[Federal Register Volume 88, Number 51 (Thursday, March 16, 2023)]
[Notices]
[Pages 16307-16308]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05368]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service


Superfund Chemical Substance Tax; Request To Modify List of 
Taxable Substances; Filing of Petition for Cellulose Acetate (Degree of 
Substitution = 1.5-2.0)

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of filing and request for comments.

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SUMMARY: This notice of filing announces that a petition has been filed 
pursuant to Revenue Procedure 2022-26, 2022-29 I.R.B. 90, requesting 
that cellulose acetate (degree of substitution = 1.5-2.0) be added to 
the list of taxable substances under section 4672(a) of the Internal 
Revenue Code (``Code''). This notice of filing also requests comments 
on the petition. This notice of filing is not a determination that the 
list of taxable substances is modified.

DATES: Written comments and requests for a public hearing must be 
received on or before May 15, 2023.

ADDRESSES: Commenters are encouraged to submit public comments or 
requests for a public hearing relating to this petition electronically 
via the Federal eRulemaking Portal at http://www.regulations.gov 
(indicate public docket number IRS-2023-0010 or cellulose acetate 
(degree of substitution = 1.5-2.0)) by following the online 
instructions for submitting comments. Comments cannot be edited or 
withdrawn once submitted to the Federal eRulemaking Portal. 
Alternatively, comments and requests for a public hearing may be mailed 
to: Internal Revenue Service, Attn: CC:PA:LPD:PR (Notice of Filing for 
Cellulose Acetate (Degree of Substitution = 1.5-2.0)), Room 5203, P.O. 
Box 7604, Ben Franklin Station, Washington, DC 20044. All comments 
received are part of the public record and subject to public 
disclosure. All comments received will be posted without change to 
www.regulations.gov, including any personal information provided. You 
should submit only information that you wish to make publicly 
available. If a public hearing is scheduled, notice of the time and 
place for the hearing will be published in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Please contact Amanda F. Dunlap, (202) 
317-6855 (not a toll-free number).

SUPPLEMENTARY INFORMATION: 
    (a) Overview. The petition requesting the addition of cellulose 
acetate (degree of substitution = 1.5-2.0) to the list of taxable 
substances under section 4672(a) of the Code is based on weight and 
contains the information detailed in paragraph (b) of this document. 
The information is provided for public notice and comment pursuant to 
section 9 of Rev. Proc. 2022-26. The publication of petition content in 
this notice of filing does not constitute Department of the Treasury or 
Internal Revenue Service (IRS) confirmation of the accuracy of the 
information published.
    Pursuant to section 10.02 of Rev. Proc. 2022-26, the IRS and 
Petitioner agreed to extend the 180-day determination.
    (b) Petition Content.
    (1) Substance name: Cellulose acetate (degree of substitution = 
1.5-2.0).
    According to the petition, the commonly used names of the substance 
include:

Cellulose acetate
Cellulose diacetate

    (2) Petitioner: Celanese Ltd., an exporter of cellulose acetate 
(degree of substitution = 1.5-2.0).
    (3) Proposed Classification Numbers:

HTSUS numbers: 5502.10.0000, 5403.33.0020
Schedule B numbers: 5502.10.0000, 5403.33.0000
CAS number: 9035-69-2

    (4) Petition Filing Date: December 20, 2022.

Petition filing date for purposes of section 11.02 of Rev. Proc. 2022-
26: July 1, 2022

    (5) Brief Description of the Petition: According to the petition, 
cellulose acetate (degree of substitution = 1.5-2.0) is a biopolymer 
obtained by the reaction of wood pulp with acetic anhydride. It can be 
injection molded into various shapes and may be used as a filter 
medium, film base, coating, and articles such as straws, and eyeglass 
frames. The substance is normally imported and exported in quantities 
and packaging for industrial use only.
    Cellulose acetate (degree of substitution = 1.5-2.0) is made from 
cellulose (wood pulp) and methane. The production process is a reaction 
of cellulose (from wood pulp) with acetic anhydride, normally using a 
solvent such as acetic acid and a strong acid such as sulfuric acid as 
a catalyst.
    The degree of substitution (DS) is the number of acetate groups on 
each cellulose ring. Each cellulose ring has three (3) places where an 
acetate can be attached, so DS can range from zero to three (0-3). 
Cellulose diacetate is the general descriptive term used in commerce, 
primarily to distinguish the substance from cellulose triacetate.

[[Page 16308]]

These terms are not intended to quantitatively state that one has a DS 
= 2.0 and the other a DS = 3.0.
    The petition covers cellulose acetate (degree of substitution = 
1.5-2.0), commonly referred to as cellulose diacetate. Cellulose 
acetate in this range generally has similar properties. The petition 
uses the lowest end of the range cellulose acetate DS = 1.5 to 
demonstrate that >20% of the substance is made from taxable chemicals, 
and the midpoint cellulose acetate DS = 1.75 to calculate the tax rate 
for the entire range.
    (6) Process Identified in Petition as Predominant Method of 
Production of Substance: Cellulose acetate is derived from cellulose by 
deconstructing wood pulp into a purified cellulose. The cellulose is 
reacted with acetic acid and acetic anhydride in the presence of 
sulfuric acid. It is subjected to a controlled, partial hydrolysis to 
remove the sulfate and a sufficient number of acetate groups to give 
the product the desired degree of substitution. The polymer unit is the 
fundamental repeating structure of cellulose and has three hydroxyl 
groups which can react to form acetate esters. The most common form of 
cellulose acetate fiber has an acetate group on approximately two of 
every three hydroxyls, referred to as cellulose diacetate. In 
Petitioner's cellulose acetate, the actual substitution is 1.674 
acetate/cellulose, a degree of substitution commonly used in US 
cellulose acetate production.
    (7) Stoichiometric Material Consumption Equation, Based on Process 
Identified as Predominant Method of Production:

3.5 CH4 + 1.75 O2 + 
C6H10O5 [rarr] 
C9.5H13.5O6.75 + 3.50 H2 + 
1.75 H2O

    (8) Rate of Tax Calculated by Petitioner Based on Petitioner's 
Conversion Factors for Taxable Chemicals Used in Production of 
Substance:

Calculation of Tax Rate using mid-point cellulose acetate DS = 1.75
Rate of Tax: $1.65 per ton
Conversion Factor: 0.24 methane

    (9) Public Docket Number: IRS-2023-0010.

Stephanie Bland,
Branch Chief (Passthroughs and Special Industries), IRS Office of Chief 
Counsel.
[FR Doc. 2023-05368 Filed 3-15-23; 8:45 am]
BILLING CODE 4830-01-P