[Federal Register Volume 69, Number 245 (Wednesday, December 22, 2004)]
[Notices]
[Pages 76783-76784]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3777]


-----------------------------------------------------------------------

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]
BILLING CODE 4510-30-P