shortage of the facilities for which certification is requested, that the material or service to be produced thereby is necessary in the interest of national defense, and that thereafter the beginning of construction, reconstruction, erection or installation of the facilities for which certification is requested will not in itself prejudice the applicant's eligibility for a Necessity Certificate.

(4) For purposes of subparagraphs (1), (2) (i) and (ii), and (3) (i) and (ii) of this paragraph, the following definition shall apply: Construction, reconstruction, erection or installation is deemed to begin with the incorporation in place on the site by the applicant or by any other person pursuant to any contract, understanding or arrangement, directly or indirectly for or with the applicant, of physical materials as an integral and permanent part of any building, structure or other real property (for example, the pouring or placing of footings or other foundations). Acquisition of land; engineering; contracting for construction; preparation of site; building of access roads; excavation; demolition; installation of service utilities required for construction; the fabrication, production or processing of building materials or building equipment; or the acquisition of personal property to be installed in the building, structure or other real property does not constitute beginning of construction, reconstruction, erection or installation.

(e) Modification of regulations. The provisions of this regulation concerning the filing of applications for Necessity Certificates may be changed by the Certifying Authority. Such change shall be made effective not less than 15 days after publication in the FEDERAL REGISTER.

(f) Referral of application. Each application, after acknowledgement, will be referred to that agency or officer of the Government according to its respective assigned responsibilities under the Defense Production Act of 1950, as amended.

The military department or other Government agency directly interested in the production of the material or service involved in the application for a Necessity Certificate shall on request of any agency or officer to whom the application has been referred, and may in any case, supply such information and advice as may aid the agency or officer in making his report and recommendation to the Certifying Authority.

(g) Responsibilities of agencies and officers other than Certifying Authority. Delegate agencies or officers of the Government to which an application is referred, shall be responsible for making a report and recommendation for specific action to the Certifying Authority regarding each application. Such report and recommendation shall be based upon a thorough examination and investigation conducted by the delegate agency or officer or by other competent Government agencies or officers. Such reports shall conform to instructions issued by the Certifying Authority.

(h) Action by the Certifying Authority. After consideration of relevant factors, including but not limited to the reports of the delegate agencies and officers of the Government, the Certifying Authority will take action upon the application.

(i) Necessity Certificates. Upon approval of an application, a Necessity Certificate will be forwarded to the Commissioner of Internal Revenue and will constitute conclusive evidence of certification by the Certifying Authority that the facilities therein described are necessary in the interest of national defense and of the portion of the adjusted basis upon which the amortization deduction under section 124A (a) shall be computed. The Certifying Authority will not certify the accuracy of the cost of any facility nor of any date relative to the construction, reconstruction, erection, installation or acquisition thereof. It will be incumbent upon taxpayers electing to take the amortization deduction to establish to the satisfaction of the Commissioner of Internal Revenue the identities of the facilities, the costs thereof, and the dates relative thereto.

(j) Further description after certification. (1) Where the actual description or cost of a certified facility varies or will vary so materially from the description or cost in the application for a Necessity Certificate as to put in question the identity of the facility, the taxpayer may request an amendment of the certificate by filing a statement with the Certifying Authority setting forth the revised description or cost.

(2) The statement should consist of four copies of an amended Appendix A setting forth all of the emergency facilities certified with their revised descriptions or costs in the same order in which such emergency facilities were listed on

the original Appendix A. However, where the original Appendix is lengthy and only a few variations or changes are involved, the four copies of the amended Appendix A may list only the facilities changed. In all instances, the amended descriptions or costs should be identified, by item and page number, with the descriptions or costs contained in the original Appendix A and should be accompanied by a letter explaining all changes with the reasons therefor.

(3) If the Certifying Authority is of the opinion that the varied or changed costs or descriptions are within the scope of the original certification, the amended Appendix A will be forwarded by the Certifying Authority to the Commissioner of Internal Revenue for substitution for the original Appendix A attached to the original certificate to have the effect of an amendment thereof. A copy of the amendment will be transmitted to the taxpayer.

(4) Although reasonable substitutions for facilities previously certified may be determined to be within the scope of the original certification, additional facilities, as a general rule, will not be considered to be within the scope of the original certification and will require a separate new application which may be subject to the provisions of paragraph (d) (3) (i) of this section. The Certifying Authority may, however, afford a filing date for such separate application which will correspond to the date on which the application for amendment was filed for the facilities found to be outside the Scope of the original certification.

(k) Cancellation or amendment of Necessity Certificate. The Certifying Authority may (1) cancel any Necessity Certificate where it has been obtained by fraud or misrepresentation or has been issued through error or inadvertence, or (2) amend any Necessity Certificate for sufficient cause.

SEC. 5. Exercise of powers of Certifying Authority. (a) Any actions taken in exercise of the powers and authority vested in the Director of the Office of Defense Mobilization, by Executive Order 10480, dated August 14, 1953, under section 124A (e) of the Internal Revenue Code may be taken in the name of the Office of Defense Mobilization by the Director's authorized representative.

(b) The Director may for good and sufficient reason in the interest of na

tional defense make exceptions to the requirements for filing in section 4 (d) (2) (i) and (ii) and the requirements of section 4 (d) (3) (i).

SEC. 6. Granting accelerated tax amortization for the reconstruction, rehabilitation, and replacement of emergency facilities destroyed or damaged by major disaster. Notwithstanding the foregoing, accelerated tax amortization pursuant to Section 168 of the Internal Revenue Code of 1954 may be granted for the reconstruction, rehabilitation, and replacement of facilities destroyed or damaged by major disaster as defined and determined under the provisions of the act entitled "An Act to Authorize Federal Assistance to States or Local Governments in Major Disasters, and for Other Purposes" (64 Stat. 1109), whenever such facilities will be used for production of materials or services required for national defense as reflected by their inclusion in expansion goals established by the Office of Defense Mobilization whether or not such goals remain open.

[Amdt. 1, 20 F. R. 6452, Sept. 1, 1955]

(b) "Certifying Authority" means the Certifying Authority designated by the President for purposes of section 124A (g) of the Internal Revenue Code.

(c) "Contracting Agency" means that agency or department of the United States Government which authorizes payment by the United States for the unamortized cost of an Emergency Facility.

(d) "Payment" means an amount received by a contractor or subcontractor, directly or indirectly from the United States, as compensation for the unamortized cost of an Emergency Facility because (1) a contract with the United States or subcontracts thereunder involving the use of the Emergency Facility have been terminated by the terms thereof or by cancellation, or (2) the taxpayer had reasonable ground (either from provisions of a contract with the United States or subcontracts thereunder involving the use of the Emergency Facility, or from written or oral representations made under the authority of the United States) for anticipating future contracts involving the use of the facility, which future contracts have not been made.

(e) "Payment Certificate" means a certificate made pursuant to section 124A (g) of the Internal Revenue Code certifying that a payment made by the United States to a taxpayer is compensation for the unamortized cost of an Emergency Facility.

SEC. 2. Application for Payment Certificate. An application for a Payment Certificate shall conform with the standard form approved by the Certifying Authority and shall be executed in the manner and by the person prescribed by the form. Such form may be obtained from and filed with the Contracting Agency within such time as shall be prescribed.

SEC. 3. Responsibility of Certifying Authority. The Certifying Authority shall direct and control the activities of the Contracting Agency and other agencies under section 124A (g) of the Internal Revenue Code and this regulation. The Certifying Authority or his delegate shall make the findings provided for by sections 124A (g) (1) (A) or (B) and 124A (g) (2) of the Internal Revenue Code and by section 1 (d) of this regulation and shall certify to the Commissioner of Internal Revenue pursuant thereto. Such certification shall set forth the payment made for each separate Emergency Facility.

SEC. 4. Conclusiveness of Payment Certificate. A Payment Certificate shall be binding upon the Commissioner of Internal Revenue as to the fact of payment. The treatment of amounts received and the amount of the amortization or depreciation deduction allowable by reason of such amounts shall be governed by the applicable provisions of the Internal Revenue Code.

The

SEC. 5. Referral of application. Certifying Authority or his delegate may request information relevant to the performance of his functions from all other agencies and departments of the United States.

SEC. 6. Amendment or cancellation. Any Payment Certificate may be amended or cancelled for fraud, misrepresentation, error or other sufficient cause.

SEC. 7. Delegation. The Certifying Authority under section 124A (g) of the Internal Revenue Code in carrying out his functions may provide, by redelegation or otherwise, for their performance, in whole or in part by the appropriate Contracting Agencies.