findings and determinations in connection with Price Commission functions;

(6) Order enforcement actions related to noncompliance with Price Commission regulations or orders;

(7) Interpret the rules and guidelines of the Commission and the laws to which the Commission is subject;

(8) Advise and recommend with respect to litigation concerning the Commission in all State or Federal courts, and represent the Commission in that litigation;

of

(9) Administer the allocations funds from the Cost of Living Council to the Price Commission;

(10) Place orders for supplies, materials, and services from the General Services Administration, enter into Price Commission contracts and interagency agreements, effect personnel actions, authorize travel and publications, and perform other ministerial and administrative functions in accordance with applicable laws and regulations;

(11) Certify any Price Commission documents and statements;

(12) Sign regulations, orders, notices and other documents to be published in the FEDERAL REGISTER.

(c) The Chairman is further authorized to organize the Price Commission staff and to redelegate to Price Commission personnel any authority deiegated to him in this order.

(d) The delegated authority to perform any function of the Commission heretofore performed by any person to whom authority is or may be delegated horeunder is hereby ratified and confirmed.

[37 F.R. 7551, Apr. 15, 1972]

[Price Commission Order 4]

EXECUTIVE DIRECTOR, GENERAL COUNSEL, AND DIRECTORS OF PROGRAM OPERATIONS AND EXCEPTIONS REVIEW

DELEGATION OF AUTHORITY Pursuant to the provisions of the Economic Stabilization Act, as amended (Public Law 92-210), Executive Order No. 11640 (37 F.R. 1213), Cost of Living Council Orders No. 4 (36 F.R. 20202) and No. 7 (37 F.R. 2727), delegations of authority thereunder, and Price Commission Order No. 3:

(a) I hereby delegate authority to the Executive Director of the Price Com

mission to supervise and administer the staff of the Commission and to execute its decisions and orders, including, without limitation, the authority to

(1) Administer funds received from the Cost of Living Council or other sources for the purpose of the Commission;

(2) Place orders for supplies, materials, and services from the General Services Administration, enter into Price Commission contracts and interagency agreements, authorize travel and publications, certify Price Commission statements and documents, and effect all other ministerial and administrative functions in accordance with applicable laws and regulations;

(3) Make decisions and issue orders with respect to individual requests for price or rent increases or adjustments involving a dollar impact of less than $10 million;

(4) Make decisions and issue orders with respect to individual requests for exceptions;

(5) Review and determine correctness of reported price or rent increases or adjustments and issue appropriate orders with respect thereto, in cases involving a dollar impact of less than $10 million;

(6) Order and supervise investigations to determine whether persons are in compliance with the regulations, decisions and orders of the Commission;

(7) Effect all personnel actions; and

(8) When the Chairman is absent from Washington, D.C., make decisions and issue orders with respect to matters covered by subparagraphs (3) and (5) of this paragraph, without regard to impact or amount.

(b) I hereby delegate authority to the General Counsel to

(1) Represent the Price Commission in all litigation, and recommend procedures to the Department of Justice with respect thereto;

(2) Make recommendations to the Department of Justice as to the prosecution of violations of the rules and decisions of the Price Commission and as to the handling of all other court proceedings relating to the Commission and its rules and decisions;

(3) Issue legal opinions and interpretations of the regulations, decisions, and orders of the Price Commission and on all other laws relating thereto;

(4) Sign, for FEDERAL REGISTER publication, regulations, orders, rulings, notices, and other Price Commission documents; and

(5) Consider and decide all appeals from adverse determinations by the Internal Revenue Service.

(c) I hereby delegate authority to the Director of Program Operations, subject to the authority of the Executive Director, to

(1) Make decisions and issue orders with respect to individual requests for price or rent increases or adjustments involving a dollar impact of less than $10 million and a percentage of price increase on sales of less than 5 percent, and those involving less than $5 million, regardless of the percentage of price increase on sales;

(2) Review and determine correctness of reported price or rent increases or adjustments and issue appropriate orders with respect thereto; and

(3) Conduct investigations, conferences, or hearings with respect to the foregoing, and take such further action as may appear necessary in connection therewith.

(d) I hereby delegate authority to the Director of Exceptions Review, subject to the authority of the Executive Director, to

(1) Make decisions and issue orders with respect to individual requests for exceptions in cases in which the requesting party has annual gross revenues of $50 million or less and in rent cases involving less than 100 units; and

(2) Conduct investigations, conferences, or hearings with respect to the foregoing and take such further action as may appear necessary in connection therewith.

(e) The Executive Director may redelegate any authority delegated to him by this order to other Price Commission personnel.

(f) The General Counsel may redelegate any authority delegated to him by this order to the Deputy General Counsel.

(g) The Director of Program Operations or the Director of Exceptions Review may redelegate any authority delegated to him by this order to the Deputy Director or any Assistant Director of his office.

(h) The delegated authority to perform any function heretofore performed by any person to whom authority is or may be delegated hereunder is hereby ratified and confirmed.

[37 F.R. 7552, Apr. 15, 1972]

[Price Commission Order 5] INSTITUTIONAL PROVIDERS OF HEALTH SERVICES

DETERMINATION OF BASE PRICES FOR PROSPECTIVE REIMBURSEMENT PLANS Certain States require, under their statutes, that third party payers prospectively reimburse institutional health providers for services.

Thus, budgets are submitted by health providers in advance of the period for which charges are to be made. The budgets are reviewed, and the final rate is determined either by a State Rate Setting Commission or other designated body. On the basis of such determinations, a fixed rate is set for an institution which it must adhere to for the period of at least 1 year.

The States involved in such rating either use a calendar year as their fiscal year, or use a fiscal year ending on September 30. The rate set up to the time of the price freeze in August 1971 could have been determined as much as 16 months prior to the beginning of Phase I. The institutions under this arrangement have no way to make any adjustments in the rate to take into consideration inflation prior to Phase I. The result is an inaccurate base price.

In order to provide an accurate basis for determining base prices for institutions in States where the above requirement is in effect, the Price Commission hereby orders each institution subject to such requirement to use the following calculation for determining their base prices. Take the fixed rate which became effective before August 14, 1971, but in no event later than January 1, 1971; adjust that rate, if desired, to reflect actual expense increases from their fiscal year midpoint through November 13, 1971, but not to exceed an increase of 6 percent over the fixed rate. This adjustment can only be made once to determine the correct base price to be used in future pricing.

[37 F.R. 9696, May 16, 1972]

[Price Commission Order 6] PASS THROUGH OF LEATHER COSTS DETERMINATION REGARDING PROFIT

MARGINS

During the past year the cost of cattle hides has doubled, as revealed by both industry and Government statistics. Corresponding increases have been passed on to leather, processed from cattle hides, which is a major raw material used by the shoe manufacturing and other industries. For the purposes of this order, "leather" means a hide that has gone through its first processing. This extraordinary increase has a major effect on profit margins, because of the increased profits resulting from the application of usual percentage markups to costs which have escalated at an extraordinary rate. The policy of profitmargin maintenance, which is reflected in both the Price Commission's profitmargin rules and its allowable-costincrease rules, is based upon the assumption that the percentage relationship between a firm's costs and its profits and prices is a unique characteristic of each firm. Price increases which materially change that relationship are generally prohibited. When any one or more elements change substantially, over a comparatively short period of time, the characteristic relationship of those cost elements to the other cost elements of the firm is destroyed. Also destroyed with it is the basis for assuming that the historic relationship between those cost elements and the profits and prices of the firm is characteristic of that firm.

In consideration of these conditions, and pursuant to the authority of § 300.60 of the Price Stabilization Regulations of the Commission, the Commission has determined that the profits of the firms concerned should remain as they were in relations to the cost structure prevailing before August 15, 1971, rather than to the increased costs since that time and that such determination is necessary to achieve the overall goal of holding average increases across the economy to a rate of not more than 2.5 percent a year.

Therefore, notwithstanding any provision of Part 300 of the regulations of the Price Commission (6 CFR Part 300), it is hereby ordered that

(1) No manufacturer which sells a product as to which, on the date of this order, the cost of leather constitutes more than 10 percent of the total allowable costs thereof may charge a price for that product which is above the price which could legally be charged for the product under Part 300 had the cost of leather not increased since January 1, 1971, or since the last price increase on the product before November 13, 1971, whichever is later, plus the dollar amount of the cost increase of the product attributable to leather since that last price increase; and

(2) If the cost of the product which is attributable to leather decreases at any time after the date of this order, the manufacturer shall reduce the price of the product accordingly, by dollar amount.

[37 F.R. 12756, June 28, 1972]

[Price Commission Order 7] MANUFACTURERS OF LUMBER AND WOOD PRODUCTS

ALLOWABLE COSTS

The definition of "allowable cost" in § 300.5 of the regulations of the Price Commission (6 CFR 300.5) states that "allowable cost" means any cost not disallowed by the Commission. A variety of methods of determining allowable costs for the manufacture of logs into lumber and wood products have been considered by the Commission.

The Commission has now determined that under present practices respecting allowable costs, persons in the lumber and wood products industries who use logs as a raw material are able to substantially control the level of log costs and, therefore, cost increases in direct materials that they incur in the manufacture of lumber and other wood products, such as plywood.

In consideration of the foregoing and for the purpose of more closely controlling the amounts of allowable price increases in the lumber and wood products industries, it is hereby ordered that the allowable costs for logs costed into production as a direct material shall be calculated as the average cost of the logs, weighted by production volume measured in thousands of board or cubic feet of lumber and wood products, meas

ured over a 6-month period. Allowable increases of direct raw material costs relating to logs shall be determined by comparing the average cost of logs, by species, into production for the 6-month period ending at a present or past point in time with a comparable average cost of logs into production figures for the immediately preceding 6-month period. EXAMPLE: For a price increase (if any) effective June 1, 1972, compare average log costs for the 6-month period ending May 30, 1972, with average log costs for the 6-month period ending November 30, 1971. This calculation can next be done for a price increase (if any) effective July 1, 1972. For the July 1 increase, the period for calculation would be the 6-month period ending June 30, 1972, compared with the 6-month period ending December 31, 1971. [37 F.R. 12525, June 24, 1972]

[Price Commission Order 8]

PERSONS ENGAGED IN THE SALE OF CERTAIN LUMBER AND WOOD PRODUCTS

Pursuant to the amendments to § 101.51 of Part 101 of the regulations of the Cost of Living Council, effective July 17, 1972, the small business exemption of the Council was made inapplicable to any firm which in its most recent fiscal year derived more than $100,000 of its sales or revenues from or by the sale or brokerage of lumber, plywood, veneer, millwork, and structural wood members, and associated wood products such as hard-board and particle board.

The effect of this amendment is to make the price stabilization regulations of the Price Commission in Part 300 of Title 6 of the Code of Federal Regulations applicable to all sales of those products, except as noted above. Thus, the price control provisions will continue to apply to manufacturers, brokers, wholesalers, and retailers who were not exempted under the small business exemption and will automatically and immediately apply, as provided therein, to manufacturers, brokers, wholesalers, and retailers who were covered by the exemption, and to certain new persons who entered the business of selling those products during the period the exemption was in effect, and who meet the gross sales test of § 101.51(b) (2) (vii) of Part 101 of the regulations of the Cost of Living Council.

Under current regulations applicable to retailers and wholesalers (§ 300.13) such a person may charge a price in

excess of the base price whenever its customary initial percentage markup is equal to or less than its customary initial percentage markup before November 14, 1971, or at its option, its customary initial percentage markup during its last fiscal year ending before August 15, 1971, subject in both cases to a profit margin limitation. Also, the posting and base price information requirements of § 300.13 will be applicable.

Under current regulations applicable to manufacturers (§ 300.13) such a person may charge a price in excess of the base price only to reflect increases in allowable costs that it incurred since the last price increase (but not price increases during the period May 2-July 17, 1972, if the person was exempt during that period) or that it incurred after January 1, 1971, whichever was later, and that it is continuing to incur, reduced to reflect productivity gains, and subject to a profit margin limitation. Price Commission Order No. 7 (37 F.R. 12525), effective June 23, 1972, should be consulted regarding allowable costs of manufacturers of lumber and wood products.

Under current regulations applicable to persons engaged in the sale of those products, which persons are neither manufacturers nor wholesalers or retailers (that is, service organizations, such brokers, covered by § 300.14) the rule is the same as that applicable to manufacturers.

In order to provide a reasonable time for persons who were exempt and whose exemption has been removed to make the necessary computations and to take such other action as may be necessary to comply with those applicable requirements, the Price Commission has determined that such compliance may reasonably be achieved by Monday, July 31, 1972. Therefore compliance with those requirements, except as provided below, by that date will be considered to be timely compliance.

The most recent dates for which published price lists for the industry are generally available are July 14, 1972, for Crow's Weekly Letter and Random Lengths and July 15, 1972, for the Hardwood Market Report. Although some persons may have sold at prices slightly above or below the prices contained in the lists published for that date, the general availability of the lists for that date, and the need for some uniform base line for determining the prices that were ac

tually in effect, makes it appropriate to use the prices in that list as the prices in effect.

It is therefore ordered, That, during the period beginning on July 20, 1972, and ending at the close of July 30, 1972, no wholesaler or broker may sell a product covered by the first paragraph of this order at a price exceeding the price for that product stated in the July 14, 1972, list published by Crow's Weekly Letter or Random Lengths, whichever is higher, in the case of prices stated as wholesale prices. However, in the case of prices stated in Crow's Weekly Letter, Random Lengths, or the Hardwood Market Report as mill prices, a wholesaler or broker may add its customary initial percentage markup, not to exceed 5 percent.

It is further ordered, That no retailer may, during that period, sell such a product at a price exceeding its acquisition cost plus its customary initial percentage markup.

After that period, all prices shall be governed by the applicable provisions of Part 300.

An additional facet of the renewed applicability of Price Commission regulations to the formerly exempted activities concerns the application of the profit margin limitations. The Commission is considering this matter and will issue an appropriate amendment to the regulations or a further order with respect thereto within a short time.

[37 FR. 14338, July 18, 1972, as amended at 37 F.R. 14647, July 21, 1972]

[Price Commission Order No. 9] MANUFACTURERS OF COFFEE AND COFFEE PRODUCTS

LIMITATIONS ON PRICE INCREASES Over the past 2 months there has been a rapid surge of approximately 20 percent in the world market price of green coffee beans. This rapid increase threatens to push the wholesale and retail prices of coffee and coffee products up significantly, and is thus of serious concern in connection with attainment of the overall goals of the Economic Stabilization Program.

This extraordinary increase in green coffee bean prices has a major effect on profit margins, because of the increased profits resulting from the application of usual percentage markups to costs which have escalated at an extraordinary rate. The policy of profit-margin maintenance, which is reflected in both the

Price Commission's profit-margin rules and its allowable-cost-increase rules, is based upon the assumption that the percentage relationship between a firm's costs and its profits and prices is a unique characteristic of each firm. Price increases which materially change that relationship are generally prohibited. When any one or more elements change substantially, over a comparatively short period of time, the characteristic relationship of those cost elements to the other cost elements of the firm is destroyed. Also destroyed with it is the basis for assuming that the historic relationship between those cost elements and the profits and prices of the firm is characteristic of that firm.

Under § 300.51 of the Price Stabilization Regulations of the Commission, a prenotification firm that customarily prices an item in a manner immediately responsive to volatile prices of raw material used in that item may, to the extent authorized by the Commission, increase (and also must decrease) the price of that item to reflect the volatile price fluctuations of such raw materials, without carrying out the normal prenotification requirements. Certain prenotification firms were given permission by the Price Commission to use this volatile pricing rule on the basis that green coffee bean prices met the criteria set forth in § 300.51(f). However, such Price Commission authority has been subjected to varying interpretations, which, especially in light of the rapid increase in the world market price of green coffee beans, has resulted or potentially will result in nonuniform treatment of calculation of increases in prices of coffee and coffee products in excess of their base prices.

In consideration of these conditions, and pursuant to the authority of § 300.60 of the Price Stabilization Regulations of the Commission, the Commission has determined that because of rapid increases in the world market price of green coffee beans and confusion with respect to domestic pricing of coffee and coffee products, it is necessary to impose more stringent control with respect to the price of coffee and coffee products in order to achieve the goals of the Economic Stabilization Program.

To this end, any increase in price of coffee or any coffee product over the base price of such coffee or coffee product will be limited to reflect no more than the dollar amount of any cost increase