result of paragraph (b)(3)(i) of this section and the number of trees, bushes, or vines destroyed by a qualifying disaster event; (iii) Multiplying the result of paragraph (b)(3)(ii) of this section by the price; and (iv) Subtracting the result of paragraph (b)(3)(iii) of this section from the expected value specified in paragraph (b)(2) of this section; (4) The SDRP liability is determined by multiplying the expected value of the tree, bush, or vine by the SDRP factor. (c) To calculate the Stage 2 payment, FSA will: (1) Subtract the actual value of the tree, bush, or vine from the SDRP liability; (2) Subtract the salvage value from the result of paragraph (c)(1) of this section; (3) Multiply the result of paragraph (c)(2) of this section by the producer's share; (4) Add premiums and fees for insured trees or vines if the calculated loss is greater than zero; and (5) Multiply the result of paragraph (c)(4) of this section by 35 percent to remain within available funding. (d) FSA will adjust the number of damaged and destroyed trees, bushes, and vines used to calculate a Stage 2 payment if it determines that the number of damaged or destroyed trees, bushes, or vines certified by the participant is inaccurate. (e) If an applicant designates shares for SBIs on FSA-504, the payment amounts for the primary policy holder and SBIs will be multiplied by the applicable share." 7:7:7.1.1.4.11.10.9.23,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2223 Stage 2 payment calculation for NAP-covered yield-based crops with an approved NAP application for payment.,FSA,,,"[90 FR 51984, Nov. 18, 2025]","(a) Stage 2 payments for eligible NAP-covered crops and units with an approved NAP application for payment with a calculated NAP payment amount of zero will be calculated according to this section. (b) For the purpose of calculating payments under this section: (1) The SDRP liability equals the expected crop value multiplied by the SDRP factor and uses FSA data already on file for NAP purposes; (2) Because NAP service fees and premiums are not calculated individually by crop and unit, the service fee and premium amount used to calculate a payment under this section will be zero if the producer has already received a payment for a NAP-covered crop under Stage 1. (c) To calculate a Stage 2 payment, FSA will: (1) Determine the calculated loss by: (i) Converting the quality loss percentage to a decimal and subtracting the amount from 1; (ii) Multiplying the production by the result of paragraph (c)(1)(i) of this section, and then multiplying by the average market price; and (iii) Multiplying the result of paragraph (c)(1)(ii) of this section by the unharvested payment factor, if applicable; (iv) Subtracting the salvage value from the result of paragraph (c)(1)(iii) of this section; (v) Multiplying the result of paragraph (c)(1)(iv) of this section by the producer's share; and (vi) Subtracting the result of paragraph (c)(1)(v) of this section from the SDRP liability specified in paragraph (b)(1) of this section; (2) If the calculated loss is greater than zero, determine the factored gross Stage 2 payment by adding the premium and service fees to the result of paragraph (c)(1) of this section, and multiply the result by 35 percent to stay within available funding; and (3) If the calculated loss is equal to or less than zero, determine that the payment amount is zero." 7:7:7.1.1.4.11.10.9.24,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2224 Stage 2 payment calculation for NAP-covered yield-based crops without an approved NAP application for payment.,FSA,,,"[90 FR 51984, Nov. 18, 2025]","(a) Stage 2 payments for eligible NAP-covered yield-based crops and units without an approved NAP application for payment will be calculated according to this section. (b) For the purpose of calculating payments under this section: (1) FSA will adjust the amount of production if necessary to reflect the amount substantiated by the producer's documentation; and (2) The SDRP liability is equal to the eligible acres, multiplied by the producer's approved yield, multiplied by the average market price, multiplied by the SDRP factor; and (3) Because NAP service fees and premiums are not calculated individually by crop and unit, the service fee and premium amount used to calculate a payment under this section will be zero if the producer has already received a payment for a NAP-covered crop under Stage 1. (c) To calculate the Stage 2 payment, FSA will: (1) Determine the calculated loss by: (i) Converting the quality loss percentage to a decimal and subtracting the amount from 1; (ii) Multiplying the result of paragraph (c)(1)(i) of this section by the production, and then by the average market price; (iii) Multiplying the result of paragraph (c)(1)(ii) of this section by the unharvested payment factor, if applicable, and then subtracting the salvage value from the result; (iv) Multiplying the result of paragraph (c)(1)(iii) of this section by the producer's share; and (v) Subtracting the result of paragraph (c)(1)(iv) of this section from the SDRP liability; (2) Determine the potential NAP payment by: (i) Dividing the SDRP liability by the SDRP factor, and multiplying the result by the producer's coverage level under NAP; (ii) Multiplying the production by the average market price, and then subtracting that amount from the result of paragraph (c)(2)(i) of this section; (iii) Multiplying the result of paragraph (c)(2)(ii) of this section by the price election under NAP, and then by the unharvested payment factor; (iv) Subtracting the salvage value from the result of paragraph (c)(2)(iii) of this section and multiplying the result by the producer's share; (3) If the calculated loss minus the potential NAP payment is greater than zero, determine the factored gross Stage 2 payment by: (i) Subtracting the potential NAP payment from the calculated loss, and adding the NAP administrative fees and premiums; and (ii) Multiplying the result of paragraph (c)(3)(i) of this section by 35 percent to stay within available funding; and (4) If the amount of the calculated loss minus the potential NAP payment is equal to or less than zero, determine that the payment amount is zero." 7:7:7.1.1.4.11.10.9.25,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2225 Stage 2 payment calculation for NAP-covered value loss crops with an approved NAP application for payment.,FSA,,,"[90 FR 51984, Nov. 18, 2025]","(a) Stage 2 payments for eligible NAP-covered value loss crops and units with an approved NAP application for payment with a calculated payment amount of zero will be calculated according to this section. (b) To calculate the Stage 2 payment, FSA will: (1) Calculate the amount specified in § 760.2208(d); and (2) Multiply the result of paragraph (b)(1) of this section by 35 percent to stay within available funding." 7:7:7.1.1.4.11.10.9.26,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2226 Stage 2 payment calculation for NAP-covered value loss crops without an approved NAP application for payment.,FSA,,,"[90 FR 51984, Nov. 18, 2025]","(a) Stage 2 payments for eligible NAP-covered value loss crops and units without an approved NAP application for payment will be calculated according to this section. (b) To calculate the Stage 2 payment, FSA will: (1) Determine the calculated loss by: (i) Multiplying the dollar value before disaster by the SDRP factor; (ii) Subtracting the dollar value after disaster from the result of paragraph (b)(1)(i) of this section; and (iii) Multiplying the result of paragraph (b)(1)(ii) of this section by the unharvested payment factor, if applicable, and subtracting the salvage value from the result; and (iv) Multiplying the result of paragraph (b)(1)(iii) of this section by producer's share. (2) Determine the potential NAP payment by: (i) Multiplying the dollar value before the disaster by the coverage level, and subtracting the dollar value after the disaster from the result; (ii) Multiplying the result of paragraph (b)(2)(i) of this section by the unharvested payment factor, if applicable, and subtracting the salvage value from the result; (iii) Multiplying the result of paragraph (b)(2)(ii) of this section by the price election; and (iv) Multiplying the result of paragraph (b)(2)(iii) of this section by the producer's share. (3) If the calculated loss in paragraph (b)(1) of this section minus the potential NAP payment in paragraph (b)(2) of this section is greater than zero, determine the factored gross Stage 2 payment by: (i) Subtracting the potential NAP payment from the calculated payment specified in paragraph (c) of this section, and adding service fees and premiums; and (ii) Multiplying the result of paragraph (b)(3)(i) of this section by the producer's share, and then multiplying by 35 percent to stay within available funding. (4) If the calculated loss in paragraph (b)(1) of this section minus the potential NAP payment in paragraph (b)(2) of this section is equal to or less than zero, determine that the payment amount is zero." 7:7:7.1.1.4.11.10.9.27,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2227 Stage 2 payment calculation for uninsured yield-based crops.,FSA,,,"[90 FR 51984, Nov. 18, 2025]","(a) Stage 2 payments for yield-based uninsured eligible crops will be calculated according to this section. (b) For the purpose of calculating payments under this section: (1) The SDRP liability is equal to the eligible acres multiplied by the average market price, times the SDRP factor, times: (i) 65 percent of the county expected yield for crops planted on native sod; or (ii) 100 percent of the county expected yield for all other crops; (2) Eligible acres are the eligible acres reported on the FSA-578; and (3) The quality loss percentage is the percentage determined according to § 760.2209(b)and (c). (c) A producer will provide SDRP producer-certified production on the FSA-504, and FSA may adjust the amount of production if necessary to reflect the amount substantiated by the producer's documentation. (d) Stage factors will be used to calculate payments for crops produced with significant and variable production and harvesting expenses that are not incurred because the crop acreage was prevented planted, or planted but not harvested, as determined by FSA. The use of stage factors is based on whether the crop acreage was unharvested or prevented planted, not whether a participant actually incurs or does not incur expenses. Stage factors are generally applicable to all similarly situated participants and are not established in response to individual participants. A crop that is intended for mechanical harvest, but subsequently grazed and not mechanically harvested, will have an unharvested payment factor applied. (e) To calculate a Stage 2 payment for an eligible uninsured yield-based crop, FSA will: (1) Determine the calculated loss by: (i) Converting the quality loss percentage to a decimal and subtracting the amount from 1; (ii) Multiplying the production specified in paragraph (c) of this section by the result of paragraph (e)(1)(i) of this section, and then multiplying by the average market price; and (iii) Multiplying the result of paragraph (e)(1)(ii) of this section by the stage factor, if applicable, and subtracting the salvage value from the result; and (iv) Subtracting the result of paragraph (e)(1)(iii) of this section from the SDRP liability, and then multiplying by the producer's share; (2) If the calculated loss in paragraph (e)(1) of this section is greater than zero, determine the factored gross Stage 2 payment by multiplying the result of paragraph (e)(1) of this section by 35 percent to stay within available funding; and (3) If the calculated loss in paragraph (e)(1) of this section is equal to or less than zero, determine that the payment amount is zero." 7:7:7.1.1.4.11.10.9.28,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2228 Stage 2 payment calculation for uninsured value loss crops.,FSA,,,"[90 FR 51984, Nov. 18, 2025]","(a) Stage 2 payments for eligible crops that were uninsured for value loss crops will be calculated according to this section. (b) To calculate a Stage 2 payment for an uninsured eligible value loss crop and unit, FSA will: (1) Determine the calculated loss by: (i) Multiplying the dollar value before disaster by the SDRP factor; and (ii) Subtracting the dollar value after disaster from the result of paragraph (b)(1)(i) of this section; and (iii) Multiplying the result of paragraph (b)(1)(ii) of this section by the unharvested payment factor, if applicable, and subtracting the salvage value from the result, and then multiplying the result by the producer's share; and (2) If the calculated loss in paragraph (b)(1) of this section is greater than zero, determine the factored gross Stage 2 payment by: (i) Multiplying the result in paragraph (b)(1) of this section by 35 percent to stay within available funding; and (ii) [Reserved] (3) If the calculated loss in paragraph (b)(1) of this section is equal to or less than zero, determine that the payment amount is zero." 7:7:7.1.1.4.11.10.9.29,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2229 [Reserved],FSA,,,, 7:7:7.1.1.4.11.10.9.3,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2202 Definitions.,FSA,,,"[90 FR 30569, July 10, 2025, as amended at 90 FR 51977, Nov. 18, 2025]","The definitions in 7 CFR parts 718 and 1400 apply to SDRP, except where they conflict with this subpart. The following definitions also apply. Administrative fee means the amount an insured producer paid for catastrophic risk protection, and additional coverage for each crop year as specified in the applicable crop insurance policy. It does not include administrative fees for supplemental policy endorsements based on county- or area-level losses when purchased with a base policy. Affected production means the producer's ownership share of harvested production of an eligible crop, adjusted to standard moisture as established by the U.S. Grains Standards Act, a State regulatory agency, or industry standard, that had a quality loss due to a qualifying disaster event. APH and yield-based plans means the following plans of Federal crop insurance: Yield Protection (YP), Revenue Protection (RP), Revenue Protection with Harvest Price Exclusion (RP-HPE), Actual Production History (APH), Production Revenue History—Yield Protection (PRH-YP), Production Revenue History Plus (PRH-Plus), Actual Production History—Price Component (APH-Price Component), and Production Revenue History—Revenue (PRH-Revenue). Approved yield means the amount of production per acre, computed as specified in FCIC's Actual Production History (APH) Program in part 400, subpart G of this title that were in effect for the applicable crop year or, for crops not included in the regulations of part 400, subpart G of this title in effect for the applicable crop year, the yield used to determine the guarantee. For crops covered under NAP, the approved yield is established according to part 1437 of this title. Area plans means the following plans of Federal crop insurance: Actual Yield Protection (AYP), Area Revenue Protection (ARP), Area Revenue Protection with Harvest Price Exclusion (ARPHPE), Stacked Income Protection Plan-Revenue Protection (STXRP), Stacked Income Protection Plan-Revenue Protection with Harvest Price Exclusion (STAX-RP-HPE), and Rainfall Index (RI-13). Average adjusted gross farm income means the average of the person or legal entity's adjusted gross income derived from farming, ranching, and forestry operations, including losses, for the base period. (1) If the resulting average adjusted gross farm income derived from paragraphs (1) through (13) of the definition for “income derived from farming, ranching, and forestry operations” in this section is at least 66.66 percent of the average adjusted gross income of the person or legal entity, then the average adjusted gross farm income may also take into consideration income or benefits derived from the following: (i) The sale, trade, or other disposition of equipment to conduct farm, ranch, or forestry operations; and (ii) The provision of production inputs and services to farmers, ranchers, foresters, and farm operations. (2) For legal entities not required to file a Federal income tax return, or a person or legal entity that did not have taxable income in 1 or more of the tax years during the base period, the average adjusted gross farm income will be the adjusted gross farm income, including losses, averaged for the base period, as determined by FSA. For a legal entity created during the base period, the adjusted gross farm income average will include only those years of the base period for which it was in business; however, a new legal entity will not be considered “new” to the extent it takes over an existing operation and has any elements of common ownership interest and land with the preceding person or legal entity from which it took over. When there is such commonality, income of the previous person or legal entity will be averaged with that of the new legal entity for the base period. For a person filing a joint tax return, the certification of average adjusted gross farm income may be reported as if the person had filed a separate Federal tax return, and the calculation is consistent with the information supporting the filed joint return. Average AGI means the average of the adjusted gross income as defined under 26 U.S.C. 62 or comparable measure of the person or legal entity for the base period. Average market price means the average market price per unit of measure established by FSA according to 7 CFR 1437.12. Base period means: (1) 2019, 2020, and 2021 for the 2023 program year; (2) 2020, 2021, and 2022 for the 2024 program year; and (3) 2021, 2022, and 2023 for the 2025 program year. Bush means a low, branching, woody plant, from which, at maturity of the bush, an annual fruit or vegetable crop is produced for commercial market for human consumption, such as a blueberry bush. The definition does not cover nursery stock or plants that produce a bush after the normal crop is harvested. Buy-up NAP coverage has the same meaning as in 7 CFR 1437.3, which is NAP coverage at a payment amount that is equal to an indemnity amount calculated for buy-up coverage computed under section 508(c) or (h) of the Federal Crop Insurance Act and equal to the amount that the buy-up coverage yield for the crop exceeds the actual yield for the crop. Catastrophic coverage has the same meaning as in 7 CFR 1437.3, which is: (1) For insured crops, the coverage offered by the FCIC under section 508(b) of the Federal Crop Insurance Act; and (2) For eligible NAP crops, coverage at the following levels due to an eligible cause of loss impacting the NAP covered crop during the coverage period: (i) Prevented planting in excess of 35 percent of the intended acres; (ii) A yield loss in excess of 50 percent of the approved yield; (iii) A value loss in excess of 50 percent; or (iv) An animal-unit-days (AUD) loss greater than 50 percent of expected AUD. County disaster yield means the average yield per acre calculated for a county or part of a county for the applicable crop year based on disaster events, and is intended to reflect the amount of production that a participant would have been expected to make based on the eligible disaster conditions in the county or area, as determined by FSA. County expected yield means the yield determined according to § 1437.102(b) of this title. Coverage level means the percentage determined by multiplying the elected yield percentage under a crop insurance policy or NAP coverage by the elected price percentage. It does not include coverage under a supplemental policy endorsement based on county- or area-level losses when purchased with a base policy. Crop year means: (1) For insurable crops, trees, and vines, the crop year as defined according to the applicable Federal crop insurance policy; (2) For NAP-eligible crops, the crop year as defined in 7 CFR 1437.3; and (3) For uninsurable trees, bushes, and vines, the calendar year in which the qualifying disaster event occurred. Damage factor means a percentage of the value lost when a tree, bush, or vine is damaged and requires rehabilitation but is not completely destroyed, as determined by FSA. Deputy Administrator means the FSA Deputy Administrator for Farm Programs. Determined acres means acreage established by a representative of FSA by use of official acreage, digitizing areas on the photographic image, or computations from scaled dimensions or ground measurements. Dollar plans and other revenue plans means the following Federal crop insurance plans: Dollar Amount of Insurance, Fixed Dollar, Yield Based Dollar Amount Insurance, Pecan Revenue, and ARH (Actual Revenue History). Dollar value after disaster means the crop inventory immediately after the qualifying disaster event multiplied by the established price for the value loss crop. Dollar value before disaster means the crop inventory immediately before the qualifying disaster event multiplied by the established price for the value loss crop. Eligible acreage percentage means the percentage of acreage that is eligible for SDRP under the respective area plan compared to the total acreage insured. Eligible crop means a crop: (1) Including aquacultural species, for which a Federal crop insurance policy or NAP coverage was available for the 2023, 2024, or 2025 crop year, excluding crops for grazing; (2) That was produced in the United States as part of a farming operation and was intended to be commercially marketed; and (3) That was not livestock or timber. Expected price means a verifiable published price either for sale or loan on a specific crop and year or the price established by FSA for a crop and year. Farming operation means a business enterprise engaged in the production of agricultural products, commodities, or livestock, operated by a person, legal entity, or joint operation. A person or legal entity may have more than one farming operation if the person or legal entity is a member of one or more legal entities or joint operations. FCIC means the Federal Crop Insurance Corporation, a wholly owned Government Corporation of the U.S. Department of Agriculture (USDA), administered by RMA. Federal crop insurance means an insurance policy reinsured by FCIC administered by RMA under the provisions of the Federal Crop Insurance Act (7 U.S.C. 1501-1524), as amended. It does not include private plans of insurance. Federal Crop Insurance Act means the legal authority codified in 7 U.S.C. 1501-1524. Federal crop insurance indemnity means the payment to a participant for crop losses covered under Federal crop insurance administered by RMA in accordance with the Federal Crop Insurance Act. Final planting date means the latest date, established by RMA for each insurable crop or FSA for NAP-covered crops, by which the crop must initially be planted in order to be insured for the full production guarantee or amount of insurance per acre. Forage crop means a plant grown and used to feed livestock that is harvested and processed into forms like hay, silage, or green chop. It excludes crops for grazing. Grading factor means a factor that describes the physical condition or a feature that is evaluated to determine the quality of the production, such as broken kernels and low-test weight. Harvested means: (1) For insurable crops, harvested as defined according to the applicable Federal crop insurance policy; (2) For NAP-eligible single harvest crops, that a crop has been removed from the field, either by hand or mechanically; (3) For NAP-eligible crops with potential multiple harvests in 1 year or harvested over multiple years, that the producer has, by hand or mechanically, removed at least 1 mature crop from the field during the crop year; and (4) For mechanically harvested NAP-eligible crops, that the crop has been removed from the field and placed in a truck or other conveyance, except hay is considered harvested when in the bale, whether removed from the field or not. High value crop means trees, bushes, vines, aquaculture, hemp, grass for seed, tobacco, and vegetable seed. Income derived from farming, ranching, and forestry operations means income of an individual or entity derived from: (1) Production of crops and unfinished raw forestry products; (2) Production of livestock, aquaculture products used for food, honeybees, and products derived from livestock; (3) Production of farm-based renewable energy; (4) Selling (including the sale of easements and development rights) of farm, ranch, and forestry land, water or hunting rights, or environmental benefits; (5) Rental or lease of land or equipment used for farming, ranching, or forestry operations, including water or hunting rights; (6) Processing, packing, storing, and transportation of farm, ranch, or forestry commodities including for renewable energy; (7) Feeding, rearing, or finishing of livestock; (8) Payments of benefits, including benefits from risk management practices, federal crop insurance indemnities, and catastrophic risk protection plans; (9) Sale of land that has been used for agricultural purposes; (10) Benefits (including, but not limited to, cost-share assistance and other payments) from any Federal program made available and applicable to payment eligibility and payment limitation rules, as provided in 7 CFR part 1400; (11) Income reported on Internal Revenue Service (IRS) Schedule F or other schedule, approved by the Deputy Administrator, used by the person or legal entity to report income from such operations to the IRS; (12) Wages or dividends received from a closely held corporation, an Interest Charge Domestic International Sales Corporation (also known as IC-DISC), or legal entity comprised entirely of family members when more than 50 percent of the legal entity's gross receipts for each tax year are derived from farming, ranching, and forestry activities as defined in this subpart; and (13) Any other activity related to farming, ranching, and forestry, as determined by the Deputy Administrator. Insurable crop means an agricultural crop (excluding livestock and crops intended for grazing) for which the producer on a farm is eligible to obtain a policy or plan of insurance under the Federal Crop Insurance Act. IRS means the Department of the Treasury, Internal Revenue Service. Legal entity, as used in this subpart: (1) Means an entity that is created under Federal or State law and that: (i) Owns land or an agricultural commodity; or (ii) Produces an agricultural commodity; and (2) Includes corporations, joint stock companies, associations, limited partnerships, limited liability companies, irrevocable trusts, estates, charitable organizations, general partnerships, joint ventures, and other similar organizations created under Federal or State law including any such organization participating in a business structure as a partner in a general partnership, a participant in a joint venture, a grantor of a revocable trust, or as a participant in a similar organization. A business operating as a sole proprietorship is considered a legal entity. Liability means the liability as defined by the applicable crop insurance policy for a crop and unit. Multiple planting means the planting for harvest of the same crop in more than one planting period in a crop year on different acreage. NAP means the Noninsured Crop Disaster Assistance Program, which is authorized by section 196 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7333) and regulations in 7 CFR part 1437. NAP service fee means the fee the producer paid to obtain NAP coverage specified in 7 CFR 1437.7. Native sod means land on which the natural state plant cover before tilling was composed principally of native grasses, grass-like plants, forbs, or shrubs suitable for grazing and browsing and is land that has never been tilled as determined by USDA. Nutrient factor means a factor determined by a test that measures the nutrient value of a crop to be fed to livestock. Examples include, but are not limited to, relative feed value and total digestible nutrients. Other crop means a crop that is not included in the definition of specialty crop or high value crop. Ownership interest means to have either a legal ownership interest or a beneficial ownership interest in a legal entity. For the purposes of administering SDRP, a person or legal entity that owns a share or stock in a legal entity that is a corporation, limited liability company, limited partnership, or similar type entity where members hold a legal ownership interest and shares in the profits or losses of such entity is considered to have an ownership interest in such legal entity. A person or legal entity that is a beneficiary of a trust or heir of an estate who benefits from the profits or losses of such entity is considered to have a beneficial ownership interest in such legal entity. Premium means the premium paid by the producer for crop insurance coverage or NAP buy-up coverage levels. It does not include premiums for supplemental policy endorsements based on county- or area-level losses when purchased with a base policy. Prevented planting means the inability to plant an insured crop with proper equipment during the planting period as a result of an insured cause of loss, as determined by FSA. Prevented planting payment factor means a percentage established by FSA for a crop and applied in a payment formula to reduce the payment for reduced expenses due to prevented planting of the crop. Price election means the percentage of the crop insurance price for insured crops or average market price for NAP covered crops the producer elects for their individual coverage. Producer means an owner, operator, landlord, tenant, or sharecropper that shares in the risk of producing the crop and is entitled to share in the crop available for marketing from the farm, or would have shared had the crop been produced. Production means quantity of the crop produced, which is expressed in a specific unit of measure such as bushels or pounds. Production inputs mean material to conduct farming operations, such as seeds, chemicals, and fencing supplies. Production services mean services provided to support a farming operation, such as custom farming, custom feeding, and custom fencing. Production to count means the net production which includes harvested, appraised, and assigned production after production and quality adjustments, if applicable. For insured and NAP-covered crops, production to count is determined by the applicable Federal crop insurance policy or NAP provisions. Program year means the crop year. Qualifying disaster event means wildfires, hurricanes, floods, derechos, excessive heat, tornadoes, winter storms, freeze (including a polar vortex), smoke exposure, excessive moisture, qualifying drought, and related conditions that occurred in calendar year 2023 or 2024. Qualifying drought means an area within the county was rated by the U.S. Drought Monitor as having a: (1) D2 (severe drought) intensity for at least 8 consecutive weeks in the applicable calendar year; or (2) D3 (extreme drought) or higher intensity for any period of time during the applicable calendar year. Quality loss means: (1) For crops other than forage, a decrease in value based on discounts provided at the point of sale due to the physical condition of the crop indicated by an applicable grading factor; and (2) For forage crops, a reduction in an applicable nutrient factor for the crop. Related condition means damaging weather and adverse natural occurrences that occurred concurrently with and as a direct result of a specified qualifying disaster event. Related conditions include, but are not limited to: (1) Excessive wind that occurred as a direct result of a derecho; (2) Silt and debris that occurred as a direct and proximate result of flooding; (3) Excessive wind, storm surges, tornadoes, tropical storms, and tropical depressions that occurred as a direct result of a hurricane; and (4) Excessive wind and blizzards that occurred as a direct result of a winter storm. Reliable production record means evidence provided by the participant that is used to substantiate the amount of production reported when verifiable records are not available, including copies of receipts, ledgers of income, income statements of deposit slips, register tapes, invoices for custom harvesting, and records to verify production costs, contemporaneous measurements, truck scale tickets, and contemporaneous diaries that are determined acceptable by FSA. To determine whether the records are acceptable, FSA will consider whether they are consistent with the records of other producers of the crop in that area. RMA means the Risk Management Agency. Salvage value means the dollar amount or equivalent for the quantity of the commodity that cannot be marketed or sold in any recognized market for the crop. SDRP factor means: (1) For insured and NAP-covered crops, the factor in Table 1 to § 760.2208(b), which is based on the Federal crop insurance or NAP coverage level for a crop and unit that was elected by the SDRP participant for the applicable crop year; and (2) For uninsured producers, a factor of 70 percent. Stage 1 quality loss payment means a payment calculated according § 760.2209(d) and (e). Secondary use means the harvesting of a crop for a use other than the intended use. Share-adjusted means the adjustment of RMA producer certified production provided by RMA or SDRP producer certified production from the producer by the percent of insurable interest on the FSA-504. Specialty crops means fruits, tree nuts, vegetables, culinary herbs and spices, medicinal plants, and nursery, floriculture, and horticulture crops. This includes common specialty crops identified by USDA's Agricultural Marketing Service at https://www.ams.usda.gov/sites/default/files/media/USDASpecialtyCropDefinition.pdf and other crops as designated by the Deputy Administrator. Substantial beneficial interest (SBI) has the same meaning as specified in the applicable crop insurance policy. For the purposes of Stage 1, Federal crop insurance records for “transfer of coverage, right to indemnity” are considered the same as SBIs. Supplemental policy endorsement based on county- or area-level losses when purchased with a base policy means an Enhanced Coverage Option endorsement, Hurricane Insurance Protection-Wind Index endorsement, Supplemental Coverage Option Endorsement, or Stacked Income Protection Plan endorsement when purchased with a base policy. Tree means a tall, woody plant having comparatively great height, and a single trunk from which an annual crop is produced for commercial market for human consumption, such as a maple tree for sap, or papaya or orchard tree for fruit. It includes immature trees that are intended for commercial purposes. Nursery stock, banana and plantain plants, and trees used for pulp or timber are not considered eligible trees for SDRP. Tropical region means Hawaii, Puerto Rico, American Samoa, Guam, the U.S. Virgin Islands, the Commonwealth of Northern Mariana Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau. Unharvested payment factor means a percentage established by FSA for a crop and applied in a payment formula to reduce the payment for reduced expenses incurred because commercial harvest was not performed. Uninsured means a crop that was not covered by Federal crop insurance or NAP for the crop year for which a payment is being requested under this subpart. Unit means the unit structure as defined under the applicable crop insurance policy for insured crops or in 7 CFR 1437.9 for NAP-covered crops. Unit of measure means: (1) For insurable crops, the FCIC-established unit of measure; and (2) For NAP-eligible crops, the established unit of measure used for the NAP price and yield. U.S. Drought Monitor means the system for classifying drought severity according to a range of abnormally dry to exceptional drought reported by the National Drought Mitigation Center at https://droughtmonitor.unl.edu. It is a collaborative effort between Federal and academic partners, produced on a weekly basis, to synthesize multiple indices, outlooks, and drought impacts on a map and in narrative form. USDA means the U.S. Department of Agriculture. Value loss crop means crops for which losses are calculated based on the value of a producer's inventory before and after a disaster event, rather than based on a yield expressed as a unit of production per acre. The term “value loss crop” has the meaning specified in subpart D of part 1437 of this title, and includes the following crops: aquaculture, including ornamental fish, Christmas trees, floriculture, ginseng root, mushrooms, nursery crops, and turfgrass sod. Verifiable means FSA is able to verify evidence through an independent source. Vine means a perennial plant grown under normal conditions from which an annual fruit crop is produced for commercial market for human consumption, such as grape, kiwi, or passion fruit, and that has a flexible stem supported by climbing, twining, or creeping along a surface. Nursery stock, perennials that are normally propagated as annuals such as tomato plants, biennials such as strawberry plants, and annuals such as pumpkin, squash, cucumber, watermelon, and other melon plants, are excluded from the term vine. WFRP means Whole-Farm Revenue Protection available through the FCIC, including coverage under the Micro Farm Program. Yield means unit of production, measured in bushels, pounds, or other unit of measure, per area of consideration, usually measured in acres." 7:7:7.1.1.4.11.10.9.30,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2230 Stage 2 payment calculation for indemnified insured crops in Puerto Rico.,FSA,,,"[90 FR 51984, Nov. 18, 2025]","(a) Payments for indemnified insured crops in Puerto Rico will be calculated according to this section. (b) For the purpose of calculating a payment under this section: (1) The quality loss percentage is the percentage determined according to § 760.2209(b) and (c), subject to any adjustment by FSA based on the documentation submitted by the producer; (2) The production is the share-adjusted production that was used by RMA to calculate the indemnity and is pre-filled on the FSA-504; (3) The price is the price provided by RMA used to calculate the liability and indemnity; and (4) The SDRP liability is the share-adjusted amount provided by RMA based on data already on file for Federal crop insurance purposes, which is equal to the expected crop value multiplied by the SDRP factor. (c) To calculate a Stage 2 payment for an eligible crop and unit that was insured under a production-based plan in Puerto Rico and indemnified for a loss under that plan, FSA will: (1) Determine the calculated loss by: (i) Converting the quality loss percentage to a decimal and subtracting from 1; (ii) Multiplying the production by the result of paragraph (c)(1)(i) of this section, and then by the price; and (iii) Subtracting the result of paragraph (c)(1)(ii) of this section from the SDRP liability; (2) If the calculated loss in paragraph (c)(1)(iii) of this section minus the Federal crop insurance indemnity is greater than zero, determine the factored gross Stage 2 payment by: (i) Subtracting the indemnity from the calculated loss, and adding the premium and administrative fees; (ii) Multiplying the result of paragraph (c)(3)(i) of this section by 35 percent to stay within available funding; and (3) If the calculated loss in paragraph (c)(1) of this section minus the Federal crop insurance indemnity is equal to or less than zero, determine that the payment amount is zero. (d) If an applicant designates shares for SBIs on FSA-504, the payment amounts for the primary policy holder and SBIs will be multiplied by the applicable share." 7:7:7.1.1.4.11.10.9.31,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2231 Stage 2 payment calculation for non-indemnified insured crops in Puerto Rico.,FSA,,,"[90 FR 51984, Nov. 18, 2025]","(a) Payments for eligible insured crops in Puerto Rico that were not indemnified for a loss under the Federal crop insurance plan will be calculated according to this section. (b) For the purpose of calculating a payment under this section: (1) The quality loss percentage is the percentage determined according to § 760.2209(b) and (c) and is subject to any adjustment by FSA based on the documentation submitted by the producer; (2) The production is the share-adjusted producer-certified production entered on FSA-504, subject to any adjustment by FSA based on the documentation submitted by the producer; (3) The price is the price provided by RMA used to calculate the liability; and (4) The SDRP liability is the share-adjusted amount provided by RMA based on data already on file for Federal crop insurance purposes, which is equal to expected crop value multiplied by the SDRP factor. (c) To calculate a Stage 2 payment for an eligible insured crop in Puerto Rico that was not indemnified for a loss under the Federal crop insurance plan, FSA will: (1) Determine the calculated loss by: (i) Converting the quality loss percentage to a decimal and subtracting from 1; (ii) Multiplying the production by the result of paragraph (c)(1)(i) of this section, and then by the price; and (iii) Subtracting the result of paragraph (c)(1)(ii) of this section from the SDRP liability; (2) Determine the potential insured indemnity by: (i) Dividing the SDRP liability by the SDRP factor, and multiplying the result by the crop's insurance coverage level; (ii) Multiplying the production by the price, multiplied by the producer's price election under the insurance plan; and (iii) Subtracting the result of paragraph (c)(2)(ii) of this section from the insured liability, which is specified in paragraph (c)(2)(i) of this section; (3) If the calculated loss minus the potential insured indemnity is greater than zero, determine the factored gross Stage 2 payment by: (i) Subtracting the potential insured indemnity from the calculated loss, and adding the premium and administrative fees; (ii) Multiplying the result of paragraph (c)(3)(i) of this section by the producer's share, and by 35 percent to stay within available funding; and (4) If the calculated loss in paragraph (c)(1) of this section minus the potential insured indemnity in paragraph (c)(2) of this section is equal to or less than zero, determine that the payment amount is zero." 7:7:7.1.1.4.11.10.9.4,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2203 Eligible producers.,FSA,,,"[90 FR 30569, July 10, 2025, as amended at 90 FR 51979, Nov. 18, 2025]","(a) To be eligible for payment under this subpart, a producer must be a: (1) Citizen of the United States; (2) Resident alien, which for purposes of SDRP means “lawful alien” as defined in 7 CFR part 1400; (3) Partnership organized under State law consisting solely of citizens of the United States or resident aliens; (4) Corporation, limited liability company, or other organizational structure organized under State law consisting solely of citizens of the United States or resident aliens; or (5) Indian Tribe or Tribal organization, as defined in section 4(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304). (b) Members of legal entities, including those who are listed as an SBI on FSA-526, who do not individually share in the risk of producing the crop and ownership of the crop are not considered producers and are not eligible to apply for SDRP; in those instances, the entity is considered the applicant. (c) To be eligible for SDRP, a producer must be in compliance with the provisions of 7 CFR part 12 and the provisions of 7 CFR 718.6, which address ineligibility for benefits for offenses involving controlled substances. (d) FSA's creation and mailing or other transmission of a pre-filled application does not indicate that the person or legal entity listed on the application is eligible for an SDRP Stage 1 or Stage 2 payment." 7:7:7.1.1.4.11.10.9.5,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2204 Stage 1 eligible and ineligible losses.,FSA,,,"[90 FR 30569, July 10, 2025, as amended at 90 FR 51979, Nov. 18, 2025]","(a) For SDRP Stage 1, eligible losses include production, quality, and revenue losses of eligible crops and losses of eligible trees and vines for which the producer: (1) Received an indemnity under a Federal crop insurance policy that provided coverage for crop production losses or tree or vine losses related to qualifying disaster events, excluding policies for forage seeding or crops with an intended use of grazing, livestock policies, Controlled Environment policies, Margin Protection Plan policies, banana plants insured under the Hawaii Tropical Trees provisions, supplemental policy endorsements based on county- or area-level losses when purchased with a base policy, and policies issued in Puerto Rico; or (2) Received a NAP payment, excluding crops with an intended use of grazing. (b) To be eligible for SDRP Stage 1, the loss described in paragraph (a) of this section must have been caused, in whole or in part, by a qualifying disaster event. FSA's creation and mailing of a pre-filled application does not indicate that a crop, tree, or vine loss included on that application is eligible for an SDRP Stage 1 payment. (c) The following losses are not eligible for SDRP Stage 1: (1) Losses of aquacultural species that were compensated under ELAP; (2) Losses for which the producer received an: (i) ERP 2022 Track 1 payment for the 2023 crop year; or (ii) ERP 2022 Track 2 payment for which their allowable gross revenue for the 2023 tax year was used as the disaster year revenue; (3) Losses of insured crops, trees, and vines: (i) In units that were physically located in Connecticut, Hawaii, Maine, or Massachusetts; (ii) That were covered under a WFRP policy for which the producer indicated on their crop insurance reports that the majority of their expected revenue would be earned in a county located in Connecticut, Hawaii, Maine, or Massachusetts; or (iii) That were covered under a Rainfall Index plan for Apiculture or Pasture, Rangeland, and Forage, for which the producer entered a county located in Connecticut, Hawaii, Maine, or Massachusetts on their insurance application; and (4) Losses of NAP-covered crops that were included in a unit that included any land physically located in Connecticut, Hawaii, Maine, or Massachusetts. (d) If a producer received both a NAP payment and an indemnity under a Federal crop insurance policy that is included in Stage 1 to address the same loss, the producer cannot receive a Stage 1 payment based on both the crop insurance indemnity and NAP payment. The producer must elect whether to receive the Stage 1 payment based on the data associated with their Federal crop insurance indemnity or their NAP payment. (e) To be eligible for an SDRP Stage 1 quality loss payment, a producer must have: (1) Received a Federal crop insurance indemnity under an APH or yield-based plan or a NAP benefit for the crop and unit; and (2) Submitted an application for SDRP Stage 1 benefits in accordance with § 760.2206(a). (f) The following are ineligible for an SDRP Stage 1 quality loss payment: (1) Value-loss crops; (2) Maple sap; (3) Honey; (4) Crops for which the producer received a Federal crop insurance indemnity, NAP payment, or Stage 1 payment specified in § 760.2208 based on the quantity of the crop's production that was considered unmarketable; (5) Crops for which the producer previously received a Federal crop insurance indemnity, NAP payment, or Stage 1 payment specified in § 760.2208 for which the crop production was reported as salvage value or secondary use; (6) Crops that were destroyed; (7) Crops that were prevented from being planted; (8) Losses that could have been mitigated through reasonable and available measures; (9) Crops that were previously adjusted for a quality loss under NAP; (10) The portion of quality adjustment previously included in a crop insurance indemnity; (11) Trees, bushes, and vines; (12) Sugar beets for which a member of a cooperative processor received a payment for the same loss through a block grant or cooperative agreement; and (13) Crops that were unharvested." 7:7:7.1.1.4.11.10.9.6,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2205 Stage 2 eligible and ineligible losses.,FSA,,,"[90 FR 51979, Nov. 18, 2025]","(a) For SDRP Stage 2, eligible losses include production, quality, and revenue losses of eligible crops and losses of eligible trees, bushes, and vines for which the producer had: (1) Non-indemnified losses under a Federal crop insurance policy that was included in Stage 1; (2) A loss covered by a Federal crop insurance policy in Puerto Rico, excluding plantain plants and banana plants insured under Puerto Rico crop insurance provisions; (3) NAP coverage but did not receive a NAP payment, excluding crops with an intended use of grazing; (4) Production or quality losses of eligible crops that were uninsured; (5) An indemnified loss under a Federal crop insurance Annual Forage policy that was ineligible for SDRP Stage 1 because the unit included acreage that was intended for grazing, but also included acreage intended for forage or grain; or (6) An indemnified loss under a Rainfall Index plan for Apiculture or Pasture, Rangeland, and Forage that was ineligible for SDRP Stage 1 because the producer entered a county located in Connecticut, Hawaii, Maine, or Massachusetts on their application but the unit also includes land physically located in a state other than Connecticut, Hawaii, Maine, or Massachusetts. (b) To be eligible for SDRP Stage 2, the loss described in paragraph (a) of this section must have been caused, in whole or in part, by a qualifying disaster event. FSA's creation and transmission of a pre-filled application for producers with data on file with FSA or RMA does not indicate that a crop, tree, bush, or vine loss included on that application is eligible for an SDRP Stage 2 payment. (c) If a producer has both a NAP policy and a Federal crop insurance policy that address the same potential crop loss, the producer cannot receive a Stage 2 payment based on both the crop insurance policy and NAP policy. The producer must elect whether to receive the Stage 2 payment based on the data associated with their Federal crop insurance policy or their NAP policy. (d) The following losses are not eligible for SDRP Stage 2: (1) Losses covered under Stage 1, including losses: (i) For all crops covered under a Whole Farm Revenue Protection policy for which the producer received an indemnity; and (ii) Quality losses for all crops covered under Stage 1 Quality Loss provisions; (2) Losses for which the producer received an: (i) ERP 2022 Track 1 payment for the 2023 crop year; or (ii) ERP 2022 Track 2 payment for which their allowable gross revenue for the 2023 tax year was used as the disaster year revenue; (3) Prevented planting losses for crops covered by Federal crop insurance or NAP, regardless of whether the acres were determined ineligible under the terms of the Federal crop insurance plan or NAP provisions, as applicable; (4) Losses of sugar beets for which a member of a cooperative processor received a payment through a block grant or cooperative agreement; (5) Losses of crops that occur after harvest; (6) Losses for which FSA or RMA have previously disapproved a notice of loss for the crop and disaster event, unless that notice of loss was disapproved solely because it was filed after the applicable deadline; (7) Losses due to any of the following causes: (i) Poor management decisions, poor farming practices, or drifting herbicides; (ii) Failure of the participant to re-seed or replant to the same crop in a county where it is customary to re-seed or replant after a loss before the final planting date; (iii) Water contained or released by any governmental, public, or private dam or reservoir project if an easement exists on the acreage affected by the containment or release of the water; or (iv) Failure of a power supply or brownout; (8) Losses of the following, regardless of whether they were the result of an eligible disaster event: (i) Production that could not be marketed merely because of a loss of market demand that was not associated with the quality of the crop; (ii) Aquacultural species that were compensated under ELAP; (iii) Volunteer crops; (iv) Crops not intended for harvest; (v) By-products resulting from processing or harvesting a crop, such as, but not limited to, cotton seed, peanut shells, wheat or oat straw, or corn stalks or stovers; (vi) Crops, trees, bushes, and vines in home gardens; (vii) First year seeding for forage production, or immature fruit crops; (viii) Tobacco in areas where Federal crop insurance is not available; (ix) Crops, trees, bushes, and vines that were physically located in Connecticut, Hawaii, Maine, or Massachusetts; or (x) Trees, bushes, and vines that were abandoned or were not in use or intended for commercial operation at the time of loss; and (9) Losses for honey, when the honey production by colonies or bees was diminished, if caused by: (i) Unavailability of equipment or the collapse or failure of equipment or apparatus used in the honey operation; (ii) Improper storage of honey; (iii) Bee feeding; (iv) Application of chemicals; (v) Theft; (vi) Movement of bees by or for the producer; or (vii) Disease or pest infestation of the colonies, unless approved by FSA. (e) Quality losses for the following are ineligible for SDRP Stage 2: (1) Crops insured under area plans; (2) Quality losses compensated under Stage 1; (3) Value loss crops; (4) Maple sap; (5) Honey; (6) Trees, bushes, and vines; (7) Crops that were destroyed; (8) Crops that were prevented from being planted; (9) Losses that could have been mitigated through reasonable and available measures; (10) Production that cannot be marketed merely because of a loss of market demand that is not associated with the quality of the crop; and (11) Crops for which the production was already reduced for quality losses under NAP." 7:7:7.1.1.4.11.10.9.7,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2206 Time and method of application.,FSA,,,"[90 FR 30569, July 10, 2025, as amended at 90 FR 51980, Nov. 18, 2025]","(a) For SDRP Stage 1, producers will receive a pre-filled FSA-526, Supplemental Disaster Relief Program (SDRP) Stage 1 Application, which includes the producer's information that is already on file with USDA. Producers may submit complete applications to their FSA county office in person or by mail, email, facsimile, or other methods announced by FSA. A producer must submit a complete application to their recording county office by April 30, 2026. (b) Producers may not alter the pre-filled data in FSA-526. Any alterations in the pre-filled data on the application will result in FSA disapproving the producer's Stage 1 application. (c) For SDRP Stage 1 quality loss payments, FSA will generate a pre-filled FSA-526Q, Supplemental Disaster Relief Program (SDRP) Stage 1 Quality Loss Application, which includes the producer's information that is already on file with USDA. Producers must contact their FSA county office to obtain their pre-filled FSA-526Q. Producers applying for a SDRP Stage 1 quality loss payment may not alter pre-filled data in FSA-526Q. In addition to FSA-526Q, producers must also submit documentation required by § 760.2207 for all producer-certified quality loss percentages, and failure to submit that documentation will result in disapproval of the producer's FSA-526Q. Producers must submit FSA-526Q and the required documentation to any FSA county office by April 30, 2026. (d) For SDRP Stage 2, producers must submit the following to any FSA county office by April 30, 2026: (1) A completed FSA-504, Supplemental Disaster Relief Program (SDRP) Stage 2 Application; (2) FSA-578, Report of Acreage, for all acreage of any crop for the applicable crop year for which payments under this subpart are requested, with the exception of crops insured under APH or yield-based plans and insured crops in Puerto Rico; and (3) Required documentation specified in § 760.2207 for the information entered on FSA-504. Producers are not required to provide additional documentation to support pre-filled values on FSA-504. (e) FSA will pre-fill data for items on FSA-504 for crops insured under certain Federal crop insurance policies or covered by NAP when that data is already on file with RMA or FSA. Producers of those crops must contact their FSA county office to obtain their pre-filled FSA-504. Producers must review any pre-filled data and, if inaccurate, enter the correct data on FSA-504 in the items provided for producer-certified data. (f) A producer must apply for a crop and unit on the part of FSA-504 that corresponds to the type of insurance or NAP coverage obtained for the crop and unit, if applicable. A producer cannot apply for a crop and unit as an uninsured loss if the crop and unit were covered by Federal crop insurance or NAP, including acreage that was deemed ineligible. Applications for crops and units entered in the wrong part on FSA-504 will be disapproved. (g) In addition to the SDRP application, a producer must also have the following forms on file with FSA for the applicable program year byApril 30, 2027: (1) CCC-902, Farm Operating Plan, for an individual or legal entity; (2) CCC-901, Member Information for Legal Entities, if applicable; (3) AD-1026, Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) Certification, for the producer and affiliated persons as provided in 7 CFR part 12; and (4) FSA-510, Request for an Exception to the $125,000 Payment Limitation for Certain Program, for producers and members of legal entities who are requesting an increased payment limitation. (h) The date to apply for payments under this program may, at the sole discretion of FSA, be extended. If FSA makes that decision, the extended date will be set forth at https://www.fsa.usda.gov/resources/programs/supplemental-disaster-relief-program. Producers may also obtain that information from any FSA county office." 7:7:7.1.1.4.11.10.9.8,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2207 Required documentation and verification.,FSA,,,"[90 FR 30569, July 10, 2025, as amended at 90 FR 51981, Nov. 18, 2025]","(a) Participants must retain documentation in support of their application for 3 years after the date of approval. All information provided to FSA for program eligibility and payment calculation purposes, including certification of the qualifying disaster event that caused the loss, is subject to spot check. Participants receiving SDRP payments or any other person who furnishes such information to USDA must permit authorized representatives of USDA or the Government Accountability Office, during regular business hours, to enter the agricultural operation and to inspect, examine, and to allow representatives to make copies of books, records, or other items for the purpose of confirming the accuracy of the information provided by the participant. (b) Producers who apply for Stage 1 for losses covered under WFRP must submit documentation to FSA to support their certification of the percentage of expected revenue from specialty and high value crops by April 30, 2026. If a producer does not submit the required documentation, FSA will process the producer's application with 0 percent of their revenue attributed to specialty and high value crops, resulting in the producer's payment for loss being attributed to the payment limitation for other crops as provided in § 760.2215(a). (c) Producers who apply for a Stage 1 quality loss payment must submit documentation specified in paragraph (e) of this section to substantiate the certified SDRP quality loss percentage. Documentation of pre-filled information on FSA-526Q is not required unless requested by FSA. (d) Producers who apply for Stage 2 must submit documentation as specified in this section to support any of the following entered by the producer on FSA-504: Quality loss percentage; production; dollar value before disaster event; dollar value after disaster event; the number of trees, bushes, and vines destroyed; and the number of trees, bushes, and vines damaged. Documentation of pre-filled information on FSA-504 is not required unless requested by FSA. (e) Producers must submit documentation to support the producer-certified quality loss percentage entered on FSA-526Q or FSA-504. (1) The following documentation is required: (i) For eligible crops other than forage crops, verifiable documentation of the total dollar value loss and corresponding grading factors due to quality and acceptable production records to determine the amount of eligible production; and (ii) For forage crops, verifiable documentation of the nutrient factors for the affected production, and acceptable production records to determine the amount of eligible production. The nutrient factors that must be documented for a crop will be determined by FSA based on the standard practice for the crop in that county. (2) The documentation must be dated and contain all information required to substantiate the applicant's certification to the satisfaction of FSA. Verifiable documentation is required to substantiate the total dollar value loss, affected production, grading factors, and nutritional factors. FSA may verify the records with records on file at the warehouse, gin, or other entity that received or may have received the reported production. (3) To be considered acceptable, verifiable documentation for grain crops that were sold may come from any time between harvest and sale of the affected production, unless FSA determines the record is not representative of the condition within 30 days of harvest. For all other crops other than forage, the verifiable documentation must come from tests or analysis completed within 30 days of harvest, unless FSA determines that the record is representative of the condition of the affected production at time of harvest. Examples of acceptable records include, but are not limited to: (i) Warehouse grading sheets; (ii) Settlement sheets; (iii) Sales receipts showing grade and price or disposition to secondary market due to quality; and (iv) Laboratory test results. (f) To support any production entered on FSA-504, the producer must submit acceptable documentation that substantiates the certification to the satisfaction of FSA. If the eligible crop was sold or otherwise disposed of through commercial channels, an acceptable production record of that disposition must be provided to FSA with the certification. Producers must account for the total amount of unit production for the crop, whether or not records reflect this production, and provide all records for any production of a crop that is grown with an arrangement, agreement, or contract for guaranteed payment. If a producer does not have acceptable production records, the county disaster yield will apply as provided in § 760.2211(g), except in cases where the applicant has indicated a quality loss percentage. Acceptable production records include the following: (1) RMA or NAP records, if accurate and complete; (2) Commercial receipts; (3) Settlement sheets; (4) Warehouse ledger sheets or load summaries; (5) Appraisal information from a loss adjuster acceptable to FSA; and (6) For eligible crops that were farm-stored, sold, fed to livestock, or disposed of by means other than verifiable commercial channels: (i) Truck scale tickets; (ii) Appraisal information from a loss adjuster acceptable to FSA; (iii) Contemporaneous reliable diaries; and (iv) Other documentary evidence, such as contemporaneous reliable measurements, determined acceptable by FSA. (g) Under Stage 2, participants requesting payments for losses to adulterated wine grapes must submit verifiable sales tickets that document that the reduced price received was due to adulteration due to a qualifying disaster event. For adulterated wine grapes that have not been sold, participants must submit verifiable records obtained by testing or analysis to establish that the wine grapes were adulterated due to a qualifying disaster event and the price they would receive due to adulteration. (h) For value loss crops, producers must provide acceptable records to substantiate the dollar value before and after the qualifying disaster event. The producer will determine the dollar value before disaster and dollar value after disaster. Acceptable inventory records should include relevant dates (such as planting, seeding, or harvest), quantity, sizes, and location for the inventory. (1) Acceptable inventory records include but are not limited to the following: (i) FCIC records for insured crops, such as RMA appraisal worksheets or Inventory Valuation Reports; (ii) An appraisal by a NAP loss adjuster; (iii) Planting records that include date of purchase and date of planting, such as seed receipts or original inventory purchase receipts; (iv) Sales records that include dates and the quantity of inventory sold, including receipts; (v) Monthly records of inventory maintained by producers; and (vi) The producer's beginning inventory extrapolated from FSA-established mortality rates based on size, age, and days of growth, if applicable. (2) [Reserved] (i) The dollar value before disaster and dollar value after disaster are determined by multiplying the inventory for each size or age category of the crop by the average market price, and adding the values for all categories. For example, the FSA-established average market prices for bald cypress are $4.68 for a 1-gallon size, and $17.88 for a 3-gallon size. The producer's inventory records indicate 20 of each crop prior to the event. The inventory value is: $93.60 (calculated as 20 × $4.68) + $357.60 (calculated as $17.88 × 20) = $451.20. (j) For tree, bush, and vine losses, if physical evidence of the lost or damaged trees, bushes, or vines no longer exists, the producer must provide acceptable evidence to substantiate that the eligible trees, bushes, or vines existed and support the number of trees, bushes, or vines lost for each stand due to a qualifying disaster event. Acceptable evidence includes but is not limited to the following: (1) Receipts for the original purchase of the eligible trees, bushes, or vines; (2) Documentation of labor and equipment used to plant or remove the eligible trees, bushes, or vines that were lost or damaged; (3) Chemical, fertilizer, or other related receipts to substantiate the existence of the eligible trees, bushes, or vines; (4) FCIC records, such as an RMA pre-acceptance inspection report or an appraisal worksheet; (5) Maps with aerial photography that clearly identify damaged or destroyed trees, bushes, or vines; (6) Photographic evidence of the loss with the date the image was taken; (7) Evidence provided with a Tree Assistance Program or Emergency Conservation Program application for the same acreage; and (8) Certifications of tree, bush, or vine losses by third parties, such as consultants, Cooperative Extension Service, universities, or government personnel, but only if there is no other documentation available. (k) Producers are responsible for retaining, providing, and summarizing, at time of application and whenever required by FSA, the best available verifiable records for the crop. Producers must provide the information in a manner that can be easily understood by FSA. (l) Participants must provide all records for any production of a crop that is grown with an arrangement, agreement, or contract for guaranteed payment. (m) Determinations of acceptability with respect to this paragraph (m) will take into account, as appropriate, the ability for FSA to review and verify or compare the evidence against the similarity of the evidence or reports or data received by FSA for the crop or similar crops. Other factors deemed relevant by FSA may also be taken into account. FSA may verify the production evidence submitted with records on file at the warehouse, gin, or other entity that received or may have received the reported production. (n) FSA may also require the producer to submit any additional information necessary to support the certifications on the FSA-504 or determine a producer's eligibility, including but not limited to documentation of the qualifying disaster event and the producer's ownership share and risk in the crop. If FSA requests additional information, the producer must submit the requested information within 60 days or the producer's application will be disapproved and the producer must refund the payment, if previously issued." 7:7:7.1.1.4.11.10.9.9,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,V,Subpart V—Supplemental Disaster Relief Program,,§ 760.2208 Stage 1 payment calculation.,FSA,,,,"(a) FSA and RMA will calculate Stage 1 payments using the loss data on file with FSA or RMA at the time of payment calculation or as later updated by FSA or RMA upon identification and correction of an error in the data on file at time of payment calculation. Stage 1 payments will not be calculated using data manually submitted by producers. (b) The SDRP Stage 1 payment calculation for each crop and unit will use an SDRP factor based on the applicable type of coverage and the level of crop insurance or NAP coverage, as specified in the following table. Table 1 to Paragraph (b) —SDRP Factors (c) To calculate a Stage 1 payment for an eligible insured crop, tree, or vine loss, RMA will perform a calculation consistent with the calculation of an indemnity for the crop and unit. The calculation will use the approved RMA loss procedures for the type of coverage purchased by the producer, but it will substitute the SDRP factor in table 1 of paragraph (b) of this section for the policy's coverage level. Using that SDRP factor, RMA will determine the amount that will be used in place of the liability for SDRP purposes. The result of that calculation will then be adjusted by subtracting the net crop insurance indemnity, which is equal to the producer's gross crop insurance indemnity for the crop and unit minus administrative fees and premiums. (d) To calculate a Stage 1 payment for a NAP-covered crop loss, FSA will perform a calculation consistent with the NAP payment calculation for the crop and unit as provided in 7 CFR part 1437. FSA will substitute the SDRP factor in table 1 of paragraph (b) of this section for the coverage level to determine the applicable guarantee for SDRP purposes. This calculated amount will then be adjusted by subtracting the net NAP payment, which is equal to the producer's gross NAP payment for the crop and unit minus service fees and premiums. (e) Crops covered under a WFRP policy or insured under a whole-farm unit will be treated as a single crop for payment calculation purposes. (f) To ensure that SDRP payments do not exceed available funding, the SDRP Stage 1 payment will be equal to the amount calculated according to paragraph (c) or (d) of this section multiplied by a factor of 35 percent. If funding remains available after Stage 2 payments are issued, FSA may issue additional Stage 1 payments under this subpart." 7:7:7.1.1.4.11.3.9.1,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1500 Applicability.,FSA,,,"[84 FR 48528, Sept. 13, 2019, as amended at 86 FR 445, Jan. 6, 2021]","(a) This subpart specifies the terms and conditions for the 2017 Wildfires and Hurricanes Indemnity Program (2017 WHIP) and the Wildfires and Hurricanes Indemnity Program Plus (WHIP+). (b) The 2017 WHIP provides disaster assistance for necessary expenses related to crop, tree, bush, and vine losses related to the consequences of wildfires, hurricanes, and Tropical Storm Cindy that occurred in calendar year 2017, and for losses of peach and blueberry crops in calendar year 2017 due to extreme cold, and blueberry productivity losses in calendar year 2018 due to extreme cold and hurricane damage in calendar year 2017. (c) WHIP+ provides disaster assistance for necessary expenses related to losses of crops, trees, bushes, and vines, as a consequence of Hurricanes Michael and Florence, other hurricanes, floods, tornadoes, typhoons, volcanic activity, snowstorms, wildfires, excessive moisture, and qualifying drought occurring in calendar years 2018 and 2019." 7:7:7.1.1.4.11.3.9.10,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1509 Eligible and ineligible losses.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48530, Sept. 13, 2019]","(a) Except as provided in paragraphs (b) through (e) of this section, to be eligible for payments under this subpart the unit must have suffered a loss of the crop, tree, bush, or vine, or prevented planting of a crop, due to a qualifying disaster event. (b) A loss will not be eligible under this subpart if any of the following apply: (1) The cause of loss is determined by FSA to be the result of poor management decisions, poor farming practices, or drifting herbicides; (2) The cause of loss was due to failure of the participant to re-seed or replant to the same crop in a county where it is customary to re-seed or replant after a loss before the final planting date; (3) The cause of loss was due to water contained or released by any governmental, public, or private dam or reservoir project if an easement exists on the acreage affected by the containment or release of the water; (4) The cause of loss was due to conditions or events occurring outside of the applicable growing season for the crop, tree, bush, or vine; (5) The cause of loss was due to failure of a power supply or brownout; or (6) FSA or RMA have previously disapproved a notice of loss for the crop and disaster event unless that notice of loss was disapproved solely because it was filed after the applicable deadline. (c) The following types of loss, regardless of whether they were the result of an eligible disaster event, are not eligible losses: (1) Losses to crops intended for grazing; (2) Losses to crops for which FCIC coverage or NAP coverage is unavailable; (3) Losses to volunteer crops; (4) Losses to crops not intended for harvest; (5) Losses of by-products resulting from processing or harvesting a crop, such as, but not limited to, cotton seed, peanut shells, wheat or oat straw, or corn stalks or stovers; (6) Losses to home gardens; (7) Losses of first year seeding for forage production, or immature fruit crops; or (8) Losses to crops that occur after harvest. (d) The following losses of ornamental nursery stock are not eligible losses: (1) Losses caused by the inability to market nursery stock as a result of lack of compliance with State and local commercial ordinances and laws, quarantine, boycott, or refusal of a buyer to accept production; (2) Losses affecting crops where weeds and other forms of undergrowth in the vicinity of nursery stock have not been controlled; or (3) Losses caused by the collapse or failure of buildings or structures. (e) The following losses for honey, as a crop, where the honey production by colonies or bees was diminished, are not eligible losses: (1) Losses caused by the unavailability of equipment or the collapse or failure of equipment or apparatus used in the honey operation; (2) Losses caused by improper storage of honey; (3) Losses caused by bee feeding; (4) Losses caused by the application of chemicals; (5) Losses caused by theft; (6) Losses caused by the movement of bees by or for the participant; (7) Losses caused by disease or pest infestation of the colonies, unless approved by the Deputy Administrator; (8) Losses of income from pollinators; or (9) Losses of equipment or facilities. (f) Qualifying losses for trees, bushes, and vines will not include losses: (1) That could have been prevented through reasonable and available measures; and (2) To trees, bushes, or vines that were abandoned or were not in use or intended for commercial operation at the time of the loss." 7:7:7.1.1.4.11.3.9.11,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1510 Application for payment.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48530, Sept. 13, 2019; 86 FR 446, Jan. 6, 2021]","(a) An application for payment under this subpart must be submitted to the FSA county office serving as the farm's administrative county office by the close of business on October 30, 2020. Producers must submit: (1) For 2017 WHIP, a completed form FSA-890, Wildfires and Hurricanes Indemnity Program Application; or (2) For WHIP+, a completed form FSA-894, Wildfires and Hurricanes Indemnity Program + Application. (b) Once signed by a producer, the application for payment is considered to contain information and certifications of and pertaining to the producer regardless of who entered the information on the application. (c) The producer applying for payment under this subpart certifies the accuracy and truthfulness of the information provided in the application as well as any documentation filed with or in support of the application. All information is subject to verification or spot check by FSA at any time, either before or after payment is issued. Refusal to allow FSA or any agency of the Department of Agriculture to verify any information provided will result in the participant's forfeiting eligibility for payment under this subpart. FSA may at any time, including before, during, or after processing and paying an application, require the producer to submit any additional information necessary to implement or determine any eligibility provision of this subpart. Furnishing required information is voluntary; however, without it FSA is under no obligation to act on the application or approve payment. Providing a false certification will result in ineligibility and can also be punishable by imprisonment, fines, and other penalties. (d) The application submitted in accordance with paragraph (a) of this section is not considered valid and complete for issuance of payment under this subpart unless FSA determines all the applicable eligibility provisions have been satisfied and the participant has submitted all of following completed forms and information: (1) Report of all acreage for the crop for the unit for which payments under this subpart are requested, on FSA-578, Report of Acreage, or in another format acceptable to FSA; (2) AD-1026, Highly Erodible Land Conservation (HELC) and Wetland Conservation Certification; and (3) For 2017 WHIP: (i) FSA-891, Crop Insurance and/or NAP Coverage Agreement; (ii) FSA-892, Request for an Exception to the WHIP Payment Limitation of $125,000, if the applicant is requesting 2017 WHIP payments in excess of the $125,000 payment limitation; and (iii) FSA-893, 2018 Citrus Actual Production History and Approved Yield Record, Florida Only, for participants applying for payment for a citrus crop located in Florida; (4) For WHIP+: (i) FSA-895, Crop Insurance and/or NAP Coverage Agreement; (ii) FSA-896, Request for an Exception to the WHIP Payment Limitation of $125,000, if 75 percent or more of an applicant's average AGI is attributable to activities related to farming, ranching, or forestry and the applicant wants to be eligible to receive WHIP+ payments of more than $125,000, up to the $250,000 payment limitation per crop year, with an overall WHIP+ limit of $500,000; and (iii) FSA-897, Actual Production History and Approved Yield Record (WHIP+ Select Crops Only), for applicants requesting payments for select crops. (e) Application approval and payment by FSA does not relieve a participant from having to submit any form required, but not filed, according to paragraph (d) of this section." 7:7:7.1.1.4.11.3.9.12,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1511 Calculating payments for yield-based crop losses.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48530, Sept. 13, 2019; 86 FR 446, Jan. 6, 2021]","(a) Payments made under this subpart to a participant for a loss to yield-based crops, including losses due to prevented planting, subject to § 760.1514(i) and (j), are determined for a unit by: (1) Multiplying the eligible acres by the 2017 WHIP yield in paragraph (c) of this section or the WHIP+ yield in paragraph (d) of this section by the price; (2) Multiplying the result from paragraph (a)(1) of this section by the applicable 2017 WHIP factor or WHIP+ factor in paragraph (b) of this section; (3) Multiplying the applicable production in paragraph (d) of this section by the price; (4) Subtracting the result from paragraph (a)(3) of this section from the result of paragraph (a)(2) of this section; (5) Multiplying the result from paragraph (a)(4) of this section by the participant's share in paragraph (e) of this section; (6) Multiplying the result from paragraph (a)(5) of this section by the applicable payment factor in paragraph (g) of this section; (7) Subtracting the amount of the gross insurance indemnity or NAP payment from the result from paragraph (a)(6) of this section; (8) Subtracting the secondary use or salvage value of the crop from the result from paragraph (a)(7) of this section; and (b) If the NAP or crop insurance coverage is at the coverage level listed in the first column, then the 2017 WHIP factor is listed in the second column, and the WHIP+ factor is listed in the third column: Table 1 to § 760.1511( b ) (c) The 2017 WHIP yield is: (1) The producer's APH for insured crops under a crop insurance policy that has an associated yield and for NAP covered crops, excluding all crops located in Puerto Rico; (2) The county expected yield for crops located in Puerto Rico and uninsured crops, excluding citrus crops located in Florida; or (3) For uninsured citrus crops located in Florida: (i) Determined based on information provided on FSA-893 and supported by evidence that meets the requirements of § 760.1513(c), or (ii) If FSA-893 and supporting documentation are not submitted, the county expected yield. (d) The WHIP+ yield is: (1) The producer's APH for insured crops under a crop insurance policy that has an associated yield and for NAP covered crops, excluding all crops located in Puerto Rico; (2) The county expected yield for crops located in Puerto Rico and uninsured crops, excluding select crops; or (3) For select crops: (i) Determined based on information provided on FSA-897 and supported by evidence that meets the requirements of § 760.1513(c), or (ii) If FSA-897 and supporting documentation are not submitted, the county expected yield. (e) The production used to calculate a payment under this subpart will be determined as specified in § 760.1513. (f) The eligible participant's share of a payment under this subpart is based on the participant's ownership entitlement share of the crop or crop proceeds, or, if no crop was produced, the share of the crop the participant would have received if the crop had been produced. If the participant has no ownership share of the crop, the participant is ineligible for payment. (g) Payment factors will be used to calculate payments for crops produced with significant and variable production and harvesting expenses that are not incurred because the crop acreage was prevented planted, or planted but not harvested, as determined by FSA. The use of payment factors is based on whether the crop acreage was unharvested or prevented planted, not whether a participant actually incurs or does not incur expenses. Payment factors are generally applicable to all similarly situated participants and are not established in response to individual participants. Accordingly established payment factors are not appealable under parts 11 and 780 of this title. A crop that is intended for mechanical harvest, but subsequently grazed and not mechanically harvested, will have an unharvested payment factor applied. (h) Production from all end uses of a multi-use crop will be calculated separately and summarized together." 7:7:7.1.1.4.11.3.9.13,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1512 Production losses; participant responsibility.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48531, Sept. 13, 2019]","(a) For any record submitted along with the certification of production, the record must be either a verifiable or reliable record that substantiates the certification to the satisfaction of the FSA county committee. If the eligible crop was sold or otherwise disposed of through commercial channels, a record of that disposition must be provided to FSA with the certification. (1) Acceptable production records include: (i) RMA or NAP records, if accurate and complete; (ii) Commercial receipts; (iii) Settlement sheets; (iv) Warehouse ledger sheets or load summaries; or (v) Appraisal information from a loss adjuster acceptable to FSA. (2) If the eligible crop was farm-stored, sold, fed to livestock, or disposed of by means other than verifiable commercial channels, acceptable records for these purposes include: (i) Truck scale tickets; (ii) Appraisal information from a loss adjuster acceptable to FSA; (iii) Contemporaneous reliable diaries; or (iv) Other documentary evidence, such as contemporaneous reliable measurements. (3) Determinations of reliability with respect to this paragraph will take into account, as appropriate, the ability for FSA to review and verify or compare the evidence against the similarity of the evidence or reports or data received by FSA for the crop or similar crops. Other factors deemed relevant may also be taken into account. (b) If RMA or NAP records are not available, or if the FSA county committee determines the RMA or NAP records as reported by the insured or covered participant appear to be questionable or incomplete, or if the FSA county committee makes inquiry, the participant is responsible for: (1) Retaining and providing, at time of application and whenever required by FSA, the best available verifiable or reliable or other production records for the crop; (2) Summarizing all the production evidence; (3) Accounting for the total amount of unit production for the crop, whether or not records reflect this production; (4) Providing the information in a manner that can be easily understood by the FSA county committee; and (5) Providing supporting documentation if the FSA county committee has reason to question the disaster event or that all production has been taken into account. (c) FSA may verify the production evidence submitted with records on file at the warehouse, gin, or other entity that received or may have received the reported production. (d) Participants must provide all records for any production of a crop that is grown with an arrangement, agreement, or contract for guaranteed payment. (e) Under WHIP+, participants requesting payments for losses to adulterated wine grapes must submit verifiable sales tickets that document that the reduced price received was due to adulteration due to a qualifying disaster event. For adulterated wine grapes that have not been sold, participants must submit verifiable records obtained by testing or analysis to establish that the wine grapes were adulterated due to a qualifying disaster event and the price they would receive due to adulteration." 7:7:7.1.1.4.11.3.9.14,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1513 Determination of production.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48531, Sept. 13, 2019]","(a) The harvested production of eligible crop acreage harvested more than once in a crop year includes the total harvested production from all the harvests in the crop year. (b) If a crop is appraised and subsequently harvested as the intended use, the actual harvested production must be taken into account to determine payments. FSA will analyze and determine whether a participant's evidence of actual production represents all that could or would have been harvested. (c) For all crops eligible for loan deficiency payments or marketing assistance loans (see parts 1421 and 1434 of this title) with an intended use of grain but harvested as silage, ensilage, cabbage, hay, cracked, rolled, or crimped, production will be converted to a whole grain equivalent based on conversion factors as previously established by FSA. (d) If a participant does not receive compensation based upon the quantity of the commodity delivered to a purchaser, but has an agreement or contract for guaranteed payment for production, the determination of the production will be the greater of the actual production or the guaranteed payment converted to production as determined by FSA. (e) Production that is commingled between crop years, units, ineligible and eligible acres, or different practices before it was a matter of record or combination of record and cannot be separated by using records or other means acceptable to FSA will be prorated to each respective year, unit, type of acreage, or practice, respectively. Commingled production may be attributed to the applicable unit, if the participant made the unit production of a commodity a matter of record before commingling and does any of the following, as applicable: (1) Provides copies of verifiable documents showing that production of the commodity was purchased, acquired, or otherwise obtained from beyond the unit; (2) Had the production measured in a manner acceptable to the FSA county committee; or (3) Had the current year's production appraised in a manner acceptable to the FSA county committee. (f) The FSA county committee will assign production for the unit when the FSA county committee determines that: (1) The participant has failed to provide adequate and acceptable production records; (2) The loss to the crop is because of a disaster condition not covered by this subpart, or circumstances other than natural disaster, and there has not otherwise been an accounting of this ineligible cause of loss; (3) The participant carries out a practice, such as multiple cropping, that generally results in lower yields than the established historic yields; (5) A crop was late-planted; (6) Unharvested acreage was not timely appraised; or (7) Other appropriate causes exist for such assignment as determined by the Deputy Administrator. (g) The FSA county committee will establish a county disaster yield that reflects the amount of production producers would have produced considering the eligible disaster events in the county or area for the same crop. The county disaster yield for the county or area will be expressed as either a percent of loss or yield per acre. The county disaster yield will apply when: (1) Unharvested acreage has not been appraised by FSA or a company reinsured by FCIC; or (2) Acceptable production records for harvested acres are not available from any source. (h) In no case will the production amount of any applicant be less than the producer's certified loss. (i) Under WHIP+, production for eligible adulterated wine grapes will be adjusted for quality deficiencies due to a qualifying disaster event. Wine grapes are eligible for production adjustment only if adulteration occurred prior to harvest and as a result of a qualifying disaster event or as a result of a related condition (such as application of fire retardant). Losses due to all other causes of adulteration (such as addition of artificial flavoring or chemicals for economic purposes) are not eligible for WHIP+. Production will be eligible for quality adjustment if, due to a qualifying disaster event, it has a value of less than 75 percent of the average market price of undamaged grapes of the same or similar variety. The value per ton of the qualifying damaged production and the average market price of undamaged grapes will be determined on the earlier of the date the damaged production is sold or the date of final inspection for the unit. Grape production that is eligible for quality adjustment will be reduced by: (1) Dividing the value per ton of the damaged grapes by the value per ton for undamaged grapes; and (2) Multiplying this result (not to exceed 1.000) by the number of tons of the eligible damaged grapes." 7:7:7.1.1.4.11.3.9.15,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1514 Eligible acres.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48531, Sept. 13, 2019]","(a) Eligible acreage will be calculated using the lesser of the reported or determined acres shown to have been planted or prevented from being planted to a crop. (b) Initial crop acreage will be the payment acreage for under this subpart, unless the provisions for subsequent crops in this section are met. Subsequently planted or prevented planted acre acreage is considered acreage for under this subpart only if the provisions of this section are met. All plantings of an annual or biennial crop are considered the same as a planting of an initial crop in tropical regions as defined in part 1437, subpart F, of this title. (c) In cases where there is double cropped acreage, each crop may be included in the acreage only if the specific crops are approved by the FSA State committee as eligible double cropping practices in accordance with procedures approved by the Deputy Administrator. (d) Except for insured crops, participants with double cropped acreage not meeting the criteria in paragraph (c) of this section may have such acreage included in the acreage on more than one crop only if the participant submits verifiable records establishing a history of carrying out a successful double cropping practice on the specific crops for which payment is requested. (e) Participants having multiple plantings may receive payments for each planting included only if the planting meets the requirements of part 1437 of this title and all other provisions of this subpart are satisfied. (f) Losses due to prevented planting are eligible under this subpart only if the loss was due to a qualifying disaster event. Provisions of parts 718 and 1437 of this title specifying what is considered prevented planting and how it must be documented and reported apply. Crops located in tropical regions are not eligible for prevented planting. (g) Subject to the provisions of this subpart, the FSA county committee will: (1) Use the most accurate data available when determining planted and prevented planted acres; and (2) Disregard acreage of a crop produced on land that is not eligible for crop insurance or NAP. (h) If a farm has a crop that has both FSA and RMA acreage for insured crops, eligible acres will be based on the lesser of RMA or FSA acres. (i) For 2017 WHIP, prevented planting acres will be considered eligible acres if they meet all requirements of this subpart. (j) For WHIP+: (1) 2018 and 2020 crop year prevented planting acres and 2019 crop year uninsured and NAP-covered prevented planting acres will be eligible acres if they meet all requirements of this subpart; and (2) 2019 crop year insured prevented planting acres will not be eligible acres." 7:7:7.1.1.4.11.3.9.16,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1515 Calculating payments for value loss crops.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48531, Sept. 13, 2019]","(a) Payments made under this subpart to a participant for a loss on a unit with respect to value loss crops are determined by: (1) Multiplying the field market value of the crop immediately before the qualifying disaster event by the 2017 WHIP factor or WHIP+ factor specified in § 760.1511(b); (2) Subtracting the sum of the field market value of the crop immediately after the qualifying disaster event and the value of the crop lost due to ineligible causes of loss from the result from paragraph (a)(1) of this section; (3) Multiplying the result from paragraph (a)(2) of this section by the participant's share; (4) Multiplying the result from paragraph (a)(3) of this section by the applicable payment factor; (5) Subtracting the gross insurance indemnity or NAP payment from the result from paragraph (a)(4) of this section; (6) Subtracting the secondary use or salvage value of the crop from the result from paragraph (a)(5) of this section; and (7) Subtracting the amount of any payment for future economic losses received under the Florida Citrus Recovery Block Grant Program. (b) In the case of an insurable value loss crop for which crop insurance provides for an adjustment in the guarantee, liability, or indemnity, such as in the case of inventory exceeding peak inventory value, the adjustment will be used in determining the payment under this subpart for the crop. (c) In the case of a NAP eligible value loss crop for which NAP provides for an adjustment in the level of assistance, such as in the case of unharvested field grown inventory, the adjustment will be used in determining the payment for the crop." 7:7:7.1.1.4.11.3.9.17,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,"§ 760.1516 Calculating payments for tree, bush, and vine losses.",FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48532, Sept. 13, 2019]","(a) Payments will be calculated separately based on the growth stage of the trees, bushes, or vines, as determined by the Deputy Administrator. (b) Payments made under this subpart to a participant for a loss on a unit with respect to tree, bush, and vine losses are determined by: (1) Multiplying the expected value (see paragraph (c) of this section) of the trees, bushes, or vines immediately before the qualifying disaster event by the 2017 WHIP factor or WHIP+ factor specified in § 760.1511(b); (2) Subtracting the actual value (see paragraph (d) of this section) of the trees, bushes, or vines immediately after the qualifying disaster event from the result of paragraph (b)(1) of this section; (3) Multiplying the result of paragraph (b)(2) of this section by the participant's share; (4) Subtracting the amount of any insurance indemnity received from the result of paragraph (b)(3) of this section; and (5) Subtracting the value of any secondary use or salvage value from the result of paragraph (b)(4) of this section. (c) Expected value is determined by multiplying the total number of trees, bushes, or vines that were damaged or destroyed by a qualifying disaster event by the price. (d) Actual value is determined by: (1) Multiplying the number of trees, bushes, or vines damaged by a qualifying disaster event by the damage factor; (2) Adding the result of paragraph (d)(1) of this section and the number of trees, bushes, or vines destroyed by a qualifying disaster event; (3) Multiplying the result of paragraph (d)(2) of this section by the price; and (4) Subtracting the result of paragraph (d)(3) of this section from the expected value from paragraph (c) of this section. (e) The FSA county committee will adjust the number of damaged and destroyed trees, bushes, and vines, if it determines that the number of damaged or destroyed trees, bushes, or vines certified by the participant is inaccurate. (f) Citrus trees located in Florida are ineligible for payment under 2017 WHIP." 7:7:7.1.1.4.11.3.9.18,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1517 Requirement to purchase crop insurance or NAP coverage.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48532, Sept. 13, 2019]","(a) For the first 2 consecutive crop years for which crop insurance or NAP coverage is available after the enrollment period for 2017 WHIP or WHIP+ ends, subject to paragraph (c) of this section, a participant who receives payment under this subpart for a crop loss in a county must obtain: (1) For an insurable crop, crop insurance with at least a 60 percent coverage level for that crop in that county; or (2) For a NAP eligible crop: (i) NAP coverage with a coverage level of 60 percent, if available for the applicable crop year, or NAP catastrophic coverage if NAP coverage is not offered at a 60 percent coverage level for that crop year. (ii) Participants who exceed the average adjusted gross income limitation for NAP payment eligibility 1 for the applicable crop year may meet the purchase requirement specified in paragraph (a)(2)(i) of this section by purchasing Whole-Farm Revenue Protection crop insurance coverage, if eligible, or paying the NAP service fee and premium even though the participant will not be eligible to receive a NAP payment due to the average adjusted gross income limit but will be eligible for the WHIP payment. 1 See §§ 1400.500(a) and 1400.1(a)(4) of this title. (b) For the first 2 consecutive insurance years for which crop insurance is available after the enrollment period for 2017 WHIP ends, subject to paragraph (c) of this section, any participant who receives 2017 WHIP payments for a tree, bush, or vine loss must purchase a plan of insurance for the tree, bush, or vine with at least a 60 percent coverage level. (c) The final crop year to purchase crop insurance or NAP coverage to meet the requirements of paragraphs (a) and (b) of this section is the: (1) 2021 crop year for 2017 WHIP payment eligibility, except as provided in paragraph (c)(2) of this section; (2) 2023 crop year for: (i) WHIP+ payment eligibility; and (ii) 2017 WHIP payment eligibility for losses due to Tropical Storm Cindy, losses of peach and blueberry crops in calendar year 2017 due to extreme cold, and blueberry productivity losses in calendar year 2018 due to extreme cold and hurricane damage in calendar year 2017. (d) If a producer fails to obtain crop insurance or NAP coverage as required in paragraphs (a) and (b) of this section, the producer must reimburse FSA for the full amount of 2017 WHIP payment or WHIP+ payment plus interest that the producer received for that crop, tree, bush, or vine loss. A producer will only be considered to have obtained NAP coverage for the purposes of this section if the participant applied and payed the requisite NAP service fee and paid any applicable premium by the applicable deadline and completed all program requirements, including filing an acreage report as may be required under such coverage agreement." 7:7:7.1.1.4.11.3.9.2,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1501 Administration.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48528, Sept. 13, 2019]","(a) Programs under this subpart are administered under the general supervision of the Administrator, Farm Service Agency (FSA), and the Deputy Administrator for Farm Programs, FSA. Programs under this subpart are carried out by FSA State and county committees with instructions issued by the Deputy Administrator. (b) FSA State and county committees, and representatives and their employees, do not have authority to modify or waive any of the provisions of the regulations in this subpart or instructions issued by the Deputy Administrator. (c) The FSA State committee will take any action required by the regulations in this subpart that the FSA county committee has not taken. The FSA State committee will also: (1) Correct, or require an FSA county committee to correct, any action taken by the FSA county committee that is not in accordance with the regulations in this subpart; or (2) Require an FSA county committee to withhold taking any action that is not in accordance with this subpart. (d) No delegation to an FSA State or county committee precludes the FSA Administrator, the Deputy Administrator, or a designee, from determining any question arising under this subpart or from reversing or modifying any determination made by an FSA State or county committee. (e) The Deputy Administrator has the authority to permit State and county committees to waive or modify a non-statutory deadline specified in this part. (f) Items of general applicability to program participants, including, but not limited to, application periods, application deadlines, internal operating guidelines issued to FSA State and county offices, prices, yields, and payment factors established under this subpart, are not subject to appeal in accordance with part 780 of this chapter." 7:7:7.1.1.4.11.3.9.3,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1502 Definitions.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48529, Sept. 13, 2019; 86 FR 445, Jan. 6, 2021]","The following definitions apply to this subpart. The definitions in §§ 718.2 and 1400.3 of this title also apply, except where they conflict with the definitions in this section. In the event of conflict, the definitions in this section apply. 2017 WHIP factor means the factor in § 760.1511, determined by the Deputy Administrator, that is based on the crop insurance or NAP coverage level elected by the 2017 WHIP participant for a crop for which a payment is being requested; or, as applicable, the factor that applies for a crop of a crop year where the participant had no insurance or NAP coverage. 2017 WHIP yield means, for a unit: (1) For an insured crop, excluding crops located in Puerto Rico, the approved federal crop insurance APH, for the disaster year; (2) For a NAP covered crop, excluding crops located in Puerto Rico, the approved yield for the disaster year; (3) For a crop located in Puerto Rico or an uninsured crop, excluding citrus crops located in Florida, the county expected yield for the disaster year; and (4) For citrus crops located in Florida, the yield based on documentation submitted according to § 760.1511(c)(3), or if documentation is not submitted, the county expected yield. Actual production means the total quantity of the crop appraised, harvested, or assigned, as determined by the FSA State or county committee in accordance with instructions issued by the Deputy Administrator. Administrative county office means the FSA county office designated to make determinations, handle official records, and issue payments for the farm as specified in accordance part 718 of this title. Appraised production means the amount of production determined by FSA, or a company reinsured by the Federal Crop Insurance Corporation (FCIC), that was unharvested but was determined to reflect the crop's yield potential at the time of appraisal. Approved yield means the amount of production per acre, computed as specified in FCIC's Actual Production History (APH) Program in part 400, subpart G of this title or, for crops not included in part 400, subpart G of this title, the yield used to determine the guarantee. For crops covered under NAP, the approved yield is established according to part 1437 of this title. Average adjusted gross farm income means the average of the portion of adjusted gross income of the person or legal entity that is attributable to activities related to farming, ranching, or forestry. The relevant tax years are: (1) For 2017 WHIP, 2013, 2014, and 2015; and (2) For WHIP+, 2015, 2016, and 2017. Average adjusted gross income means the average of the adjusted gross income as defined under 26 U.S.C. 62 or comparable measure of the person or legal entity. The relevant tax years are: (1) For 2017 WHIP, 2013, 2014, and 2015; and (2) For WHIP+, 2015, 2016, and 2017. Bush means, a low, branching, woody plant, from which at maturity of the bush, an annual fruit or vegetable crop is produced for commercial market for human consumption, such as a blueberry bush. The definition does not cover nursery stock or plants that produce a bush after the normal crop is harvested. Buy-up NAP coverage means NAP coverage at a payment amount that is equal to an indemnity amount calculated for buy-up coverage computed under section 508(c) or (h) of the Federal Crop Insurance Act and equal to the amount that the buy-up coverage yield for the crop exceeds the actual yield for the crop. Catastrophic coverage has the meaning as defined in § 1437.3 of this title. Citrus crops and citrus trees include grapefruit, lemon, lime, Mandarin, Murcott, orange (all types), pummelo (pomelo), tangelo, tangerine, tangor. County disaster yield means the average yield per acre calculated for a county or part of a county for the applicable crop year based on disaster events, and is intended to reflect the amount of production that a participant would have been expected to make based on the eligible disaster conditions in the county or area, as determined by the FSA county committee in accordance with instructions issued by the Deputy Administrator. County expected yield has the meaning assigned in § 1437.102(b) of this title. Coverage level means the percentage determined by multiplying the elected yield percentage under a crop insurance policy or NAP coverage by the elected price percentage. Crop insurance means an insurance policy reinsured by FCIC under the provisions of the Federal Crop Insurance Act, as amended. It does not include private plans of insurance. Crop insurance indemnity means, for the purpose of this subpart, the payment to a participant for crop losses covered under crop insurance administered by RMA in accordance with the Federal Crop Insurance Act (7 U.S.C. 1501-1524). Crop year means: (1) For insurable crops, trees, bushes, and vines, the crop year as defined according to the applicable crop insurance policy; (2) For NAP eligible crops, the crop year as defined in § 1437.3 of this title; (3) For uninsurable trees, bushes, and vines, the calendar year in which the qualifying disaster event occurred. Damage factor means a percentage of the value lost when a tree, bush, or vine is damaged and requires rehabilitation but is not completely destroyed, as determined by the Deputy Administrator. Eligible crop means a crop for which coverage was available either from FCIC under part 400 of this title, or through NAP under § 1437.4 of this title, that was affected by a qualifying disaster event. Eligible disaster event means a disaster event that was: (1) For insured crops, an eligible cause of loss under the applicable crop insurance policy for the crop year; (2) For NAP covered crops and uninsured crops, an eligible cause of loss as specified in § 1437.10 of this title. End use means the purpose for which the harvested crop is used, such as grain, hay, or seed. Expected production means, for an agricultural unit, the historic yield multiplied by the number of planted or prevented planted acres of the crop for the unit. FCIC means the Federal Crop Insurance Corporation, a wholly owned Government Corporation of USDA, administered by RMA. Final planting date means the latest date, established by RMA for insurable crops, by which the crop must initially be planted in order to be insured for the full production guarantee or amount of insurance per acre. For NAP eligible crops, the final planting date is as defined in § 1437.3 of this title. Growth stage means a classification system for trees, bushes, and vines based on a combination of age and production capability, determined by: (1) The applicable insurance policy for insurable trees, bushes, and vines; or (2) The Deputy Administrator for trees, bushes, and vines for which RMA does not offer an insurance policy. Harvested means: (1) For insurable crops, harvested as defined according to the applicable crop insurance policy; (2) For NAP eligible single harvest crops, that a crop has been removed from the field, either by hand or mechanically; (3) For NAP eligible crops with potential multiple harvests in 1 year or harvested over multiple years, that the producer has, by hand or mechanically, removed at least one mature crop from the field during the crop year; (4) For mechanically-harvested NAP eligible crops, that the crop has been removed from the field and placed in a truck or other conveyance, except hay is considered harvested when in the bale, whether removed from the field or not. Grazed land will not be considered harvested for the purpose of determining an unharvested or prevented planting payment factor. Insurable crop means an agricultural crop (excluding livestock) for which the producer on a farm is eligible to obtain a policy or plan of insurance under the Federal Crop Insurance Act (7 U.S.C. 1501-1524). Multi-use crop means a crop intended for more than one end use during the crop year such as grass harvested for seed, hay, and grazing. Multiple cropping means the planting of two or more different crops on the same acreage for harvest within the same crop year. Multiple planting means the planting for harvest of the same crop in more than one planting period in a crop year on different acreage. NASS means the National Agricultural Statistics Service. NAP means the Noninsured Crop Disaster Assistance Program under section 196 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7333) and part 1437 of this title. NAP covered crop means a crop for which the producer on a farm obtained NAP coverage. NAP eligible crop means an agricultural crop for which the producer on a farm is eligible to obtain NAP coverage. NAP service fee means the amount the producer must pay to obtain NAP coverage. Planted acreage means land in which seed, plants, or trees have been placed, appropriate for the crop and planting method, at a correct depth, into a seedbed that has been properly prepared for the planting method and production practice normal to the USDA plant hardiness zone as determined by the county committee. Prevented planting means the inability to plant an eligible crop with proper equipment during the planting period as a result of an eligible cause of loss, as determined by FSA. Price means price per unit of the crop or commodity and will be: (1) For an insured crop under a crop insurance policy that establishes a price, and under WHIP+, the price for a crop for which the producer obtained a revenue plan of insurance is the greater of the projected price or the harvest price to determine liability, that established price; (2) For an insured crop under a crop insurance policy that does not establish a price to determine crop insurance liability, the county average price, as determined by FSA; (3) For a NAP covered crop or uninsured crop, the average market price determined in § 1437.12 of this title; or (4) For a tree, bush, or vine, the price determined by the Deputy Administrator based on the species of tree, bush, or vine and its growth stage. Production means quantity of the crop or commodity produced expressed in a specific unit of measure including, but not limited to, bushels or pounds. Production under this subpart includes all harvested production, unharvested appraised production, and assigned production for the total planted acreage of the crop on the unit. Qualifying disaster event means: (1) For 2017 WHIP, a hurricane, wildfire, or Tropical Storm Cindy or related condition that occurred in the 2017 calendar year; extreme cold in calendar year 2017 for losses of peach and blueberry crops in calendar year 2017; and extreme cold and hurricane damage in calendar year 2017 for blueberry productivity losses in calendar year 2018; and (2) For WHIP+, a hurricane, flood, tornado, typhoon, volcanic activity, snowstorm, wildfire, excessive moisture, qualifying drought, or related condition that occurred in the 2018 or 2019 calendar year. Qualifying drought means an area within the county was rated by the U.S. Drought Monitor as having a D3 (extreme drought) or higher level of drought intensity during the applicable calendar year. Related condition means damaging weather or an adverse natural occurrence that occurred as a direct result of a specified qualifying disaster event, as determined by FSA, such as excessive rain, high winds, flooding, mudslides, and heavy smoke, as determined by the Deputy Administrator. Repeat crop means, with respect to production, a commodity that is planted or prevented from being planted in more than one planting period on the same acreage in the same crop year. RMA means the Risk Management Agency. Salvage value means the dollar amount or equivalent for the quantity of the commodity that cannot be marketed or sold in any recognized market for the crop. Secondary use means the harvesting of a crop for a use other than the intended use. Secondary use value means the value determined by multiplying the quantity of secondary use times the FSA-established price for that use. Tree means a tall, woody plant having comparatively great height, and a single trunk from which an annual crop is produced for commercial market for human consumption, such as a maple tree for syrup, or papaya or orchard tree for fruit. It includes immature trees that are intended for commercial purposes. Nursery stock, banana and plantain plants, and trees used for pulp or timber are not considered eligible trees under this subpart. Tropical crops is defined in § 1437.501 of this title. Tropical region is defined in § 1437.502 of this title. Unharvested payment factor means a percentage established by FSA for a crop and applied in a payment formula to reduce the payment for reduced expenses incurred because commercial harvest was not performed. Uninsured means a crop that was not covered by crop insurance or NAP for the crop year for which a payment is being requested under this subpart. Unit means, unless otherwise determined by the Deputy Administrator, basic unit as defined in part 457 or § 1437.9 of this title, for ornamental nursery production, includes all eligible plant species and sizes. Unit of measure means: (1) For insurable crops, the FCIC-established unit of measure; and (2) For NAP eligible crops, the established unit of measure used for the NAP price and yield. USDA means the U.S. Department of Agriculture. USDA Plant Hardiness Zone means the 11 regions or planting zones as defined by a 10 degree Fahrenheit difference in the average annual minimum temperature. U.S. drought monitor is a system for classifying drought severity according to a range of abnormally dry to exceptional drought. It is a collaborative effort between Federal and academic partners, produced on a weekly basis, to synthesize multiple indices, outlooks, and drought impacts on a map and in narrative form. This synthesis of indices is reported by the National Drought Mitigation Center at http://droughtmonitor.unl.edu. Value loss crop has the meaning specified in subpart D, of part 1437 of this title. Vine means a perennial plant grown under normal conditions from which an annual fruit crop is produced for commercial market for human consumption, such as grape, kiwi, or passion fruit, and that has a flexible stem supported by climbing, twining, or creeping along a surface. Nursery stock, perennials that are normally propagated as annuals such as tomato plants, biennials such as strawberry plants, and annuals such as pumpkin, squash, cucumber, watermelon, and other melon plants, are excluded from the term vine in this subpart. WHIP+ factor means the factor in § 760.1511, determined by the Deputy Administrator, that is based on the crop insurance or NAP coverage level elected by the WHIP+ participant for a crop for which a payment is being requested; or, as applicable, the factor that applies for a crop during a crop year in which the participant had no insurance or NAP coverage. WHIP+ yield means, for a unit: (1) For an insured crop, excluding crops located in Puerto Rico, the approved federal crop insurance APH, for the crop year; (2) For a NAP covered crop, excluding crops located in Puerto Rico, the approved yield for the crop year; (3) For a crop located in Puerto Rico or an uninsured crop, excluding select crops, the county expected yield for the crop year; and (4) For select crops, the yield based on documentation submitted according to § 760.1511(c)(3), or if documentation is not submitted, the county expected yield. Yield means unit of production, measured in bushels, pounds, or other unit of measure, per area of consideration, usually measured in acres." 7:7:7.1.1.4.11.3.9.4,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1503 Eligibility.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48529, Sept. 13, 2019; 86 FR 445, Jan. 6, 2021]","(a) Participants will be eligible to receive a payment under this subpart only if they incurred a loss to an eligible crop, tree, bush, or vine due to a qualifying disaster event, as further specified in this subpart. (b) To be an eligible participant under this subpart a producer who is a person or legal entity must be a: (1) Citizen of the United States; (2) Resident alien; for purposes of this subpart, resident alien means “lawful alien;” (3) Partnership consisting of solely of citizens of the United States or resident aliens; or (4) Corporation, limited liability company, or other organizational structure organized under State law consisting solely of citizens of the United States or resident aliens. (c) If any person who would otherwise be eligible to receive a payment dies before the payment is received, payment may be released as specified in § 707.3 of this title. Similarly, if any person or legal entity who would otherwise been eligible to apply for a payment dies or is dissolved, respectively, before the payment is applied for, payment may be released in accordance with this subpart if a timely application is filed by an authorized representative. Proof of authority to sign for the deceased producer or dissolved entity must be provided. If a participant is now a dissolved general partnership or joint venture, all members of the general partnership or joint venture at the time of dissolution or their duly authorized representatives must sign the application for payment. Eligibility of such participant will be determined, as it is for other participants, based upon ownership share and risk in producing the crop. (d) Growers growing eligible crops under contract for crop owners are not eligible unless the grower is also determined to have an ownership share of the crop. Any verbal or written contract that precludes the grower from having an ownership share renders the grower ineligible for payments under this subpart. (e) A person or legal entity is not eligible to receive disaster assistance under this subpart if it is determined by FSA that the person or legal entity: (1) Adopted any scheme or other device that tends to defeat the purpose of this subpart or any of the regulations applicable to this subpart; (2) Made any fraudulent representation; or (3) Misrepresented any fact affecting a program determination under any or all of the following: This subpart and parts 12, 400, 1400, and 1437 of this title. (g) A person ineligible for crop insurance or NAP under §§ 400.458 or 1437.16 of this title, respectively, for any year is ineligible for payments under this subpart for the same year. (h) The provisions of § 718.11 of this title, providing for ineligibility for payments for offenses involving controlled substances, apply. (i) As a condition of eligibility to receive payments under this subpart, the participant must have been in compliance with the Highly Erodible Land Conservation and Wetland Conservation provisions of part 12 of this title for the applicable crop year for which the producer is applying for benefits under this subpart, and must not otherwise be precluded from receiving payments under parts 12, 400, 1400, or 1437 of this title or any law. (j) Members of cooperative processors are not eligible for WHIP+ assistance for sugar beet losses." 7:7:7.1.1.4.11.3.9.5,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1504 Miscellaneous provisions.,FSA,,,,"(a) All persons with a financial interest in the legal entity receiving payments under this subpart are jointly and severally liable for any refund, including related charges, which is determined to be due to FSA for any reason. (b) In the event that any application for payment under this subpart resulted from erroneous information or a miscalculation, the payment will be recalculated and any excess refunded to FSA with interest to be calculated from the date of the disbursement. (c) Any payment to any participant under this subpart will be made without regard to questions of title under State law, and without regard to any claim or lien against the commodity, or proceeds, in favor of the owner or any other creditor except agencies of the U.S. Government. The regulations governing offsets and withholdings in part 792 of this chapter apply to payments made under this subpart. (d) Any participant entitled to any payment may assign any payment(s) in accordance with regulations governing the assignment of payments in part 792 of this chapter. (e) The regulations in parts 11 and 780 of this title apply to determinations under this subpart." 7:7:7.1.1.4.11.3.9.6,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1505 General provisions.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48529, Sept. 13, 2019]","(a) For loss calculations, the participant's unit structure will be: (1) For an insured crop, the participant's existing unit structure established in accordance with part 457 of this title; (2) For a crop with NAP coverage, the participant's existing unit structure established in accordance with part 1437 of this title; (3) For an uninsured crop, the participant's unit structure established in accordance with part 1437 of this title. (b) FSA county committees will make the necessary adjustments to assign production or reduce the 2017 WHIP yield or WHIP+ yield when the county committee determines: (1) An acceptable appraisal or record of harvested production does not exist; (2) The loss is due to an ineligible cause of loss; (3) The loss is due to practices, soil type, climate, or other environmental factors that cause lower yields than those upon which the historic yield is based; (4) The participant has a contract providing a guaranteed payment for all or a portion of the crop; or (5) The crop was planted beyond the normal planting period for the crop. (c) Assignment of production or reduction in yield will apply for practices that result in lower yields than those for which the historic yield is based. (d) Eligibility and payments under this subpart will be determined based on a unit's: (1) Physical location county for insured crops; and (2) Administrative county for NAP covered crops and uninsured crops. (e) FSA may separate or combine types and varieties as a crop for eligibility and payment purposes under this subpart when specific credible information as determined by FSA shows the crop of a specific type or variety has a significantly different or similar value, respectively, when compared to other types or varieties, as determined by the Deputy Administrator. (f) Unless otherwise specified, all the eligibility provisions of part 1437 of this title apply to value loss crops and tropical crops under this subpart. (g) The quantity or value of a crop will not be reduced for any quality consideration unless a zero value is established based on a total loss of quality, except as specified in § 760.1513(i). (h) FSA will use the most reliable data available at the time payments under this subpart are calculated. If additional data or information is provided or becomes available after a payment is issued, FSA will recalculate the payment amount and the producer must return any overpayment amount to FSA. In all cases, payments can only issue based on the payment formula for losses that affirmatively occurred. (i) A participant who received a payment for a loss under 2017 WHIP cannot: (1) Be paid for the same loss under WHIP+; or (2) Refund the 2017 WHIP payment to be eligible for payment for that loss under WHIP+." 7:7:7.1.1.4.11.3.9.7,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1506 Availability of funds and timing of payments.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48529, Sept. 13, 2019]","(a) For 2017 WHIP: (1) An initial payment will be issued for 50 percent of each 2017 WHIP payment calculated according to this subpart, as determined by the Secretary. The remainder of the calculated 2017 WHIP payment will be paid to a participant only after the application period has ended and any crop insurance indemnity or NAP payment the participant is entitled to receive for the crop has been calculated and reported to FSA, and then only if there are funds available for such payment as discussed in this subpart. (2) In the event that, within the limits of the funding made available by the Secretary, approval of eligible applications would result in payments in excess of the amount available, FSA will prorate payments by a national factor to reduce the payments to an amount that is less than available funds as determined by the Secretary. FSA will prorate the payments in such manner as it determines equitable. (3) Applications and claims that are unpaid or prorated for any reason will not be carried forward for payment under other funds for later years or otherwise, but will be considered, as to any unpaid amount, void and nonpayable. (b) For WHIP: (1) For the 2018 crop year, the calculated WHIP+ payment will be paid at 100 percent. (2) For the 2019 and 2020 crop years, an initial payment will be issued for 50 percent of each WHIP+ payment calculated according to this subpart, as determined by the Secretary. Up to the remaining 50 percent of the calculated WHIP+ payment will be paid only to the extent that there are funds available for such payment as discussed in this subpart. (3) In the event that, within the limits of the funding made available by the Secretary, approval of eligible applications would result in payments in excess of the amount available, FSA will prorate 2019 and 2020 payments by a national factor to reduce the payments to the remaining available funds, as determined by the Secretary. FSA will prorate the payments accordingly. (4) Applications and claims that are unpaid or prorated for aforementioned reasons of fund availability will not be carried forward for payment and will be considered, as to any unpaid amount, void and non-payable." 7:7:7.1.1.4.11.3.9.8,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1507 Payment limitation.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48529, Sept. 13, 2019]","(a) For any 2017 WHIP payments for the 2017 or 2018 crop year combined, a person or legal entity, other than a joint venture or general partnership, is eligible to receive, directly or indirectly, 2017 WHIP payments of not more than: (1) $125,000, if less than 75 percent of the person or legal entity's average adjusted gross income is average adjusted gross farm income; or (2) $900,000, if not less than 75 percent of the average adjusted gross income of the person or legal entity is average adjusted gross farm income. (b) For any WHIP+ payments, a person or legal entity, other than a joint venture or general partnership, is eligible to receive, directly or indirectly, WHIP+ payments of not more than: (1) $125,000 combined for the 2018, 2019, and 2020 crop years, if less than 75 percent of the person or legal entity's average adjusted gross income is average adjusted gross farm income; or (2) $250,000 for each of the 2018, 2019, and 2020 crop years, if 75 percent or more of the average adjusted gross income of the person or legal entity is average adjusted gross farm income, and such payments cannot exceed a total of $500,000 combined for all of the 2018, 2019, and 2020 crop years. (c) A person or legal entity's average adjusted gross income and average adjusted gross farm income are determined based on the: (1) 2013, 2014, and 2015 tax years for 2017 WHIP; (2) 2015, 2016, and 2017 tax years for WHIP+. (d) To be eligible for more than $125,000 in payments for the applicable period specified in this section, a person or legal entity must submit FSA-892 and provide a certification in the manner prescribed by FSA from a certified public accountant or attorney that at least 75 percent of the person or legal entity's average adjusted gross income was average adjusted gross farm income. Persons or legal entities who fail to provide FSA-892 and the required certification may not receive a 2017 WHIP payment, directly or indirectly, of more than $125,000. (e) The direct attribution provisions in part 1400 of this chapter apply to payments under this subpart for both payment limitation as well as in determining average AGI as defined and used in this rule." 7:7:7.1.1.4.11.3.9.9,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,O,Subpart O—Agricultural Disaster Indemnity Programs,,§ 760.1508 Qualifying disaster events.,FSA,,,"[83 FR 33801, July 18, 2018, as amended 84 FR 48530, Sept. 13, 2019; 86 FR 445, Jan. 6, 2021]","(a) A producer will be eligible for payments under this subpart for a crop, tree, bush, or vine loss only if the producer suffered a loss to the crop, tree, bush, or vine on the unit due to a qualifying disaster event. (b) For a loss due to hurricane and conditions related to hurricanes, the crop, tree, bush, or vine loss must have occurred on acreage that was physically located in a county that received a: (1) Presidential Emergency Disaster Declaration authorizing public assistance for categories C through G or individual assistance due to a hurricane occurring in the 2017 calendar year; or (2) Secretarial Disaster Designation for a hurricane occurring in the 2017 calendar year. (c) A producer with crop, tree, bush, or vine losses on acreage not located in a physical location county that was eligible under paragraph (b) of this section will be eligible for 2017 WHIP for losses due to hurricane and related conditions only if the producer provides supporting documentation that is acceptable to FSA from which the FSA county committee determines that the loss of the crop, tree, bush, or vine on the unit was reasonably related to a qualifying disaster event as specified in this subpart. Supporting documentation may include furnishing climatological data from a reputable source or other information substantiating the claim of loss due to a qualifying disaster event. (d) For a loss due to wildfires and conditions related to wildfire in the 2017 calendar year, all counties where wildfires occurred, as determined by FSA county committees, are eligible for 2017 WHIP; a Presidential Emergency Disaster Declaration or Secretarial Disaster Designation for wildfire is not required. The loss of the crop, tree, bush, or vine must be reasonably related to wildfire and conditions related to wildfire, as specified in this subpart's definition of qualifying disaster event. (e) For WHIP+, for a loss due to a qualifying disaster event, the crop, tree, bush, or vine loss must have occurred on acreage that was physically located in a county that received a: (1) Presidential Emergency Disaster Declaration authorizing public assistance for categories C through G or individual assistance due to a qualifying disaster event occurring in the 2018 or 2019 calendar years; or (2) Secretarial Disaster Designation for a qualifying disaster event occurring in the 2018 or 2019 calendar years. (f) A producer with crop, tree, bush, or vine losses on acreage not located in a physical location county that was eligible under paragraph (e) of this section will be eligible for WHIP+ for losses due to qualifying disaster events only if the producer provides supporting documentation that is acceptable to FSA from which the FSA county committee determines that the loss of the crop, tree, bush, or vine on the unit was reasonably related to a qualifying disaster event as specified in this subpart. Supporting documentation may include furnishing climatological data from a reputable source or other information substantiating the claim of loss due to a qualifying disaster event." 7:7:7.1.1.4.11.4.9.1,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,P,Subpart P—On-Farm Stored Commodity Loss Program,,§ 760.1600 Applicability.,FSA,,,"[90 FR 51971, Nov. 18, 2025]","(a) This subpart specifies the terms and conditions for the On-Farm Stored Commodity Loss Program (OFSCLP). The On-Farm Stored Commodity Loss Program will provide payments to eligible producers who suffered uncompensated losses of harvested commodities stored in on-farm structures as a result of wildfires, hurricanes, floods, derechos, excessive heat, tornadoes, winter storms, freeze, including a polar vortex, smoke exposure, qualifying drought, and related conditions that occurred in calendar year 2023 or 2024. (b) The regulations in this subpart are applicable to crops of wheat, oats, barley, corn, grain sorghum, long grain rice, medium grain rice, seed cotton, pulse crops, soybeans, other oilseeds, peanuts, and all hay stored in on-farm structures." 7:7:7.1.1.4.11.4.9.10,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,P,Subpart P—On-Farm Stored Commodity Loss Program,,§ 760.1609 Qualifying disaster events.,FSA,,,"[90 FR 51974, Nov. 18, 2025]","(a) The On-Farm Stored Commodity Loss Program will provide a payment to eligible producers who suffered losses of harvested eligible on-farm stored commodities while such commodities were stored in on-farm structures as a result of wildfires, hurricanes, floods, derechos, excessive heat, tornadoes, winter storms, freeze, including a polar vortex, smoke exposure, qualifying drought, and related conditions that occurred in calendar year 2023 or 2024. (b) A producer must provide supporting documentation that substantiates that the loss of the commodity was reasonably related to a qualifying disaster event as specified in this subpart and meets all other eligibility conditions. Supporting documentation may include climatological data from a reputable source or other information substantiating the claim of loss due to a qualifying disaster event." 7:7:7.1.1.4.11.4.9.11,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,P,Subpart P—On-Farm Stored Commodity Loss Program,,§ 760.1610 Eligible and ineligible losses.,FSA,,,"[84 FR 48532, Sept. 13, 2019, as amended at 90 FR 51974, Nov. 18, 2025]","(a) Except as provided in paragraphs (b) of this section, to be eligible for payments under this subpart the commodity stored in an eligible structure must have suffered a loss due to a qualifying disaster event. (b) A loss will not be eligible for the On-Farm Stored Commodity Loss Program this subpart if any of the following apply: (1) The cause of loss is determined by FSA to be the result of poor management decisions, poor farming practices, or previously damaged structures; (2) The cause of loss was due to failure of the participant to store the commodity in an eligible structure before the qualifying disaster event; or (3) The cause of loss was due to water contained or released by any governmental, public, or private dam or reservoir project if an easement exists on the acreage affected by the containment or release of the water. (c) The following types of loss, regardless of whether they were the result of a qualifying disaster event, are not eligible losses: (1) Losses to crops that have not been harvested; (2) Losses to crops not intended for harvest; (3) Losses caused by improper storage; (4) Losses caused by the application of chemicals; (5) Losses caused by theft; (6) Losses due to quality loss; and (7) Losses caused by excessive moisture." 7:7:7.1.1.4.11.4.9.12,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,P,Subpart P—On-Farm Stored Commodity Loss Program,,§ 760.1611 Application for payment.,FSA,,,"[84 FR 48532, Sept. 13, 2019, as amended at 90 FR 51974, Nov. 18, 2025]","(a) An application for payment under this subpart must be submitted to the FSA county office serving as the farm's administrative county office by the close of business on January 23, 2026. (b) Once signed by a producer, the application for payment is considered to contain information and certifications of and pertaining to the producer regardless of who entered the information on the application. (c) The producer applying for the On-Farm Stored Commodity Loss Program under this subpart certifies the accuracy and truthfulness of the information provided in the application as well as any documentation filed with or in support of the application. All information is subject to verification or spot check by FSA at any time, either before or after payment is issued. Refusal to allow FSA or any agency of the Department of Agriculture to verify any information provided will result in the participant's forfeiting eligibility for this program. FSA may at any time, including before, during, or after processing and paying an application, require the producer to submit any additional information necessary to implement or determine any eligibility provision of this subpart. Furnishing required information is voluntary; however, without it FSA is under no obligation to act on the application or approve payment. Providing a false certification will result in ineligibility and can also be punishable by imprisonment, fines, and other penalties. (d) The application submitted in accordance with paragraph (a) of this section is not considered valid and complete for issuance of payment under this subpart unless FSA determines all the applicable eligibility provisions have been satisfied and the participant has submitted all required documentation. (e) Application approval and payment by FSA does not relieve a participant from having to submit any form required, but not filed. (f) Producers of commingled commodities must designate their appropriate share of the commodity when applying for payment. (g) Applicants must also submit all of the following items by January 23, 2027, if not previously filed with FSA: (1) Form AD-2047, Customer Data Worksheet, for new customers or existing customers who need to update their customer profile; (2) CCC-902, Farm Operating Plan, for an individual or legal entity; (3) CCC-901, Member Information for Legal Entities, if applicable; (4) AD-1026, Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) Certification, for the producer and affiliated persons as provided in 7 CFR part 12; and (5) FSA-510, Request for an Exception to the $125,000 Payment Limitation for Certain Programs, for producers and members of legal entities who are requesting an increased payment limitation. (h) The date to apply for payments under this program may, at the sole discretion of FSA, be extended. If FSA makes that decision, the extended date will be set forth at https://www.fsa.usda.gov/resources/programs/farm-stored-commodity-loss-program-ofsclp. Producers may also obtain that information from any FSA county office." 7:7:7.1.1.4.11.4.9.13,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,P,Subpart P—On-Farm Stored Commodity Loss Program,,§ 760.1612 Calculating payments for on-farm stored commodity losses.,FSA,,,"[90 FR 51974, Nov. 18, 2025]","(a) Payments made under this subpart for eligible on-farm stored commodities are calculated by: (1) Multiplying the NASS Market Year Average Price or FSA determined price for the eligible on-farm stored commodity by 75 percent; (2) Multiplying the result from paragraph (a)(1) of this section by the eligible quantity of the eligible on-farm stored commodity adjusted by applicable shares of the producer; (3) Reducing the calculated amount by subtracting any payment received from an insurance indemnity or salvage buyer; and (4) Applying a payment factor based on the total calculated payments for all applications if the total calculated payments exceed the available funding. (b) [Reserved]" 7:7:7.1.1.4.11.4.9.2,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,P,Subpart P—On-Farm Stored Commodity Loss Program,,§ 760.1601 Administration.,FSA,,,"[84 FR 48532, Sept. 13, 2019, as amended at 90 FR 51971, Nov. 18, 2025]","(a) The On-Farm Stored Commodity Loss Program will be administered under the general supervision and direction of the FSA Administrator and will be carried out in the field by FSA State and county committees, respectively. (b) State and county committees, and representatives and their employees, do not have authority to modify or waive any of the provisions of the regulations set forth in this part. (c) The FSA State committee will take any required action not taken by the FSA county committee. The FSA State committee will also: (1) Correct or require correction of an action taken by a county committee that is not in compliance with this part; or (2) Require a county committee to not take an action or implement a decision that is not under the regulations of this part. (d) No provision or delegation to an FSA State or county committee will preclude the FSA Administrator, the Deputy Administrator, or a designee, from determining any question arising under this subpart, or from reversing or modifying any determination made by an FSA State or county committee." 7:7:7.1.1.4.11.4.9.3,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,P,Subpart P—On-Farm Stored Commodity Loss Program,,§ 760.1602 Definitions.,FSA,,,"[84 FR 48532, Sept. 13, 2019, as amended at 90 FR 51971, Nov. 18, 2025]","The definitions in this section apply for all purposes of program administration. Administrative County Office is the FSA County Office where a producer's FSA records are maintained. Average adjusted gross farm income means the average of the person's or legal entity's adjusted gross income derived from farming, ranching, or forestry operations, including losses, for the base period. (1) If the resulting average adjusted gross farm income derived from paragraphs (1) through (12) of the definition for “income derived from farming, ranching, and forestry operations” in this section is at least 66.66 percent of the average adjusted gross income of the person or legal entity, then the average adjusted gross farm income may also take into consideration income or benefits derived from the following: (i) The sale, trade, or other disposition of equipment to conduct farm, ranch, or forestry operations; and (ii) The provision of production inputs and services to farmers, ranchers, foresters, and farm operations. (2) For legal entities not required to file a Federal income tax return, or a person or legal entity that did not have taxable income in one (1) or more of the tax years during the base period, the average gross farm income will be the adjusted gross farm income, including losses, averaged for the base period, as determined by FSA. For a legal entity created during the base period, the adjusted gross farm income average will include only those years of the base period for which it was in business; however, a new legal entity will not be considered “new” to the extent it takes over an existing operation and has any elements of common ownership interest and land with the preceding person or legal entity from which it took over. When there is such commonality, income of the previous person or legal entity will be averaged with that of the new legal entity for the base period. For a person filing a joint tax return, the certification of average adjusted gross farm income may be reported as if the person had filed a separate Federal tax return, and the calculation is consistent with the information supporting the filed joint return. Average AGI means the average of the adjusted gross income as defined under 26 U.S.C. 62 or comparable measure of the person or legal entity for the base period. Base period means: (1) 2019, 2020, and 2021 for the 2023 program year; and (2) 2020, 2021, and 2022 for the 2024 program year. Commercial storage means any activity using storage structure for hire, for persons other than the program applicant, except for family members and tenants or landlords sharing the crop storage. Any facility that shares a physical address, equipment, or other business products and services with any commercial storage operation is not included in the OFSCLP. Commingled means any grain commodity stored in the same non-commercial storage structure with grain owned by another individual or entity. The nature of the storage allows for blending, making it necessary to identify the owner of the grain by share. Crop means with respect to a year, commodities harvested in that year. Therefore, the referenced crop year of a commodity means commodities that when planted were intended for harvest in that calendar year. Eligible on-farm stored commodity means any of the following commodities that were produced, harvested, and stored on a farm in the United States: wheat, oats, barley, corn, grain sorghum, all hay, long grain rice, medium grain rice, seed cotton, pulse crops, soybeans, other oilseeds, and peanuts. Grazed commodities are not included in the OFSCLP. Farming operation means a business enterprise engaged in the production of agricultural products, commodities, or livestock, operated by a person, legal entity, or joint operation. A person or legal entity may have more than one farming operation if the person or legal entity is a member of one or more legal entities or joint operations. FSA means the Farm Service Agency of the United States Department of Agriculture. Income derived from farming, ranching, and forestry operations means income of an individual or entity derived from: (1) Production of crops, specialty crops, and unfinished raw forestry products; (2) Production of livestock, aquaculture products used for food, honeybees, and products derived from livestock; (3) Production of farm-based renewable energy; (4) Selling (including the sale of easements and development rights) of farm, ranch, and forestry land, water or hunting rights, or environmental benefits; (5) Rental or lease of land or equipment used for farming, ranching, or forestry operations, including water or hunting rights; (6) Processing, packing, storing, and transportation of farm, ranch, forestry commodities including renewable energy; (7) Feeding, rearing, or finishing of livestock; (8) Payments of benefits, including benefits from risk management practices, crop insurance indemnities, and catastrophic risk protection plans; (9) Sale of land that has been used for agricultural purposes; (10) Payments and benefits authorized under any program made available and applicable to payment eligibility and payment limitation rules; (11) Income reported on IRS Schedule F or Form 4835; and (12) Wages or dividends received from a closely held corporation, and IC-DISC or legal entity comprised entirely of family members when more than 50 percent of the legal entity's gross receipts for each tax year are derived from farming, ranching, or forestry activities as defined in this part. IRS means the Department of the Treasury, Internal Revenue Service. Legal entity, as used in this subpart: (1) Means an entity that is created under Federal or State law and that: (i) Owns land or an agricultural commodity; or (ii) Produces an agricultural commodity; and (2) Includes corporations, joint stock companies, associations, limited partnerships, limited liability companies, irrevocable trusts, estates, charitable organizations, general partnerships, joint ventures, and other similar organizations created under Federal or State law including any such organization participating in a business structure as a partner in a general partnership, a participant in a joint venture, a grantor of a revocable trust, or as a participant in a similar organization. A business operating as a sole proprietorship is considered a legal entity. Market Year Average (MYA) Price means the national average price received by producers during the 12-month marketing year established by NASS. NASS means the USDA National Agricultural Statistics Service. Oilseeds means any crop of sunflower seed, canola, rapeseed, safflower, flaxseed, mustard seed, crambe, sesame seed, and other oilseeds as designated by CCC or the Secretary. Ownership interest means to have either a legal ownership interest or a beneficial ownership interest in a legal entity. For the purposes of administering this subpart, a person or legal entity that owns a share or stock in a legal entity that is a corporation, limited liability company, limited partnership, or similar type entity where members hold a legal ownership interest and shares in the profits or losses of such entity is considered to have an ownership interest in such legal entity. A person or legal entity that is a beneficiary of a trust or heir of an estate who benefits from the profits or losses of such entity is considered to have a beneficial ownership interest in such legal entity. Production inputs mean material to conduct farming operations, such as seeds, chemicals, and fencing supplies. Production services mean services provided to support a farming operation, such as custom farming, custom feeding, and custom fencing. Qualifying disaster event means a wildfire, hurricane, flood, derecho, excessive heat, tornado, winter storm, freeze, including a polar vortex, smoke exposure, qualifying drought, and related conditions, that occurred in calendar year 2023 or 2024. Qualifying drought means an area within the county was rated by the U.S. Drought Monitor as having a: (1) D2 (severe drought) intensity for at least 8 consecutive weeks in the applicable calendar year; or (2) D3 (extreme drought) or higher intensity for any period of time during the applicable calendar year. Related condition means damaging weather and adverse natural occurrences that occurred concurrently with and as a direct result of a specified qualifying disaster event. Related conditions include, but are not limited to: (1) Excessive wind that occurred as a direct result of a derecho; (2) Silt and debris that occurred as a direct and proximate result of flooding; (3) Excessive wind, storm surges, tornadoes, tropical storms, and tropical depressions that occurred as a direct result of a hurricane; and (4) Excessive wind and blizzards that occurred as a direct result of a winter storm. Secretary means the Secretary of the United States Department of Agriculture, or the Secretary's delegate. U.S. Drought Monitor means the system for classifying drought severity according to a range of abnormally dry to exceptional drought reported by the National Drought Mitigation Center at http://droughtmonitor.unl.edu. It is a collaborative effort between Federal and academic partners, produced on a weekly basis, to synthesize multiple indices, outlooks, and drought impacts on a map and in narrative form." 7:7:7.1.1.4.11.4.9.4,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,P,Subpart P—On-Farm Stored Commodity Loss Program,,§ 760.1603 Eligible producers.,FSA,,,"[90 FR 51973, Nov. 18, 2025]","(a) To be eligible for payment under this subpart, a producer must be a: (1) Citizen of the United States; (2) Resident alien, which for purposes of OFSCLP means “lawful alien” as defined in 7 CFR part 1400; (3) Partnership organized under State law consisting solely of citizens of the United States or resident aliens; (4) Corporation, limited liability company, or other organizational structure organized under State law consisting solely of citizens of the United States or resident aliens; or (5) Indian Tribe or Tribal organization, as defined in section 4(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304). (b) Members of legal entities, who do not individually share in the risk of producing the crop and ownership of the crop are not considered producers and are not eligible to apply for OFSCLP; in those instances, the entity is considered the applicant. (c) To be eligible for OFSCLP, a producer must be in compliance with the provisions of 7 CFR part 12, “Highly Erodible Land and Wetland Conservation,” and the provisions of 7 CFR 718.6, which address ineligibility for benefits for offenses involving controlled substances. (d) A receiver or trustee of an insolvent or bankrupt debtor's estate, an executor or an administrator of a deceased person's estate, a guardian of an estate of a ward or an incompetent person, and trustees of a trust are considered to represent the insolvent or bankrupt debtor, the deceased person, the ward or incompetent, and the beneficiaries of a trust, respectively. The production of the receiver, executor, administrator, guardian, or trustee is considered to be the production of the person or estate represented by the receiver, executor, administrator, guardian, or trustee. On-Farm Stored Commodity Loss Program documents executed by any such person will be accepted by FSA only if they are legally valid and such person has the authority to sign the applicable documents. (e) A minor who is otherwise an eligible producer is eligible to receive a program payment only if the minor meets one of the following requirements: (1) The right of majority has been conferred on the minor by court proceedings or by statute; (2) A guardian has been appointed to manage the minor's property and the applicable program documents are signed by the guardian; (3) Any program application signed by the minor is cosigned by a person determined by FSA to be financially responsible." 7:7:7.1.1.4.11.4.9.5,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,P,Subpart P—On-Farm Stored Commodity Loss Program,,§ 760.1604 Eligible commodities.,FSA,,,"[84 FR 48532, Sept. 13, 2019, as amended at 90 FR 51973, Nov. 18, 2025]","(a) Commodities eligible to be compensated for loss under this subpart are eligible on-farm stored commodities as defined in this subpart. (b) A commodity produced on land owned or otherwise in the possession of the United States that is occupied without the consent of the United States is not an eligible commodity. (c) To be eligible for payment under this subpart, the eligible on-farm stored commodity must have been: (1) Stored in an on-farm structure that under normal circumstances would have maintained the quality of the commodity throughout harvest until marketing or feed if not for the qualifying disaster event; (2) At the time of loss, physically located in or under a structure and not left in a field baled or held together with netting, twine, or plastic as the only cover; (3) Not stored in a commercial structure; and (4) Properly dried prior to harvest—losses resulting from excessive moisture due to the commodity not being dried properly prior to storage are not eligible." 7:7:7.1.1.4.11.4.9.6,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,P,Subpart P—On-Farm Stored Commodity Loss Program,,§ 760.1605 Miscellaneous provisions.,FSA,,,"[84 FR 48532, Sept. 13, 2019, as amended at 90 FR 51973, Nov. 18, 2025]","(a) All persons with an ownership interest in the legal entity receiving payments under this subpart are jointly and severally liable for any refund, including related charges, which is determined to be due to FSA for any reason. (b) In the event that any application for payment under this subpart resulted from erroneous information or a miscalculation, the payment will be recalculated and any excess refunded to FSA with interest to be calculated from the date of the disbursement. (c) Any payment to any participant under this subpart will be made without regard to questions of title under State law, and without regard to any claim or lien against the commodity, or proceeds, in favor of the owner or any other creditor except agencies of the U.S. Government. The regulations governing offsets and withholdings in part 792 of this chapter apply to payments made under this subpart. (d) Any participant entitled to any payment may assign any payment(s) in accordance with regulations governing the assignment of payments in part 792 of this chapter. (e) The regulations in 7 CFR parts 11 and 780 apply to determinations under this subpart." 7:7:7.1.1.4.11.4.9.7,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,P,Subpart P—On-Farm Stored Commodity Loss Program,,§ 760.1606 General provisions.,FSA,,,"[90 FR 51973, Nov. 18, 2025]","(a) Losses will be determined by the total production of an eligible on-farm stored commodity in storage at time of loss. Eligibility and payments will be based on physical location of storage. Payments will be made on eligible commodities that were completely lost or destroyed while in storage due to the qualifying disaster event. (b) The amount received from the salvage of the damaged facility and the amount of any insurance indemnity received with respect to the damage of the facility will be deducted from the calculated payment amount determined in accordance with § 760.1612." 7:7:7.1.1.4.11.4.9.8,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,P,Subpart P—On-Farm Stored Commodity Loss Program,,§ 760.1607 Availability of funds and timing of payments.,FSA,,,"[90 FR 51973, Nov. 18, 2025]","On-Farm Stored Commodity Loss Program payments will be prorated, with all producers receiving payments based on the sum of all eligible payments and available funds. FSA will not disburse On-Farm Stored Commodity Loss Program payments at the beginning of the application period. During the application period, FSA may evaluate program demand and begin issuing payments if an initial payment factor can be established to ensure that payments do not exceed available funding. After the application deadline, a final payment factor will be determined and applied, which may or may not provide an additional or final payment, depending upon the factor." 7:7:7.1.1.4.11.4.9.9,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,P,Subpart P—On-Farm Stored Commodity Loss Program,,§ 760.1608 Payment limitation and AGI.,FSA,,,"[90 FR 51973, Nov. 18, 2025]","(a) Per program loss year, a person or legal entity, other than a joint venture or general partnership, is eligible to receive, directly or indirectly, payments under this subpart of not more than: (1) $125,000 if less than 75 percent of the person's or legal entity's average AGI is average adjusted gross farm income; or (2) $250,000 if 75 percent or more of the person's or legal entity's average AGI is average adjusted gross farm income. (b) To be eligible to receive payments based on the limitation in paragraph (a)(2) of this section, a person or legal entity must submit FSA-510, Request for an Exception to the $125,000 Payment Limitation for Certain Programs, accompanied by a certification from a certified public accountant or attorney as to that person's or legal entity's certification. (c) If a producer requesting the $250,000 payment limitation is a legal entity, all members of that entity must also complete FSA-510 and provide the required certification according to the direct attribution provisions in 7 CFR 1400.105. If a legal entity would be eligible for the $250,000 payment limitation based on the legal entity's average adjusted gross farm income but a member of that legal entity either does not complete an FSA-510 and provide the required certification or is not eligible for the $250,000 payment limitation, the payment to the legal entity will be reduced for the limitation applicable to the share of the OFSCLP 2023 or 2024 payment attributed to that member. (d) If a producer or member of a legal entity files FSA-510 and the accompanying certification after their payment is issued but before the deadline specified in § 760.1611(g), FSA will recalculate the payment and issue the additional calculated amount. (e) The direct attribution provisions in § 1400.105 of this chapter apply for payment limitation and determining average AGI as defined and used in this subpart. (f) If an individual or legal entity is not eligible to receive OFSCLP payments due to the individual or legal entity failing to satisfy payment eligibility provisions, the payment made either directly or indirectly to the individual or legal entity will be reduced to zero. The amount of the reduction for the direct payment to the producer will be commensurate with the direct or indirect ownership interest of the ineligible individual or ineligible legal entity." 7:7:7.1.1.4.11.5.9.1,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,Q,Subpart Q—Milk Loss Program,,§ 760.1700 Applicability.,FSA,,,"[88 FR 62288, Sept. 11, 2023, as amended at 90 FR 51974, Nov. 18, 2025]","This subpart specifies the terms and conditions for the Milk Loss Program. The Milk Loss Program will provide payments to eligible dairy operations for milk that was dumped or removed without compensation from the commercial milk market due to the results of droughts, wildfires, hurricanes, floods, derechos, tornadoes, excessive moisture, excessive heat, winter storms, freeze (including polar vortex), and smoke exposure that occurred in the 2023 and 2024 calendar year." 7:7:7.1.1.4.11.5.9.10,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,Q,Subpart Q—Milk Loss Program,,§ 760.1709 Payment limitation and AGI.,FSA,,,"[90 FR 51976, Nov. 18, 2025]","(a) Per program year, a person or legal entity, other than a joint venture or general partnership, is eligible to receive, directly or indirectly, payments under this subpart of not more than: (1) $125,000 if less than 75 percent of the person's or legal entity's average adjusted gross income is average adjusted gross farm income; or (2) $250,000 if not less than 75 percent of the person's or legal entity's average adjusted gross income is average adjusted gross farm income. (b) To be eligible to receive payments based on the limitation in paragraph (a)(2) of this section, a person or legal entity must submit FSA-510, accompanied by a certification from a certified public accountant or attorney as to that person's or legal entity's certification. (c) If a producer requesting the $250,000 payment limitation is a legal entity, all members of that entity must also complete FSA-510 and provide the required certification according to the direct attribution provisions in 7 CFR 1400.105. If a legal entity would be eligible for the $250,000 payment limitation based on the legal entity's average adjusted gross farm income but a member of that legal entity either does not complete an FSA-510 and provide the required certification or is not eligible for the $250,000 payment limitation, the payment to the legal entity will be reduced for the limitation applicable to the share of the payment attributed to that member. (d) If a producer or member of a legal entity files FSA-510 and the accompanying certification after their payment is issued but before the deadline, FSA will recalculate the payment and issue the additional calculated amount. (e) The direct attribution provisions in § 1400.105 apply for payment limitation and determining average adjusted gross income as defined and used in this subpart. (f) If an individual or legal entity is not eligible to receive Milk Loss Program payments due to the individual or legal entity failing to satisfy payment eligibility provisions, the payment made either directly or indirectly to the individual or legal entity will be reduced to zero. The amount of the reduction for the direct payment to the producer will be commensurate with the direct or indirect ownership interest of the ineligible individual or ineligible legal entity." 7:7:7.1.1.4.11.5.9.11,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,Q,Subpart Q—Milk Loss Program,,§ 760.1710 Time and method of application.,FSA,,,"[88 FR 62291, Sept. 11, 2023, as amended at 90 FR 51976, Nov. 18, 2025]","(a) A completed FSA-376, Milk Loss Program Application, must be submitted at the time of application along with the information listed in § 760.1707 to any FSA county office by the close of business on January 23, 2026. (b) Failure of an individual, entity, or a member of an entity to submit the following payment limitation and payment eligibility formsby January 23, 2027, may result in no payment or a reduced payment: (1) Form AD-2047, Customer Data Worksheet, for new customers or existing customers who need to update their customer profile; (2) Form CCC-901, Member Information for Legal Entities, if applicable; (3) Form CCC-902, Farm Operating Plan for an individual or legal entity as provided in 7 CFR part 1400; (4) Form FSA-510, Request for an Exception to the $125,000 Payment Limitation for Certain Programs, for producers and members of legal entities who are requesting an increased payment limitation; and (5) Form AD-1026, Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) Certification, for the Milk Loss Program applicant and applicable affiliates as provided in 7 CFR part 12. (c) If supporting documentation is requested under § 760.1707(b), the documentation must be submitted to FSA within 60 calendar days from the request or the application will be disapproved by FSA. (d) Milk Loss Program payments are limited to 30 days per year for each of 2023 and 2024. (e) Each Milk Loss Program application is limited to the milk loss for one calendar month due to a qualifying disaster event or multiple qualifying disaster events. Milk loss that occurs in a subsequent month for the same qualifying disaster event will require a separate application. (f) The date to apply for payments under this program may, at the sole discretion of FSA, be extended. If FSA makes that decision, the extended date will be set forth at https://www.fsa.usda.gov/resources/programs/milk-loss-program-mlp. Producers may also obtain that information from any FSA county office." 7:7:7.1.1.4.11.5.9.12,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,Q,Subpart Q—Milk Loss Program,,§ 760.1711 Limitation of authority.,FSA,,,"[84 FR 48534, Sept. 13, 2019. Redesignated and amended at 88 FR 62290, 62292, Sept. 11, 2023]","(a) FSA county executive directors and State and county committees do not have authority to modify or waive any of the provisions of the regulations in this subpart. (b) The FSA State committee may take any action authorized or required by the regulations in this subpart to be taken by the FSA county committee when such action has not been taken by the FSA county committee. The FSA State committee may also: (1) Correct, or require a county committee to correct, any action taken by such county committee which is not in accordance with the regulations in this subpart; or (2) Require a county committee to withhold taking any action which is not in accordance with the regulations in this subpart. (c) No delegation herein to a State or county committee will preclude the Deputy Administrator or designee from determining any question arising under the regulations in this subpart or from reversing or modifying any determination made by a State or county committee." 7:7:7.1.1.4.11.5.9.13,7,Agriculture,VII,D,760,PART 760—INDEMNITY PAYMENT PROGRAMS,Q,Subpart Q—Milk Loss Program,,§ 760.1712 Estates and trusts; minors.,FSA,,,"[88 FR 62292, Sept. 11, 2023]","(a) A receiver of an insolvent debtor's estate and the trustee of a trust estate will, for the purpose of this subpart, be considered to represent an insolvent affected farmer and the beneficiaries of a trust, respectively, and the production of the receiver or trustee will be considered to be the production of the represented person. Program documents executed by any such person will be accepted only if they are legally valid and such person has the authority to sign the applicable documents. (b) An affected dairy farmer who is a minor will be eligible for milk loss payments only if at least one of the following requirements is true: (1) The right of majority has been conferred on him by court proceedings or by law; (2) A guardian has been appointed to manage the property and the applicable program documents are signed by the guardian; or (3) A bond is furnished under which the surety guarantees any loss incurred for which the minor would be liable had the person been an adult."