pursuant thereto have been made; (C) such person is not a part of or an affiliate of the business of any other person eligible for a license for the article(s) for which application for license is made, and is not an associate of the business of such other person;

(ii) A list of the person(s) holding an ownership interest of 5 percent or more in the applying firm (if other than an individual) showing the percent of ownership held by each such person, and;

(iii) In addition, in the case of application for license(s) to enter any article(s) under Groups II through V (cheese), documentary evidence that such person has made at least two commercial entries of cheese or cheese products together totaling at least 10,000 pounds, as owner of the product and importer of record, or is listed in the most current issue of "Dairy Plants Surveyed and Approved for USDA Grading Service" and has manufactured in his or her own plant 100,000 pounds or more of cheese or cheese product within the United States, during the 12 month period ending August 1 of the year preceding that for which application for license is being made, including, when required, proof of payment in said person's own name for the said entered cheese or cheese products and corresponding duties.

(3) In determining whether persons or legal entities having no direct relation are, for purposes of this regulation, affiliated, the following rules of attribution apply:

(i) Members of a family: Unless established otherwise to the satisfaction of the Licensing Authority, an individual shall be considered as owning the stock or other ownership interest owned, directly or indirectly, by or for (A) a spouse (other than a spouse legally separated from the individual under a decree of divorce or separate maintenance), and (B) children, grandchildren, parents, brothers and sisters.

(ii) Attribution from partnerships and estates: Stock or other ownership interest owned, directly or indirectly, by or for a partnership or estate shall be considered as owned proportionately by its partners of beneficiaries.

(iii) Attribution from trusts. (A) Stock or other ownership interest owned, directly or indirectly, by or for a trust (other than an employees' trust) shall be considered as owned by its beneficiaries in such trust.

(B) Stock or other ownership interest owned, directly or indirectly, by or for any portion of a trust of which a person is considered the owner under Subpart E of Part I of Subchapter J of the Internal Revenue Code (relating to grantors and others treated as substantial owners) shall be considered as being owned by such person.

(iv) Attribution from corporations. If five percent or more in value of the stock or other ownership interest in a corporation is owned, directly or indirectly, by or for any person, such person shall be considered as owning the stock or other interest owned, directly or indirectly, by or for such person.

(v) Attribution to partnerships and estates. Stock or other ownership interest owned, directly or indirectly, by or for a beneficiary of a trust (other than an employees' trust) shall be considered as owned by the trust, unless such beneficiary's interest in the trust is a remote contingent interest. For purposes of this clause, a contingent interest of a beneficiary in a trust shall be considered remote if, under the maximum exercise of discretion by the trustee in favor of such beneficiary, the value of such interest, computed actuarially, is five percent or less of the value of the trust property. Stock or other ownership interest owned, directly or indirectly, by or for a person who is considered the owner of any portion of a trust under Subpart E of Part I of Subchapter J of the Internal Revenue Code (relating to grantors and others treated as substantial owners) shall be considered as owned by a trust.

(vi) Attribution to corporations. If five percent or more in value of the stock or other ownership interest of a corporation is owned, directly or indirectly, by or for any person, such corporation shall be considered as owning the stock or other ownership interest owned, directly or indirectly, by or for such person.

(vii) Options. If any person has an option to acquire stock or other ownership interest, such stock or other ownership shall be considered as owned by such person. For purposes of this paragraph, an option to acquire such an option, and each one of a series of such options, shall be considered as an option to acquire such stock or ownership interest.

(viii) Operating Rules-(A) In general. Except as provided in paragraph (b)(3)(viii)(B) and (C) of this section, stock or other ownership interest constructively owned by a person by reason of the application of paragraph (b)(3) (i), (v), (vi), or (vii), shall for purposes of applying paragraph (b)(3) (i), (v), (vi), and (vii) be considered as actually owned by such person.

(B) Members of a family. Stock or other ownership interest constructively owned by an individual by reason of the application of paragraph (b)(3)(i) of this section shall not be considered as owned by him or her for purposes of again applying paragraph (b)(3)(i) of this section in order to make another the constructive owner of such stock or ownership interest.

(C) Partnerships, estates, trusts, and corporations. Stock or ownership interest constructively owned by a partnership, estate, trust or corporation by reason of the application of paragraph (b)(3) (v) and (vi) of this section shall not be considered as owned by it for purposes of again applying paragraph (b)(3) (ii), (iii) and (iv) of this section in order to make another the constructive owner of such stock or ownership of interest.

(D) Option rule in lieu of family rule. For purposes of this paragraph, if stock or other ownership interest may be considered as held by an individual under paragraph (b)(3) (i) or (vii) of this section, it shall be considered as held by him under paragraph (b)(3)(viii) of this section.

(4) Evidence and certification required to establish the nonhistorical eligibility of a person making application to receive a quota share for a given quota year shall not be approved by the Licensing Authority if postmarked before August 1 or later than November 1 of the year preceding the quota year for which the license to

import is requested, except as may otherwise be provided by notice published in the FEDERAL REGISTER.

(c) Supplementary licenses. (1) Supplementary license eligibility for specific articles listed in Appendix 2 will be established (i) by submission of documentary evidence acceptable to the Licensing Authority as required under paragraph (b) (2) and (4) of this section or; (ii) by application by a person having historical eligibility under paragraph (a) (2) and (3) of this section for the article from the country of origin for which such person is seeking supplementary license or (iii) by being endorsed in writing by the government of the supplying country as a preferred importer, with such endorsement being sent directly from the government of the supplying country through appropriate channels to the Licensing Authority and, beginning with the 1981 quota year, by meeting one or both of qualifications (c)(1) (i) and (ii) of this section. Endorsement by the government of a supplying country of a person who is known by the Licensing Authority to have at any time violated any provision of this or any other regulation or law of the United States applicable to international commerce will not be recognized by the Licensing Authority.

(2) Notwithstanding paragraph (b)(4) of this section, certification required to establish supplementary eligibility for license for TSUS Appendix item 950.10D from "Other Countries" for 1981 must be postmarked no earlier than January 22, 1981 and no later than February 11, 1981. Importers who have already submitted supplementary license certification during the application period which ended November 1, 1980, may simply request license for this article by submitting a letter without further documentation postmarked as required in this paragraph.

(d) Continuation of eligibility. (1) The historical eligibility of a person to receive a license for a quota share established under paragraph (a) of this section will be continued for subsequent quota years unless surrendered in accordance with paragraph (d)(4) of this section or suspended or revoked pursuant to § 6.29: Provided, That, no

such licenses shall be issued to any licensee unless such licensee, no later than 60 days prior to the beginning of each subsequent quota year submits to the Licensing Authority a notarized certification sworn to by the licensee under the penalty of perjury stating that such licensee maintains a bonafide business office within the United States and has a person, principal or resident agent upon whom service of judicial process may be made; that such licensee has been the sole user of his or her license(s); that such licensee has not permitted his or her license(s) to be used by or for any other person; that such licensee has not entered any article(s) under license(s) issued to any other person(s); and, that such licensee will enter only for his or her own entrepreneurial use the articles for which he or she will be issued license(s) during the next quota year.

(2) The nonhistorical or supplementary eligibility of a person established under paragraph (b) or (c) of this section to enter a quota share of an article for a particular quota year will expire at the end of such quota year. Eligibility for each ensuing year, if desired, must be established by following the procedures set forth in paragraph (b) or (c) of this section.

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(3) Any licensee who fails to enter at least 85 percent of a particular nonhistorical or supplementary quota share for any article for a given year will be ineligible to have such nonhistorical or supplementary quota share newed for the next quota year, unless such licensee notifies the Licensing Authority in a letter postmarked no later than October 1 of the quota year for which his license is valid, of his intentions to enter less than 85 percent of his quota share and surrenders to the Licensing Authority that portion of the quota share which he or she does not intend to use. If, after surrendering a portion of a nonhistorical or supplementary quota share of an article, a licensee fails to import 85 percent or more of the unsurrendered portion of the quota share, such licensee will be ineligible to receive a license to import a quota share of such article in the next quota year, unless the licensee establishes that he or she was unable to enter such article due to

reasons acceptable to the Licensing Authority. Furthermore, failure to enter more than 85 percent of the total of a particular nonhistorical or supplementary quota share combined with any reallocated portions added to such original share (despite more than 85 percent utilization of the original share) will result in the licensee being ineligible for a reallocated portion for that item in the following year.

(4) A historical licensee may elect to permanently surrender his or her historical eligiblity for an ariticle in Appendix 1 and receive a nonhistorical quota share for the same article from the same country of origin in the next quota year. If done, said licensee's nonhistorical eligibility will be deemed to have been in effect in the year preceding the year for which nonhistorical application is made giving said licensee the priority accorded under § 6.26(b)(3)(i) of this part

(e) Transfer of eligibility. (1) Upon receipt of documentary evidence acceptable to the Licensing Authority that the entire dairy products business covered by this regulation of a person who has established historical eligibility for a quota share has been sold or otherwise transferred (a complete transfer of total assets, binding on all parties-in-interest) to a person who is assuming the operation of the entire business involving dairy products covered by this regulation, the Licensing Authority will recognize the successorin-interest as having eligibility for such quota share: Provided, That, in the event of the merger of the businesses of two or more persons, the successor-in-interest, with the persons or firms for which said person is successor-in-interest and said person's affiliates and associates, will be considered only as one person for the purpose of determining nonhistorical or supplementary license eligibility for quota shares. Eligibility for nonhistorical or supplementary quota shares may not be transferred.

(f) The Licensing Authority may, on an annual basis, require submission of signatures of the person(s) authorized to sign for a licensee.

(Sec. 3, Pub. L. 80-897, 62 Stat. 1248, as amended (7 U.S.C. 724); Secs. 701, 703, Pub.

L. 96-39, 93 Stat. 268, 272 (19 U.S.C. 1202 note); Part 3 of the appendix to the Tariff Schedules of the United States (19 U.S.C. 1202))

[44 FR 75596, Dec. 20, 1979, as amended at 45 FR 33589, May 20, 1980; 45 FR 58333, Sept. 3, 1980; 46 FR 1660, Jan. 7, 1981]

§ 6.26 Allocation of annual quota and issuance of licenses.

(a) Historical licenses. (1) Subject to paragraph (d) of this section (concerning temporary reduction of historical quota share), and paragraph (d)(1) of § 6.25 (concerning continuation of eligibility), a person, or his or her successor-in-interest, eligible to receive a historical quota share for an article in Appendix 1 will receive his or her basic annual allocation plus a prorated share of the portion derived from temporary reductions of historical quota shares (done under paragraph (d) of this section) of other historical licensees for the same article in Appendix 1. (2) Subject to paragraph (d) of this section and paragraph (d)(1) of § 6.25, a person, or his or her successor-in-interest, eligible to receive a historical quota share for an article in Appendix 2 will receive his or her basic annual allocation, but portions of quota shares of articles in Appendix 2 derived from temporary reductions of historical quota shares (done under paragraph (d) of this section) will, to the extent practicable, be allocated as supplementary quota shares in accordance with the provisions of paragraph (c) of this section.

(3) Subject to paragraph (d) of this section and paragraph (d)(1) of § 6.25, a person, or his or her successor-in-interest, who is eligible to receive a historical quota share for an article in Group II, III, or IV of Appendix 1 from a particular country of origin will receive a prorated historical quota share for such article from such country of origin in Appendix 2. A person who has established historical eligibility in accordance with the requirements of § 6.25(a)(2) for an article from a particular country in Group V of Appendix 2 will receive a prorated historical quota share for such article from such country. Provided, That, in no case shall more than 50 percent of any quota for any particular country in Appendix 2 be allocated on a his

torical basis; and no licensee, except as provided in paragraph (a)(4) of this section, may receive a historical quota share for an article in Group V of Appendix 2 from a particular country of origin which exceeds in size the quantity of such article entered free of quota from such country of origin by such licensee during the period July 1, 1978 through June 30, 1979.

(4) Subject to paragraph (d) of this section and paragraph (d)(1) of § 6.25, a person, or his or her successor-in-interest, who is eligible to receive a historical quota share for an article in Group V of Appendix 1 from a particular country of origin for which entries during the base period were equal to or less than 2 percent of the quota amount in Appendix 2 for such article from such countries of origin, will receive a historical quota share in Appendix 2 for such article from such country, but in no case shall such person receive a historical quota share for such article from such country in Appendix 2 which is greater in size than 50 percent of his or her basic annual allocation for such article from such country in Appendix 1.

(5) Historical licensees for articles classified under item 950.10D from "Other Countries" in Appendix 1 who can show proof satisfactory to the Licensing Authority that their quota shares for this quota were based on entries of an article for which Australia was the supplying country, may, upon written request, have the country of origin for such quota share(s) "Other permanently changed from Countries" to "Australia."

(6) Where loss of historical licenses has occurred as a result of elimination of a particular quota from a particular country of origin, during the Tokyo Round of Multilateral Trade Negotiations, the Licensing Authority may, to the extent practicable, compensate the affected licensees with equal but not larger historical shares from another quota from the same or another country. Shifts in historical licenses granted for this reason shall be done with the intent of avoiding any adverse impact on eligibility for or the sizes of other historical or non-historical licenses granted to such licensees.

(2) A person with his or her affiliate(s) and associate(s) will be considered only as one person for the purpose of allocation of nonhistorical quota shares. A person with historical eligibility for an article in Appendix 1 or Appendix 2 may not qualify for a nonhistorical quota share for the same article in Appendix 1, except where nonhistorical eligibility for a particular article was established and maintained prior to the awarding of Appendix 2 historical eligibility.

(3) A nonhistorical quota share (referring only to articles in Appendix 1) will be determined on the following basis:

(i) If, after applications for nonhistorical eligibility for a quota year have been evaluated, the Licensing Authority determines that the number of eligible applicants who held a nonhistorical license for an article in Appendix 1 from a particular country of origin during the previous quota year exceeds the number which could be issued a

quota share at the minimum quantity set forth above, the Licensing Authority will determine the quota shares by dividing the amount available by the number of such eligible applicants.

(ii) If the Licensing Authority determines that the number of eligible applicants for a quota year who held a nonhistorical license for an article from a particular country of origin during the previous year plus the number of eligible applicants who did not hold a nonhistorical license for such article from such country of origin during such year is less than the number which could be issued a quota share at the minimum quantity, the Licensing Authority will determine the quota shares by dividing the amount available by the number of such eligible applicants, subject to provisions in § 6.26 (b)(4).

(iii) If the number of eligible applicants for a quota year who held a nonhistorical license for an article from a particular country of origin during the previous year plus the number of eligible applicants who either did not hold a nonhistorical license for such article from such country of origin during such year or did not hold any nonhistorical license for such article exceeds the number which could be issued a quota share at the minimum quantity, the Licensing Authority will first issue quota shares at the minimum quantity to each of the eligible applicants who held a nonhistorical license for such article from that particular country of origin during the previous year, secondly, issue quota shares at the minimum quantity to eligible applicants who held a nonhistorical license for such article from a different country of origin during the previous year, and thirdly, issue quota shares at the minimum quantity to eligible applicants who did not hold a nonhistorical license for such article during the previous year, until all available quota shares are issued. Selection of eligible applicants in the latter two groups shall be made on the basis of the date of postmark of the application received pursuant to § 6.24 of the regulation.

(4) Subject to paragraph (b)(3)(i) of this section, quota shares for an article may not be smaller than the appli