[Federal Register Volume 71, Number 69 (Tuesday, April 11, 2006)]
[Notices]
[Pages 18355-18357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-5279]


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DEPARTMENT OF LABOR

Employment and Training Administration

[TA-W-50,486]


Electronic Data Systems Corporation, I Solutions Center, 
Fairborn, Ohio; Notice of Revised Determination on Remand

    The United States Court of International Trade (USCIT) remanded to 
the Secretary of Labor for further investigation the case of Former 
Employees of Electronic Data Systems Corporation v. U.S. Secretary of 
Labor (Court No. 03-00373).
    On January 15, 2003, the Department of Labor (Department) issued a 
negative determination regarding the eligibility of workers at 
Electronic Data Systems (EDS) Corporation, I Solutions Center, 
Fairborn, Ohio to apply for Trade Adjustment Assistance (TAA). The 
determination was based on the Department's finding that the workers at 
the subject facility performed information technology services, and did 
not produce or support the production of an article. Therefore, the 
workers did not satisfy the eligibility criteria of section 222 of the 
Trade Act of 1974. 19 U.S.C. 2272. On February 6, 2003, the Notice of 
Negative Determination Regarding Eligibility to Apply for Worker 
Adjustment Assistance for Electronic Data Systems Corporation, I 
Solutions Center, Fairborn, Ohio was published in the Federal Register 
(68 FR 6211).
    In a letter dated March 4, 2003, the petitioner requested 
administrative reconsideration of the Department's

[[Page 18356]]

negative determination, and included additional information indicating 
that all usage and copyrights of the computer programs, job control 
language, documentation, etc. produced at the Fairborn facility were 
transferred to the client upon sale. The Department determined that the 
information submitted did not constitute an adequate basis for 
reconsideration and affirmed its finding that the workers of Electronic 
Data Systems Corporation, I Solutions Center, Fairborn, Ohio were not 
eligible to apply for TAA, because they did not produce an article 
within the meaning of Section 222 of the Trade Act. Accordingly, the 
Department issued a Notice of Negative Determination Regarding 
Application for Reconsideration on April 15, 2003. The Notice was 
published in the Federal Register on April 24, 2003 (68 FR 20180).
    After the petitioner sought review by the USCIT, the Court remanded 
the case to the Department. On January 31, 2005, the Department issued 
a Negative Determination on Remand based on the finding that workers of 
the subject facility did not produce an article, nor did they support, 
either directly or through an appropriate subdivision of EDS, the 
production of an article within the meaning of the Trade Act. The 
investigation revealed that the products designed and/or developed at 
the Fairborn facility were not mass-replicated to any physical carrier 
medium.
    After another review, on November 14, 2005, the USCIT remanded the 
case to the Department, giving rise to the current investigation and 
determination.
    Since the publication of the last remand determination, the 
Department has revised its policy to acknowledge that, at least in the 
context of this case, there are tangible and intangible articles and to 
clarify that the production of intangible articles can be distinguished 
from the provision of services. Software and similar intangible goods 
that would have been considered articles for the purposes of the Trade 
Act if embodied in a physical medium will now be considered to be 
articles regardless of their method of transfer.
    The Department stresses that it will continue to implement the 
longstanding precedent that firms must produce an article to be 
certified under the Act. This determination is not altered by the fact 
the provision of a service may result in the incidental creation of an 
article. For example, accountants provide services for the purposes of 
the Act even though, in the course of providing those services, they 
may produce audit reports or similar financial documents that may be 
articles on the Harmonized Tariff Schedule of the United States. 
Because the new policy may have ramifications beyond this case of which 
the Department is not fully cognizant, the new policy will be further 
developed in rulemaking.
    Because it is the Department's practice to apply current policy 
instead of the policy which existed during the investigative period if 
doing so is favorable to the workers, the Department conducted the 
second remand investigation under the new policy.
    The second remand investigation revealed that the financial 
applications software work performed at the subject facility was 
divided into three categories: maintenance, enhancements, and service 
agreements.
    Maintenance comprised approximately [business confidential] percent 
of the work performed at the subject facility and, as the term 
``maintenance'' implies, was a service-oriented activity. The 
maintenance services performed at the subject facility generally 
involved ``minor updates to tables, defect fixes to programs or data, 
monitoring operating performance, and other activities that do not 
materially affect the original functional specifications for existing 
software.''
    Software enhancements accounted for approximately [business 
confidential] percent of the subject facility's total work load, and 
generally involved ``modifications to (usually small) portions of a 
program or system that is meant to incorporate new functional 
specifications but does not significantly alter the fundamental intent, 
architecture, or structure of the application.'' These modifications 
involved both modifying existing code and writing new code modules to 
be added to the program's existing code.
    Some enhancements, particularly those that make very minor 
alterations to existing code, do appear to be services. However, a 
significant portion of the enhancements developed at the subject 
facility involves the development of new code that adds new 
functionality and represents the essence of what constitutes software. 
Therefore, the Department has determined that a significant portion of 
the software enhancements developed by the subject worker group are 
articles for the purposes of the Trade Act.
    This does not mean that any activity which added functionality to 
an article would be considered production of an article. For example, 
the installation of a car radio is clearly a service, even though the 
radio is clearly an article. In the case at hand, the subject firm 
performs a service by installing software enhancements, but they also 
produce an article in that they write the code for (produce) the 
significant enhancements themselves.
    While most software maintenance and enhancement activities were 
provided for under the general contract between EDS and General Motors 
Acceptance Corporation (GMAC), the development of wholly new software 
(the most clear cut production activity taking place at the subject 
facility) only took place as the result of ``Service Agreements'' or 
supplementary contracts between EDS and GMAC. Service agreements 
covered all three categories of work (maintenance, enhancements, and 
new software), and comprised the remaining percent of work performed at 
the subject facility. EDS estimates that somewhere between [business 
confidential] percent of the service agreements carried out at the 
subject facility involved the development of completely new software, 
thus [business confidential] percent of the total work performed at the 
subject facility involved the development of completely new software.
    Based on findings that the former employees spent a considerable 
amount of their work time on the development of significant 
enhancements that include new code, and the development of totally new 
software, the Department has determined that a significant portion of 
the workers of the subject facility were engaged in the production of 
an article (financial applications software). Given that those workers 
were not differentiated as to whether they worked on maintenance, 
enhancement or new software, the Department will consider all workers 
within the facility as a part of the petitioning worker group.
    The second remand investigation revealed that a significant portion 
of the production of software enhancements was shifted to Mexico during 
the period under investigation. Moreover, while no production of wholly 
new software occurred in Mexico during the period under investigation, 
the Mexican workers were being trained in the production of new 
software during the relevant period and the production of such software 
now occurs in Mexico. Thus, a shift of new software production to 
Mexico was also already underway. Based on a review of the record 
developed on remand, the Department determines that the software 
produced in Mexico is like or directly competitive to that produced at 
the subject facility. Moreover, previous investigation established that 
the requisite declines in

[[Page 18357]]

employment occurred at the subject facility during the relevant period.

Conclusion

    After careful review of the facts generated through the remand 
investigation, I determine that a shift in production of financial 
applications software like or directly competitive to that produced at 
the subject facility to Mexico contributed importantly to the total or 
partial separation of a significant number of workers at the subject 
facility. In accordance with the provisions of the Act, I make the 
following certification:

    ``All workers of Electronic Data Systems Corporation, I 
Solutions Center, Fairborn, Ohio, who became totally or partially 
separated from employment on or after December 27, 2001, 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 24th day of March 2006.
Elliott S. Kushner,
Certifying Officer, Division of Trade Adjustment Assistance.
[FR Doc. E6-5279 Filed 4-10-06; 8:45 am]
BILLING CODE 4510-30-P