en a rate increase is proposed for use in more than one State, of each proed rate increase in excess of 5 percent which affects $500,000 or more of its nual revenues under the existing rate. Each HMO submitting a notice under s section shall certify to the Cost of Living Council and the State regulatory ency that the proposed rate increase conforms to the requirements of §§ 150.536 1 150.537. The certification must be signed by the chief executive officer of › prenotifier or by an individual to whom he has delegated that authority. A y of the delegation must be filed with the Cost of Living Council.

50.539 Certification by State regulatory agency.

A State regulatory agency may agree, in writing, with the Cost of Living Counto certify that the rate increases of which it has received prenotification under 150.538 are or are not in compliance with §§ 150.536 and 150.537. Each agency tering into such agreement with the Cost of Living Council shall furnish its rtification to the Council (with a copy to the HMO) within 20 days after it ceives the notice. A certification by an agency under this section is prima facie idence that the proposed rate increase is or is not in compliance with §§ 150.536 d 150.537.

Whenever a prenotifier cannot obtain a certification of a rate increase from a ate regulatory agency in accordance with § 150.539 because:

(a) There is no State regulatory agency:

(b) The State regulatory agency concerned has not agreed to furnish certificaon under that section; or

(c) The State regulatory agency did not act upon the filing within the period quired under this section; the prenotifier shall immediately notify the Cost of iving Council that it cannot obtain the certification and may request the Council act upon the certification filed with it under § 150.538.

150.541 Federal Employees Health Benefits Law.

The Cost of Living Council designated the U.S. Civil Service Commission to ct as certifying agent for contracts of HMO's under the Federal Employees [ealth Benefits Law. Each prenotifier that proposes to increase rates under a ederal Health Benefits contract by more than 5 percent shall file notice thereof with the Cost of Living Council that the increase is or is not in compliance with 150.536 and that certification is prima facie evidence of compliance or nonompliance. A rate certified by the Civil Service Commission as being in complince may go into effect on any date, specified by that Commission, that is at least 0 days after the date of the certification, and at least 30 days after the date of renotification.

150.542 Cost of Living Council actions.

(a) With respect to any rate increase certified by a State regulatory agency inder § 150.539, or self-certified by a prenotifier, the Cost of Living Council may, within 30 days after the State regulatory agency received the prenotification, or within 30 days after the Cost of Living Council receives the prenotification under 150.538, take one or more of the following actions:

(1) Require the HMO to furnish additional information regarding the increase. (2) Delay the effective date of the increase pending further Council action. (3) Suspend all or part of the effect of the increase, pending further action by the Cost of Living Council or by the State regulatory agency.

(4) Limit, refuse, rescind, reduce, or modify the increase.

(b) If the Cost of Living Council does not act upon a request under this section before the end of the thirtieth day as described above, the increase may go into effect. However, in any case in which that period would otherwise end on a Saturday, Sunday, or Federal holiday, it will end at the close of the next succeeding workday. However, if after implementation of the rate increase the Council finds that the increase is inconsistent with the rules of this subpart or unreasonably inconsistent with the goals of the Economic Stabilization Program, it may issue an order modifying, deferring, suspending or disapproving the rate increase. A prenotification to a State regulatory agency which has been certified by that agency as being not in compliance with $$ 150.536 and 150.537 may not be placed into effect unless the written approval of the Cost of Living Council has been granted.

$ 150.543 HMO rates subject to State laws.

Approval of an HMO rate increase or rating formula under these sections does not authorize the use of a rate or formula in contravention of any applicable State law.

$ 150.544 Reporting.

Each HMO shall file an annual report with the Cost of Living Council with copy to the appropriate State regulatory agency at the time it normally releas its annual reports, but in any event no later than 120 days after the end ofte fiscal year. This report shall include information specified by the Cost of Livi Council on a form to be prescribed by the Council.

§ 150.545 HMO providers of health care.

(a) An HMO provider of health care that is an acute care hospital is limit to:

(1) In the provision of outpatient care, an increase in its charges of 6 peres per procedure per year;

(2) In the provision of inpatient care:

(i) An increase in its charges of 7.5 percent per admission per year. if t contract between the HMO and the acute hospital is on a percentage of charge : fixed charge per admission basis; or

(ii) An increase in its charges of 9 percent per capita per year, if the contr is on a per capital basis; or

(iii) An increase in its inpatient operating expenses of 9 percent per cap per year if that acute care hospital is owned or operated by the HMO. (b) An HMO provider of health care that is a medical practitioner is limite. to:

(1) An increase of 4 percent per year in his aggregate weighted price, onputed on the preceding calendar year's billings, for all services and property i the contract between the HMO and the practitioner is on a fee-for-service bass:

or

(2) An increase in its charges of 6.2 percent per year, if the contract is fixed dollar amount or on a per capita basis.

(c) An HMO provider of health care that is a long term care institution b limited to an increase of 6.5 percent per year in its average realized revenues per diem.

(d) An HMO provider of health care is excluded from the limitations of pars graphs (a), (b), and (c) of this section if it is providing health care for a HMO that is a new HMO.

[FR Doc. 73-23874 Filed 11-6-73; 10:20 am]

[From the Federal Register, Nov. 16, 1973]

TITLE 6-ECONOMIC STABILIZATION

CHAPTER I-COST OF LIVING COUNCIL

[Phase IV Price Ruling 1973-7]

APPENDIX-PHASE IV PRICE RULINGS

Rulings and Interpretations

Facts. During Phase IV, rulings and interpretations have been issued by the Cost of Living Council. Section 155.2 of the Phase IV price procedures defines a ruling as "an official interpretation by the General Counsel of the Cost of Living Council, published in the FEDERAL REGISTER, which applies the regulations and guidelines of the Cost of Living Council to a specified set of facts." An interpreta tion is defined in the same section to mean "a written statement issued by a di trict director in response to an inquiry by an individual or an organization, whic applies to the particular facts involved the principles and precedents previously

announced by the Cost of Living Council."

Issue. What is the nature and effect of Cost of Living Council Phase IV price

rulings and interpretations?

are (a) of general applicability, (b) illustrative of a general principle, or e Ruling. Under 6 CFR 155.161 it is explained that Cost of Living Council rulings of assistance to tht public in applying the Act, regulations and guidelines to a specific situation. Because rulings are of general applicability, their issuance cannot be considered an adverse action in any particular case from which at

Since rulings are also explanatory in nature, their effectiveness relates back to the effective date of the regulations or guidelines they explain. However, when

- rulings cause a person to change a business practice previously followed in A faith reliance on the presumed intent of the regulations, the Cost of Living neil shall, in the course of determining whether that person has violated the ilations, take into account the extent to which that person could reasonably be ned to have prior notice of the interpretation contained in the ruling. terpretations on the other hand, are issued only where a determination can made on the basis of established rules as set forth in existing regulations, lelines, rulings, or court decisions. Written requests for interpretation should iled with the appropriate key IRS District Office pursuant to § 155.21 (b) (7) will receive initial action by the Cost of Living Council pursuant to § 155.22 or the Internal Revenue Service pursuant to the delegation of authority tained in paragraph (1)(k) of Cost of Living Council Order No. 37. Any son who receives an adverse interpretation from the Council may seek resideration under Subpart F of Part 155.

WILLIAM N. WALKER,

PROPOSED PRICE CONTROLS FOR PETROLEUM INDUSTRY

Notice is hereby given that, pursuant to authority of Executive Orders 11695 d 11730, the Cost of Living Council, as part of its continuing review of the opation of price controls with respect to the petroleum industry, is considering › adoption of certain amendments to the Phase IV petroleum regulations to be ective November 30, 1973.

A major change is elimination of the refiner-researcher rule. Pursuant to this endment, the refiner would be required to include all product cost ineases in the $150.356 formula for allocation of increased product costs. This ould prevent further divergence in the base prices for a single covered product ich have resulted from the dissimilar calculation of increased costs solely as function of whether a firm commingles an imported product with domestic oduct.

For this reason, the reseller rule § 150.359 has been amended to exclude refinersellers, and the refiner's rule § 150.355 has been amended to apply to all sales a refiner. The terms "retiner-reseller" and "refiner-retailer" would no longer be erative and have been eliminated from the definitions in § 150.352. The proposed amendment to § 150.355 contains a simplified restatement of the rmula for the allocation of non-product cost increases which was initially prosed by the Council in its October 15, 1973 notice of proposed rule-making. The rinula translates the percentage of prenotified non-product cost increase "F", aparing in item 24 column (f) Part IV of CLC-22 into a dollar amount of costs to · allocated among the special products and other covered products. These costs e computed on the basis of projected sales for a twelve period "e". For special oducts (gasoline, No. 2 heating oil and No. 2-D diesel fuel), the cost increase is vided by the estimated twelve month sales volume "V" of that special product reflect the dollar amount "d" by which the base price to each class of puraser may be increased. For non-special covered products a total dollar amount 'cost "D" is computed, and may be allocated to any of the non-special products any amounts provided any increase is equally applied among all classes of urchasers of the particular product.

The purpose of this formula is to assure that non-product cost increases preotified on a product line basis are allocated to the products in that product ne in a manner similar to the allocation of product cost increases in § 150.356. he amendments proposed for $150.356 are made in response to comments reived from the industry, and specifically address the request by the smaller fineries to simplify and clarify the formula for allocation of increased product osts. Among the significant modifications in the general formula is the change

to total sales volume from total sales revenues for use in allocating the incre costs of crude petroleum. This change is proposed in order to more accura reflect the economies of increased product costs on particular products. Simil the levels of distribution, previously reflected by the symbol "j" have be eliminated in order to permit normal price movement between levels of distri tion and avoid the possible development of pricing distortions.

Also, No. 2-D diesel fuel and No. 2 heating oil are now represented by 1 in the formula. Consolidation of these two basically interchangeable produ for purposes of the allocation of increased product costs is designed to als similar price movement for these similar products. For the symbol “Y”, in p of the current complex computation required,a refiner would have the option d establishing the cost of purchased products as either the lowest price at or ab which 10% of the product was priced in transactions with wholesalers in My 1973 or a cost of product accounting figure if approved by the Council.

Other technical changes in the formula are also proposed. A separate for for non-special products is provided to more accurately reflect that a total d amount is calculated for such products. A new variable "G" is placed in b formulas which reflects the unused costs which have been carried over fr previous months pursuant to paragraph (d) of § 150.356. A variable "H" in formulas reflects the increased costs allocated to special products which pursu to paragraph (c) (1) (ii) a refiner elects to use for non-special products. Par graph (d) of § 150.356 is amended to make clear that if in any month a refr adds an "H" factor to the formula for non-special products, any amount not > ceived in sales of non-special products may only be carried over and applied sales of non-special products in a subsequent month.

Adjustments have been made to the definitions in § 150.356, in order to for: on combined petroleum products costs--both crude petroleum and purchased pe leum products. Crude petroleum costs are re-defined to include both imported in domestic crude costs. Thus, the subscript "k". which previously identified t origin of the product, has been eliminated from the allocation formula as no long necessary. In further recognition of all product cost ingredients, the definit of crude petroleum has been broadened to include unfinished oils used in fining.

A new definition "increased product costs" consolidates all increased est over the May 15, 1973, cost level and thereby eliminates any need to impute the cost of petroleum purchased from a different source if the firm purchased the product from any source in May 1973. If a firm did not make any purchases a particular covered product in May 1973, the cost from which increases 27 measured shall be imputed as the lowest price at or above which at least 16 of that product was priced by the refiner during the month of May 1973.

Products purchased by the refiner, whether imported or domestic are describe by the term "petroleum product" and denote covered products, including cover natural gas liquids which the refiner buys, but which are not unfinished input" refinery operations, whether or not these products are commingled with produc refined by the refiner.

A change in the "landed cost" definition makes it clear that only transportati costs to the domestic entry port are part of "landed costs." Similarly, the det tion of "cost of crude petroleum" is amended to clarify that in no circumstan does this include domestic transportation costs.

Finally, in order that the Council may more closely monitor the increased pro uct costs a refiner uses to increase May 15, 1973, selling prices, monthly report will be required.

Interested persons are invited to participate in the rulemaking by submitti written data, views or arguments with respect to the proposed regulations forth in his notice to the Executive Secretariat, Cost of Living Council, 20 M Street NW., Washington, D.C. 20508.

Comments should be identified on the outside envelope and on the documen submitted with the designation "Proposed Phase IV Petroleum Amendments and should be organized so that those comments dealing with a particular r are on a separate page from those dealing with other rules. Ten copies shok be conside by the Council before final action is taken on the proposed regulations. The p posed regulations may be changed in light of the comments received. All ments received in response to this notice will be available for examination and copying by interested persons at the Cost of Living Council, 2000 M Street NW. Washington, D.C., 20508, during the hours of 9 am and 5 pm, Monday through

Friday.

onomic Stabilization Act of 1970; as amended, Pub. L. 92-210, 85 Stat. 743; Pub. L. 28, 87 Stat. 27; E.O. 11695, 38 FR 1473; E.Ó. 11730, 38 FR 19345; Cost of Living ncil Order No. 14, 38 FR 1489.)

n consideration of the foregoing, it is proposed to amend Part 150 of Title 6 he Code of Federal Regulations as set forth below. ssued in Washington, D.C., on November 15, 1973.

JAMES W. MCLANE,

Deputy Director, Cost of Living Council.

50.352 [Amended]

Section 150.352 is amended by deleting the definitions of "refiner-reseller" "refiner-retailer".

Section 150.355 is revised to read as follows:

a) Applicability. This section applies to each sale of a covered product which urchased or refined by a refiner.

b) Rule. A refiner may not charge to any class of purchaser a price in excess he base price of that covered product except to the extent permitted pursuant the provisions of paragraphs (c) through (k) of this section.

c) Price increases. (1) A price in excess of the base price of an item in a duct line may be charged only to recover on a dollar-for-dollar basis those increases in allowable costs that have been incurred with respect to the duct line since the period for determining base cost and which the refiner connes to incur.

2) For the purpose of determining whether net allowable costs have been urred which permit the charging of a price in excess of the base price, base ts shall be compared with current costs. Current costs which exceed base costs y be used to justify a price in excess of the base price. "Allowable costs" under s section mean non-product costs attributable to refining operations under customary accounting procedures generally accepted and historically and sistently applied by the firm concerned and exclude any costs attributable narketing operations.

d) Application of price increases. (1) A firm may not increase prices above se prices pursuant to this section until it complies with the prenotification rerements of Subpart H of this part.

2) A firm which is authorized to charge a prenotified percentage price inase pursuant to Subpart H of this part with respect to a product line by tue of cost justification determined in accordance with this section, shall apply at percentage price increase in the following manner: (i) A refiner may arge a price in excess of the base price of a special product which reflects that t of the total allowable percentage price increase with respect to the product e allocable to sales of that special product: Provided, That (a) The amount the increase above the base price is calculated by use of the formula in paraph (d)(3)(i) of this section; (b) the amount of increased costs allocable that special product is equally applied to each class of purchasers; and (c) increase above the base prices may not be implemented more than once in y calendar month and must be implemented on the same date that increased duct costs are added to May 15, 1973 selling prices to compute base prices purant to paragraph (g) of this section.

(ii) A refiner may charge a price in excess of the base price of its covered oducts other than special products which reflects that part of the total allowe percentage price increase with respect to the product line allocable to sales those products or sales of special products not otherwise allocated pursuant paragraph (d) (2) (i) of this section: Provided, That, (a) the amount of rease above the base price is calculated by use of the formula in paragraph ) (3) (ii) of this section and (b) the amount of increased costs allocated to a wered product other than a special product is equally applied to each class purchaser.

(3) General formulae. (i) For special products (i=1 and i=2):

S&F di= Vi

ii) For covered products other than special products (i=3):

D=S; F