[Federal Register: December 22, 2004 (Volume 69, Number 245)]
[Notices]
[Page 76783-76784]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22de04-83]
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DEPARTMENT OF LABOR
Employment And Training Administration
[TA-W-53,918]
BMC Software, Inc., Houston, TX; Notice of Revised Determination
on Remand
The United States Court of International Trade (USCIT) granted the
Secretary of Labor's motion for voluntary remand for further
investigation in Former Employees of BMC Software, Inc. v. U.S.
Secretary of Labor (Court No. 04-00229).
The Department's denial of the initial petition (filed on December
23, 2003) was issued on January 20, 2004. The Notice of determination
was published in the Federal Register (69 FR 11888) on March 12, 2004.
The negative determination was based on the finding that, while the
subject company experienced significant employment declines, the worker
group did not produce an article within the meaning of section 222 of
the Trade Act of 1974 (TAA), as amended. Workers at the subject
facility develop software solutions.
By letter dated February 9, 2004, the petitioner requested
administrative reconsideration, contending that the subject company
did, in fact, produce articles. During review of the request for
reconsideration, the Department asked the company to characterize the
work performed at the subject facility. The company responded that
workers of BMC Software, Inc., Houston, Texas, are software developers.
The official further stated that software developed at the subject firm
is not mass-produced on media devices and is not sold in an ``off-the-
shelf'' manner. The company official also stated that due to
significant restructuring actions to reduce ongoing operational
expenses, BMC Software, Inc., had implemented a large reduction of its
worldwide workforce, which included the Houston, Texas location of the
firm. Based on the information provided by the company official, the
Department confirmed its initial finding and issued a Notice of
Negative Determination Regarding Application for Reconsideration on
March 31, 2004 and published the Notice in the Federal Register on
April 16, 2004 (69 FR 20642).
By letter dated June 1, 2004, the petitioner filed an appeal with
the USCIT, alleging that the Department had erred in its determination
that the subject facility did not produce an article. The appeal
included photocopied pictures of packaged software produced at the
subject facility, which the Department had not seen before. Having
identified the need to resolve the apparent conflict between
information provided by the petitioners and that provided by the
employer, the Department filed a motion for voluntary remand, on July
6, 2004. In an Order issued on August 11, 2004, the USCIT granted the
Department's uncontested motion for voluntary remand and further
investigation.
The Department conducted a remand investigation in order to
determine whether the subject worker group met the criteria set forth
in the Trade Act of 1974 for TAA certification as primarily-affected
workers. Section 222(a) of the Trade Act (19 U.S.C. 2272(a)) provides:
A group of workers (including workers in any agricultural firm
or subdivision of an agricultural firm) shall be certified by the
Secretary as eligible to apply for adjustment assistance under this
part pursuant to a petition filed under section 2271 of this title
if the Secretary determines that--
(1) A significant number or proportion of the workers in such
workers' firm, or an appropriate subdivision of the firm, have
become totally or partially separated, or are threatened to become
totally or partially separated; and
(2)(A)(i) The sales or production, or both, of such firm or
subdivision have decreased absolutely; (ii) imports of articles like
or directly competitive with articles produced by such firm or
subdivision have increased; and (iii) the increase in imports
described in clause (ii) contributed importantly to such workers'
separation or threat of separation and to the decline in the sales
or production of such firm or subdivision; or
(B)(i) There has been a shift in production by such workers'
firm or subdivision to a foreign country of articles like or
directly competitive with articles which are produced by such firm
or subdivision; and (ii)(I) the country to which the workers' firm
has shifted production of the articles is a party to a free trade
agreement with the United States; (II) the country to which the
workers' firm has shifted production of the articles is a
beneficiary country under the Andean Trade Preference Act, African
Growth and Opportunity Act, or the Caribbean Basin Economic Recovery
Act; or (III) there has been or is likely to be an increase in
imports of articles that are like or directly competitive with
articles which are or were produced by such firm or subdivision.
During the remand investigation, the Department raised additional
questions and obtained detailed supplemental responses from the
company. In particular, the new information showed that, in addition to
software design and development, the firm does, in fact, mass-replicate
software at the subject facility. Further, software produced by the
firm at the subject facility includes not only custom applications, but
packaged ``off-the-shelf'' applications which are mass-replicated on
various media (CDs and tapes) at the subject facility. Workers at the
subject facility are not separately identifiable by product line.
Therefore, the subject worker group did engage in activity related to
the production of an article.
The Department has consistently maintained that the design and
development of software is a service. In order to be treated as an
article, for TAA purposes, a software product must be tangible,
fungible, and widely marketed. The Department considers software that
is mass-replicated on physical media (such as CDs, tapes, or diskettes)
and widely marketed and commercially available (e.g., packaged ``off-
the-shelf'' programs) and dutiable under the Harmonized Tariff Schedule
of the United States to be an article. The workers designing and
developing such products would be considered to be engaged in services
supporting the production of an article.
On remand, the Department also investigated the petitioner's
allegations that the firm shifted production. Based on the information
generated through that investigation, the Department determined that
there was no shift in production, for TAA purposes, to a foreign
country of articles like or directly competitive with the packaged,
mass-replicated software produced by BMC during the relevant period.
The investigation also revealed that employment and production of
packaged, mass-replicated software at the subject facility had declined
significantly from 2002 to 2003, while company imports of mass-
replicated software increased during the same period. The Department
has found that the increase in company imports represented a
significant percentage of the decline in production at the subject
facility during the relevant period.
Conclusion
After careful review of the facts generated through the remand
investigation, I determine that increases of imports of articles like
or directly
[[Page 76784]]
competitive with those produced at BMC Software, Inc., Houston, Texas,
contributed importantly to the total or partial separation of a
significant number of workers and to the decline in sales or production
at that firm or subdivision. In accordance with the provisions of the
Act, I make the following certification:
All workers of BMC Software, Inc., Houston, Texas, who became
totally or partially separated from employment on or after December
23, 2002, through two years from the issuance of this revised
determination, are eligible to apply for Trade Adjustment Assistance
under section 223 of the Trade Act of 1974.
Signed at Washington, DC this 13th day of December 2004.
Elliott S. Kushner,
Certifying Officer, Division of Trade Adjustment Assistance.
[FR Doc. E4-3777 Filed 12-21-04; 8:45 am]
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