Notice of Issuance of Final Determination Concerning Certain Network Cables and Transceivers, 34363-34367 [2016-12798]

Download as PDF Federal Register / Vol. 81, No. 104 / Tuesday, May 31, 2016 / Notices DEPARTMENT OF HEALTH AND HUMAN SERVICES National Institutes of Health National Library of Medicine; Notice of Closed Meeting Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App), notice is hereby given of the following meeting. The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable materials, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy. Name of Committee: National Library of Medicine Special Emphasis Panel; R01/R13/ R21/K01/K99/F31 Conflicts. Date: July 21, 2016. Time: 12:00 p.m. to 4:30 p.m. Agenda: To review and evaluate grant applications. Place: National Library of Medicine, 6705 Rockledge Drive, Suite 301, Bethesda, MD 20817, (Telephone Conference Call). Contact Person: Zoe E. Huang, MD, Scientific Review Officer, Extramural Programs, National Library of Medicine, NIH, 6705 Rockledge Drive, Suite 301, Bethesda, MD 20892–7968, 301–594–4937, huangz@ mail.nih.gov. (Catalogue of Federal Domestic Assistance Program No. 93.879, Medical Library Assistance, National Institutes of Health, HHS) [FR Doc. 2016–12648 Filed 5–27–16; 8:45 am] BILLING CODE 4140–01–P DEPARTMENT OF HEALTH AND HUMAN SERVICES National Institutes of Health sradovich on DSK3TPTVN1PROD with NOTICES National Heart, Lung, and Blood Institute; Notice of Closed Meeting Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting. The meeting will be closed to the public in accordance with the provisions set forth in section 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential 21:53 May 27, 2016 Jkt 238001 Name of Committee: Heart, Lung, and Blood Initial Review Group; NHLBI Mentored Patient-Oriented Research Review Committee. Date: June 23–24, 2016. Time: 8:30 a.m. to 12:00 p.m. Agenda: To review and evaluate grant applications. Place: Crowne Plaza Washington National Airport, (Between 15th Street and Crystal Drive), 1480 Crystal Drive, Arlington, VA 22202. Contact Person: Stephanie Johnson Webb, Ph.D., Scientific Review Officer, Office of Scientific Review/DERA, National Heart, Lung, and Blood Institute, 6701 Rockledge Drive, Room 7196, Bethesda, MD 20892, 301– 435–0291, stephanie.webb@nih.gov. (Catalogue of Federal Domestic Assistance Program Nos. 93.233, National Center for Sleep Disorders Research; 93.837, Heart and Vascular Diseases Research; 93.838, Lung Diseases Research; 93.839, Blood Diseases and Resources Research, National Institutes of Health, HHS) Dated: May 24, 2016. Michelle Trout, Program Analyst, Office of Federal Advisory Committee Policy. [FR Doc. 2016–12644 Filed 5–27–16; 8:45 am] BILLING CODE 4140–01–P DEPARTMENT OF HEALTH AND HUMAN SERVICES Date: June 24, 2016. Time: 11:00 a.m. to 2:30 p.m. Agenda: To review and evaluate grant applications. Place: National Institutes of Health, Neuroscience Center, 6001 Executive Boulevard, Rockville, MD 20852, (Telephone Conference Call). Contact Person: Hiromi Ono, Ph.D., Scientific Review Officer, Office of Extramural Affairs, National Institute on Drug Abuse, National Institutes of Health, DHHS, 6001 Executive Boulevard, Room 4238, MSC 9550, Bethesda, MD 20892, 301– 402–6020, hiromi.ono@nih.gov. Name of Committee: National Institute on Drug Abuse Special Emphasis Panel; NIH Pathway to Independence Award (K99/R00). Date: June 30, 2016. Time: 10:00 a.m. to 2:00 p.m. Agenda: To review and evaluate grant applications. Place: National Institutes of Health, Neuroscience Center, 6001 Executive Boulevard, Rockville, MD 20852, (Telephone Conference Call). Contact Person: Susan O. McGuire, Ph.D., Scientific Review Officer, Office of Extramural Affairs, National Institute on Drug Abuse, National Institutes of Health, DHHS, 6001 Executive Blvd., Room 4245, Rockville, MD 20852, 301–435–1426, mcguireso@mail.nih.gov. (Catalogue of Federal Domestic Assistance Program Nos.: 93.279, Drug Abuse and Addiction Research Programs, National Institutes of Health, HHS) Dated: May 24, 2016. Natasha M. Copeland, Program Analyst, Office of Federal Advisory Committee Policy. [FR Doc. 2016–12646 Filed 5–27–16; 8:45 am] BILLING CODE 4140–01–P National Institutes of Health National Institute on Drug Abuse; Notice of Closed Meetings Dated: May 24, 2016. Michelle Trout, Program Analyst, Office of the Federal Advisory Committee Policy. VerDate Sep<11>2014 trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy. 34363 Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App), notice is hereby given of the following meetings. The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy. Name of Committee: National Institute on Drug Abuse Special Emphasis Panel; Services Planning Research in the Appalachian Region to Address Adverse Health Consequences Associated with Increased Opioid Injection Drug Use (R03). PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 DEPARTMENT OF HOMELAND SECURITY U.S. Customs and Border Protection Notice of Issuance of Final Determination Concerning Certain Network Cables and Transceivers U.S. Customs and Border Protection, Department of Homeland Security. ACTION: Notice of final determination. AGENCY: This document provides notice that U.S. Customs and Border Protection (‘‘CBP’’) has issued a final determination concerning the country of origin of certain network cables and transceivers. Based upon the facts presented, CBP has concluded that the country of origin of the network cables and transceivers is China for purposes of U.S. Government procurement. DATES: The final determination was issued on May 19, 2016. A copy of the final determination is attached. Any SUMMARY: E:\FR\FM\31MYN1.SGM 31MYN1 34364 Federal Register / Vol. 81, No. 104 / Tuesday, May 31, 2016 / Notices party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial review of this final determination within June 30, 2016. FOR FURTHER INFORMATION CONTACT: Grace A. Kim, Valuation and Special Programs Branch, Regulations and Rulings, Office of International Trade (202) 325–7941. SUPPLEMENTARY INFORMATION: Notice is hereby given that on May 19, 2016, pursuant to subpart B of Part 177, U.S. Customs and Border Protection Regulations (19 CFR part 177, subpart B), CBP issued a final determination concerning the country of origin of certain network cables and transceivers, which may be offered to the U.S. Government under an undesignated government procurement contract. This final determination, HQ H273091, was issued under procedures set forth at 19 CFR part 177, subpart B, which implements Title III of the Trade Agreements Act of 1979, as amended (19 U.S.C. 2511–18). In the final determination, CBP concluded that the processing in the U.S. does not result in a substantial transformation. Therefore, the country of origin of the certain network cables and transceivers is China for purposes of U.S. Government procurement. Section 177.29, CBP Regulations (19 CFR 177.29), provides that a notice of final determination shall be published in the Federal Register within 60 days of the date the final determination is issued. Section 177.30, CBP Regulations (19 CFR 177.30), provides that any party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial review of a final determination within 30 days of publication of such determination in the Federal Register. Dated: May 19, 2016. Myles B. Harmon, Acting Executive Director, Regulations and Rulings, Office of International Trade. HQ H258960 OT:RR:CTF:VS H258960 GaK sradovich on DSK3TPTVN1PROD with NOTICES CATEGORY: Origin Mr. Stuart P. Seidel Baker & McKenzie, LLP 815 Connecticut Ave. NW Washington, DC 20006–4078 RE: U.S. Government Procurement; Country of Origin Marking; Network Transceivers and High Speed Cabling Devices; Substantial Transformation Dear Mr. Seidel: This is in response to your letter dated October 24, 2014, requesting a final determination on behalf of AddOn Computer Peripherals LLC (‘‘AddOn’’) pursuant to Subpart B of Part 177 of the VerDate Sep<11>2014 20:07 May 27, 2016 Jkt 238001 U.S. Customs & Border Protection (‘‘CBP’’) Regulations (19 CFR part 177). Under these regulations, which implement Title III of the Trade Agreements Act of 1979 (‘‘TAA’’), as amended (19 U.S.C. 2511 et seq.), CBP issues country of origin advisory rulings and final determinations as to whether an article is or would be a product of a designated country or instrumentality for the purposes of granting waivers of certain ‘‘Buy American’’ restrictions in U.S. law or for products offered for sale to the U.S. Government. This final determination concerns the country of origin of AddOn’s network transceivers and high speed cabling devices. As a U.S. importer, AddOn is a party-atinterest within the meaning of 19 CFR 177.22(d)(1) and is entitled to request this final determination. You also request a country of origin marking determination. In your letter, you requested confidential treatment for certain information contained in the file. Pursuant to 19 CFR 177.2(b)(7), the identified information has been bracketed and will be redacted in the public version of this final determination. FACTS: The products at issue are network transceivers and high speed cabling devices. You state that network transceivers are used for transmitting and receiving information between two network devices. The medium of transmission is usually copper or fiber optic cables and you claim that AddOn’s network transceivers can work with one or the other. There are different models of transceivers based on the technology employed for a particular network device, transmission medium, speed and/or distance. Depending on the original equipment manufacturer (‘‘OEM’’), technology, and applications, the sales price for the transceivers range from [*******] to [*******]. You claim that the difference in cost and the sales price is attributable to the software program and subsequent testing and quality assurance process. The transceiver also ‘‘hot plugs,’’ which means that it can be plugged into a network device while the transceiver is working, and connect that device to a network. You state that most transceivers are built to a Multi-Source Agreement (‘‘MSA’’) standard to provide common formats and functions to ensure that transceivers can operate with systems and each other. The MSA standard is said to incorporate a programmable memory, called an EEPROM. The EEPROM can also be used to tell the PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 transceiver to enable functionality that goes beyond the MSA standard, which can be unique to the network device manufacturer. You claim that sometimes the EEPROM is programmed to allow the transceiver to perform a proprietary handshake and be identified as capable of certain advanced features. You further claim that if the transceiver fails the proprietary handshake, it may be rendered inoperable. You state that AddOn’s transceivers conform to the MSA standard and to the OEM’s higher level of compatibility. You provided two scenarios in transceiver production. In both scenarios, the hardware components are manufactured in China or other Asian country. In Scenario 1, AddOn purchases the ‘‘blank’’ transceivers from an unrelated supplier in China or other Asian country. You state that ‘‘blank’’ transceivers are just hardware without any programming. AddOn downloads its proprietary software, which was developed in the U.S. and you claim that this makes the transceivers functional. This scenario applies to over 95% of the imported transceivers. In Scenario 2, AddOn purchases transceivers that have already been programmed with a generic program, which is removed and AddOn’s proprietary software is installed to provide interoperability between different OEMs’ systems. AddOn’s transceivers are then tested for compatibility in its Certification Test Lab. In both scenarios, the programming and testing are conducted in the U.S. The second product is a high speed cabling device, which comprises two transceivers and a transmission medium (copper or fiber optic cable) in one integrated part. All programming and testing are said to be the same as the transceivers, except that AddOn programs and tests two transceivers instead of one for each product. AddOn’s proprietary operational firmware/software was developed and programmed in the U.S. You state that the amount of time invested in development was approximately [*******] hours and the software developers have a Bachelors of Science or better or equivalent work experience. You also state that the dollar value increases significantly after programming, which ranges from [*******] depending on the part type, application and customer. ISSUE: What is the country of origin of the network transceivers and high speed cabling devices for purposes of U.S. government procurement and marking? E:\FR\FM\31MYN1.SGM 31MYN1 sradovich on DSK3TPTVN1PROD with NOTICES Federal Register / Vol. 81, No. 104 / Tuesday, May 31, 2016 / Notices LAW AND ANALYSIS: Government Procurement Pursuant to Subpart B of Part 177, 19 CFR 177.21 et seq., which implements Title III of the Trade Agreements Act of 1979, as amended (19 U.S.C. 2511 et seq.), CBP issues country of origin advisory rulings and final determinations as to whether an article is or would be a product of a designated country or instrumentality for the purposes of granting waivers of certain ‘‘Buy American’’ restrictions in U.S. law or practice for products offered for sale to the U.S. Government. Under the rule of origin set forth under 19 U.S.C. 2518(4)(B): An article is a product of a country or instrumentality only if (i) it is wholly the growth, product, or manufacture of that country or instrumentality, or (ii) in the case of an article which consists in whole or in part of materials from another country or instrumentality, it has been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed. See also 19 CFR 177.22(a). In rendering advisory rulings and final determinations for purposes of U.S. government procurement, CBP applies the provisions of subpart B of part 177 consistent with the Federal Acquisition Regulations. See 19 CFR 177.21. In this regard, CBP recognizes that the Federal Acquisition Regulations restrict the U.S. Government’s purchase of products to U.S.-made or designated country end products for acquisitions subject to the TAA. See 48 CFR 25.403(c)(1). The Federal Acquisition Regulations define ‘‘U.S.-made end product’’ as: . . .an article that is mined, produced, or manufactured in the United States or that is substantially transformed in the United States into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. 48 CFR 25.003. In Data General v. United States, 4 Ct. Int’l Trade 182 (1982), the court determined that for purposes of determining eligibility under item 807.00, Tariff Schedules of the United States (predecessor to subheading 9802.00.80, Harmonized Tariff Schedule of the United States), the programming of a foreign PROM (Programmable ReadOnly Memory chip) in the United States substantially transformed the PROM into a U.S. article. In programming the imported PROMs, the U.S. engineers systematically caused various distinct VerDate Sep<11>2014 20:07 May 27, 2016 Jkt 238001 electronic interconnections to be formed within each integrated circuit. The programming bestowed upon each circuit its electronic function, that is, its ‘‘memory’’ which could be retrieved. A distinct physical change was effected in the PROM by the opening or closing of the fuses, depending on the method of programming. This physical alteration, not visible to the naked eye, could be discerned by electronic testing of the PROM. The court noted that the programs were designed by a U.S. project engineer with many years of experience in ‘‘designing and building hardware.’’ In addition, the court noted that while replicating the program pattern from a ‘‘master’’ PROM may be a quick one-step process, the development of the pattern and the production of the ‘‘master’’ PROM required much time and expertise. The court noted that it was undisputed that programming altered the character of a PROM. The essence of the article, its interconnections or stored memory, was established by programming. The court concluded that altering the nonfunctioning circuitry comprising a PROM through technological expertise in order to produce a functioning read only memory device, possessing a desired distinctive circuit pattern, was no less a ‘‘substantial transformation’’ than the manual interconnection of transistors, resistors and diodes upon a circuit board creating a similar pattern. In Texas Instruments v. United States, 681 F.2d 778, 782 (CCPA 1982), the court observed that the substantial transformation issue is a ‘‘mixed question of technology and customs law.’’ In C.S.D. 84–85, 18 Cust. B. & Dec. 1044, CBP stated: We are of the opinion that the rationale of the court in the Data General case may be applied in the present case to support the principle that the essence of an integrated circuit memory storage device is established by programming; . . . [W]e are of the opinion that the programming (or reprogramming) of an EPROM results in a new and different article of commerce which would be considered to be a product of the country where the programming or reprogramming takes place. Accordingly, the programming of a device that confers its identity as well as defines its use generally constitutes substantial transformation. See also Headquarters Ruling Letter (‘‘HQ’’) 558868, dated February 23, 1995 (programming of SecureID Card substantially transformed the card because it gave the card its character and use as part of a security system and PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 34365 the programming was a permanent change that could not be undone); HQ 735027, dated September 7, 1993 (programming blank media (EEPROM) with instructions that allowed it to perform certain functions that prevented piracy of software constituted substantial transformation); and, HQ 733085, dated July 13, 1990; but see HQ 732870, dated March 19, 1990 (formatting a blank diskette did not constitute substantial transformation because it did not add value, did not involve complex or highly technical operations and did not create a new or different product); and, HQ 734518, dated June 28, 1993, (motherboards were not substantially transformed by the implanting of the central processing unit on the board because, whereas in Data General use was being assigned to the PROM, the use of the motherboard had already been determined when the importer imported it). In this case, the hardware components of the transceivers in both scenarios are wholly manufactured in a foreign country and imported into the U.S. In Scenario 1, the transceivers are ‘‘blanks’’, and in Scenario 2, the transceivers are preprogrammed with a generic program. In both scenarios, AddOn will download its proprietary software onto the transceivers which will transform them into a proprietary network device capable of performing its intended functions. You argue that in both scenarios, the imported hardware is substantially transformed by the development, configuration, and download operations of the U.S. origin software. In Scenario 1, you argue that the completely non-functional hardware is transformed into a transceiver and in Scenario 2, you argue that the hardware with generic software is substantially transformed into a fully functional network device that is capable of performing their intended functions. You also state that the expenses for the work performed in the U.S. far outweigh the work performed abroad. In support of your argument, you cite to HQ 562964, dated March 29, 2004; HQ H034843, dated May 5, 2009; and HQ H175415, dated October 4, 2011. In HQ 562964, CBP considered certain network tape drive units and its components, including ‘‘bare bones’’ (basic) tape drives, imported into Country X where the components were assembled into a Small Computer System Interface (‘‘SCSI’’) tape drive rack unit. The assembly process involved approximately eight major components, simple operations, and required approximately twenty minutes. In Scenario 1, the ‘‘bare bones’’ tape drives were preprogrammed with the E:\FR\FM\31MYN1.SGM 31MYN1 sradovich on DSK3TPTVN1PROD with NOTICES 34366 Federal Register / Vol. 81, No. 104 / Tuesday, May 31, 2016 / Notices OEM’s firmware prior to importation, which allowed the tape drives to be recognized and controlled by the OEM’s network. CBP found that the assembly operations did not alter the function of the tape drive, and that its character and use as a network storage device was defined prior to importation into Country X, and therefore the tape drive rack unit was not substantially transformed. In Scenario 2, the ‘‘bare bones’’ tape drives were imported with a universal firmware that was installed only for testing and diagnostic purposes and the OEM proprietary firmware was burned onto the tape drives in Country X. CBP found that the OEM firmware allowed the tape drives to be recognized and controlled by the OEM’s network and defined the character and use of the tape drive as a network storage device and concluded that the tape drive rack unit had been substantially transformed. In HQ H034843, CBP held that USB flash drives were products of Israel because, though the assembly process began in China and the software and firmware were developed in Israel, the installation and customization of the firmware and software that took place in Israel made the USB flash drives functional, permitted them to execute their security features, and increased their value. In HQ H175415, CBP held that Ethernet switches were products of the U.S. because, though the hardware components were fully assembled into Ethernet switches in China, they were programmed with U.S.-origin operating software enabling them to interact and route within the network, and to monitor, secure, and access control of the network. However, in HQ H241177, dated December 3, 2013, Ethernet switches were assembled to completion in Malaysia and then shipped to Singapore, where U.S.-origin software was downloaded onto the switches. CBP further found that software downloading did not amount to programming, which involved writing, testing and implementing code necessary to make the computer function a certain way. See also HQ H240199, dated March 10, 2015 (the notebook computer was not substantially transformed when the computer was assembled in Country A, imported into Country F, and Country D-origin BIOS was downloaded). CBP concluded in HQ H241177, that the software downloading performed in Singapore did not amount to programming and that the country of origin was Malaysia, where the last substantial transformation occurred. In Scenario 1, the imported transceivers are completely non- VerDate Sep<11>2014 20:07 May 27, 2016 Jkt 238001 functional and AddOn’s proprietary software is downloaded in the U.S., making the transceivers functional and compatible with the OEM technology. The proprietary software was developed in the U.S. at significant cost to AddOn over many years. Without the proprietary software, the transceivers could not function as a network device in any capacity. In accordance with HQ H175415, we find that the nonfunctional transceivers are substantially transformed as a result of downloading performed in the U.S., with proprietary software developed in the U.S. Therefore, the country of origin of the transceivers in Scenario 1 is the U.S. In Scenario 2, the imported transceivers are preprogrammed with a generic program prior to importation, which is replaced with the proprietary software in the U.S. While the transceivers have generic network functionality, it is stated that they will not be recognized by or work on proprietary networks. As HQ 732870 and HQ 734518 point out, when programming does not actually create a new or different product, it may not constitute a substantial transformation. Given these considerations, it would appear that programming an imported, already functional, transceiver just to customize its network compatibility, would not actually change the identity of the imported transceiver. See HQ H241177 supra. Also, in HQ 562964, CBP found that the ‘‘bare bones’’ tape drives were substantially transformed when the universal firmware was replaced with the proprietary firmware because the universal firmware was only for testing and diagnostic purposes. In this case, while the preprogrammed transceivers cannot function as intended by AddOn’s market and its customers, the transceivers are capable of generic network functionality at the time of importation. Downloading the AddOn proprietary software does not actually change the identity of the imported transceiver and its name, character, and use remain the same. Therefore, in Scenario 2, we find that the imported transceivers with a generic program will not be substantially transformed in the U.S. Therefore, we find that the country where the last substantial transformation occurs is China or other Asian country where the hardware components are manufactured. The country of origin of the transceivers in Scenario 2 is China or other Asian country. Marking Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Part 134, CBP Regulations (19 CFR part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b), CBP Regulations (19 CFR 134.1(b)), defines the country of origin of an article as the country of manufacture, production, or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the country of origin for country of origin marking purposes. Thus, the issue in determining the country of origin of the transceivers is whether the transceivers of Chinese (or other Asian country) origin are substantially transformed as a result of the operations performed in the U.S. As indicated above, in Scenario 1, we have found that the Chinese (or other Asian country) origin transceivers are substantially transformed in the U.S., but not in Scenario 2. Therefore, pursuant to 19 U.S.C. 1304, the country of origin for marking purposes of the transceivers is the U.S. in Scenario 1, and China or other Asian country in Scenario 2. HOLDING: Based on the facts of this case, the country of origin of transceivers and high speed cabling devices is the U.S. in Scenario 1, and China or other Asian country in Scenario 2 for purposes of U.S. Government procurement and country of origin marking. Notice of this final determination will be given in the Federal Register, as required by 19 CFR 177.29. Any partyat-interest other than the party which requested this final determination may request, pursuant to 19 CFR 177.31, that CBP reexamine the matter anew and issue a new final determination. Pursuant to 19 CFR 177.30, any partyat-interest may, within 30 days of publication of the Federal Register Notice referenced above, seek judicial review of this final determination before the Court of International Trade. Sincerely, Myles B. Harmon Acting Executive Director Regulations and Rulings E:\FR\FM\31MYN1.SGM 31MYN1 Federal Register / Vol. 81, No. 104 / Tuesday, May 31, 2016 / Notices Office of International Trade [FR Doc. 2016–12798 Filed 5–27–16; 8:45 am] BILLING CODE P DEPARTMENT OF HOMELAND SECURITY [Docket No. DHS–2013–0067] Sector Outreach and Programs Division Online Meeting Registration Tool National Protection and Programs Directorate, DHS. ACTION: 60-day notice and request for comments; Renewal Information Collection Request: 1670–0019. AGENCY: The Department of Homeland Security (DHS), National Protection and Programs Directorate (NPPD), Office of Infrastructure Protection (IP), Sector Outreach and Programs Division (SOPD), will submit the following Information Collection Request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104–13, 44 U.S.C. chapter 35). DATES: Comments are encouraged and will be accepted until August 1, 2016. This process is conducted in accordance with 5 CFR 1320.1. ADDRESSES: Written comments and questions about this Information Collection Request should be forwarded to DHS/NPPD/IP/SOPD, 245 Murray Lane SW., Mail Stop 0608, Arlington, VA 20598–0640. Emailed requests should go to Michael Bowen, michael.bowen@hq.dhs.gov. Written comments should reach the contact person listed no later than August 1, 2016. Comments must be identified by ‘‘DHS–2013–0067’’ and may be submitted by one of the following methods: Federal eRulemaking Portal: http:// www.regulations.gov. • Email: Include the docket number in the subject line of the message. Instructions: All submissions received must include the words ‘‘Department of Homeland Security’’ and the docket number for this action. Comments received will be posted without alteration at http://www.regulations.gov, including any personal information provided. sradovich on DSK3TPTVN1PROD with NOTICES SUMMARY: On behalf of DHS, NPPD/IP manages the Department’s program to protect the Nation’s 16 critical infrastructure sectors by implementing the National Infrastructure Protection Plan (NIPP) 2013, Partnering for Critical SUPPLEMENTARY INFORMATION: VerDate Sep<11>2014 20:07 May 27, 2016 Jkt 238001 Infrastructure Security and Resilience. Under Presidential Policy Directive 21 on Critical Infrastructure Security and Resilience (February 2013), each sector is assigned a Sector-Specific Agency (SSA) to oversee Federal interaction with the array of sector security partners, both public and private. SSAs are responsible for leading unified public-private sector efforts to develop, coordinate, and implement a comprehensive physical, human, and cybersecurity strategy for its assigned sector. The Sector Outreach and Programs Division executes the SSA responsibilities for the six critical infrastructure sectors assigned to IP: Chemical; Commercial Facilities; Critical Manufacturing; Dams; Emergency Services; and Nuclear Reactors, Materials, and Waste. The mission of SOPD is to enhance the resiliency of the Nation by leading the unified public-private sector effort to ensure its assigned critical infrastructure is prepared, secure, and safe from terrorist attacks, natural disasters, and other incidents. To achieve this mission, SOPD leverages the resources and knowledge of its critical infrastructure sectors to develop and apply security initiatives that result in significant benefits to the Nation. Each SOPD branch builds sustainable partnerships with its public and private sector stakeholders to enable more effective sector coordination, information sharing, and program development and implementation. These partnerships are sustained through the Sector Partnership Model, described in the NIPP 2013, pages 10– 12. Information sharing is a key component of the NIPP Partnership Model, and DHS-sponsored conferences are one mechanism for information sharing. To facilitate conference planning and organization, SOPD established an event registration tool for use by all of its branches. The information collection is voluntary and is used by the SSAs within the SOPD. The six SSAs within SOPD use this information to register public and private sector stakeholders for meetings hosted by the SSA. The Sector Outreach and Programs Division will use the information collected to reserve space at a meeting for the registrant, contact the registrant with a reminder about the event, develop meeting materials for attendees, determine key topics of interest, and efficiently generate attendee and speaker nametags. Additionally, it will allow SOPD to have a better understanding of the organizations participating in the critical infrastructure protection PO 00000 Frm 00059 Fmt 4703 Sfmt 9990 34367 partnership events. By understanding who is participating, the SSA can identify portions of a sector that are underrepresented, and the SSA could then target that underrepresented sector element through outreach and awareness initiatives. OMB is particularly interested in comments that: 1. Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; 2. Evaluate the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; 3. Enhance the quality, utility, and clarity of the information to be collected; and 4. Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submissions of responses. Analysis Agency: Department of Homeland Security, National Protection and Programs Directorate, Office of Infrastructure Protection, Sector Outreach and Programs Division. Title: Sector Outreach and Programs Division Online Meeting Registration Tool. OMB Number: 1670–0019. Frequency: Annually. Affected Public: Federal, State, local, tribal, and territorial government personnel; private sector members. Number of Respondents: 3,000 respondents (estimate). Estimated Time per Respondent: 3 minutes. Total Burden Hours: 150 annual burden hours. Total Burden Cost (capital/startup): $0. Total Recordkeeping Burden: $0. Total Burden Cost (operating/ maintaining): $34,416. Dated: May 24, 2016. David Epperson, Chief Information Officer, National Protection and Programs Directorate, Department of Homeland Security. [FR Doc. 2016–12678 Filed 5–27–16; 8:45 am] BILLING CODE 9110–9P–P E:\FR\FM\31MYN1.SGM 31MYN1

Agencies

[Federal Register Volume 81, Number 104 (Tuesday, May 31, 2016)]
[Notices]
[Pages 34363-34367]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-12798]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Certain 
Network Cables and Transceivers

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security.

ACTION: Notice of final determination.

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SUMMARY: This document provides notice that U.S. Customs and Border 
Protection (``CBP'') has issued a final determination concerning the 
country of origin of certain network cables and transceivers. Based 
upon the facts presented, CBP has concluded that the country of origin 
of the network cables and transceivers is China for purposes of U.S. 
Government procurement.

DATES: The final determination was issued on May 19, 2016. A copy of 
the final determination is attached. Any

[[Page 34364]]

party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial 
review of this final determination within June 30, 2016.

FOR FURTHER INFORMATION CONTACT: Grace A. Kim, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of International Trade 
(202) 325-7941.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on May 19, 2016, 
pursuant to subpart B of Part 177, U.S. Customs and Border Protection 
Regulations (19 CFR part 177, subpart B), CBP issued a final 
determination concerning the country of origin of certain network 
cables and transceivers, which may be offered to the U.S. Government 
under an undesignated government procurement contract. This final 
determination, HQ H273091, was issued under procedures set forth at 19 
CFR part 177, subpart B, which implements Title III of the Trade 
Agreements Act of 1979, as amended (19 U.S.C. 2511-18). In the final 
determination, CBP concluded that the processing in the U.S. does not 
result in a substantial transformation. Therefore, the country of 
origin of the certain network cables and transceivers is China for 
purposes of U.S. Government procurement.
    Section 177.29, CBP Regulations (19 CFR 177.29), provides that a 
notice of final determination shall be published in the Federal 
Register within 60 days of the date the final determination is issued. 
Section 177.30, CBP Regulations (19 CFR 177.30), provides that any 
party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial 
review of a final determination within 30 days of publication of such 
determination in the Federal Register.

    Dated: May 19, 2016.
Myles B. Harmon,
Acting Executive Director, Regulations and Rulings, Office of 
International Trade.
HQ H258960
OT:RR:CTF:VS H258960 GaK
CATEGORY: Origin
Mr. Stuart P. Seidel
Baker & McKenzie, LLP
815 Connecticut Ave. NW
Washington, DC 20006-4078
RE: U.S. Government Procurement; Country of Origin Marking; Network 
Transceivers and High Speed Cabling Devices; Substantial Transformation
Dear Mr. Seidel:
    This is in response to your letter dated October 24, 2014, 
requesting a final determination on behalf of AddOn Computer 
Peripherals LLC (``AddOn'') pursuant to Subpart B of Part 177 of the 
U.S. Customs & Border Protection (``CBP'') Regulations (19 CFR part 
177). Under these regulations, which implement Title III of the Trade 
Agreements Act of 1979 (``TAA''), as amended (19 U.S.C. 2511 et seq.), 
CBP issues country of origin advisory rulings and final determinations 
as to whether an article is or would be a product of a designated 
country or instrumentality for the purposes of granting waivers of 
certain ``Buy American'' restrictions in U.S. law or for products 
offered for sale to the U.S. Government. This final determination 
concerns the country of origin of AddOn's network transceivers and high 
speed cabling devices. As a U.S. importer, AddOn is a party-at-interest 
within the meaning of 19 CFR 177.22(d)(1) and is entitled to request 
this final determination. You also request a country of origin marking 
determination.
    In your letter, you requested confidential treatment for certain 
information contained in the file. Pursuant to 19 CFR 177.2(b)(7), the 
identified information has been bracketed and will be redacted in the 
public version of this final determination.

FACTS:

    The products at issue are network transceivers and high speed 
cabling devices. You state that network transceivers are used for 
transmitting and receiving information between two network devices. The 
medium of transmission is usually copper or fiber optic cables and you 
claim that AddOn's network transceivers can work with one or the other. 
There are different models of transceivers based on the technology 
employed for a particular network device, transmission medium, speed 
and/or distance. Depending on the original equipment manufacturer 
(``OEM''), technology, and applications, the sales price for the 
transceivers range from [*******] to [*******]. You claim that the 
difference in cost and the sales price is attributable to the software 
program and subsequent testing and quality assurance process. The 
transceiver also ``hot plugs,'' which means that it can be plugged into 
a network device while the transceiver is working, and connect that 
device to a network.
    You state that most transceivers are built to a Multi-Source 
Agreement (``MSA'') standard to provide common formats and functions to 
ensure that transceivers can operate with systems and each other. The 
MSA standard is said to incorporate a programmable memory, called an 
EEPROM. The EEPROM can also be used to tell the transceiver to enable 
functionality that goes beyond the MSA standard, which can be unique to 
the network device manufacturer. You claim that sometimes the EEPROM is 
programmed to allow the transceiver to perform a proprietary handshake 
and be identified as capable of certain advanced features. You further 
claim that if the transceiver fails the proprietary handshake, it may 
be rendered inoperable. You state that AddOn's transceivers conform to 
the MSA standard and to the OEM's higher level of compatibility.
    You provided two scenarios in transceiver production. In both 
scenarios, the hardware components are manufactured in China or other 
Asian country. In Scenario 1, AddOn purchases the ``blank'' 
transceivers from an unrelated supplier in China or other Asian 
country. You state that ``blank'' transceivers are just hardware 
without any programming. AddOn downloads its proprietary software, 
which was developed in the U.S. and you claim that this makes the 
transceivers functional. This scenario applies to over 95% of the 
imported transceivers. In Scenario 2, AddOn purchases transceivers that 
have already been programmed with a generic program, which is removed 
and AddOn's proprietary software is installed to provide 
interoperability between different OEMs' systems. AddOn's transceivers 
are then tested for compatibility in its Certification Test Lab. In 
both scenarios, the programming and testing are conducted in the U.S.
    The second product is a high speed cabling device, which comprises 
two transceivers and a transmission medium (copper or fiber optic 
cable) in one integrated part. All programming and testing are said to 
be the same as the transceivers, except that AddOn programs and tests 
two transceivers instead of one for each product.
    AddOn's proprietary operational firmware/software was developed and 
programmed in the U.S. You state that the amount of time invested in 
development was approximately [*******] hours and the software 
developers have a Bachelors of Science or better or equivalent work 
experience. You also state that the dollar value increases 
significantly after programming, which ranges from [*******] depending 
on the part type, application and customer.

ISSUE:

    What is the country of origin of the network transceivers and high 
speed cabling devices for purposes of U.S. government procurement and 
marking?

[[Page 34365]]

LAW AND ANALYSIS:

    Government Procurement
    Pursuant to Subpart B of Part 177, 19 CFR 177.21 et seq., which 
implements Title III of the Trade Agreements Act of 1979, as amended 
(19 U.S.C. 2511 et seq.), CBP issues country of origin advisory rulings 
and final determinations as to whether an article is or would be a 
product of a designated country or instrumentality for the purposes of 
granting waivers of certain ``Buy American'' restrictions in U.S. law 
or practice for products offered for sale to the U.S. Government.
    Under the rule of origin set forth under 19 U.S.C. 2518(4)(B):
    An article is a product of a country or instrumentality only if (i) 
it is wholly the growth, product, or manufacture of that country or 
instrumentality, or (ii) in the case of an article which consists in 
whole or in part of materials from another country or instrumentality, 
it has been substantially transformed into a new and different article 
of commerce with a name, character, or use distinct from that of the 
article or articles from which it was so transformed.

See also 19 CFR 177.22(a).
    In rendering advisory rulings and final determinations for purposes 
of U.S. government procurement, CBP applies the provisions of subpart B 
of part 177 consistent with the Federal Acquisition Regulations. See 19 
CFR 177.21. In this regard, CBP recognizes that the Federal Acquisition 
Regulations restrict the U.S. Government's purchase of products to 
U.S.-made or designated country end products for acquisitions subject 
to the TAA. See 48 CFR 25.403(c)(1). The Federal Acquisition 
Regulations define ``U.S.-made end product'' as:
    . . .an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United States 
into a new and different article of commerce with a name, character, or 
use distinct from that of the article or articles from which it was 
transformed.

48 CFR 25.003.

    In Data General v. United States, 4 Ct. Int'l Trade 182 (1982), the 
court determined that for purposes of determining eligibility under 
item 807.00, Tariff Schedules of the United States (predecessor to 
subheading 9802.00.80, Harmonized Tariff Schedule of the United 
States), the programming of a foreign PROM (Programmable Read-Only 
Memory chip) in the United States substantially transformed the PROM 
into a U.S. article. In programming the imported PROMs, the U.S. 
engineers systematically caused various distinct electronic 
interconnections to be formed within each integrated circuit. The 
programming bestowed upon each circuit its electronic function, that 
is, its ``memory'' which could be retrieved. A distinct physical change 
was effected in the PROM by the opening or closing of the fuses, 
depending on the method of programming. This physical alteration, not 
visible to the naked eye, could be discerned by electronic testing of 
the PROM. The court noted that the programs were designed by a U.S. 
project engineer with many years of experience in ``designing and 
building hardware.'' In addition, the court noted that while 
replicating the program pattern from a ``master'' PROM may be a quick 
one-step process, the development of the pattern and the production of 
the ``master'' PROM required much time and expertise. The court noted 
that it was undisputed that programming altered the character of a 
PROM. The essence of the article, its interconnections or stored 
memory, was established by programming. The court concluded that 
altering the non-functioning circuitry comprising a PROM through 
technological expertise in order to produce a functioning read only 
memory device, possessing a desired distinctive circuit pattern, was no 
less a ``substantial transformation'' than the manual interconnection 
of transistors, resistors and diodes upon a circuit board creating a 
similar pattern.
    In Texas Instruments v. United States, 681 F.2d 778, 782 (CCPA 
1982), the court observed that the substantial transformation issue is 
a ``mixed question of technology and customs law.''
    In C.S.D. 84-85, 18 Cust. B. & Dec. 1044, CBP stated:
    We are of the opinion that the rationale of the court in the Data 
General case may be applied in the present case to support the 
principle that the essence of an integrated circuit memory storage 
device is established by programming; . . . [W]e are of the opinion 
that the programming (or reprogramming) of an EPROM results in a new 
and different article of commerce which would be considered to be a 
product of the country where the programming or reprogramming takes 
place.
    Accordingly, the programming of a device that confers its identity 
as well as defines its use generally constitutes substantial 
transformation. See also Headquarters Ruling Letter (``HQ'') 558868, 
dated February 23, 1995 (programming of SecureID Card substantially 
transformed the card because it gave the card its character and use as 
part of a security system and the programming was a permanent change 
that could not be undone); HQ 735027, dated September 7, 1993 
(programming blank media (EEPROM) with instructions that allowed it to 
perform certain functions that prevented piracy of software constituted 
substantial transformation); and, HQ 733085, dated July 13, 1990; but 
see HQ 732870, dated March 19, 1990 (formatting a blank diskette did 
not constitute substantial transformation because it did not add value, 
did not involve complex or highly technical operations and did not 
create a new or different product); and, HQ 734518, dated June 28, 
1993, (motherboards were not substantially transformed by the 
implanting of the central processing unit on the board because, whereas 
in Data General use was being assigned to the PROM, the use of the 
motherboard had already been determined when the importer imported it).
    In this case, the hardware components of the transceivers in both 
scenarios are wholly manufactured in a foreign country and imported 
into the U.S. In Scenario 1, the transceivers are ``blanks'', and in 
Scenario 2, the transceivers are preprogrammed with a generic program. 
In both scenarios, AddOn will download its proprietary software onto 
the transceivers which will transform them into a proprietary network 
device capable of performing its intended functions. You argue that in 
both scenarios, the imported hardware is substantially transformed by 
the development, configuration, and download operations of the U.S. 
origin software. In Scenario 1, you argue that the completely non-
functional hardware is transformed into a transceiver and in Scenario 
2, you argue that the hardware with generic software is substantially 
transformed into a fully functional network device that is capable of 
performing their intended functions. You also state that the expenses 
for the work performed in the U.S. far outweigh the work performed 
abroad. In support of your argument, you cite to HQ 562964, dated March 
29, 2004; HQ H034843, dated May 5, 2009; and HQ H175415, dated October 
4, 2011.
    In HQ 562964, CBP considered certain network tape drive units and 
its components, including ``bare bones'' (basic) tape drives, imported 
into Country X where the components were assembled into a Small 
Computer System Interface (``SCSI'') tape drive rack unit. The assembly 
process involved approximately eight major components, simple 
operations, and required approximately twenty minutes. In Scenario 1, 
the ``bare bones'' tape drives were preprogrammed with the

[[Page 34366]]

OEM's firmware prior to importation, which allowed the tape drives to 
be recognized and controlled by the OEM's network. CBP found that the 
assembly operations did not alter the function of the tape drive, and 
that its character and use as a network storage device was defined 
prior to importation into Country X, and therefore the tape drive rack 
unit was not substantially transformed. In Scenario 2, the ``bare 
bones'' tape drives were imported with a universal firmware that was 
installed only for testing and diagnostic purposes and the OEM 
proprietary firmware was burned onto the tape drives in Country X. CBP 
found that the OEM firmware allowed the tape drives to be recognized 
and controlled by the OEM's network and defined the character and use 
of the tape drive as a network storage device and concluded that the 
tape drive rack unit had been substantially transformed.
    In HQ H034843, CBP held that USB flash drives were products of 
Israel because, though the assembly process began in China and the 
software and firmware were developed in Israel, the installation and 
customization of the firmware and software that took place in Israel 
made the USB flash drives functional, permitted them to execute their 
security features, and increased their value. In HQ H175415, CBP held 
that Ethernet switches were products of the U.S. because, though the 
hardware components were fully assembled into Ethernet switches in 
China, they were programmed with U.S.-origin operating software 
enabling them to interact and route within the network, and to monitor, 
secure, and access control of the network.
    However, in HQ H241177, dated December 3, 2013, Ethernet switches 
were assembled to completion in Malaysia and then shipped to Singapore, 
where U.S.-origin software was downloaded onto the switches. CBP 
further found that software downloading did not amount to programming, 
which involved writing, testing and implementing code necessary to make 
the computer function a certain way. See also HQ H240199, dated March 
10, 2015 (the notebook computer was not substantially transformed when 
the computer was assembled in Country A, imported into Country F, and 
Country D-origin BIOS was downloaded). CBP concluded in HQ H241177, 
that the software downloading performed in Singapore did not amount to 
programming and that the country of origin was Malaysia, where the last 
substantial transformation occurred.
    In Scenario 1, the imported transceivers are completely non-
functional and AddOn's proprietary software is downloaded in the U.S., 
making the transceivers functional and compatible with the OEM 
technology. The proprietary software was developed in the U.S. at 
significant cost to AddOn over many years. Without the proprietary 
software, the transceivers could not function as a network device in 
any capacity. In accordance with HQ H175415, we find that the non-
functional transceivers are substantially transformed as a result of 
downloading performed in the U.S., with proprietary software developed 
in the U.S. Therefore, the country of origin of the transceivers in 
Scenario 1 is the U.S.
    In Scenario 2, the imported transceivers are preprogrammed with a 
generic program prior to importation, which is replaced with the 
proprietary software in the U.S. While the transceivers have generic 
network functionality, it is stated that they will not be recognized by 
or work on proprietary networks. As HQ 732870 and HQ 734518 point out, 
when programming does not actually create a new or different product, 
it may not constitute a substantial transformation. Given these 
considerations, it would appear that programming an imported, already 
functional, transceiver just to customize its network compatibility, 
would not actually change the identity of the imported transceiver. See 
HQ H241177 supra. Also, in HQ 562964, CBP found that the ``bare bones'' 
tape drives were substantially transformed when the universal firmware 
was replaced with the proprietary firmware because the universal 
firmware was only for testing and diagnostic purposes. In this case, 
while the preprogrammed transceivers cannot function as intended by 
AddOn's market and its customers, the transceivers are capable of 
generic network functionality at the time of importation. Downloading 
the AddOn proprietary software does not actually change the identity of 
the imported transceiver and its name, character, and use remain the 
same. Therefore, in Scenario 2, we find that the imported transceivers 
with a generic program will not be substantially transformed in the 
U.S. Therefore, we find that the country where the last substantial 
transformation occurs is China or other Asian country where the 
hardware components are manufactured. The country of origin of the 
transceivers in Scenario 2 is China or other Asian country.

Marking

    Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), 
provides that, unless excepted, every article of foreign origin 
imported into the U.S. shall be marked in a conspicuous place as 
legibly, indelibly, and permanently as the nature of the article (or 
container) will permit, in such manner as to indicate to the ultimate 
purchaser in the U.S. the English name of the country of origin of the 
article.
    Part 134, CBP Regulations (19 CFR part 134), implements the country 
of origin marking requirements and exceptions of 19 U.S.C. 1304. 
Section 134.1(b), CBP Regulations (19 CFR 134.1(b)), defines the 
country of origin of an article as the country of manufacture, 
production, or growth of any article of foreign origin entering the 
U.S. Further work or material added to an article in another country 
must effect a substantial transformation in order to render such other 
country the country of origin for country of origin marking purposes.
    Thus, the issue in determining the country of origin of the 
transceivers is whether the transceivers of Chinese (or other Asian 
country) origin are substantially transformed as a result of the 
operations performed in the U.S. As indicated above, in Scenario 1, we 
have found that the Chinese (or other Asian country) origin 
transceivers are substantially transformed in the U.S., but not in 
Scenario 2. Therefore, pursuant to 19 U.S.C. 1304, the country of 
origin for marking purposes of the transceivers is the U.S. in Scenario 
1, and China or other Asian country in Scenario 2.

HOLDING:

    Based on the facts of this case, the country of origin of 
transceivers and high speed cabling devices is the U.S. in Scenario 1, 
and China or other Asian country in Scenario 2 for purposes of U.S. 
Government procurement and country of origin marking.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 CFR 177.29. Any party-at-interest other 
than the party which requested this final determination may request, 
pursuant to 19 CFR 177.31, that CBP reexamine the matter anew and issue 
a new final determination. Pursuant to 19 CFR 177.30, any party-at-
interest may, within 30 days of publication of the Federal Register 
Notice referenced above, seek judicial review of this final 
determination before the Court of International Trade.

Sincerely,

Myles B. Harmon

Acting Executive Director
Regulations and Rulings

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Office of International Trade

[FR Doc. 2016-12798 Filed 5-27-16; 8:45 am]
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