Part 155 establishes price procedures to be utilized in proceedings involving price matters before the Cost of Living Council and the Internal Revenue Service in Phase IV of the Economic Stabilization Program. In general, Part 155 embodies procedures previously utilized in earlier phases of the program and combines them into one part. The use of the term "Council" throughout the part encompasses actions by and appearances before both the Cost of Living Council and the Internal Revenue Service.

In general, this part provides that firms should file their submissions in duplicate with the key IRS District Office which serves the district in which their corporate headquarters are domiciled. Exceptions to this rule are insurers who file with the National Office of Internal Revenue Service, and institutional and noninstitutional providers of health services who file with the Cost of Living Council. Initial actions and reconsideration of such actions will be made by the Council or IRS in accordance with Cost of Living Council Order No. 37, 38 F.R. (August 1973).

Subpart A of part 155 contains general provisions embodying, with only minor technical changes, Part 305 of the Price Commission regulations. Section 155.11, Instructions to applicants, was previously included in Part 401 of the Internal Revenue Service regulations in this Title.

Subpart B, Prenotifications, reports, interpretations and other matters, is new. It establishes procedures governing initial actions of the Council with respect to all filings required or permitted under Part 150 of this chapter except for requests for exceptions, exemptions and reclassifications. Subparts C, D and E deal with exceptions, exemptions and reclassifications, notices of probable violation and remedial orders, and generally parallel Phase II Price Commission and Cost of Living Council Procedures. Subpart F is a new subpart combining all requests for reconsideration of deci

sions issued under Subparts B, C, D and E under a single procedure. Subpart G, which concerns compromise of civil penalties, sets forth procedures which are the same as those employed by the Price Commission during Phase II. Subparts H and I, which relate to petition and comment on rulemaking and published rulings, respectively, are again similar to Phase II rules.

Subpart J sets out the range of Council responses to a violation of the profit margin limitations established for Phase IV in Part 150. The provisions are essentially those provided in Phase II, with the exception of § 155.181 dealing with custom products. That section provides relief for a firm which exceeds its base period margin in 8 fiscal year during which it sells a custom product or service, and which does not qualify for the Special Rule of § 155.11(d) (iii). That Special Rule provides that charging a price for a custom product or service does not subject a firm to a profit margin limitation during its first fiscal year ending in Phase IV when the firm derives less than $10 million or less than 1% of its sales or revenues for that fiscal year, whichever is greater, from the sale of custom products and custom services. When a firm does not qualify for this de minimis provision, and therefore is required to take remedial action under this subpart, Subpart J provides the following rules. Where no prices have been charged above base levels for noncustom products and noncustom services, only an amount that bears the same ratio to the total profit margin overage as sales of custom products and services bears to total sales must be disgorged. Where prices in excess of base levels have been charged with respect to noncustom products and services, and the profit margin overage exceeds the revenues derived from the price increases above base levels for noncustom products and services, a firm must disgorge the revenue derived from charging prices above base levels with respect to

noncustom products and services plus a portion of the remaining profit margin overage equal to the ratio that custom products and services sales bear to total sales; and if the profit margin overage is less than the revenues derived from price increases above base levels, the firm is required to disgorge the full amount of the profit margin

overage.

The purpose of Subpart K is to add to the Phase IV regulations the "repurification" procedures that were available under Special Regulation No. 1 issued during Phase II. Under the "repurification" procedure, a firm which becomes subject to the profit margin limitation by virtue of having raised a price above the base level may elect to eliminate those price increases and the revenues derived there from and thus return to the position of a firm which has not raised prices to the level which triggers the profit margin limitation. The remission of revenues must be made in the following

manner:

(1) If the ultimate consumers who purchased the goods and services prices above the "base level" are reasonably identifiable, refunds must first be made to them.

(2) To the extent that these ultimate consumers are not reasonably identifiable, revenues must be remitted in the form of future sales at prices below the base level of the same goods and services previously sold at prices above the base level.

However, in order to avoid a profit margin violation a firm which wishes to repurify must complete all action to remit revenues before the end of the fiscal year. This procedure is available to a firm which increases prices above the base level and completes action within the same fiscal year. It also is available to a firm which raises a price or prices above the base level in a previous fiscal year (without exceeding its base period profit margin for that fiscal year) and which continues to charge the increased price or prices in an ensuing

fiscal year. To avoid the profit margin limitation in the ensuing fiscal year, the firm must return prices at least to the base levels and take appropriate steps to remit revenues derived in that ensuing fiscal year from the price increases which were previously put into effect. In any event, a firm which completes the steps listed above becomes subject to the profit margin limitation once again if it subsequently charges a price in excess of the "base level."

Since Executive Order No. 11730 provides that Phase IV of the Economic Stabilization Program will begin on 11:59 p.m., e.s.t., August 12, 1973 and since the Phase IV substantive regulations, Part 150, will be effective on that date, it is essential that the procedures governing appearances before and proceedings by the Cost of Living Council also be effective on 11:59 p.m., e.s.t., August 12, 1973. Consequently, in order to give immediate guidance and information to the public with respect to Phase IV price procedures, the Council finds that publication in accordance with usual rulemaking procedures is impractical and that good cause exists for making these regulations effective in less than 30 days. Interested persons may submit written comments regarding these regulations. Communications should be addressed to the Office of General Counsel, Cost of Living Council, 2000 M Street N.W., Washington, D.C. 20508.

(Economic Stabilization Act of 1970, as amended, Pub. L. 92-210, 85 Stat. 743; Pub. L. 93-28, 87 Stat. 27; E.O. 11695, 38 F.R. 1473; E.O. 11730, 38 F.R. 19345; Cost of Living Council Order No. 14, 38 F.R. 1489.)

In consideration of the foregoing, Part 155 is added to Chapter I of Title 6 of the Code of Federal Regulations, effective 11:59 p.m., e.s.t., August 12, 1973.

Issued in Washington, D.C. on August 9, 1973. JOHN T. DUNLOP,

Director, Cost of Living Council.

SUBPART A-GENERAL PROVISIONS

§ 155.1 Purpose and scope.

(a) This part establishes procedures to be utilized in proceedings before the Cost of Living Council and the Internal Revenue Service relating to price stabilization matters under Part 150 of this chapter. The word "Council" used throughout this part encompasses actions by and appearances before both agencies in economic stabilization matters. Cost of Living Council Order No. 37, 38 F.R. (August 1973) contains information relating to the division of stabilization functions between the Council and IRS. More specifically, this part contains procedures for:

(1) Initial actions with respect to prenotifications, reports, interpretations and other matters; (2) Initial action on requests for exceptions; (3) Initial actions with respect to requests for exemption and reclassification;

(4) Issuance of notices of probable violation and remedial orders;

(5) Requests for reconsideration;

(6) Compromise of civil penalties;

(7) Petition and comment on rulemaking; (8) Published rulings;

(9) Profit margin limitations: Council actions;

and

(10) Profit margin repurification.

(b) Procedural rules contained in Parts 105, 130, 140, 305 and 401 of this title continue in effect for the purpose of disposing of matters subject to those parts.

(c) Nothing in this part extinguishes or otherwise modifies present [August 13, 1973] procedures utilized by the Council in pay matters.

(d) When any small business enterprise within the meaning of section 214 (a) of the Economic Stabilization Act of 1970, as amended, files a request, application or appeal under the provisions of this part it will be accorded expedited handling by affording it priority on the dockets maintained by the Council for the orderly conduct of its busi

ness.

§ 155.2 Definitions.

As used in this part, except where the context indicates otherwise, the term:

"Act" means the Economic Stabilization Act of 1970, as amended.

"Act or transaction" shall include a series or combination of such acts or transactions.

"Adverse action" means an action issued by the Council which is contrary to the position asserted by the applicant.

"Council" means the Chairman of the Cost of Living Council established by Executive Order 11615 (3 CFR, 1971 Comp., p. 199) and continued under the provisions of Executive Order 11695, or his delegate (including IRS).

"District conferee" means a person designated by a district director to process and decide any request for reconsideration referred to in this part. "District director" means a district director of the Internal Revenue Service or his delegate.

"District office" means a district director's office and such local offices within his district as a director may designate. "Key District office" means a district office specially designated by the Assistant Commissioner of Internal Revenue (Stabilization) to handle particular stabilization matters.

"Exception" means a waiver in a particular case of the requirements of any rule, regulation, or order, issued pursuant to the Act.

"Exemption" means a general waiver of the requirements of all rules, regulations, and orders issued pursuant to the Act.

"Firm" has the same meaning as in § 150.31 of this chapter.

"Hearing Officer" means a person appointed by the Director of the Cost of Living Council or his delegate to conduct a hearing.

"Information letter" means a statement issued by a district director which calls attention to a well-established interpretation or principle of the regulations or guidelines of the Cost of Living Council without applying it to a specific set of facts. An information letter may be issued when the nature of the request from the individual or the organization suggests that it is seeking general information or where the request does not meet all the requirements of § 155.11, and it is believed that such general information will assist the individual or organization.

"Interpretation" means a written statement issued by a district director in response to an inquiry by an individual or an organization, which applies to the particular facts involved the principles and precedents previously announced by the Cost of Living Council. Interpretations are issued only where a determination can be made on the

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