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					1–2–98                               Friday
Vol. 63   No. 1                      January 2, 1998
Pages 1–138




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II                               Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998

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                                                                                                                                       2
                                                                                                                         III

Contents                                                       Federal Register
                                                               Vol. 63, No. 1

                                                               Friday, January 2, 1998



Agriculture Department                                         Environmental Protection Agency
See Animal and Plant Health Inspection Service                 RULES
See Forest Service                                             Air quality implementation plans; approval and
See Grain Inspection, Packers and Stockyards                       promulgation; various States:
    Administration                                               Connecticut et al., 26–27
See Natural Resources Conservation Service                     NOTICES
See Risk Management Agency                                     Environmental statements; availability, etc.:
                                                                 Agency statements—
                                                                   Comment availability, 74
Animal and Plant Health Inspection Service0I11RULES
                                                                   Weekly receipts, 74–75
Animal welfare:
                                                               Integrated risk information system; pilot program;
  Marine mammals, humane handling, care, treatment and
                                                                   information request, 75–77
       transportation, 1–2
                                                               Meetings:
Plant-related quarantine, domestic:
                                                                 Common sense initiative—
  Karnal bunt disease—
                                                                   Iron and steel sector and petroleum refining sector, 77
    Texas et al.; correction, 1
Poultry improvement:
  National Poultry Improvement Plan and auxiliary              Federal Aviation Administration
       provisions—                                             RULES
    Nonsubstantive corrections, 2–4                            Air carrier certification and operations:
                                                                 Alaskan hunt and fish guides who transport persons by
                                                                     air for compensation or hire, 4–6
Army Department                                                Airworthiness directives:
NOTICES
                                                                 Boeing; correction,
Meetings:                                                      PROPOSED RULES
 Army Science Board, 61                                        Air carrier certification and operations:
                                                                 Repair assessment for pressurized fuselages, 126–136
Children and Families Administration                           NOTICES
NOTICES                                                        Advisory circulars; availability, etc.:
Agency information collection activities:                        Aircraft—
  Proposed collection; comment request, 80–81                      Flight in icing conditions, 120–121
Organization, functions, and authority delegations:              Repair assessment of pressurized fuselages, 137
  Administration for Children and Families, et al., 81–87      Exemption petitions; summary and disposition, 121–122
                                                               Meetings:
                                                                 Aviation Rulemaking Advisory Committee, 122
Commerce Department                                              RTCA, Inc., 122–123
See National Oceanic and Atmospheric Administration
                                                               Federal Communications Commission
Community Development Financial Institutions Fund              NOTICES
NOTICES                                                        Agency information collection activities:
Agency information collection activities:                        Proposed collection; comment request, 77–78
 Proposed collection; comment request, 123–124                 Common carrier services:
 Submission for OMB review; comment request, 124                 In-region interLATA services—
                                                                   BellSouth Corp.; application to provide services in
Defense Department                                                      South Carolina denied, 78–79
See Army Department
See Navy Department                                            Federal Deposit Insurance Corporation
                                                               PROPOSED RULES
Employment Standards Administration                            Freedom of Information Act; implementation, 29–34
NOTICES
Minimum wages for Federal and federally-assisted               Federal Election Commission
   construction; general wage determination decisions,         NOTICES
   113                                                         Meetings; Sunshine Act, 79–80

Energy Department                                              Federal Energy Regulatory Commission
See Federal Energy Regulatory Commission                       NOTICES
NOTICES                                                        Electric rate and corporate regulation filings:
Defense Nuclear Facilities Safety Board; criticality safety,     Alabama Power Co. et al., 64–69
    recommendation 97-2, 61–62                                   El Segundo Power, LLC et al., 69–74
Meetings:                                                      Applications, hearings, determinations, etc.:
  Environmental Management Advisory Board, 62                    El Paso Natural Gas Co., 62–63
IV                    Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Contents


  Mountain Fuel Supply Co., 63–64                          Internal Revenue Service
  Natural Gas Pipeline Company of America, 64              RULES
                                                           Excise taxes:
Federal Highway Administration                               Gasoline and diesel fuel; special rules for Alaska, 24–26
NOTICES                                                    Income taxes:
Agency information collection activities:                    Foreign investment—
 Proposed collection; comment request, 123                     Passive foreign investment company preferred shares;
                                                                    special income exclusion, 6–24
Federal Maritime Commission                                PROPOSED RULES
NOTICES                                                    Income taxes:
Freight forwarder licenses:                                  Foreign investment—
  Marianas Steamship Agencies, Inc., et al., 80                Passive foreign investment company preferred shares;
                                                                   special income exclusion; cross reference, 39–42
Fish and Wildlife Service                                    Loans to plan participants from qualified employer plans,
NOTICES                                                          42–45
Endangered and threatened species:                           Qualified long-term care insurance contracts; consumer
  Recovery plans—                                                protection, 35–39
    Rio Grande silvery minnow, 106–107

Food and Drug Administration                               Justice Department
NOTICES                                                    See Foreign Claims Settlement Commission
                                                           NOTICES
Medical devices; premarket approval:
  Richard-James, Inc.; SILIKON 1000-silicone oil, 87–88    Pollution control; consent judgments:
  Vitrophage, Inc.; VITREON, 88–89                           USX Corp., 111
Reports and guidance documents; availability, etc.:
  External penile rigidity devices; regulatory policy      Labor Department
      availability, 89                                     See Employment Standards Administration
                                                           NOTICES
Foreign Claims Settlement Commission                       Agency information collection activities:
NOTICES                                                     Proposed collection; comment request, 112–113
Meetings; Sunshine Act, 111–112

Forest Service                                             Land Management Bureau
NOTICES                                                    NOTICES
Environmental statements; notice of intent:                Closure of public lands:
  Wasatch-Cache and Uinta National Forests, UT, 50           California, 107
                                                             Idaho, 107
Grain Inspection, Packers and Stockyards Administration    Management framework plans:
NOTICES                                                      Nevada, 107–108
Agency designation actions:                                Minerals management:
 Ohio et al., 50–51                                          Arizona—
                                                               Recreational mineral collection, 108
Health and Human Services Department                       Oil and gas leases:
See Children and Families Administration                     New Mexico, 108–109
See Food and Drug Administration                           Public land orders:
See Health Care Financing Administration                     Idaho, 109
See National Institutes of Health                            Oregon, 109
NOTICES                                                    Realty actions; sales, leases, etc.:
Meetings:                                                    Nevada, 109–110
 National Committee on Vital and Health Statistics, 80     Recreation management restrictions, etc.:
                                                             Indian Creek Canyon Corridor; San Juan Resource Area,
Health Care Financing Administration                              UT, 110–111
NOTICES
                                                           Survey plat filings:
Medicare:                                                    Wyoming, 111
 Home health agency costs per visit; schedule of limits,
     89–105
                                                           National Highway Traffic Safety Administration
Housing and Urban Development Department                   RULES
NOTICES                                                    Motor vehicle safety standards:
Grants and cooperative agreements; availability, etc.:      Occupant crash protection—
  Facilities to assist homeless—                              Head impact protection; correction, 27–28
    Excess and surplus Federal property, 106               PROPOSED RULES
                                                           Motor vehicle safety standards:
Interior Department                                         Reflecting surfaces; components in driver’s forward field
See Fish and Wildlife Service                                    of view: windshield wiper arms and blades, inside
See Land Management Bureau                                       windshield mouldings, etc., 46–49
                       Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Contents                            V


National Institutes of Health                                 Risk Management Agency
NOTICES                                                       NOTICES
Meetings:                                                     Dairy options pilot program and agency information
 National Center for Research Resources, 105                      collection activities:
 National Institute of Child Health and Human                   Availability and proposed collection; comment request,
      Development, 105                                              51–55
 National Institute of Mental Health, 105–106
                                                              Securities and Exchange Commission
National Labor Relations Board                                NOTICES
NOTICES                                                       Self-regulatory organizations; proposed rule changes:
Meetings; Sunshine Act, 114                                     National Association of Securities Dealers, Inc., 117–118
                                                                New York Stock Exchange, Inc., 118–119
National Oceanic and Atmospheric Administration               Applications, hearings, determinations, etc.:
NOTICES                                                         Crown Laboratories, Inc., 117
Environmental statements; availability, etc.:
  Willamette Falls, OR; preventing California sea lion        State Department
      foraging and predation on salmonids, 55–60              NOTICES
Marine mammals:                                               Foreign Operations, Export Financing, and Related
  Stock assessment reports and guidelines; availability, 60       Programs Appropriations Act:
Meetings:                                                       Reconstruction Assistance Project Credit; waiver—
  Pacific Fishery Management Council, 60–61                       Bosnia, 119
                                                                USAID-funded programs in Republika Srpska; waiver,
Natural Resources Conservation Service                               119
NOTICES
                                                              Meetings:
Environmental statements; availability, etc.:                   International Comunications and Information Policy
  Santa Cruz River Watershed; Rio Arriba County, NM, 51              Advisory Committee, 119–120
                                                                Shipping Coordinating Committee, 120
Navy Department
                                                              Transportation Department
NOTICES
                                                              See Federal Aviation Administration
Patent licenses; non-exclusive, exclusive, or partially
                                                              See Federal Highway Administration
    exclusive:
                                                              See National Highway Traffic Safety Administration
  U.S. Drug Testing, Inc., 61
                                                              Treasury Department
Nuclear Regulatory Commission                                 See Community Development Financial Institutions Fund
NOTICES
                                                              See Internal Revenue Service
Environmental statements; availability, etc.:
  Baltimore Gas and Electric Co., 114–115
Meetings:
  Radiological criteria for license termination; public       Separate Parts In This Issue
       workshop, 115–116
Meetings; Sunshine Act, 116                                   Part II
Applications, hearings, determinations, etc.:                 Department of Transportation, Federal Aviation
  Allied Technology Group, 114                                    Administration, 126–137
  Northeast Nuclear Energy Co., 114

Public Health Service                                         Reader Aids
See Food and Drug Administration                              Additional information, including a list of telephone
See National Institutes of Health                             numbers, finding aids, reminders, and a list of Public Laws
                                                              appears in the Reader Aids section at the end of this issue.
Railroad Retirement Board
PROPOSED RULES
General administration:                                       Electronic Bulletin Board
  Board forms, list and descriptions; elimination, 34         Free Electronic Bulletin Board service for Public Law
NOTICES                                                       numbers, Federal Register finding aids, and a list of
Agency information collection activities:                     documents on public inspection is available on 202–275–
 Submission for OMB review; comment request, 116–117          1538 or 275–0920.
VI                                      Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Contents

CFR PARTS AFFECTED IN THIS ISSUE

A cumulative list of the parts affected this month can be found in the
Reader Aids section at the end of this issue.

7 CFR
301...........................................1
9 CFR
3...............................................1
145...........................................2
147...........................................2
12 CFR
Proposed Rules:
309.........................................29
14 CFR
39.............................................4
119...........................................4
121...........................................4
135...........................................4
Proposed Rules:
91.........................................126
121.......................................126
125.......................................126
129.......................................126
20 CFR
Proposed Rules:
200.........................................34
26 CFR
1...............................................6
40...........................................24
48...........................................24
602...........................................6
Proposed Rules:
1 (3 documents) ...................35,
                                       39, 42
40 CFR
52...........................................26
49 CFR
571.........................................27
Proposed Rules:
571.........................................46
                                                                                                                                          1

Rules and Regulations                                                                        Federal Register
                                                                                             Vol. 63, No. 1

                                                                                             Friday, January 2, 1998



This section of the FEDERAL REGISTER            ahead on (202) 690–2817 to facilitate          Authority: 7 U.S.C. 147a, 150bb, 150dd,
contains regulatory documents having general    entry into the comment reading room.         150ee, 150ff, 161, 162, and 164–167; 7 CFR
applicability and legal effect, most of which                                                2.22, 2.80, and 371.2(c).
are keyed to and codified in the Code of        FOR FURTHER INFORMATION CONTACT:  Mr.
Federal Regulations, which is published under   Mike Stefan, Operations Officer,             § 301.89–3   [Corrected]
50 titles pursuant to 44 U.S.C. 1510.           Domestic and Emergency Operations,             2. In § 301.89–3, in paragraph (f),
                                                PPQ, APHIS, 4700 River Road Unit 134,        under the heading ‘‘Texas’’, in
The Code of Federal Regulations is sold by      Riverdale, MD 20737–1236, (301) 734–         paragraph (2), under ‘‘San Saba
the Superintendent of Documents. Prices of      8247.                                        County’’, the number ‘‘40113 3301’’ is
new books are listed in the first FEDERAL
REGISTER issue of each week.                    SUPPLEMENTARY INFORMATION:      In an        removed and the numbers ‘‘40113 3302’’
                                                interim rule published in the Federal        and ‘‘40113 3303’’ are added in its
                                                Register on November 24, 1997 (62 FR         place.
DEPARTMENT OF AGRICULTURE                       62504–62506, Docket No. 96–016–26),            Done in Washington, DC, this 18th day of
                                                we amended the Karnal bunt regulations       December 1997.
Animal and Plant Health Inspection              in 7 CFR part 301 by adding certain          Terry L. Medley,
Service                                         counties in Texas to the list of regulated   Administrator, Animal and Plant Health
                                                areas due to the detection of Karnal bunt    Inspection Service.
7 CFR Part 301                                  in those areas. We also expanded the         [FR Doc. 97–34177 Filed 12–31–97; 8:45 am]
[Docket No. 96–016–28]                          boundaries of regulated areas in certain     BILLING CODE 3410–34–P
                                                counties in Arizona for the same reason.
RIN 0579–AA83
                                                   In the Supplementary Information
Karnal Bunt; Additions to Regulated             section of the interim rule, we              DEPARTMENT OF AGRICULTURE
Areas                                           summarized the regulations that apply
                                                to these newly regulated areas. Among        Animal and Plant Health Inspection
AGENCY:  Animal and Plant Health                other things, we stated that ‘‘While         Service
Inspection Service, USDA.                       Karnal bunt host crops may be planted
ACTION: Interim rule; technical                 in the surveillance area, they may not be    9 CFR Part 3
amendment.                                      used for seed.’’ We should have said         [Docket No. 97–126–1]
                                                that Karnal bunt host crops may be
SUMMARY: In an interim rule published                                                        Specifications for the Humane
                                                planted in the surveillance area and
in the Federal Register on November             may be used for seed within the              Handling, Care, Treatment, and
24,1997, we amended the Karnal bunt             regulated area if tested and found free      Transportation of Marine Mammals;
regulations by adding portions of               from spores and bunted wheat kernels         Nonsubstantive Corrections
McCulloch, Mills, and San Saba                  and then treated with fungicide in
Counties, TX, to the list of regulated                                                       AGENCY:  Animal and Plant Health
                                                acccordance with § 301.89–13(d).
areas and by expanding the boundaries                                                        Inspection Service, USDA.
of the regulated areas in La Paz,                  Also, the rule portion of the interim
                                                                                             ACTION: Final rule.
Maricopa, and Pinal Counties, AZ, due           rule contained an error in a list of
to the detection of Karnal bunt in those        numbered fields designated as restricted     SUMMARY:   We are amending the
areas.                                          areas for regulated articles other than      regulations regarding humane handling,
  The interim rule contained an error in        seed in San Saba County, TX. Field           care, treatment, and transportation of
the Supplementary Information section           number 40113 3301 should not have            marine mammals to correct the
and an error in a list of fields in the rule    been listed. Fields numbers 40113 3302       designations of three footnotes. This
portion. This document corrects those           and 40113 3303 should have been listed       action will result in all the footnotes in
errors.                                         instead. All these fields belong to the      9 CFR part 3, ‘‘Standards,’’ being
                                                same individual, and the                     numbered consecutively. We are also
DATES: This amendment is effective              misdesignation stemmed from a
November 24, 1997.                                                                           removing the authority citations that
                                                paperwork error. We are correcting the       appear unnecessarily in three places in
ADDRESSES: Please send an original and          error in our list.                           the regulations.
three copies of your comments to
                                                List of Subjects in 7 CFR 301                EFFECTIVE DATE: December 23, 1997.
Docket No. 96–016–26, Regulatory
Analysis and Development, PPD,                                                               FOR FURTHER INFORMATION CONTACT: Mrs.
                                                  Agricultural commodities, Plant
APHIS, suite 3C03, 4700 River Road                                                           Kathy Holmes, Regulatory Coordination
                                                diseases and pests, Quarantine reporting
Unit 118, Riverdale, MD 20737–1238.                                                          Specialist, Regulatory Analysis and
                                                and recordkeeping requirements,
Please state that your comments refer to                                                     Development, Program Planning and
                                                Transportation.
Docket No. 96–016–26. Comments                                                               Development, APHIS, USDA, 4700
                                                  Accordingly, 7 CFR part 301 is             River Road Unit 118, Riverdale, MD
received may be inspected at USDA,              amended as follows:
room 1141, South Building, 14th Street                                                       20737–1238; (301) 734–8682.
and Independence Avenue SW.,                    PART 301—DOMESTIC QUARANTINE                 SUPPLEMENTARY INFORMATION:
Washington, DC, between 8 a.m. and              NOTICES
4:30 p.m., Monday through Friday,                                                            Background
except holidays. Persons wishing to               1. The authority citation for part 301       The regulations in 9 CFR part 3,
inspect comments are requested to call          continues to read as follows:                subpart E (§§ 3.100 through 3.118,
2              Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations

referred to below as the regulations)            2. The authority citation for ‘‘Subpart    Poultry Improvement Plan, Veterinary
contain specifications for the humane          E—Specifications for the Humane              Services, APHIS, USDA, 1498 Klondike
handling, care, treatment, and                 Handling, Care, Treatment, and               Road, Suite 200, Conyers, GA 30094–
transportation of marine mammals. The          Transportation of Marine Mammals’’ is        5104; (770) 922–3496.
three footnotes in subpart E are               removed.
                                                                                            SUPPLEMENTARY INFORMATION:
currently designated as footnotes 1, 5,
and 2. We are amending the regulations         § 3.100   [Amended]                          Background
by redesignating those three footnotes as        3. In § 3.100, paragraph (a), footnote 1      The regulations in 9 CFR parts 145
footnotes 6, 7, and 8, respectively. This      and its reference in the text are            and 147 contain the provisions of the
action will result in all the footnotes in     redesignated as footnote 6.                  National Poultry Improvement Plan
9 CFR part 3, ‘‘Standards,’’ being             § 3.102   [Amended]                          (NPIP), a cooperative Federal-State-
numbered consecutively.                                                                     industry mechanism for controlling
                                                 4. In § 3.102, paragraph (c), footnote 5
   We are also removing the authority          and its reference in the text are            certain poultry diseases. We are making
citation that appears at the beginning of      redesignated as footnote 7.                  several nonsubstantive changes to those
subpart E, as well as the authority                                                         provisions to correct errors or
citation that appears at the beginning of      § 3.104   [Amended]                          inconsistencies and to reflect: (1) The
‘‘Subpart F—Specifications for the                5. In § 3.104, paragraph (b)(1)(i),       relocation of the NPIP staff to a new
Humane Handling, Care, Treatment, and          footnote 2 and its reference in the text     office; (2) the current organizational
Transportation of Warmblooded                  are redesignated as footnote 8.              affiliation of the Veterinary Biologics
Animals Other Than Dogs, Cats, Rabbits,           6. The authority citation for ‘‘Subpart   staff within the Animal and Plant
Hamsters, Guinea Pigs, Nonhuman                F—Specifications for the Humane              Health Inspection Service (APHIS); and
Primates, and Marine Mammals’’ and             Handling, Care, Treatment, and               (3) the current edition number and
the authority citation that appears in         Transportation of Warmblooded                publication date of a textbook referred
subpart F just above § 3.136,                  Animals Other Than Dogs, Cats, Rabbits,      to in the regulations.
‘‘Consignments to carriers and                 Hamsters, Guinea Pigs, Nonhuman                 We are also correcting several
intermediate handlers.’’ The authority         Primates, and Marine Mammals’’ is            paragraph references within § 147.11 of
that applies to all of part 3, including       removed.                                     the regulations. In a final rule published
subparts E and F, is cited at the                 7. In subpart F, under the                in the Federal Register on March 18,
beginning of the part.                         undesignated center heading                  1994 (59 FR 12795–12805, Docket No.
   Because the changes contained in this       ‘‘Transportation Standards’’, the            92–151–2), we amended § 147.11 by
rule are nonsubstantive in nature, we          authority citation is removed.               redesignating paragraphs (a) through (j)
have found that notice and public                                                           as paragraphs (b)(1) through (b)(10).
                                                 Done in Washington, DC, this 23rd day of   When we made that change, however,
procedure on this rule are unnecessary.        December 1997 .                              we failed to update several internal
Therefore, pursuant to 5 U.S.C. 553,           Craig A. Reed,                               references within the section to reflect
notice of proposed rulemaking and              Acting Administrator, Animal and Plant       the redesignation of its paragraphs. We
opportunity to comment are not                 Health Inspection Service.                   are, therefore, amending § 147.11 to
required, and this rule may be made            [FR Doc. 97–34178 Filed 12–31–97; 8:45 am]   correct those errors.
effective less than 30 days after                                                              Because the changes contained in this
                                               BILLING CODE 3410–34–P
publication in the Federal Register.                                                        rule are nonsubstantive in nature, we
Further, since this rule relates to                                                         have found that notice and public
internal agency management, it is              DEPARTMENT OF AGRICULTURE                    procedure on this rule are unnecessary.
exempt from the provisions of Executive                                                     Therefore, pursuant to 5 U.S.C. 553,
Order 12866 and Executive Order                Animal and Plant Health Inspection           notice of proposed rulemaking and
12988. Finally, this action is not a rule      Service                                      opportunity to comment are not
as defined by Pub. L. 96–354, the                                                           required, and this rule may be made
Regulatory Flexibility Act, and thus, is       9 CFR Parts 145 and 147                      effective less than 30 days after
exempt from the provisions of the Act.         [Docket No. 97–120–1]                        publication in the Federal Register.
Paperwork Reduction Act                                                                     Further, since this rule relates to
                                               National Poultry Improvement Plan and        internal agency management, it is
   This rule contains no new                   Auxiliary Provisions; Nonsubstantive         exempt from the provisions of Executive
information collection or recordkeeping        Corrections                                  Order 12866 and Executive Order
requirements under the Paperwork                                                            12988. Finally, this action is not a rule
Reduction Act of 1995 (44 U.S.C. 3501          AGENCY:  Animal and Plant Health
                                               Inspection Service, USDA.                    as defined by Pub. L. 96–354, the
et seq.).                                                                                   Regulatory Flexibility Act, and thus, is
                                               ACTION: Final rule.
List of Subjects in 9 CFR Part 3                                                            exempt from the provisions of the Act.
                                               SUMMARY:   We are amending the               Paperwork Reduction Act
  Animal welfare, Marine mammals,
                                               provisions of the National Poultry
Pets, Reporting and recordkeeping                                                              This rule contains no new
                                               Improvement Plan (the Plan) to update
requirements, Research, Transportation.                                                     information collection or recordkeeping
                                               the address of the Plan’s office, which
  Accordingly, 9 CFR part 3 is amended                                                      requirements under the Paperwork
                                               has been moved to a new location. We
as follows:                                                                                 Reduction Act of 1995 (44 U.S.C. 3501
                                               are also making several nonsubstantive
                                                                                            et seq.).
PART 3—STANDARDS                               changes to the provisions of the Plan to
                                               correct errors or inconsistencies.           List of Subjects in 9 CFR Parts 145 and
  1. The authority citation for part 3         EFFECTIVE DATE: December 23, 1997.           147
continues to read as follows:                  FOR FURTHER INFORMATION CONTACT: Mr.           Animal diseases, Poultry and poultry
  Authority: 7 U.S.C. 2131–2156; 7 CFR 2.22,   Andrew R. Rhorer, Senior Coordinator,        products, Reporting and recordkeeping
2.80, and 371.2(d).                            Poultry Improvement Staff, National          requirements.
                Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations                                     3

  Accordingly, 9 CFR parts 145 and 147            ii. In paragraph (d)(1)(vi),                and the date ‘‘1971’’ is removed and the
are amended as follows:                        immediately after the words ‘‘and              date ‘‘1991’’ is added in its place.
                                               § 147.24(b)’’.                                    b. In paragraph (b)(1)(vii), the words
PART 145—NATIONAL POULTRY                         iii. In paragraph (e)(1), in the            ‘‘§ 147.6(b) of this part’’ are removed
IMPROVEMENT PLAN                               introductory text, immediately after the       and the reference ‘‘§ 147.6’’ is added in
  1. The authority citation for part 145       words ‘‘of § 147.26’’.                         their place.
continues to read as follows:                     iv. In paragraph (e)(1)(ii)(B),                c. In paragraph (d)(2), in the
                                               immediately after the words ‘‘with             introductory text, the words
  Authority: 7 U.S.C. 429; 7 CFR 2.22, 2.80,   § 147.8’’.
and 371.2(d).                                                                                 ‘‘subparagraphs (d)(2)(i) thru (x) of this
                                                  v. In paragraph (e)(3), immediately         paragraph’’ are removed and the words
§ 145.14   [Amended]                           after the words ‘‘in § 147.24(a)’’.            ‘‘paragraphs (d)(2)(i) through (x) of this
   2. Section 145.14 is amended as                vi. In paragraph (f)(3), immediately        section’’ added in their place.
follows:                                       after the words ‘‘of § 147.26’’.                  d. In paragraph (d)(2)(viii), the words
   a. In paragraph (a)(1), in both the first      vii. In paragraph (g)(3), immediately       ‘‘(d)(2)(i) thru (vii) of this paragraph’’
sentence and the last sentences, the           after the words ‘‘of § 147.26’’.               are removed and the words ‘‘paragraphs
words ‘‘enzyme-labeled’’ are removed              viii. In paragraph (i)(1)(v),               (d)(2)(i) through (vii) of this section’’
and the words ‘‘enzyme-linked’’ are            immediately after the words ‘‘and              added in their place.
added in their place, and in footnote 1,       § 147.24(b)’’.
the words ‘‘Biotechnology, Biologics,                                                         § 147.8    [Amended]
                                               § 145.43   [Amended]
and Environmental Protection’’ are                                                               11. In § 147.8, the introductory text of
removed and the words ‘‘Veterinary                5. Section 145.43 is amended as             the section is amended by adding the
Services’’ are added in their place.           follows:                                       words ‘‘of this chapter’’ immediately
   b. In paragraph (b)(1), in the first           a. In paragraph (b)(2)(iii), in the         after the words ‘‘and
sentence and in footnote 3, the words          second sentence, the words ‘‘of this           § 145.33(e)(1)(ii)(b)’’.
‘‘enzyme-labeled’’ are removed and the         part’’ are removed.
words ‘‘enzyme-linked’’ are added in              b. In paragraph (d)(2), the words           § 147.11   [Amended]
their place.                                   ‘‘enzyme-labeled’’ are removed and the            12. Section 147.11 is amended as
   c. In paragraph (b)(3), the words ‘‘of      words ‘‘enzyme-linked’’ are added in           follows:
this chapter’’ are added immediately           their place.                                      a. In paragraph (b)(1), in the last
before the words ‘‘shall be used’’.               c. In paragraph (d)(2), footnote 5, the     sentence, the words ‘‘paragraph (g)’’ are
                                               words ‘‘of this part’’ are removed.            removed and the words ‘‘paragraph
§ 145.23   [Amended]                              d. In paragraph (e)(2), in the last         (b)(7)’’ are added in their place.
   3. Section 145.23 is amended as             sentence, the words ‘‘of this chapter’’           b. In paragraph (b)(4), in the first
follows:                                       are added immediately after the words          sentence, the words ‘‘paragraph (c)’’ are
   a. In paragraph (b)(2)(iii), in the         ‘‘in § 147.6’’.                                removed and the words ‘‘paragraph
second sentence, the words ‘‘of this                                                          (b)(3) of this section’’ are added in their
part’’ are removed.                            § 145.53   [Amended]
                                                                                              place.
   b. The words ‘‘of this chapter’’ are          6. In § 145.53(b)(2)(iii), the second           c. In paragraph (b)(5), in the second-
added in the following places:                 sentence is amended by removing the            to-last sentence, the words ‘‘paragraph
   i. In paragraph (c)(1)(ii)(C),              words ‘‘of this part’’.                        (a)’’ are removed and the words
immediately after the words ‘‘with
                                               PART 147—AUXILIARY PROVISIONS                  ‘‘paragraph (b)(1)’’ are added in their
§ 147.8’’.
   ii. In paragraph (e)(1), in the             ON NATIONAL POULTRY                            place.
introductory text, immediately after the       IMPROVEMENT PLAN                                  d. In paragraph (b)(7), in the last
words ‘‘of § 147.26’’.                                                                        sentence, the words ‘‘paragraph (f)’’ are
   iii. In paragraph (e)(1)(ii)(B),              7. The authority citation for part 147       removed and the words ‘‘paragraph
immediately after the words ‘‘with             continues to read as follows:                  (b)(6)’’ are added in their place.
§ 147.8’’.                                       Authority: 7 U.S.C. 429; 7 CFR 2.22, 2.80,   § 147.12   [Amended]
   iv. In paragraph (e)(3), immediately        and 371.2(d).
after the words ‘‘in § 147.24(a)’’.                                                              13. In § 147.12(a)(3), footnote 11 is
   v. In paragraph (f)(3), immediately         § 147.5    [Amended]                           amended by removing the words ‘‘1500
after the words ‘‘of § 147.26’’.                 8. In § 147.5(b), footnote 4 is amended      Klondike Road, Suite A–102, Conyers,
   vi. In paragraph (g)(3), immediately        by removing the words ‘‘1500 Klondike          GA 30207’’ and adding the words ‘‘1498
after the words ‘‘of § 147.26’’.               Road, Suite A–102, Conyers, GA 30207’’         Klondike Road, Suite 200, Conyers, GA
   c. In paragraph (f)(5), the words ‘‘in      and adding the words ‘‘1498 Klondike           30094’’ in their place.
§ 145.24(a)’’ are removed and the words        Road, Suite 200, Conyers, GA 30094’’ in           14. In § 147.12(b)(3)(ii)(A), footnote 12
‘‘in § 147.24(a)’’ are added in their          their place.                                   is amended by removing the words
place.                                                                                        ‘‘1500 Klondike Road, Suite A–102,
                                               § 147.6    [Amended]                           Conyers, GA 30207’’ and adding the
§ 145.33   [Amended]                             9. In § 147.6, the last sentence of the      words ‘‘1498 Klondike Road, Suite 200,
  4. Section 145.33 is amended as              introductory text of the section is            Conyers, GA 30094’’ in their place.
follows:                                       amended by removing the words ‘‘of
  a. In paragraph (b)(2)(iii), in the          this part’’.                                   § 147.22   [Amended]
second sentence, the words ‘‘of this                                                            15. In § 147.22, paragraph (c) is
part’’ are removed.                            § 147.7    [Amended]                           amended by removing the words ‘‘of
  b. The words ‘‘of this chapter’’ are            10. Section 147.7 is amended as             this chapter’’.
added in the following places:                 follows:
  i. In paragraph (c)(1)(ii)(C),                  a. In footnote 5, the words ‘‘2nd           § 147.24   [Amended]
immediately after the words ‘‘with             Edition’’ are removed and the words               16. In § 147.24, paragraphs (b)(3) and
§ 147.8’’.                                     ‘‘3rd Edition’’ are added in their place       (c) are amended by removing the words
4               Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations

‘‘of this chapter’’ both times they           requires disconnection of the electrical       hire must comply with the regulatory
appear.                                       connector to the scavenge pump of the          requirements for air carriers and
  Done in Washington, DC, this 23rd day of    center wing tank; and a one-time               commercial operators. The FAA has not
December 1997.                                inspection to identify the part number         enforced these regulatory requirements
Craig A. Reed,                                of the electrical connector, and               consistently throughout the country. In
                                              replacement of the pump with a new             particular, it has not enforced them
Acting Administrator, Animal and Plant
Health Inspection Service.                    pump, if necessary.                            adequately against Alaskan guides, and
                                                As published, that AD contained an           many Alaskan guides conducting such
[FR Doc. 97–34179 Filed 12–31–97; 8:45 am]
                                              inadvertent omission in reference to           operations are not properly certificated
BILLING CODE 3410–34–P
                                              acceptable replacement components.             under applicable regulations. The FAA
                                              Throughout the preamble and in                 expects to provide those guides who do
                                              paragraph (a)(2) of the AD, the FAA            not currently hold the necessary
DEPARTMENT OF TRANSPORTATION                  required that a replacement scavenge           certification a fair opportunity to
                                              pump be new. However, the FAA                  achieve compliance with the applicable
Federal Aviation Administration               intended that a serviceable scavenge           regulations. During 1998, the FAA
14 CFR Part 39                                pump also be specified as an acceptable        intends to offer certification clinics for
                                              replacement component. In all other            these guides in three Alaskan cities in
[Docket No. 97–NM–271–AD; Amendment           respects, the original document is             order to expedite the necessary
39–10230; AD 97–25–06]                        correct.                                       certification process for the influx of
RIN 2120–AA64
                                                Since no other part of the regulatory        these new operators. This notice is
                                              information has been changed, the              published to emphasize these regulatory
Airworthiness Directives; Boeing              entire final rule is not being                 requirements.
Model 747 Series Airplanes                    republished.                                   EFFECTIVE DATE: This notice is effective
                                                The effective date of the AD remains         December 24, 1997.
AGENCY:  Federal Aviation                     December 16, 1997.                             FOR FURTHER INFORMATION CONTACT:
Administration, DOT.                                                                         Jerry Paterson, Technical Standards
                                              § 39.13   [Corrected]
ACTION: Final rule; correction.                                                              Branch Manager, AAL–230, Federal
                                                 On page 63623, in the second column,
                                              paragraph (a)(2) of AD 97–25–06 is             Aviation Administration, Alaskan
SUMMARY: This document corrects
                                              corrected to read as follows:                  Region Headquarters, 222 West 7th
information that appeared in                                                                 Avenue, #14, Anchorage, Alaska 99513,
airworthiness directive (AD) 97–25–06,        *      *      *     *     *                    Telephone 907–271–5514 or Kathleen
amendment 39–10230, that was                     (2) If an electrical connector having a
                                                                                             Yodice, Office of the Chief Counsel,
published in the Federal Register on          part number other than the correct part
                                                                                             AGC–300, Federal Aviation
December 1, 1997 (62 FR 63622). The           number (as specified in the alert service
                                                                                             Administration, 800 Independence
error resulted in an advertent omission       bulletin) is installed: Prior to further
                                                                                             Avenue, S.W., Washington, D.C. 20591,
in reference to acceptable replacement        flight, replace the scavenge pump with
                                                                                             Telephone 202–267–9956.
components. This AD, applicable to            a new or serviceable scavenge pump
certain Boeing Model 747 series               with an electrical connector having the        SUPPLEMENTARY INFORMATION:
airplanes, requires disconnection of the      correct part number (as specified in the       History
electrical connector to the scavenge          alert service bulletin) in accordance
pump of the center wing tank. This AD         with the Accomplishment Instructions              In Alaska there are organizations
also requires a one-time inspection to        of the alert service bulletin.                 generally referred to as ‘‘guides,’’ that
identify the part number of the electrical                                                   offer commercial packages for persons
                                              *      *      *     *     *
connector; and replacement of the pump          Issued in Renton, Washington, on
                                                                                             seeking to hunt, fish, and engage in
with a new or serviceable pump, if            December 24, 1997.                             other similar sport activities within the
necessary.                                    Darrell M. Pederson,                           state of Alaska. This industry has grown
                                                                                             to be a major economic activity in
DATES: Effective December 16, 1997.           Acting Manager, Transport Airplane
                                              Directorate, Aircraft Certification Service.   Alaska contributing directly and
  The incorporation by reference of                                                          indirectly to the livelihood of a
certain publications listed in the            [FR Doc. 97–34180 Filed 12–31–97; 8:45 am]
                                                                                             significant percentage of the state’s
regulations was previously approved by        BILLING CODE 4910–13–P
                                                                                             population. The use of an aircraft plays
the Director of the Federal Register as of                                                   a key role in these operations because it
December 16, 1997 (62 FR 63622,                                                              is often the guide’s only reasonable
December 1, 1997).                            DEPARTMENT OF TRANSPORTATION
                                                                                             means of transporting customers. In
FOR FURTHER INFORMATION CONTACT:              Federal Aviation Administration                some instances, these guides transport
Chris Hartonas, Aerospace Engineer,                                                          people by aircraft from airports within
Systems and Equipment Branch, ANM–            14 CFR Parts 119, 121, and 135                 the state of Alaska to lodges within the
130S; or G. Michael Collins, Aerospace                                                       state of Alaska. They often transport
Engineer, Propulsion Branch, ANM–             Compliance With Parts 119, 121, and            persons and supplies to and from lodges
140S; FAA, Transport Airplane                 135 by Alaskan Hunt and Fish Guides            and remote hunting and fishing sites
Directorate, Seattle Aircraft Certification   Who Transport Persons by Air for               within the state of Alaska. As a general
Office, 1601 Lind Avenue, SW., Renton,        Compensation or Hire                           rule, the hunting and fishing sites are
Washington 98055–4056; telephone              AGENCY: Federal Aviation                       not easily accessible by any
(425) 227–2864 or (425) 227–2689; fax         Administration (FAA), DOT.                     conventional mode of surface
(425) 227–1181.                                                                              transportation. Charges for the flights
                                              ACTION: Notice to operators.
SUPPLEMENTARY INFORMATION: On                                                                are usually not separately itemized on a
November 26, 1997, the FAA issued AD          SUMMARY:   Operators transporting              bill, but are usually included in the
97–25–06, amendment 39–10230 (62 FR           persons or property by air from one            ‘‘package price.’’ Many of the guides
63622, December 1, 1997). The AD              location to another for compensation or        conduct only day, VFR operations and
               Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations                                   5

employ only one pilot. Some of these          compensation for the transportation,         associated with those operations.
pilots hold the minimum airman                either by separate charge or by an           Accordingly, the Alaskan Regional
certification for flying passengers not for   amount included in a ‘‘package price.’’      Flight Standards Division recommended
compensation, i.e., a private pilot           The transportation by air is itself an       taking action to ensure the higher level
certificate without an instrument rating,     integral, major part of the enterprise for   of aviation safety that is required for
which is not valid for commercial             profit. Without the transportation by air,   commercial operations involving
operations. This transportation of            the business arrangement would likely        transportation by air that is engaged in
persons from one location to another          not exist. Furnishing transportation by      by guides.
location is transportation by air for         air is a crucial part of the guide’s            In May 1994, the National
compensation or hire, and requirements        package because there is no alternative,     Transportation Safety Board (NTSB)
contained in part 119, and parts 121 or       practical, or commercially acceptable        made several safety recommendations to
135, are applicable.                          way for the customers to get to the lodge    the FAA based on its own study of the
   Part 119 contains the certification        or to the remote hunting or fishing sites.   Alaskan guide operations. See NTSB
requirements for operations conducted         The lack of proper enforcement in this       recommendations A–94–99 and A–94–
under part 121 and for operations             situation is contrary to the FAA’s           100. The NTSB studied 29 aircraft
conducted under part 135. Operation           consistent interpretation that               accidents involving pilots working in
conducted under part 121 or part 135          transportation of persons from point to      guide operations in Alaska who had
provide a higher level of safety than         point, even to remote sites and even         been operating only under part 91 and
those conducted solely under part 91.         when no separate charge is made, is          not also under the more stringent
Alaskan guides providing transportation       transportation of persons by air for         standards of part 135. Specifically, the
by air to persons form one point to           compensation or hire requiring the           NTSB considered those aircraft
another point for compensation or hire        appropriate commercial FAA                   accidents that had occurred over a two-
are acting as air carriers or commercial      certification.                               year period, from July 4, 1991, to August
operators, and each must comply with             It should not be assumed that all         31, 1993. The NTSB concluded that
the applicable requirements of part 121       guides operating within the state of         because of the large number of accidents
or part 135, including proper                 Alaska have been operating under part        and causal factors revealed by the study,
certification of pilots, proper training of   91 only. On the contrary, many guides        there are serious safety problems
pilots, and proper maintenance of             have obtained part 121 or part 135           associated with guides who
aircraft.                                     certification and have been operating in     commercially transport persons from
   In the past, the FAA’s Alaskan Region      compliance with those standards. This        point to point solely under part 91, and
has not enforced part 121 or part 135,        notice is intended to ensure                 that the number of accidents and a
as applicable, against those guides who       improvement in consistently enforcing        review of the legal issues involved
provide transportation by air to persons      compliance with, and that all of the         warrant action to enhance the level of
patronizing their lodges. The Alaskan         guides operate under the stricter and        passenger safety by ensuring that these
Region’s enforcement, inconsistent with       safer aviation standards of, parts 119,      operations are operated under part 135.
enforcement in the rest of the country,       121, and 135, as applicable. As a result,    THe NTSB observed that ‘‘the overall
was apparently based, in part, upon a         all of the guides will operate under         [Alaska flying] operation requires a high
misunderstanding of when an aircraft          similar high standards and will receive      degree of knowledge, skill,
operation is ‘‘merely incidental’’ to the     fair and consistent treatment under the      professionalism, respect for the
guide services and upon incorrect             Federal Aviation Regulations.                elements, and a keen awareness of the
analysis of circumstances in which it            The FAA’s statutory and regulatory        limitation of the aircraft and one’s self.’’
might be concluded that ‘‘no charge’’         provisions require that commercial air          In November 1995, the NTSB released
was made for the flight. On the ‘‘merely      transportation services are to be            a Safety Study that superseded its
incidental’’ issue, there appears to have     conducted under a higher standard of         earlier safety recommendations. See
been a misinterpretation of the scope         care than air operations that are not        NTSB Safety Study NTSB/SS–95–03.
and effect of a 1963 enforcement case         conducted for compensation or hire.          The NTSB reaffirmed its belief that the
involving a registered hunting guide,         However, wholly apart from the legal         requirements of part 135 are needed to
Administrator v. Marshall, 39 CAB 948         requirements that require operators          provide an enhanced level of safety to
(1963) (decided on an extremely narrow        transporting persons from point to point     guide operations by introducing safety
set of facts that involved a registered       to comply with parts 119, 121, and 135,      improvements and by facilitating FAA
guide’s single flight from base camp to       as applicable, there are safety concerns     oversight. The NTSB recommended
spot game from the air and return to          as well.                                     that, by December 31, 1996, the FAA
base camp, with no landing at a point            On December 31, 1992, the FAA’s           take action that would ensure that the
other than the point of takeoff).             Alaskan Regional Flight Standards            transportation by air services provided
   This local misunderstanding was not        Division released a Study of Aviation        by Alaskan guides are conducted under
based on any agency interpretation or         Commercial Guiding Activities Within         a part 135 level of safety. See NTSB
policy, and it must be corrected. The         the State of Alaska. The purpose of the      recommendation A–95–134.
use of aircraft by a guide who transports     study was to assess the safety of
customers to and from hunting or              transportation by air associated with        Regulatory Compliance
fishing sites and from their lodge may        commercial hunting, fishing, and               To promote uniform compliance
not reasonably be viewed as ‘‘merely          guiding activities within the state of       under parts 119, 121, and 135, as
incidental’’ to the guide’s business, even    Alaska. In that study, the Alaskan           applicable, those guides carrying
when no separate charge is made for the       Regional Flight Standards Division           persons and/or cargo by air for
flights. Rather, it is an integral part of    concluded that those guides who              compensation or hire, who have not
the guide’s business to transport the         conducted transportation by air solely       done so, must apply for and obtain an
customer to the remote fishing or             under part 91 experienced a higher           air carrier or commercial operating
hunting sites. It is, in fact,                number of accidents and violations of        certificate and appropriate operations
transportation of persons from point to       the Federal Aviation Regulations,            specifications. 14 CFR 119.5, 119.21,
point and those persons are paying            indicating a lower level of safety           119.33. These guides are required to
6             Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations

seek and obtain certification under part      applicable security requirements            certificates or commercial operating
119 for operations under part 121 or          contained within 14 CFR part 108. 14        certificates and appropriate operations
part 135, as applicable. The FAA              CFR 135.125.                                specifications to the guides when they
anticipates that most guides                 —Drug and alcohol testing                    are determined to be qualified.
transporting persons from point to point      requirements: each part 135 operator          Issued in Washington, DC on December 24,
for compensation or hire will conduct         must establish a drug and alcohol           1997.
those operations in accordance with the       testing program under 14 CFR 135.251        Guy Gardner,
requirements contained within part 135.       and 135.255.
                                                                                          Associate Administrator for Regulation and
Qualification to obtain the appropriate      Compliance Plan                              Certification.
part 119 certification principally
                                                The FAA intends to implement a plan       [FR Doc. 97–34164 Filed 12–31–97; 8:45 am]
includes the following:
—Level of airman certification; pilots       to aid guides and other new part 121 or      BILLING CODE 4910–13–M

   conducting operations under part 135      part 135 operators in obtaining the
   must hold, at a minimum, a                appropriate part 119 certification in an
   commercial pilot certificate and a        efficient, expeditious manner.               DEPARTMENT OF THE TREASURY
   Class II medical certificate. 14 CFR      Implementation of this plan is expected
                                             to occur during the 1998 calendar year.      Internal Revenue Service
   61.3, 135.95, and 135.243. In addition,
   pilots may be required to hold an         During the year, the FAA may, of
                                             necessity, devote the bulk of its            26 CFR Parts 1 and 602
   instrument rating, except where such
   a rating is not required under 14 CFR     available resources to securing              [TD 8750]
   135.243(d).                               compliance by processing certification
                                                                                          RIN 1545–AV40
—Training and testing: each part 135         applications submitted by persons
   operator must properly test and keep      under this plan. Accordingly, resources      General Rules for Making and
   current the pilots who are used in        that would normally be devoted toward        Maintaining Qualified Electing Fund
   these operations. 14 CFR 135.97.          investigation and enforcement may be         Elections
   Subpart G of 14 CFR part 135              constrained. The FAA does not expect
   prescribes the tests and checks each      enforcement actions related to guides        AGENCY:  Internal Revenue Service (IRS),
   operator must perform. Subpart H of       operating without proper certification to    Treasury.
   14 CFR part 135 prescribes the            be a major focus during implementation       ACTION: Temporary and final
   requirements for establishing and         of the certification plan. However,          regulations.
   maintaining an approved training          following this period, FAA resources
                                             will be available for a strong               SUMMARY:   This document contains
   program. Those part 135 operators                                                      temporary regulations that provide
   who employ more than one pilot will       enforcement response regarding any
                                             guides providing transportation by air       guidance to a passive foreign investment
   be required to provide training to                                                     company (PFIC) shareholder that makes
   those pilots. 14 CFR 135.341.             for compensation or hire without proper
                                             certification. In addition, the FAA          the election under section 1295 (section
—Aircraft requirements: each part 135
                                             expects that resources will be available     1295 election) to treat the PFIC as a
   operator must have exclusive use of at
                                             at that time to permit a special emphasis    qualified electing fund (QEF). This
   least one aircraft, 14 CFR 135.25, and
                                             on investigation and enforcement of          document also contains temporary
   must accomplish annual and 100-
   hour inspections or comply with an        compliance with the appropriate              regulations that provide guidance for
   approved inspection program on each       certification and operational                shareholders that wish to make a section
   of these aircraft, 14 CFR 135.71 and      requirements for those guides who            1295 election that will apply on a
   135.421. Subpart C of 14 CFR part 135     transport persons by air for                 retroactive basis (retroactive election).
   sets forth aircraft and equipment         compensation or hire.                        In addition, this document contains a
   requirements, which must be                  The Alaskan Regional Flight               temporary regulation that provides
   complied with in addition to those        Standards District Offices (FSDOs)           guidance under section 1291 to a PFIC
   aircraft and equipment requirements       intend to hold two informational             shareholder that is a tax-exempt
   under 14 CFR part 91.                     meetings in three different locations        organization. Temporary regulations are
—Maintenance requirements: each part         within the State of Alaska. The three        needed to provide taxpayers additional
   135 operator using an aircraft that is    Alaskan locations are Anchorage,             time to satisfy certain requirements to
   type certificated with a seating          Fairbanks, and Juneau. The meetings          make the section 1295 election. The text
   configuration of 9 seats or less,         will be held in the spring and in the fall   of these temporary regulations also
   excluding any pilot seat, shall           of 1998 in each location, most likely        serves as the text of proposed
   maintain that aircraft in accordance      over a weekend. In addition, the FSDOs       regulations set forth in the notice of
   with 14 CFR parts 43 and 91, and          will provide information and guidance        proposed rulemaking on this subject in
   those requirements set forth in           to those guides who contact or visit the     the Proposed Rules section of this issue
   subpart J of 14 CFR part 135. Each        FSDOs in Anchorage, Fairbanks, and           of the Federal Register. In addition, this
   operator shall comply with the            Juneau. Information concerning the           document removes § 1.1291–9(i)(1) of
   aircraft manufacturer’s recommended       technical requirements will be available     the final regulations, and amends
   maintenance program or a program          at the meetings and at the FSDOs.            § 1.1297–3T. References to sections
   approved by the FAA. 14 CFR               During the weekend meetings, the             1296 and 1297 in this document are
   135.421.                                  FSDOs will be providing personnel who        references to sections 1296 and 1297 as
—Periodic surveillance: each part 135        will conduct flight tests and examine        in effect before the effective date of
   operator may be subject to periodic       documentation and aircraft.                  section 1122(a) of the Tax Relief Act of
   inspections of its required records and      The FAA expects to accept and             1997.
   its facilities. 14 CFR 135.73 and         consider part 119 certification              DATES: These regulations are effective
   135.75.                                   applications from guides during these        January 2, 1998.
—Airplane operator security: each part       weekend meetings. The FAA further              For dates of applicability, see
   135 operator must comply with the         expects to issue air carrier operating       §§ 1.1291–1T(e)(2), 1.1293–1T(a)(2)(ii),
              Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations                                7

1.1293–1T(c)(3), 1.1295–1T(k), 1.1295–       further amended by the Omnibus              1297(b)(1) to purge the PFIC taint from
3T(h), and § 1.1297–3T(c)(3) of these        Budget Reconciliation Act of 1993.          stock of a foreign corporation that is
regulations.                                 Section 1297 also was amended by the        treated as stock of a PFIC under section
FOR FURTHER INFORMATION CONTACT:             Revenue Reconciliation Act of 1989 and      1297(b)(1). Section 1.1291–9(i)(1) of the
Gayle Novig, (202) 622–3840 (not a toll-     the Small Business Job Protection Act of    regulations, published December 27,
free number).                                1996. In addition, the Taxpayer Relief      1996 (61 FR 68149), provides that the
                                             Act of 1997 (1997 TRA) amended              deemed dividend election rules of
SUPPLEMENTARY INFORMATION:                   section 1 to provide categories of long-    § 1.1291–9 do not apply to elections
Paperwork Reduction Act                      term capital gain and the maximum           made under section 1297(b)(1). A
                                             rates of tax to which the categories are    similar rule had been provided in
  These regulations are being issued
                                             subject. In certain cases, this             temporary regulations published April
without prior notice and public
                                             amendment affects the calculation of net    1, 1992 (52 FR 10992). The temporary
procedure pursuant to the
                                             capital gain for purposes of section        regulations, which had been effective
Administrative Procedure Act (5 U.S.C.
                                             1293.                                       April 1, 1992, sunset April 1, 1995.
553). For this reason, the collections of       Guidance for making the election            Treasury and the Service believe that
information contained in these               under section 1295 was first provided       immediate guidance in the form of
regulations have been reviewed and,          on March 2, 1988, in the Federal            temporary regulations regarding the
pending receipt and evaluation of            Register (53 FR 6770), with the             section 1295 election is necessary. First,
public comments, approved by the             publication of temporary regulations        the regulations provide significant new
Office of Management and Budget under        (TD 8178) relating to the section 1295      QEF election procedures that are
control number 1545–1555. Responses          election. These temporary regulations       beneficial to taxpayers. For example, the
to these collections of information are      provided guidance to PFICs making the       regulations provide procedures for both
mandatory.                                   section 1295 election and therefore         retroactive and protective elections. The
  An agency may not conduct or               became obsolete with the 1988               benefits provided by these changes may
sponsor, and a person is not required to     amendment to section 1295. The              be jeopardized, or simply unavailable
respond to, a collection of information      Internal Revenue Service published          (as a result of closed taxable years), if
unless the collection of information         Notice 88–125, 1988–2 C.B. 535, to          taxpayers cannot immediately rely on
displays a valid control number.             provide guidance to shareholders            them. Second, although the regulations
  For further information concerning         making the section 1295 election under      embody guidance already provided in
these collections of information, and        section 1295, as amended. Notice 88–        Notice 88–125, the regulations
where to submit comments on the              125 was an administrative                   significantly reduce the burden for
collections of information and the           pronouncement, as that term is used in      making and maintaining the election
accuracy of the estimated burden, and        § 1.6661–3(b)(2) of the Income Tax          and clarify, most often in favor of
suggestions for reducing this burden,        Regulations, and taxpayers could rely       taxpayers, significant ambiguities left by
please refer to the preamble to the cross-   on Notice 88–125 to the same extent as      the Notice. Treasury and the Service
referencing notice of proposed               a revenue ruling or a revenue procedure.    believe that the benefits of immediate
rulemaking published in the Proposed         Notice 88–125 stated that taxpayers         guidance significantly outweigh any
Rules section of this issue of the Federal   could rely on the notice until              advantage obtained by issuing the
Register.                                    regulations were published, and that        regulations in proposed form only
  Books or records relating to a             those regulations would be effective for    because these temporary regulations
collection of information must be            taxable years beginning after December      prevent prejudice to taxpayers as a
retained as long as their contents may       31, 1986.                                   consequence of a further delay in
become material in the administration           Proposed regulations published April     guidance and because they benefit
of any internal revenue law. Generally,      1, 1992 (57 FR 11024), provide a general    taxpayers by providing additional time
tax returns and tax return information       rule regarding the application of section   to make certain elections. Finally, the
are confidential, as required by 26          1291 to a PFIC shareholder that is an       temporary regulations provide guidance
U.S.C. 6103.                                 organization exempt from tax under          concerning the manner in which section
Background                                   chapter 1. In addition, these proposed      1(h), which was added to the Code by
                                             regulations provide general rules           1997 TRA, effective for taxable years
  This document contains amendments          regarding the application of section        ending after May 6, 1997, applies to
to the Income Tax Regulations (26 CFR        1293 and special rules regarding the        determine the net capital gain of the
part 1) under sections 1291, 1293, 1295,     application of section 1295, including      PFIC and the QEF shareholder’s pro rata
and 1297 of the Internal Revenue Code.       rules with respect to transfers of PFIC     share of the net capital gain. Therefore,
Sections 1291, 1293, 1295, and 1297          stock subject to a section 1295 election.   it would be impractical and contrary to
were added by the Tax Reform Act of          Proposed regulation § 1.1295–2,             public interest to issue this Treasury
1986, effective for taxable years of         published December 24, 1996 (61 FR          decision with prior notice under section
foreign corporations beginning after         67752), permits certain shareholders to     553(b) of title 5 of the United States
December 31, 1986. As originally             make a special section 1295 election        Code.
enacted, the section 1295 election was       with respect to certain preferred stock.
an election made by the PFIC. The            Proposed regulation § 1.1293–2, also        Explanation of Provisions
Technical and Miscellaneous Revenue          published December 24, 1996 (61 FR             A foreign corporation is a passive
Act of 1988 (TAMRA) amended section          67752), provides the special inclusion      foreign investment company (PFIC) for
1295, effective for taxable years of         rules applicable to shareholders that       a taxable year if the foreign corporation
foreign corporations beginning after         make the special section 1295 election      satisfies either the income or asset test
December 31, 1986, to change the             with respect to their preferred stock.      of section 1296(a) for that year. A
section 1295 election to a shareholder-         Temporary regulations § 1.1297–3T,       foreign corporation is a PFIC under the
by-shareholder election. Sections 1291,      published March 2, 1988 (53 FR 6770),       income test if 75 percent or more of its
1293, and 1297 also were amended by          provides guidance for making the            gross income for its taxable year is
TAMRA; sections 1293 and 1297 were           deemed sale election under section          passive, or investment-type, income.
8             Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations

Alternatively, under the asset test, a      the temporary regulations introduce         lieu of passing on the PFIC Annual
foreign corporation is a PFIC if 50         rules for making a retroactive election.    Information Statement.
percent or more of the average fair         Finally, the temporary regulations             The temporary regulations allow
market value of its assets during its       provide guidance concerning the             PFICs and intermediaries more
taxable year are assets that produce or     application of the deemed dividend          flexibility in fulfilling these
are held for the production of passive      election rules to elections under section   requirements. A PFIC that owns directly
income. A shareholder of a foreign          1297(b)(1).                                 or indirectly any shares of one or more
corporation that qualifies as a PFIC is                                                 PFICs may provide its shareholders with
                                            1. Rules of Notice 88–125                   a PFIC Annual Information Statement in
subject to the interest charge regime of
section 1291 with respect to certain           Temporary regulation § 1.1295–1T(c)      which it combines the required
distributions by the PFIC and certain       through (g) adopts the rules provided in    information and representations of the
dispositions of its stock. Generally, a     Notice 88–125, with certain                 PFIC and any lower tier PFICs. The PFIC
shareholder may avoid the interest          modifications. These modifications          may use any format for a combined PFIC
charge regime by making a timely            reflect certain comments received with      Annual Information Statement provided
election under section 1295 to treat a      respect to the notice.                      the required information and
PFIC as a QEF, in which case the               Notice 88–125 describes the              representations are clearly presented
shareholder will be taxable annually        requirements a shareholder must satisfy     and identified with the respective
under section 1293 on its pro rata shares   to make and maintain a section 1295         corporations. Similarly, an intermediary
of the ordinary ordinary earnings and       election. In particular, each year the      through which a shareholder indirectly
net capital gain of the PFIC. Under         shareholder must file Form 8621 with        holds stock in more than one PFIC may
section 1295(a), a section 1295 election    its income tax return and attach a PFIC     provide the shareholder a combined
will apply with respect to the PFIC if      Annual Information Statement                statement based on multiple PFIC
the PFIC complies with requirements         (described below). In the year of           Annual Information Statements.
prescribed by the Secretary for purposes    election, the shareholder also must         Comments are requested concerning
of determining the ordinary earnings        attach a Shareholder Election Statement.    alternative reporting methods that could
and net capital gain of the PFIC and        Notice 88–125 requires satisfaction of      further reduce the burden on electing
otherwise carrying out the purposes of      the election and annual reporting           shareholders.
the PFIC provisions.                        requirements with respect to each PFIC         As provided in Notice 88–125, the
   Section 1295(b)(1) provides that a       for which the shareholder makes the         PFIC Annual Information Statement
shareholder may make a section 1295         section 1295 election.                      must include the shareholder’s pro rata
election with respect to a PFIC for any        Commenters indicated that these          shares of the ordinary earnings and net
taxable year of the shareholder             election and annual reporting               capital gain of the PFIC for the PFIC’s
(shareholder election year). Once made,     requirements are burdensome,                taxable year or information that will
the election will apply to that year and    especially if the shareholder is making     enable the shareholder to calculate its
to all subsequent years of the              the election with respect to many           pro rata shares. In addition, the PFIC
shareholder unless revoked with the         foreign corporations. In response to the    Annual Information Statement must
consent of the Secretary. Section           comments, the temporary regulations         contain information about distributions
1295(b)(2) prescribes the time for          change these requirements to reduce the     to shareholders and a statement that the
making the election. In general, for the    burden on the electing shareholder.         PFIC will permit the shareholder to
section 1295 election to be applicable to   First, the temporary regulations            inspect and copy its permanent books of
a taxable year, the shareholder must        eliminate the need to file a Shareholder    account, records, and other documents
make the election by the due date, as       Election Statement. Second, the             of the PFIC necessary to determine that
extended under section 6081, for the        temporary regulations eliminate the         the ordinary earnings and net capital
shareholder’s return for that taxable       need to file a copy of the PFIC Annual      gain of the PFIC have been calculated
year. However, to the extent provided in    Information Statement with Form 8621        according to federal income tax
regulations, a section 1295 election may    and require instead that the shareholder    accounting principles. Commenters
be made for a taxable year after the time   retain a copy of the PFIC Annual            indicated that it was unclear in the
required if the shareholder failed to       Information Statement for production        notice whether a shareholder, rather
make a timely election because the          upon examination by the Service. Thus,      than the PFIC, could calculate the
shareholder reasonably believed that the    to make and maintain a section 1295         requisite federal income tax information
foreign corporation was not a PFIC.         election, the shareholder need only file    with respect to a PFIC that did not keep
   This document provides temporary         Form 8621 for each PFIC on an annual        its books and records according to U.S.
regulations that interpret sections 1291,   basis and maintain records to support       Tax accounting rules. In response to the
1293, 1295, and 1297. In particular, the    the information entered on that form.       comments, the temporary regulations
temporary regulations incorporate the          Notice 88–125 imposes certain            clarify that a shareholder may obtain the
rules of Notice 88–125, with certain        requirements on PFICs and on                books, records and other documents of
modifications. The temporary                intermediaries through which                the foreign corporation necessary for the
regulations also clarify the rules of the   shareholders own PFIC stock. The            shareholder to determine the correct
notice and proposed regulation              notice requires a PFIC to provide its       earnings and profits and net capital gain
§ 1.1295–1(b) with respect to the           shareholders with a PFIC Annual             of the PFIC according to federal income
application of section 1295 to options,     Information Statement containing            tax principles and calculate the
lapse of PFIC status, cessation of          information necessary to determine each     shareholder’s pro rata shares of the
ownership of PFIC stock, transfer of        shareholder’s yearly income inclusion.      PFIC’s ordinary earnings and net capital
stock subject to a section 1295 election    In the case of indirect ownership of        gain. The temporary regulations provide
to a pass through entity, and tax-exempt    PFIC stock, a nominee or shareholder of     that, in that case, the PFIC must include
organizations. The temporary                record that has received a PFIC Annual      a statement in its PFIC Annual
regulations also provide rules regarding    Information Statement may issue its         Information Statement that it has
invalidation, termination and revocation    own statement to the shareholder            permitted the shareholder to examine
of a section 1295 election. In addition,    containing the relevant information in      the PFIC’s books of account, records,
              Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations                                  9

and other documents necessary for the         termination of section 1295 election          2. Additional Clarifications
shareholder to calculate the amounts of       when a partnership terminates, the
                                                                                            A. Options
ordinary earnings and net capital gain.       partners of the former partnership that
   Notice 88–125 provides that a              are partners of the new partnership are          Options with respect to PFIC stock
domestic partnership makes the section        bound by the section 1295 election            present unique problems under section
1295 election rather than each                made by the former partnership whether        1295. Section 1297(a)(4) provides that,
individual partner that is an indirect        or not the new partnership makes a            under regulations, an option to acquire
shareholder of the PFIC by reason of the      section 1295 election.                        stock may be treated as ownership of
partner’s interest in the partnership. The       Notice 88–125 does not provide any         stock.
notice also provides that an S                special rules concerning tax-exempt
corporation makes the section 1295            entities. As provided in proposed                Proposed regulations under section
election. This entity-level election in the   regulations under section 1291 (see           1291 (see Regulation Project INTL–656–
case of domestic partnerships and S           Regulation Project INTL–656–87,               87, published in 1992–1 C.B. 1124)
corporations reflects the view that           published at 1992–1 C.B. 1124), section       provide that options are treated like
multiple elections by the partners or S       1291 and the regulations under section        stock for purposes of section 1291.
corporation shareholders would be more        1291 apply to a tax-exempt organization       Under proposed regulation § 1.1291–
burdensome than the single entity-level       that is a shareholder of a PFIC that is not   1(d), an option is considered to be stock
election. The temporary regulations           a pedigreed QEF, within the meaning of        of a PFIC that is not a pedigreed QEF for
adopt the rules of the notice with            § 1.1291–9(j)(2)(ii), only if a dividend      purposes of applying section 1291 to a
respect to elections by domestic pass         from the PFIC would be taxable to the         disposition of the option, unless the
through entities, clarifying that the         organization under subchapter F.              holder of the actual stock which is
section 1295 election with respect to         Section 1.1291–1T(e) of these temporary       subject to the option is currently
stock owned directly or indirectly by a       regulations provides the same rule. To        including income from the stock under
domestic trust or estate generally is also    prevent such a tax-exempt organization        section 1293. Under proposed
made at the entity level. The temporary       from being subject to an unnecessary          regulation § 1.1291–1(h)(3), the holding
regulations also adopt the rules of the       section 1295 election that may have           period of stock acquired upon exercise
notice with respect to interests held by      adverse consequences to the tax-exempt        of an option treated as stock under
foreign pass through entities. Interest       entity (e.g., an excise tax on gross          § 1.1291–1(d) includes the period the
holder in foreign partnerships, trusts,       investment income of a private                option was held. These rules recognize
and estates must make the section 1295        foundation that arises as a consequence       that the value of an option is linked to
election with respect to their indirect       of a section 1295 election), the              the value of the underlying stock and
interests in PFICs held through those         temporary regulations provide a rule          therefore such an option should be
entities; foreign entities may not make       that precludes a tax-exempt entity that       subject to the PFIC rules.
the section 1295 election.                    is not taxable with respect to dividends         Because of the potential for
   Partnerships, S corporations, trusts,      from a PFIC from making a section 1295        application of section 1291 to options or
and estates are referred to as pass           election with respect to that PFIC or         stock acquired upon exercise of options,
through entities in the temporary             from being subject to a pass through          some option holders have requested that
regulations. The regulations clarify that     entity level election.                        regulations provide rules for making a
an election made by a domestic pass              Commenters indicated that Notice 88–       section 1295 election with respect to an
through entity is made in the pass            125 is unclear about which taxable year       option. Application of a section 1295
through entity’s capacity as a                of the PFIC is the first taxable year to      election and the section 1293 current
shareholder, as specially defined in          which the section 1295 election applies.      inclusion regime to options would
temporary regulation § 1.1295–1T(j) for       Temporary regulation § 1.1295–1T(c)(2)        present serious computational issues
purposes of the section 1295 election         clarifies that the section 1295 election is   and would be administratively
provisions. Thus, the domestic pass           effective with respect to the taxable year
                                                                                            burdensome. Therefore, the temporary
through entity takes the section 1293         of the foreign corporation that ends
                                                                                            regulations continue the rule that any
inclusion into account in its return for      during the shareholder’s election year.
                                                                                            shareholder’s section 1295 election with
the year in which or with which the           Because certain shareholders may have
                                                                                            respect to stock of a PFIC does not apply
PFIC’s taxable year ends, and the             misinterpreted Notice 88–125, the
                                                                                            to options to acquire stock of the PFIC
interest holders in the pass through          Commissioner will respect a section
                                                                                            and that an option holder may not make
entity take the section 1293 inclusion        1295 election made prior to February 2,
                                                                                            a section 1295 election with respect to
into account under the rules applicable       1998 that was intended to be effective
                                                                                            the optioned stock. Accordingly, if a
to inclusions of income from the pass         for the taxable year of the PFIC that
                                                                                            shareholder of stock subject to a section
through entity. In addition, the              began during the shareholder’s election
temporary regulations clarify that if an      year provided that it is clear from all the   1295 election exercises an option to
interest holder in a domestic pass            facts and circumstances that the              purchase additional shares of stock of
through entity transfers stock of a PFIC      shareholder intended the election to be       that PFIC, the stock received will be
subject to a section 1295 election to the     effective for that taxable year of the        subject to the section 1295 election
pass through entity, the section 1295         foreign corporation. For example, a           made by the shareholder, but, because
election continues to apply to the            calendar year shareholder that made the       of the rules of proposed regulation
interest holder whether or not the pass       section 1295 election in its 1995 return      § 1.1291–1(h)(3), the stock may be
through entity makes the section 1295         with respect to a foreign corporation         treated as stock of an unpedigreed QEF.
election.                                     whose taxable year began in 1995 and             Comments are requested concerning
   Similarly, the temporary regulations       ended in 1996, with the intention that        the option rule. In particular, comments
clarify the effect of the termination         the election first apply to the foreign       are requested that identify any
under section 708(b) of a partnership on      corporation’s taxable year ended in           administratively feasible mechanisms
a section 1295 election made by the           1996, will be treated as having made a        that would permit a shareholder to
partnership. Section 1.1295–1T(b)(3)(iii)     valid section 1295 election with respect      make a section 1295 election that will
provides that, notwithstanding the            to that year.                                 apply to options.
10            Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations

B. Section 1295 Election Made in a Joint     provides the rules for requesting             calculated, especially in light of the
Return                                       consent to revoke an election.                1997 Act changes to section 1.
                                                The effects of an invalidation,              The temporary regulations under
   Section 1.1295–1T(b)(4) of the
                                             termination, or revocation of a section       section 1293 also clarify the application
temporary regulations clarifies the
                                             1295 are provided in § 1.1295–1T(i)(3)        of the current inclusion rules of section
application of a section 1295 election
                                             of the temporary regulations. In the          1293 to interests in a QEF held through
made in a joint return within the
                                             Commissioner’s discretion, stock of a         a domestic pass through entity. The
meaning of section 6013. The temporary
                                             foreign corporation, with respect to          temporary regulations provide generally
regulations provide that a section 1295                                                    that a U.S. person that is a shareholder
election made in a joint return will be      which the section 1295 election is
                                             invalidated, terminated, or revoked will      of the QEF by reason of an interest in
treated as having been made by both                                                        a domestic pass through entity takes
spouses that join in the filing of that      be treated as sold as of the last day of
                                             the PFIC’s last taxable year as a QEF.        into account its pro rata shares of the
return.                                                                                    ordinary earnings and net capital gain of
                                             The Commissioner also has the
C. Lapse in PFIC Status or in Ownership      discretion to impose any other terms          the QEF attributable to the QEF shares
                                             and conditions that the Commissioner          held by the pass through entity
   Section 1.1295–1T(c)(2) of the
                                             deems necessary to ensure a                   according to the general rules applicable
temporary regulations clarifies the
                                             shareholder’s compliance with sections        to inclusions of income from the pass
status of a shareholder’s section 1295
                                             1291 through 1297. In addition,               through entity.
election with respect to a foreign
corporation after the foreign corporation    revocation will terminate all section         4. Exempt organizations subject to
ceases to be a PFIC and a QEF, or after      1294 elections.                               section 1291
the shareholder ceases to be a                  Section 1.1295–1T(i)(4) of the                As stated above, the temporary
shareholder of the PFIC. In general, once    temporary regulations permits a               regulations include the rule of proposed
a section 1295 election is made with         shareholder to make another section           regulation § 1.1291–1(e). Under
respect to a corporation, it remains in      1295 election with respect to the PFIC        temporary regulation § 1.1291–1T(e), if
effect, although not applicable, during      after the fifth taxable year following the    the shareholder of a PFIC is an
those years that the foreign corporation     invalidation, termination, or revocation.     organization exempt from tax under this
is not a PFIC. Therefore, if the             However, the shareholder may request          chapter (including an Individual
corporation requalifies as a PFIC, the       consent to make the section 1295              Retirement Account (IRA)), section 1291
section 1295 election previously made        election for an earlier taxable year.         and these regulations apply to such
is still valid, and the shareholder is       3. Section 1293                               shareholder only if a dividend from the
required to satisfy the requirements of                                                    PFIC would be taxable to the
that election. Furthermore, as indicated        The temporary regulations provide          organization under subchapter F.
in H.R. No. 795, 100th Cong., 2d Sess.,      guidance to PFICs concerning the
at 567 (1988), an election remains in        application of section 1(h) to section        5. Effective Dates of Temporary
effect with respect to a shareholder,        1293 and the calculation of net capital       Regulations §§ 1.1291–1T(e), 1.1293–
although dormant, after a shareholder        gain. Section 1.1293–1T(a)(2) of the          1T(a)(2), 1.1293–1T(c) and 1.1295–1T
disposes of its entire interest in the       temporary regulations provides three             As stated above, Notice 88–125
PFIC. Upon the shareholder’s                 alternatives for a QEF to calculate and       provides that the notice’s rules will be
reacquisition of a interest in the PFIC,     report net capital gain. First, the PFIC      provided in regulations applicable to
the section 1295 election will apply to      may calculate and report to its share-        taxable years beginning after 1986.
the newly acquired stock.                    holders the amount of each category of        However, because the temporary
                                             long-term capital gain provided in            regulations do not adopt the rules of
D. Invalidation, Termination, and            section 1(h). Alternatively, the PFIC         Notice 88–125 in their entirety, the
Revocation of Section 1295 Elections         may determine and report a single             temporary regulations will not be
  As provided in temporary regulation        amount of net capital gain, stating that      retroactively applied. Therefore,
§ 1.1295–T(i)(1), the Commissioner has       that amount of long-term capital gain is      § 1.1295–1T(c) through (j) will apply to
discretion to invalidate or terminate a      subject to the highest capital gain rate of   taxable years of shareholders beginning
section 1295 election if the shareholder     tax applicable to the shareholder. Under      after December 31, 1997. As provided in
or the QEF fails to satisfy the section      the third option, the PFIC may treat the      § 1.1295–1T(h), the Internal Revenue
1295 election requirements. However,         total of its earnings and profits for the     Service will honor taxpayer reliance on
intentional failure to satisfy the section   taxable year as ordinary earnings. The        Notice 88–125 for taxable years
1295 election requirements will not          provision of these options is intended to     beginning after December 31, 1986, and
automatically result in invalidation or      simplify compliance with the                  before January 1, 1998. Thus, if a person
termination. If the Commissioner             requirements of sections 1293 and 1295.       made a valid section 1295 election
invalidates a section 1295 election, the     It is anticipated that, without providing     under the rules of Notice 88–125 for
shareholder will be treated as if it never   these options, some PFICs would not be        taxable years beginning before January
made a section 1295 election with            willing or able to calculate the              1, 1998, and, for those taxable years,
respect to the PFIC. If the Commissioner     categories of net capital gain required by    complied with the rules of the notice
terminates a section 1295 election for a     section 1(h) and therefore would not          relating to maintaining that election, the
taxable year, the section 1295 election      provide the information necessary for a       election remains in effect for taxable
will be valid for all taxable years before   QEF shareholder to maintain a valid           years beginning after December 31,
that year, but inapplicable to that year     section 1295 election. A shareholder          1997. However, elections made under
and all subsequent taxable years.            that has access to information necessary      Notice 88–125, as well as elections
  Once a shareholder makes a section         to calculate its pro rata share of the        made under these temporary
1295 election, the shareholder may           PFIC’s ordinary earnings and net capital      regulations, must be maintained as
revoke its section 1295 election only        gain may also use any of these options.       provided in the temporary regulations.
with the consent of the Commissioner.        The Service requests comments about              Temporary regulation § 1.1291–1T(e)
Temporary regulation § 1.1295–1T(i)(2)       how net capital gain should be                will apply on and after April 1, 1992.
              Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations                               11

Section 1.1293–1T(a)(2) of the                 The temporary regulations provide          know and understand the PFIC
temporary regulations will apply to          the exclusive rules for making a             provisions, and must make a good faith
sales by QEFs during their taxable years     retroactive election. Thus, a shareholder    effort to apply the income and asset
ending on or after May 7, 1997.              that does not satisfy the requirements of    tests of section 1296 to determine
Temporary regulation §§ 1.1293–1T(c)         the temporary regulations may not seek       whether the foreign corporation is a
and 1.1295–1T(b)(2)(iii), (b)(3), and        relief under any other provision of the      PFIC.
(b)(4) will apply to taxable years of        law, including § 301.9100 regulations.          Except for certain small shareholders,
shareholders beginning after December        Although such a shareholder may not          a shareholder must file a single
31, 1997.                                    make a retroactive election, the             Protective Statement pursuant to
                                             shareholder may be able to attain certain    temporary regulation § 1.1295–3T(c)
6. Retroactive Section 1295 Elections        benefits associated with a retroactive       that applies to a taxable year to preserve
a. In General                                election by making a section 1295            the shareholder’s ability to make a
                                             election for the current year together       retroactive election with respect to such
   Section 1295(b)(2) provides that, to
                                             with a purging election under section        taxable year of the shareholder and
the extent provided in regulations, a
                                             1291(d)(2).                                  subsequent taxable years. The Protective
shareholder may make a section 1295                                                       Statement must contain information
election with respect to a foreign           b. Protective Regime                         describing the basis for the
corporation later than the election due         A shareholder that satisfies the          shareholder’s conclusion as of the
date if the shareholder failed to make a     requirements of the protective regime        election due date that the foreign
timely section 1295 election because the     may make a retroactive election under        corporation was not a PFIC for its
shareholder reasonably believed that the     the rules of temporary regulation            taxable year that ended in the first
foreign corporation was not a PFIC. In       § 1.1295–3T(c) through (e) without           taxable year of the shareholder for
temporary regulation § 1.1295–3T,            obtaining the Commissioner’s consent.        which the Protective Statement applies.
Treasury and the Service interpret           This regime requires that the                As part of the Protective Statement, the
section 1295(b)(2) to permit a               shareholder possess reasonable belief,       shareholder must extend the periods of
shareholder of a PFIC to make a              contemporaneous with the election due        limitations for the assessment of taxes
retroactive election in certain limited      date, that the foreign corporation was       determined under sections 1291 through
circumstances where the shareholder          not a PFIC.                                  1297 (PFIC related taxes) for all taxable
possessed reasonable belief that the            The legislative history of section 1295   years to which the Protective Statement
corporation was not a PFIC or the            suggests that in certain circumstances a     will apply, as provided in § 1.1295–
shareholder demonstrates that it             shareholder that reasonably believed         3T(c)(4) of the temporary regulations.
reasonably relied on the advice of a         that a foreign corporation was not a         The shareholder also must include
qualified tax professional.                  PFIC for a taxable year (e.g., based on a    certain additional information in the
   As described below, the temporary         reasonable valuation of the                  Protective Statement. A special
regulations set forth two distinct sets of   corporation’s assets) may make a             transition rule permits shareholders to
rules for making a retroactive election.     retroactive election if the Service          use the protective regime for taxable
Under the first set of rules, a              determines, upon examination, that the       years ending prior to January 2, 1998
shareholder of a PFIC that meets certain     corporation was in fact a PFIC for such      provided the periods of limitations on
conditions may make a retroactive            taxable year (e.g., based on the Service’s   the assessment of taxes for such years
election without obtaining the consent       valuation of the corporation’s assets for    have not expired.
of the Commissioner (protective              the taxable year). Consistent with the          Temporary regulation § 1.1295–3T(e)
regime). A shareholder may make a            legislative history, temporary regulation    provides special rules for certain small
retroactive election under the protective    § 1.1295–3T(c) through (e) permits a         shareholders. A shareholder that
regime only if the shareholder possessed     shareholder to make a retroactive            qualifies under § 1.1295–3T(e) for a
reasonable belief as of the election due     election for a taxable year of the           taxable year will not be required to
date that the foreign corporation was not    shareholder (retroactive election year),     satisfy the reasonable belief requirement
a PFIC. A shareholder of a PFIC may          even if the Service raises the PFIC status   or file a Protective Statement to preserve
make a retroactive election under the        of the corporation upon audit. Although      the shareholder’s ability to make a
protective regime even after the issue of    the shareholder need not request the         retroactive election with respect to such
PFIC status has been raised in an audit      Service’s consent to make a retroactive      year (a qualified shareholder).
by the Service.                              election under this regime, the                 Except as provided below, a
   Under the second set of rules, a          shareholder must satisfy certain             shareholder is a qualified shareholder
shareholder may make a retroactive           conditions to make a retroactive             only if the shareholder owns, directly,
election only after obtaining the            election.                                    indirectly or constructively, less than
Commissioner’s consent (consent                 First, except for certain small           two percent of the vote and value of
regime). To make a retroactive election      shareholders, the shareholder must be        each class of stock of the foreign
under the consent regime, the                able to establish that the shareholder       corporation during such year, and has
shareholder must demonstrate, to the         reasonably believed, within the meaning      not filed a Protective Statement that
satisfaction of the Commissioner, that       of temporary regulation § 1.1295–3T(d),      applies to an earlier year included in the
the shareholder’s failure to make a          as of the election due date, that the        shareholder’s holding period of stock of
timely section 1295 election resulted        foreign corporation was not a PFIC.          the foreign corporation. In addition, for
from the shareholder’s reasonable            Temporary regulation § 1.1295–3T(d)          the special rule to apply to a taxable
reliance on the advice of a qualified tax    interprets the reasonable belief standard    year of the shareholder, the foreign
professional. A shareholder of a PFIC        to require an actual determination by        corporation or its U.S. counsel must
may not make a retroactive election          the shareholder, based on a good faith       have indicated in a corporate filing,
under the consent regime unless the          application of the law, that a foreign       shareholder mailing or similar
shareholder files a request for consent      corporation was not a PFIC. Therefore,       document that the foreign corporation
before the issue of PFIC status is raised    to satisfy the reasonable belief             reasonably believed that it was not a
on audit.                                    requirement, the shareholder must            PFIC for the taxable year of the foreign
12             Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations

corporation that ended with or within         section 1295 election on a timely basis.    domestic nongrantor trusts, and
such taxable year of the shareholder.         The temporary regulations provide that      domestic estates that own stock of a
However, no shareholder will be a             in certain cases the interests of the       PFIC, and a partner or beneficiary-level
qualified shareholder if the shareholder      government may be preserved by a            retroactive election in the case of foreign
knew that the corporation was in fact a       closing agreement between the Service       partnerships, foreign trusts, domestic
PFIC or knew or had reason to know            and the shareholder requiring the           grantor trusts, and foreign estates that
that a corporate filing relating to the       shareholder to make a payment to the        own stock of a PFIC.
corporation’s PFIC status was                 government that compensates the               The Service welcomes comments
inaccurate. For this purpose, a               government for amounts that would           concerning the benefits of requiring
shareholder will be treated as knowing        have been due in respect of closed years    certain entities, rather than their interest
that the corporation was in fact a PFIC       affected by the retroactive election.       holders, to satisfy the requirements
if the principal activity of the foreign         Under temporary regulation § 1.1295–     under the protective and consent
corporation is owning or trading a            3T(f)(2), the Service will treat a          regimes. In particular, comments are
diversified portfolio of stock, securities,   shareholder as having reasonably relied     requested concerning whether requiring
or other financial contracts. A qualified     on a qualified tax professional             S corporations, domestic nongrantor
shareholder that makes a valid                (including an employee of the               trusts, and domestic estates to satisfy
retroactive election in its earliest open     shareholder), within the meaning of the     the requirements of the protective
taxable year in which the foreign             § 301.9100 regulations, if the qualified    regime at the entity-level is
corporation is a PFIC may, subject to         tax professional failed to identify the     inappropriate.
certain conditions, be treated as a           corporation as a PFIC or failed to advise
                                                                                          e. Making a Retroactive Election
shareholder of a pedigreed QEF even if        the shareholder of the consequences of
the period of limitations for the             making, or failing to make, a section          A shareholder that has satisfied the
assessment of taxes for an earlier taxable    1295 election. Therefore, if a qualified    requirements of the protective regime or
year in which the corporation qualified       tax professional, due to ignorance of the   has obtained the consent of the
as a PFIC has expired.                        law or negligence, failed to identify the   Commissioner under the consent regime
                                              corporation as a PFIC or failed to advise   must comply with the rules in
c. Consent Regime                             the shareholder of the consequences of      temporary regulation § 1.1295–3T(g) for
   Certain taxpayers have urged the           making, or failing to make, the section     making a retroactive election. In general,
Service to interpret the reasonable belief    1295 election, the Commissioner may         the shareholder must file an amended
requirement of section 1295(b)(2) to          consent to a retroactive election.          return for the retroactive election year in
allow a shareholder to make a                 However, in no event will the               which the shareholder complies with
retroactive election if the shareholder or    Commissioner consent to a retroactive       the requirements for making a section
its tax adviser did not know or properly      election if, prior to the application for   1295 election, report its pro rata shares
apply the PFIC rules. In particular,          such consent, the Service has raised the    of the ordinary earnings and net capital
certain taxpayers have recommended            PFIC status of the foreign corporation in   gain of the foreign corporation for that
adoption of the reasonable action and         an audit of the retroactive election year   year (section 1293 inclusion), if any,
good faith standard of § 301.9100             or any subsequent year. Furthermore, a      and pay any taxes resulting from the
regulations for demonstrating                 shareholder may not disregard               redetermination of its income and any
reasonable belief.                            knowledge that the corporation was a        applicable section 6621 interest. The
   Treasury and the Service recognize         PFIC or advice or knowledge relating to     shareholder also must file amended
that the PFIC rules are complex and, in       the tax consequences of owning stock of     returns for the taxable years that follow
some cases, difficult for shareholders to     a PFIC and then request relief under this   the retroactive election year in which
apply. Accordingly, the temporary             regime.                                     the foreign corporation is a PFIC and a
regulations provide that, in certain                                                      QEF to report the section 1293 inclusion
limited circumstances, a shareholder          d. Who Makes a Retroactive Election         for each of these years, and pay the
may obtain the Commissioner’s consent         and Who Satisfies the Requirements of       resulting tax and section 6621 interest.
to make a retroactive election, even if       the Protective or Consent Regime            If the shareholder’s taxable year in
the shareholder failed to know or               Temporary regulation § 1.1295–3T          which the corporation first qualified as
properly apply the PFIC rules in the          adopts the rules of temporary regulation    a PFIC, or the retroactive election year
earlier year. Under temporary regulation      § 1.1295–1T(d), relating to who may         or any subsequent taxable years, are
§ 1.1295–3T(f), a shareholder that            make a section 1295 election, for           closed for the assessment of PFIC
reasonably relied on the advice of a          purposes of determining the appropriate     related taxes (i.e., in certain cases where
qualified tax professional may request        person to satisfy the requirements of the   the shareholder is a qualified
consent to make a retroactive election.       protective or consent regime and to         shareholder or the shareholder has
   In response to taxpayer comments,          make a retroactive election. Consistent     obtained the consent of the
Treasury and the Service have                 with these rules, temporary regulation      Commissioner to file a retroactive
incorporated into the consent regime          § 1.1295–3T(c)(3) provides that the         election), the shareholder must file
certain rules set forth in § 301.9100         person that executes and files the          amended returns to report section 1293
regulations. As described below,              Protective Statement under the              inclusions in all open affected years
temporary regulation § 1.1295–3T(f)(1)        protective regime is the person that        beginning with the first taxable year
and (4), respectively, require the            makes the section 1295 election, as         open for the assessment of tax on such
shareholder to have reasonably relied on      provided in § 1.1295–1T(d). Temporary       amounts.
a qualified tax professional and to           regulation § 1.1295–3T(f)(4)(vi) sets
document such reliance. The Service           forth a similar rule for requests for       7. Removal of § 1.1291–9(i)(1)
will not grant consent under this regime      consent under the consent regime. In           Section 1121 of the 1997 TRA amends
if doing so would prejudice the interests     addition, temporary regulation              section 1296, adding section 1296(e).
of the government by placing the              § 1.1295–3T(g)(3) provides for an entity-   Section 1296(e) provides that after
shareholder in a position more favorable      level retroactive election in the case of   December 31, 1997, a controlled foreign
then if the shareholder had made the          domestic partnerships, S corporations,      corporation (as defined in section
              Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations                                     13

957(a)) (CFC) will not be treated as a       return for its taxable year that includes     § 1.1291–0    [Amended]
PFIC with respect to a U.S. shareholder      the termination date, as defined in             Par. 2. Section 1.1291–0 is amended
(as defined in section 951(b)) of the        § 1.1297–3T(a), and apply the rules of        by removing and reserving the entry for
CFC. After a shareholder ceases to           the deemed dividend election to its           § 1.1291–9(i)(1).
qualify for this exception, because the      section 1297(b)(1) election at any time         Par. 3. The section heading and
shareholder creases to be subject to         before the expiration of the period of        introductory text for § 1.1294–0 are
subpart F, generally the shareholder will    limitations for the assessment of taxes       added to read as follows:
have a new holding period for purposes       for that taxable year. Section 1.1297–
of the PFIC provisions pursuant to           3T(c) is effective as of January 2, 1998.     § 1.1294–0    Table of contents.
section 1296(e)(3)(A). However,                                                              This section contains a listing of the
pursuant to section 1296(e)(3)(B), if the    Special Analyses                              headings for § 1.1294–1T.
foreign corporation was a nonqualified         It has been determined that this              Par. 4. The section heading and
fund before the shareholder qualified for    Treasury Decision is not a significant        introductory text for § 1.1297–0 are
this exception, and the shareholder did      regulatory action as defined in               added to read as follows:
not make the section 1297(b)(1) election     Executive Order 12866. Therefore, a
                                             regulatory assessment is not required.        § 1.1297–0    Table of contents.
to purge the stock of its PFIC taint, the
shareholder will not get a new holding       Pursuant to section 7805(f) of the              This section contains a listing of the
period when it ceases to qualify for the     Internal Revenue Code, these temporary        headings for § 1.1297–3T.
exception for U.S. shareholders of CFCs.     regulations will be submitted to the          § 1.1291–0T    [Amended]
Congress, in the Conference Report to        Chief Counsel for Advocacy of the Small
the 1997 TRA, H.R. Rept. 105–220,            Business Administration for comment             Par. 5. Section 1.1291–0T is amended
105th Congress, 1st session, at 625,         on their impact on small business. An         by:
stated that ‘‘the stock held by such         initial regulatory flexibility analysis has     1. Transferring the listing of the
shareholder continues to be treated as       been prepared for the proposed                section heading and entries for
PFIC stock unless the shareholder            regulations for which these temporary         § 1.1294–1T to new § 1.1294–0.
makes an election to pay tax and an                                                          2. Transferring the listing of the
                                             regulations serve as a text and which is
interest charge with respect to the                                                        section heading and entries for
                                             set forth in the notice of proposed
unrealized appreciation in the stock or                                                    § 1.1297–3T to new § 1.1297–0.
                                             rulemaking on this subject in the
the accumulated earnings of the                                                              3. Removing the section heading and
                                             Proposed Rules section of this issue of
corporation.’’ Congress thus indicated                                                     introductory text.
                                             the Federal Register.
its intent that a shareholder may apply                                                      Par. 6. Section 1.1291–1T is added to
the rules of either section 1291(d)(2)(A),   Drafting Information                          read as follows:
the deemed sale election, or section           The principal authors of these              § 1.1291–1T Taxation of U.S. persons that
1291(d)(2)(B), the deemed dividend           regulations are Gayle Novig and Judith        are shareholders of PFICs that are not
election, when making the section            Cavell Cohen, of the Office of the            pedigreed QEFs (temporary).
1297(b)(1) election to purge a former        Associate Chief Counsel (International).        (a) through (d) [Reserved].
PFIC of its PFIC taint. In order to give     Other personnel from the IRS and                (e) Exempt organization as
effect to that intent, Treasury and the      Treasury Department also participated         shareholder—(1) In general. If the
IRS have decided to remove § 1.1291–         in the development of these regulations.      shareholder of a PFIC is an organization
9(i)(1), which provides that the rules of                                                  exempt from tax under this chapter,
                                             List of Subjects
§ 1.1291–9, the deemed dividend                                                            section 1291 and these regulations
election, do not apply to an election        26 CFR Part 1                                 apply to such shareholder only if a
under section 1297(b)(1). The removal          Income taxes, Reporting and                 dividend from the PFIC would be
of § 1.1291–9(i)(1) is effective as of       recordkeeping requirements.                   taxable to the organization under
January 2, 1998. Section 1.1291–9(i)(2)                                                    subchapter F.
is not affected by the removal of            26 CFR Part 602
                                                                                             (2) Effective date. Paragraph (e)(1) of
§ 1.1291–9(i)(1).                              Reporting and recordkeeping                 this section is applicable on and after
8. Section 1297                              requirements.                                 April 1, 1992.
   The temporary regulations amend           Adoption of Amendments to the                 § 1.1291–9    [Amended]
§ 1.1297–3T to provide that a                Regulations                                      Par. 7. Section 1.1291–9 is amended
shareholder of a former PFIC, within the       Accordingly, 26 CFR parts 1 and 602         by removing and reserving paragraph
meaning of § 1.1291–9(j)(2)(iv), that was    are amended as follows:                       (i)(1).
a CFC during its last taxable year as a                                                       Par. 8. Section 1.1293–0 is added to
PFIC under section 1296(a), may apply        PART 1—INCOME TAXES                           read as follows.
the rules of the deemed dividend
election under section 1291(d)(2)(B) and       Paragraph 1. The authority citation         § 1.1293–0    Table of contents.
§ 1.1291–9 to its section 1297(b)(1)         for part 1 is amended by adding the
                                             following entries, in numerical order to        This section contains a listing of the
election made by the time and in the                                                       headings for § 1.1293–1T.
manner provided in § 1.1297–3T(b). If        read as follows:
                                               Authority: 26 U.S.C. 7805 * * *             § 1.1293–1T Current inclusion of income of
the time for making a section 1297(b)(1)
                                                                                           qualified electing funds (temporary).
election, provided in § 1.1297–3T(b),          Section 1.1291–1T also issued under
expired before January 2, 1998, a                                                             (a) In general. [Reserved].
                                             26 U.S.C. 1291.* * *                             (1) Other rules. [Reserved].
shareholder that applied the rules of          Section 1.1293–1T also issued under            (2) Net capital gain defined.
section 1291(d)(2)(A) and § 1.1291–10 to     26 U.S.C. 1293.* * *                             (i) In general.
a section 1297(b)(1) election, made with       Section 1.1295–1T also issued under            (ii) Effective date.
respect to a former PFIC that was a CFC      26 U.S.C. 1295(b).                               (b) Other rules [Reserved].
in its last taxable year as a PFIC under       Section 1.1295–3T also issued under            (c) Application of rules of inclusion with
section 1296(a), may file an amended         26 U.S.C. 1295(b).* * *                       respect to stock held by a pass through entity.
14              Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations

  (1) In general.                               into account its pro rata shares of the              (v) Examples.
  (2) QEF stock transferred to a pass through   ordinary earnings and net capital gain               (d) Who may make a section 1295 election.
entity.                                         attributable to the QEF shares under the             (1) General rule.
  (i) Pass through entity makes a section                                                            (2) Application of general rule to pass
                                                rules applicable to inclusions of income
1295 election.                                                                                    through entities.
  (ii) Pass through entity does not make a
                                                from the pass through entity.                        (i) Partnerships.
section 1295 election.                             (ii) Pass through entity does not make            (A) Domestic partnership.
  (3) Effective date.                           a section 1295 election. If the pass                 (B) Foreign partnership.
                                                through entity does not make a section               (ii) S corporation.
  Par. 9. Section 1.1293–1T is added to         1295 election with respect to the PFIC,              (iii) Trust or estate.
read as follows:                                the shares of which were transferred to              (A) Domestic trust or estate.
                                                the pass through entity subject to the               (1) Nongrantor trust or estate.
§ 1.1293–1T Current taxation of income                                                               (2) Grantor trust.
from qualified electing funds (temporary).      1295 election of the shareholder, the
                                                                                                     (B) Foreign trust or estate.
   (a) In general. [Reserved].                  shareholder continues to be subject, in              (1) Nongrantor trust or estate.
   (1) Other rules. [Reserved].                 its capacity as an indirect shareholder,             (2) Grantor trust.
   (2) Net capital gain defined—(i) In          to the income inclusion rules of section             (iv) Indirect ownership of the pass through
general. This paragraph (a)(2) defines          1293 and reporting rules required of              entity or the PFIC.
the term net capital gain for purposes of       shareholders of QEFs. Proper                         (3) Member of consolidated return group as
                                                adjustments to reflect an inclusion in            shareholder.
sections 1293 and 1295 and the                                                                       (4) Option holder.
regulations under those sections. The           income under section 1293 by the
                                                indirect shareholder must be made,                   (5) Exempt organization.
QEF, as defined in § 1.1291–9(j)(2)(i), in                                                           (e) Time for making a section 1295
determining its net capital gain for a          under the principles of § 1.1291–9(f), to
                                                                                                  election.
taxable year, may either—                       the basis of the indirect shareholder’s              (f) Manner of making a section 1295
   (A) Calculate and report the amount          interest in the pass through entity.              election and the annual election
of each category of long-term capital              (3) Effective date. Paragraph (c) of this      requirements of the shareholder.
gain provided in section 1(h) that was          section is applicable to taxable years of            (1) Manner of making the election.
recognized by the PFIC in the taxable           shareholders beginning after December                (2) Annual election requirements.
                                                31, 1997.                                            (i) In general.
year;                                                                                                (ii) Retention of documents.
                                                   Par. 10. Section 1.1295–0 is added to
   (B) Calculate and report the amount of                                                            (g) Annual election requirements of the
                                                read as follows:
net capital gain recognized by the PFIC                                                           PFIC or intermediary.
in the taxable year, stating that that          § 1.1295–0   Table of contents.                      (1) PFIC Annual Information Statement.
amount is subject to the highest capital          This section contains a listing of the             (2) Alternative documentation.
gain rate of tax applicable to the              headings for §§ 1.1295–1T and 1.1295–                (3) Annual Intermediary Statement.
shareholder; or                                                                                      (4) Combined statements.
                                                3T.                                                  (i) PFIC Annual Information Statement.
   (C) Calculate its earnings and profits
                                                § 1.1295–1T Qualified electing funds                 (ii) Annual Intermediary Statement.
for the taxable year and report the entire
                                                (temporary).                                         (h) Transition rules.
amount as ordinary earnings.                                                                         (i) Invalidation, termination or revocation
   (ii) Effective date. Paragraph (a)(2)(i)        (a) In general. [Reserved.]
                                                   (b) Application of section 1295 election.      of section 1295 election.
of this section is applicable to sales by                                                            (1) Invalidation or termination of election
                                                [Reserved.]
QEFs during their taxable years ending             (1) Election personal to shareholder.          at the discretion of the Commissioner.
on or after May 7, 1997.                        [Reserved.]                                          (i) In general.
   (b) Other rules. [Reserved].                    (2) Election applicable to specific               (ii) Deferral of section 1293 inclusion.
   (c) Application of rules of inclusion        corporation only.                                    (iii) When effective.
with respect to stock held by a pass               (i) In general. [Reserved.]                       (2) Shareholder revocation.
through entity—(1) In general. A                   (ii) Stock of QEF received in a                   (i) In general.
                                                nonrecognition transfer. [Reserved.]                 (ii) Time for and manner of requesting
domestic pass through entity takes into                                                           consent to revoke.
account its pro rata shares of the                 (iii) Exception for options.
                                                   (3) Application of general rules to stock         (A) Time.
ordinary earnings and net capital gain          held by a pass through entity.                       (B) Manner of making request.
attributable to the QEF shares held by             (i) Stock subject to a section 1295 election      (iii) When effective.
the pass through entity. A U.S. person          transferred to a pass through entity.                (3) Effect of invalidation, termination, or
that indirectly owns QEF shares through            (ii) Limitation on application of pass         revocation.
the domestic pass through entity                through entity’s section 1295 election.              (4) Election after invalidation, termination,
accounts for its pro rata shares of                (iii) Effect of partnership termination on     or revocation.
ordinary earnings and net capital gain          section 1295 election.                               (j) Definitions.
                                                   (iv) Characterization of stock held through       (k) Effective date.
attributable to the QEF shares according
                                                a pass through entity.
to the general rules applicable to                 (4) Application of general rules to a          § 1.1295–3T Retroactive elections
inclusions of income from the domestic          taxpayer filing a joint return under section      (temporary).
pass through entity. For the definition of      6013.                                                (a) In general.
pass through entity, see § 1.1295–1T(j).           (c) Effect of section 1295 election.              (b) General rule.
   (2) QEF stock transferred to a pass             (1) In general.                                   (c) Protective Statement.
through entity—(i) Pass through entity             (2) Years to which section 1295 election          (1) In general.
makes a section 1295 election. If a             applies.                                             (2) Reasonable belief statement.
shareholder transfers stock subject to a           (i) In general.                                   (3) Who executes and files the Protective
section 1295 election to a domestic pass           (ii) Effect of PFIC status on election.        Statement.
                                                   (iii) Effect on election of complete              (4) Waiver of the periods of limitations.
through entity of which it is an interest       termination of a shareholder’s interest in the       (i) Time for and manner of extending
holder and the pass through entity              PFIC.                                             periods of limitations.
makes a section 1295 election with                 (iv) Effect on section 1295 election of           (A) In general.
respect to that stock, as provided in           transfer of stock to a domestic pass through         (B) Application of general rule to domestic
§ 1.1295–1T(D)(2), the shareholder takes        entity.                                           partnerships.
                Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations                                    15

  (1) In general                                   § 1.1295–1T Qualified electing funds            (A) In the case of PFIC stock acquired
  (2) Special rules.                               (temporary).                                 (other than in a transaction in which
  (i) Addition of partner to non-TEFRA                (a) In general. [Reserved].               gain is not recognized pursuant to
partnership.                                          (b) Application of section 1295           regulations under section 1291(f) with
  (ii) Change in status from non-TEFRA             election. [Reserved]
partnership to TEFRA partnership.                                                               respect to that stock), and held by a
                                                      (1) Election personal to shareholder.     domestic pass through entity, the pass
  (C) Application of general rule to domestic
nongrantor trusts and domestic estates.            [Reserved].                                  through entity makes the section 1295
  (D) Application of general rule to S                (2) Election applicable to specific       election and the PFIC has been a QEF
corporations.                                      corporation only—                            with respect to the pass through entity
  (E) Effect on waiver of complete                    (i) In general. [Reserved].               for all taxable years that are included
termination of a pass through entity or pass          (ii) Stock of QEF received in a           wholly or partly in the pass through
through entity’s business.                         nonrecognition transfer. [Reserved].         entity’s holding period of the PFIC stock
  (F) Application of general rule to foreign          (iii) Exception for options. A            and during which the foreign
partnerships, foreign trusts, domestic or          shareholder’s section 1295 election does
foreign grantor trusts, and foreign estates.                                                    corporation was a PFIC within the
                                                   not apply to any option to buy stock of      meaning of § 1.1291–9(j)(1); or
  (ii) Terms of waiver.                            the PFIC.
  (A) Scope of waiver.                                                                             (B) In the case of PFIC stock
                                                      (3) Application of general rules to       transferred by an interest holder or
  (B) Period of waiver.
  (5) Time for and manner of filing a
                                                   stock held by a pass through entity—(i)      beneficiary to a pass through entity in
Protective Statement.                              Stock subject to a section 1295 election     a transaction in which gain is not
  (i) In general.                                  transferred to a pass through entity. A      recognized pursuant to regulations
  (ii) Special rule for taxable years ended        shareholder’s section 1295 election will     under section 1291(f) with respect to
before January 2, 1998                             not apply to a domestic pass through         that stock and held by the pass through
  (6) Applicability of the Protective              entity to which the shareholder transfers
Statement.
                                                                                                entity, the PFIC stock transferred to the
                                                   stock subject to section 1295 election, or   pass through entity was treated as stock
  (i) In general.                                  to any other U.S. person that is an
  (ii) Invalidity of the Protective Statement.                                                  of a pedigreed QEF with respect to the
  (7) Retention of Protective Statement and
                                                   interest holder or beneficiary of the        interest holder or beneficiary at the time
information demonstrating reasonable belief.       domestic pass through entity. However,       of the transfer and the pass through
  (d) Reasonable belief.                           as provided in paragraph (c)(2)(iv) of       entity makes a section 1295 election.
  (1) In general.                                  this section (relating to a transfer to a       (4) Application of general rules to a
  (2) Knowledge of law required.                   domestic pass through entity of stock        taxpayer filing a joint return under
  (e) Special rules for qualified shareholders.    subject to a section 1295 election), a       section 6013. A section 1295 election
  (1) In general.                                  shareholder that transfers stock subject     made by a taxpayer in a joint return,
  (2) Qualified shareholder.                       to a section 1295 election to a pass
  (3) Exceptions.
                                                                                                within the meaning of section 6013, will
  (f) Special consent.
                                                   through entity will continue to be           be treated as also made by the spouse
  (1) In general.                                  subject to the section 1295 election with    that joins in the filing of that return.
  (2) Reasonable reliance on a qualified tax       respect to the stock indirectly owned           (c) Effect of section 1295 election—(1)
professional.                                      through the pass through entity and any      In general. Except as otherwise
  (i) In general.                                  other stock of that PFIC owned by the        provided in this paragraph (c), the effect
  (ii) Shareholder deemed to have not              shareholder.                                 of a shareholder’s section 1295 election
reasonably relied on a qualified tax                  (ii) Limitation on application of pass    is to treat the foreign corporation as a
professional.                                      through entity’s section 1295 election.      QEF with respect to the shareholder for
  (3) Prejudice to the interests of the United     Except as provided in paragraph              each taxable year of the foreign
States government.
  (i) General rule.                                (c)(2)(iv) of this section, a section 1295   corporation ending with or within a
  (ii) Elimination of prejudice to the interests   election made by a domestic pass             taxable year of the shareholder for
of the United States government.                   through entity does not apply to other       which the election is effective. A section
  (4) Procedural requirements.                     stock of the PFIC held directly or           1295 election is effective for the
  (i) Filing instructions.                         indirectly by the interest holder or         shareholder’s election year and all
  (ii) Affidavit from shareholder.                 beneficiary.                                 subsequent taxable years of the
  (iii) Affidavits from other persons.                (iii) Effect of partnership termination   shareholder unless invalidated,
  (iv) Other information.                          on section 1295 election. Termination of     terminated or revoked as provided in
  (v) Notification of Internal Revenue
                                                   a section 1295 election made by a            paragraph (i) of this section. The terms
Service.
  (vi) Who requests special consent under          domestic partnership by reason of the        shareholder and shareholder’s election
this paragraph (f) and who enters into a           termination of the partnership under         year are defined in paragraph (j) of this
closing agreement.                                 section 708(b) will not terminate the        section.
  (g) Time for and manner of making a              section 1295 election with respect to           (2) Years to which section 1295
retroactive election.                              partners of the terminated partnership       election applies—(i) In general. Except
  (1) Time for making a retroactive election.      that are partners of the new partnership.    as otherwise provided in this paragraph
  (i) In general.                                  Except as otherwise provided, the stock      (c), a foreign corporation with respect to
  (ii) Transition rule.
                                                   of the PFIC of which the new partners        which a section 1295 election is made
  (iii) Ownership not required at time
retroactive election is made.                      are indirect shareholders will be treated    will be treated as a QEF for its taxable
  (2) Manner of making a retroactive               as stock of a QEF only if the new            year ending with or within the
election.                                          domestic partnership makes a section         shareholder’s election year and all
  (3) Who makes the retroactive election.          1295 election with respect to that stock.    subsequent taxable years of the foreign
  (4) Other elections.                                (iv) Characterization of stock held       corporation that are included wholly or
  (i) Section 1291(d)(2) election.                 through a pass through entity. Stock of      partly in the shareholder’s holding
  (ii) Section 1294 election.                      a PFIC held through a pass through           period (or periods) of stock of the
  (h) Effective date.                              entity will be treated as stock of a         foreign corporation.
  Par. 11. Section 1.1295–1T is added              pedigreed QEF with respect to an                (ii) Effect of PFIC status on election.
to read as follows:                                interest holder or beneficiary only if—      A foreign corporation will not be treated
16              Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations

as a QEF for any taxable year of the              purchased by C in 2002. C therefore is subject    partnership that, in turn, holds an
foreign corporation that the foreign              in 2002 to the income inclusion and               interest in stock of a PFIC makes the
corporation is not a PFIC under section           reporting rules required of shareholders of       section 1295 election with respect to
                                                  QEFs.
1296(a) and is not treated as a PFIC                                                                that PFIC. A partner’s election applies to
                                                     Example 3. The facts are the same as in
under section 1297(b)(1). However,                Example (2) except that C is a partner in         the stock of the PFIC owned directly or
cessation of a foreign corporation’s              domestic partnership P and C transferred its      indirectly by the foreign partnership
status as a PFIC will not terminate a             FC stock to P in 1999. Because C had made         and to any other stock of the PFIC
section 1295 election.                            a section 1295 election in 1998 with respect      owned by that partner. A section 1295
   (iii) Effect on election of complete           to stock of FC, and the election had not been     election by a partner applies only to that
termination of a shareholder’s interest           invalidated, terminated, or revoked, within       partner.
in the PFIC. Complete termination of a            the meaning of paragraph (i) of this section,        (ii) S corporation. An S corporation
                                                  C’s section 1295 election remains in effect       that holds an interest in stock of a PFIC
shareholder’s direct and indirect                 with respect to its indirect interest in the
interest in stock of a foreign corporation        stock of FC. If P does not make the section
                                                                                                    makes the section 1295 election with
will not terminate a shareholder’s                1295 election with respect to the FC stock,       respect to that PFIC. The S corporation
section 1295 election with respect to the         C will continue to be subject, in C’s capacity    election applies only to the stock of the
foreign corporation.                              as an indirect shareholder of FC, to the          PFIC held directly or indirectly by the
   (iv) Effect on section 1295 election of        income inclusion and reporting rules              S corporation and not to any other stock
transfer of stock to a domestic pass              required of shareholders of QEFs in 1999 and      held directly or indirectly by any S
through entity. The transfer of a                 subsequent years. If P makes the section 1295     corporation shareholder. As provided in
                                                  election, C will take into account its pro rata   § 1.1293–1T(c)(1), shareholders owning
shareholder’s direct or indirect interest         shares of the ordinary earnings and net
in stock of a foreign corporation to a            capital gain of the FC under the rules
                                                                                                    stock of a QEF by reason of an interest
domestic pass through entity (as defined          applicable to inclusions of income from P.        in the S corporation take into account
in paragraph (j) of this section) will not                                                          the section 1293 inclusions with respect
                                                     (d) Who may make a section 1295                to the QEF shares under the rules
terminate the shareholder’s section 1295
                                                  election—(1) General rule. Except as              applicable to inclusions of income from
election with respect to the foreign
                                                  otherwise provided in this paragraph              the S corporation.
corporation, whether or not the pass
                                                  (d), any U.S. person that is a                       (iii) Trust or estate—(A) Domestic
through entity makes a section 1295
                                                  shareholder (as defined in paragraph (j)          trust or estate—(1) Nongrantor trust or
election. For the rules concerning the
                                                  of this section) of a PFIC, including a           estate. A domestic nongrantor trust or a
application of section 1293 to stock
                                                  shareholder that holds stock of a PFIC            domestic estate that holds an interest in
transferred to a domestic pass through
                                                  in bearer form, may make a section 1295           stock of a PFIC makes the section 1295
entity, see § 1.1293–1T(c).
   (v) Examples. The following examples           election with respect to that PFIC. The           election with respect to that PFIC. The
illustrate the rules of this paragraph            shareholder need not own directly or              trust or estate’s election applies only to
(c)(2).                                           indirectly any stock of the PFIC at the           the stock of the PFIC held directly or
                                                  time the shareholder makes the section            indirectly by the trust or estate and not
   Example 1. In 1998, C, a U.S. person,          1295 election provided the shareholder
purchased stock of FC, a foreign corporation
                                                                                                    to any other stock held directly or
                                                  is a shareholder of the PFIC during the           indirectly by any beneficiary. As
that is a PFIC. Both FC and C are calendar
year taxpayers. C made a timely section 1295      taxable year of the PFIC that ends with           provided in § 1.1293–1T(c)(1),
election to treat FC as a QEF in C’s 1998         or within the taxable year of the                 shareholders owning stock of a QEF by
return, and FC was therefore a pedigreed          shareholder for which the section 1295            reason of an interest in a domestic trust
QEF. C included its shares of FC’s 1998           election is made. Except in the case of           or estate take into account the section
ordinary earnings and net capital gain in C’s     a shareholder that is an exempt                   1293 inclusions with respect to the QEF
1998 Income and did not make a section            organization that may not make a                  shares under the rules applicable to
1294 election to defer the time for payment       section 1295 election, as provided in             inclusions of income from the trust or
of tax on that income. In 1999, 2000, and
                                                  paragraph (d)(5) of this section, in a            estate.
2001, FC did not satisfy either the income or
asset test of section 1296(a), and therefore      chain of ownership only the first U.S.               (2) Grantor trust. A U.S. person that
was neither a PFIC nor a QEF. C therefore did     person that is a shareholder of the PFIC          is treated under sections 671 through
not have to include its pro rata shares of the    may make the section 1295 election.               678 as the owner of the portion of a
ordinary earnings and net capital gain of FC         (2) Application of general rule to pass        domestic trust that owns an interest in
pursuant to section 1293, or satisfy the          through entities—(i) Partnerships—(A)             stock of a PFIC makes the section 1295
section 1295 annual reporting requirements        Domestic partnership. A domestic                  election with respect to that PFIC. If that
for any of those years. FC qualified as a PFIC    partnership that holds an interest in             person ceases to be treated as the owner
again in 2002. Because C had made a section       stock of a PFIC makes the section 1295            of the portion of the trust that owns an
1295 election in 1998, and the election had       election with request to that PFIC. The           interest in the PFIC stock and is a
not been invalidated, terminated, or revoked,
within the meaning of paragraph (i) of this
                                                  partnership election applies only to the          beneficiary of the trust, that person’s
section, C’s section 1295 election remains in     stock of the PFIC held directly or                section 1295 election will continue to
effect for 2002. C therefore is subject in 2002   indirectly by the partnership and not to          apply to the PFIC stock indirectly
to the income inclusion and reporting rules       any other stock held directly or                  owned by that person under the rules of
required of shareholders of QEFs.                 indirectly by any partner. As provided            paragraph (c)(2)(iv) of this section as if
   Example 2. The facts are the same as in        in § 1.1293–1T(c)(1), shareholders                the person had transferred its interest in
Example (1) except that FC did not lose PFIC      owning stock of a QEF by reason of an             the PFIC stock to the trust. However, the
status in any year and C sold all the FC stock    interest in the partnership take into             stock will be treated as stock of a PFIC
in 1999 and repurchased stock of FC in 2002.      account the section 1293 inclusions               that is not a QEF with respect to other
Because C had made a section 1295 election
in 1998 with respect to stock of FC, and the
                                                  with respect to the QEF shares owned              beneficiaries of the trust, unless the
election had not been invalidated,                by the partnership under the rules                trust makes the section 1295 election as
terminated, or revoked, within the meaning        applicable to inclusions of income from           provided in paragraph (d)(2)(iii)(A)(1) of
of paragraph (i) of this section, C’s section     the partnership.                                  this section.
1295 election remained in effect and                 (B) Foreign partnership. A U.S. person            (B) Foreign trust or estate—(1)
therefore applies to the stock of FC              that holds an interest in a foreign               Nongrantor trust or estate. A U.S.
               Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations                                 17

person that is a beneficiary of a foreign      subject to any section 1295 election          section, the Annual Intermediary
nongrantor trust or estate that holds an       made by a domestic pass through entity.       Statement described in paragraph (g)(3)
interest in stock of a PFIC makes the             (e) Time for making a section 1295         of this section, or the applicable
section 1295 election with respect to          election. Except as provided in               combined statement described in
that PFIC. A beneficiary’s section 1295        § 1.1295–3T, a shareholder making the         paragraph (g)(4) of this section, for the
election applies to all the PFIC stock         section 1295 election must make the           taxable year of the PFIC ending with or
owned directly and indirectly by the           election on or before the due date, as        within the taxable year for which Form
trust or estate and to the other PFIC          extended under section 6081 (election         8621 is being filed. If the PFIC Annual
stock owned directly or indirectly by          due date), for filing the shareholder’s       Information Statement contains a
the beneficiary. A section 1295 election       income tax return for the first taxable       statement described in paragraph
by a beneficiary applies only to that          year to which the election will apply.        (g)(1)(ii)(C) of this section, the
beneficiary.                                   The section 1295 election must be made        shareholder must attach a statement to
   (2) Grantor trust. A U.S. person that       in the original return for that year, or in   its Form 8621 that the shareholder
is treated under sections 671 through          an amended return, provided the               rather than the PFIC provided the
679 as the owner of the portion of a           amended return is filed on or before the      calculations of the PFIC’s ordinary
foreign trust that owns an interest in         election due date.                            earnings and net capital gain; and
stock of a PFIC stock makes the section           (f) Manner of making a section 1295           (D) File a copy of Form 8621 with the
1295 election with respect to that PFIC.       election and the annual election              Philadelphia Service Center, P.O. Box
If that person ceases to be treated as the     requirements of the shareholder—(1)           21086, Philadelphia, PA 19114 by the
owner of the portion of the trust that         Manner of making the election. A              election due date.
owns an interest in the PFIC stock and         shareholder must make a section 1295             (ii) Retention of documents. For all
is a beneficiary of the trust, that person’s   election by—                                  taxable years subject to the section 1295
section 1295 election will continue to            (i) Completing Form 8621 in the            election, the shareholder must retain
apply to the PFIC stock indirectly             manner required by that form and this         copies of all Forms 8621, with their
owned by that person under the rules of        section for making the section 1295           attachments, and PFIC Annual
paragraph (c)(2)(iv) of this section.          election;                                     Information Statements or Annual
However, as provided in paragraph                 (ii) Attaching Form 8621 to its federal    Intermediary Statements. Failure to
(d)(2)(iii)(B)(1) of this section, any other   income tax return filed by the election       produce those documents at the request
shareholder that is a beneficiary of the       due date for the shareholder’s election       of the Commissioner in connection with
trust and that wishes to treat the PFIC        year;                                         an examination may result in
as a QEF must make the section 1295               (iii) Receiving and reflecting in Form     invalidation or termination of the
election.                                      8621 the information provided in the          shareholder’s section 1295 election.
                                               PFIC Annual Information Statement                (g) Annual election requirements of
   (iv) Indirect ownership of the pass
                                               described in paragraph (g)(1) of this         the PFIC or intermediary—(1) PFIC
through entity or the PFIC. The rules of
                                               section, the Annual Intermediary              Annual Information Statement. For each
this paragraph (d)(2) apply whether or
                                               Statement described in paragraph (g)(3)       year of the PFIC ending in a taxable year
not the shareholder holds its interest in
                                               of this section, or the applicable            of a shareholder to which the
the pass through entity directly or
                                               combined statement described in               shareholder’s section 1295 election
indirectly and whether or not the pass
                                               paragraph (g)(4) of this section, for the     applies, the PFIC must provide the
through entity holds its interest in the
                                               taxable year of the PFIC ending with or       shareholder with a PFIC Annual
PFIC directly or indirectly.
                                               within the taxable year for which Form        Information Statement. The PFIC
   (3) Member of consolidated return
                                               8621 is being filed. If the PFIC Annual       Annual Information Statement is a
group as shareholder. Pursuant to
                                               Information Statement contains a              statement of the PFIC, signed by the
§ 1.1502–77(a), the common parent of an
                                               statement described in paragraph              PFIC or an authorized representative of
affiliated group of corporations that join
                                               (g)(1)(ii)(C) of this section, the            the PFIC, that contains the following
in filing a consolidated income tax
                                               shareholder must attach a statement to        information and representation—
return makes a section 1295 election for                                                        (i) The first and last days of the
                                               Form 8621 that indicates that the
all members of the affiliated group. An                                                      taxable year of the PFIC to which the
                                               shareholder rather than the QEF
election by a common parent will be                                                          PFIC Annual Information Statement
                                               calculated the QEF’s ordinary earnings
effective for all members of the affiliated                                                  applies;
                                               and net capital gain; and
group with respect to interests in PFIC           (iv) Filing a copy of Form 8621 with          (ii) Either—
stock held at the time the election is         the Philadelphia Service Center, P.O.            (A) The shareholder’s pro rata shares
made or at any time thereafter. A              Box 21086, Philadelphia, PA 19114 by          of the ordinary earnings and net capital
separate election must be made by the          the election due date.                        gain (as defined in § 1.1295–1T(a)(2)) of
common parent for each PFIC of which              (2) Annual election requirements—(i)       the PFIC for the taxable year indicated
a member of the affiliated group is a          In general. A shareholder that makes a        in paragraph (g)(1)(i) of this section; or
shareholder.                                   section 1295 election with respect to a          (B) Sufficient information to enable
   (4) Option holder. A holder of an           PFIC held directly or indirectly, for each    the shareholder to calculate its pro rata
option to acquire stock of a PFIC may          taxable year to which the section 1295        shares of the PFIC’s ordinary earnings
not make a section 1295 election that          election applies, must—                       and net capital gain, for that taxable
will apply to the option or to the stock          (A) Complete Form 8621 in the              year; or
subject to the option.                         manner required by that form and this            (C) A statement that the foreign
   (5) Exempt organization. A tax-             section;                                      corporation has permitted the
exempt organization that is not taxable           (B) Attach Form 8621 to its federal        shareholder to examine the books of
under section 1291, pursuant to                income tax return filed by the due date       account, records, and other documents
§ 1.1291–1T(e), with respect to a PFIC         of the return, as extended;                   of the foreign corporation for the
may not make a section 1295 election              (C) Receive and reflect in Form 8621       shareholder to calculate the amounts of
with respect to that PFIC. In addition,        the PFIC Annual Information Statement         the PFIC’s ordinary earnings and the net
such an exempt organization will not be        described in paragraph (g)(1) of this         capital gain according to federal income
18             Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations

tax accounting principles and to              Statement if the following conditions               (h) Transition rules. The rules of
calculate the shareholder’s pro rata          are satisfied—                                   Notice 88–125, 1988–2 C.B. 535 (see
shares of the PFIC’s ordinary earnings           (i) The intermediary receives a copy          § 601.601(d)(2)(ii)(b) of this chapter),
and net capital gain;                         of the PFIC Annual Information                   apply for making elections and
   (iii) The amount of cash and the fair      Statement or the intermediary receives           maintaining elections for taxable years
market value of other property                an annual intermediary statement from            beginning after December 31, 1986, and
distributed or deemed distributed to the      another intermediary which contains a            before January 1, 1998. Elections made
shareholder during the taxable year of        statement that the other intermediary            under Notice 88–125 must be
the PFIC to which the PFIC Annual             has received a copy of the PFIC Annual           maintained as provided in § 1.1295–1T
Information Statement pertains; and           Information Statement and represents             for taxable years beginning after
   (iv) Either—                               that the conditions of paragraphs                December 31, 1997. A section 1295
   (A) A statement that the PFIC will         (g)(3)(ii) and (g)(3)(iii) of this section are   election made prior to February 2, 1998
permit the shareholder to inspect and         met;                                             that was intended to be effective for the
copy the PFIC’s permanent books of               (ii) The representations and                  taxable year of the PFIC that began
account, records, and such other              information contained in the Annual              during the shareholder’s election year
documents as may be maintained by the         Intermediary Statement reflect the               will be effective for that taxable year of
PFIC to establish that the PFIC’s             representations and information                  the foreign corporation provided that it
ordinary earnings and net capital gain                                                         is clear from all the facts and
                                              contained in the PFIC Annual
are computed in accordance with U.S.                                                           circumstances that the shareholder
                                              Information Statement; and
income tax principles, and to verify                                                           intended the election to be effective for
                                                 (iii) The PFIC Annual Information
these amounts and the shareholder’s pro                                                        that taxable year of the foreign
                                              Statement issued to the intermediary
rata shares thereof; or                                                                        corporation.
   (B) In lieu of the statement required      contains either the representation set
in paragraph (g)(1)(iv)(A) of this section,   forth in paragraph (g)(1)(iv)(A) of this            (i) Invalidation, termination, or
a description of the alternative              section, or, if alternative documentation        revocation of section 1295 election—(1)
documentation requirements approved           requirements were approved by the                Invalidation or termination of election
by the Commissioner, with a copy of the       Commissioner pursuant to paragraph               at the discretion of the Commissioner—
private letter ruling and the closing         (g)(2) of this section, a copy of the            (i) In general. The Commissioner, in the
agreement entered into by the                 private letter ruling and closing                Commissioner’s discretion, may
Commissioner and the PFIC pursuant to         agreement between the Commissioner               invalidate or terminate a section 1295
paragraph (g)(2) of this section.             and the PFIC, agreeing to an alternative         election applicable to a shareholder if
   (2) Alternative documentation. In rare     method of verifying PFIC ordinary                the shareholder, the PFIC, or any
and unusual circumstances, the                earnings and net capital gain as                 intermediary fails to satisfy the
Commissioner will consider alternative        described in paragraph (g)(2) of this            requirements for making a section 1295
documentation requirements necessary          section;                                         election or the annual election
to verify the ordinary earnings and net          (4) Combined statements—(i) PFIC              requirements of this section to which
capital gain of a PFIC other than the         Annual Information Statement. A PFIC             the shareholder, PFIC, or intermediary
documentation requirements described          that owns directly or indirectly any             is subject, including the requirement to
in paragraph (g)(1)(iv)(A) of this section.   stock of one or more PFICs with respect          provide, on request, copies of the books
Alternative documentation                     to which a shareholder may make the              and records of the PFIC or other
requirements will be allowed only             section 1295 election may prepare a              documentation substantiating the
pursuant to a private letter ruling and a     PFIC Annual Information Statement that           ordinary earnings and net capital gain of
closing agreement entered into by the         combines with its own information and            the PFIC.
Commissioner and the PFIC describing          representations the information and                 (ii) Deferral of section 1293 inclusion.
an alternative method of verifying the        representations of all the PFICs. The            The Commissioner may invalidate any
PFIC’s ordinary earnings and net capital      PFIC may use any format for a combined           pass through entity section 1295
gain. If the PFIC has not obtained a          PFIC Annual Information Statement                election with respect to an interest
private letter ruling from the                provided the required information and            holder or beneficiary if the section 1293
Commissioner approving an alternative         representations are separately stated and        inclusion with respect to that interest
method of verifying the PFIC’s ordinary       identified with the respective                   holder or beneficiary is not included in
earnings and net capital gain by the time     corporations.                                    the gross income of either the pass
a shareholder is required to make a              (ii) Annual Intermediary Statement.           through entity, an intermediate pass
section 1295 election, the shareholder        An intermediary described in paragraph           through entity, or the interest holder or
may not use an alternative method for         (g)(3) of this section that owns directly        beneficiary within two years of the end
that taxable year.                            or indirectly stock of one or more PFICs         of the PFIC’s taxable year due to
   (3) Annual Intermediary Statement. In      with respect to which an indirect                nonconforming taxable years of the
the case of a U.S. person that is a           shareholder may make the section 1295            interest holder and the pass through
shareholder of a PFIC through an              election may prepare an Annual                   entity or any intermediate pass through
intermediary, as defined in paragraph (j)     Intermediary Statement that combines             entity.
of this section, an Annual Intermediary       with its own information and                        (iii) When effective. Termination of a
Statement issued by an intermediary           representations the information and              shareholder’s section 1295 election will
containing the information described in       representations with respect to all the          be effective for the taxable year of the
paragraph (g)(1) of this section and          PFICs. The intermediary may use any              PFIC determined by the Commissioner
reporting the indirect owner’s pro rata       format for a combined Annual                     in the Commissioner’s discretion. An
shares of the ordinary earnings and net       Intermediary Statement provided the              invalidation of a shareholder’s section
capital gain of the QEF as described in       required information and                         1295 election will be effective for the
paragraph (g)(1)(i)(A) of this section,       representations are separately stated and        first taxable year to which the section
may be provided to the indirect owner         identified with the intermediary and the         1295 election applied, and the
in lieu of the PFIC Annual Information        respective corporations.                         shareholder whose election is
               Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations                                  19

invalidated will be treated as if the          under this paragraph (i) may not make         a Protective Statement required to be
section 1295 election never was made.          the section 1295 election with respect to     filed under the general rules. Paragraph
   (2) Shareholder revocation—(i) In           the PFIC before the sixth taxable year        (d) of this section sets forth factors that
general. In the Commissioner’s                 ending after the taxable year in which        establishes a shareholder’s reasonable
discretion, upon a finding of a                the invalidation, termination or              belief that a foreign corporation was not
substantial change in circumstances, the       revocation became effective.                  a PFIC. Paragraph (e) of this section
Commissioner may consent to a                     (j) Definitions. For purposes of this      prescribes special rules for certain
shareholder’s request to revoke a section      section—                                      shareholders that are deemed to satisfy
1295 election. Request for revocation             Intermediary is a nominee or               the reasonable belief requirement and
must be made by the shareholder that           shareholder of record that holds stock        therefore are not required to file a
made the election and at the time and          on behalf of the shareholder or on behalf     Protective Statement. Paragraph (f) of
in the manner provided in paragraph            of another person in a chain of               this section describes the limited
(i)(2)(ii) of this section.                    ownership between the shareholder and         circumstances under which the
   (ii) Time for and manner of requesting      the PFIC, and any direct or indirect          Commissioner may permit a shareholder
consent to revoke—(A) Time. The                beneficial owner of PFIC stock                that lacked the requisite reasonable
shareholder must request consent to            (including a beneficial owner that is a       belief or failed to satisfy the
revoke the section 1295 election no later      pass through entity) in the chain of          requirements of paragraph (b) or (e) of
than 12 calendar months after the              ownership between the shareholder and         this section to make a retroactive
discovery of the substantial change of         the PFIC.                                     election. Paragraph (g) of this section
circumstances that forms the basis for            Pass through entity is a partnership, S    provides the time for and manner of
the shareholder’s request to revoke the        corporation, trust, or estate.                making a retroactive election. Paragraph
section 1295 election.                            Shareholder has the same meaning as        (h) of this section provides the effective
   (B) Manner of making request. A             the term shareholder in § 1.1291–9(j)(3),     date of this section.
shareholder requests consent to revoke         except that for purposes of this section,        (b) General rule. Except as provided
a section 1295 election by filing a ruling     a partnership and an S corporation also       in paragraphs (e) and (f) of this section,
request with the Office of the Associate       are treated as shareholders.                  a shareholder may make a retroactive
Chief Counsel (International). The             Furthermore, unless otherwise                 election for a taxable year of the
ruling request must satisfy the                provided, an interest holder of a pass        shareholder (retroactive election year)
requirements, including payment of the         through entity, which is treated as a         only if the shareholder—
user fee, for filing ruling requests with      shareholder of a PFIC, also will be              (1) Reasonably believed, within the
that office.                                   treated as a shareholder of the PFIC.         meaning of paragraph (d) of this section,
   (iii) When effective. Unless otherwise         Shareholder’s election year is the         as of the election due date that the
determined by the Commissioner,                taxable year of the shareholder for           foreign corporation was not a PFIC for
revocation of a section 1295 election          which it made the section 1295 election.      its taxable year that ended during the
will be effective for the first taxable year      (k) Effective date. Section 1.1295–
                                                                                             retroactive election year;
of the PFIC beginning after the date the       1T(b)(2)(iii), (b)(3), (b)(4), and (c)
                                                                                                (2) Filed a Protective Statement with
Commissioner consents to the                   through (j) is applicable to taxable years
                                                                                             respect to the foreign corporation,
revocation.                                    of shareholders beginning after
   (3) Effect of invalidation, termination,                                                  applicable to the retroactive election
                                               December 31, 1997.
or revocation. An invalidation,                   Par. 12. Section 1.1295–3T is added        year, in which the shareholder
termination, or revocation of a section        to read as follows:                           described the basis for its reasonable
1295 election—                                                                               belief and extended, in the manner
   (i) Terminates all section 1294             § 1.1295–3T Retroactive elections             provided in paragraph (c)(4) of this
elections, as provided in § 1.1294–1T(e),      (temporary).                                  section, the periods of limitations on the
and the undistributed PFIC earnings tax           (a) In general. This section prescribes    assessment of taxes determined under
liability and interest thereon are due by      the exclusive rules under which a             sections 1291 and 1297 with respect to
the due date, without regard to                shareholder, as defined in § 1.1295–          the foreign corporation (PFIC related
extensions, for the return for the last        1T(j), may make a section 1295 election       taxes) for all taxable years of the
taxable year of the shareholder to which       for a taxable year after the election due     shareholder to which the Protective
the section 1295 election applies;             date, as defined in § 1.1295–1T(e)            Statement applies; and
   (ii) In the Commissioner’s discretion,      (retroactive election). Therefore, a             (3) Complied with the other terms and
results in a deemed sale of the QEF            shareholder may not seek such relief          conditions of the Protective Statement.
stock on the last day of the PFIC’s last       under any other provision of the law,            (c) Protective Statement—(1) In
taxable year as a QEF, in which gain,          including § 301.9100 of this chapter.         general. A Protective Statement is a
but not loss, will be recognized and           Paragraph (b) of this section describes       statement executed under penalties of
with respect to which appropriate basis        the general rules for a shareholder to        perjury by the shareholder, or a person
and holding period adjustments will be         preserve the ability to make a retroactive    authorized to sign a federal income tax
made; and                                      election. These rules require that the        return on behalf of the shareholder, that
   (iii) Subjects the shareholder to any       shareholder possess reasonable belief as      preserves the shareholder’s ability to
other terms and conditions that the            of the election due date that the foreign     make a retroactive election. To file a
Commissioner determines are necessary          corporation was not a PFIC for its            Protective Statement that applies to a
to ensure the shareholder’s compliance         taxable year that ended in the                taxable year of the shareholder, the
with sections 1291 through 1297 or any         shareholder’s taxable year to which the       shareholder must reasonably believe as
other provisions of the Code.                  election due date pertains, and that the      of the election due date that the foreign
   (4) Election after invalidation,            shareholder file a Protective Statement       corporation was not a PFIC for the
termination or revocation. Without the         to preserve its ability to make a             foreign corporation’s taxable year that
Commissioner’s consent a shareholder           retroactive election. Paragraph (c) of this   ended during the retroactive election
whose section 1295 election was                section establishes the terms, conditions     year. The Protective Statement must
invalidated, terminated, or revoked            and other requirements with respect to        contain—
20            Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations

   (i) The shareholder’s reasonable belief   waiver on such form as the Commission        which the individual became a partner.
statement, as described in paragraph         may prescribe for purposes of this           Failure to so comply will render the
(c)(2) of this section;                      paragraph (c)(4). Until that form is         Protective Statement invalid with
   (ii) The shareholder’s agreement          published, the shareholder must execute      respect to the partnership and partners.
extending the periods of limitations on      a statement in which the shareholder            (ii) Change in status from non-TEFRA
the assessment of PFIC related taxes for     agrees to extend the periods of              partnership to TEFRA partnership. If a
all taxable years to which the Protective    limitations on the assessment of taxes       partnership is a non-TEFRA partnership
Statement applies, as provided in            for all the shareholder’s taxable years to   in one taxable year but becomes a
paragraph (c)(4) of this section; and        which the Protective Statement applies,      TEFRA partnership in a subsequent
   (iii) The following information and       as provided in this paragraph (c)(4), and    taxable year, the partnership must file
representations—                             agrees to the restrictions in paragraph      one or more waivers obtained or
   (A) The shareholder’s name, address,      (c)(4)(ii)(A) of this section. The           arranged under this paragraph
taxpayer identification number, and the      shareholder or a person authorized to        (c)(4)(i)(B)(2)(ii), as part of the Protective
shareholder’s first taxable year to which    sign the shareholder’s federal income        Statement, as provided in paragraph
the Protective Statement applies;            tax return must sign the form or             (c)(1) of this section. The partnership
   (B) The foreign corporation’s name,       statement. A properly executed form or       must either—obtain from any new
address, and taxpayer identification         statement authorized by this paragraph       partner the partner’s waiver described
number, if any; and                          (c)(4) will be deemed consented to and
   (C) The highest percentage of shares                                                   in this paragraph (c)(4); obtain from the
                                             signed by a Service Center Director or       new partner a duly executed power of
of each class of stock of the foreign        the Assistant Commissioner
corporation held directly or indirectly                                                   attorney under § 601.501 of this chapter
                                             (International) for purposes of              authorizing the partnership to extend
by the shareholder during the                § 301.6501(c)–1(d) of this chapter.
shareholder’s first taxable year to which                                                 the partner’s periods of limitations, and
                                                (B) Application of general rule to        execute a waiver on behalf of the new
the Protective Statement applies.            domestic partnerships— (1) In general.
   (2) Reasonable belief statement. The                                                   partner; or arrange for the tax matters
                                             A domestic partnership that holds an         partner (or any other person authorized
Protective Statement must contain a          interest in stock of a PFIC satisfies the
reasonable belief statement, as described                                                 to enter into an agreement to extend the
                                             waiver requirement of paragraph (c)(4)       periods of limitations) to execute a
in paragraph (c)(1) of this section. The     of this section pursuant to the rules of
reasonable belief statement is a                                                          waiver on behalf of all the partners. In
                                             this paragraph (c)(4)(i)(B)(1). The          each case, the partnership must attach
description of the shareholder’s basis for   partnership must file one or more
its reasonable belief that the foreign                                                    any new waiver of a partner’s periods of
                                             waivers obtained or arranged under this      limitations, and a copy of the Protective
corporation was not a PFIC for its           paragraph (c)(4)(i)(B) as part of the
taxable year that ended with or within                                                    Statement to its federal income tax
                                             Protective Statement, as provided in
the shareholder’s first taxable year to                                                   return for that taxable year.
                                             paragraph (c)(1) of this section. The
which the Protective Statement applies.                                                      (C) Application of general rule to
                                             partnership must either—
If the Protective Statement applies to a        (i) Obtain from each partner the          domestic nongrantor trusts and
taxable year or years described in           partner’s waiver of the periods of           domestic estates. A domestic nongrantor
paragraph (c)(5)(ii) of this section, the    limitations;                                 trust or a domestic estate that holds an
reasonable belief statement must                (ii) Obtain from each partner a duly      interest in stock of a PFIC satisfies the
describe the shareholder’s basis for its     executed power of attorney under             waiver requirement of this paragraph
reasonable belief that the foreign           § 601.501 of this chapter authorizing the    (c)(4) at the entity level. For this
corporation was not a PFIC for the           partnership to extend that partner’s         purpose, such entity must comply with
foreign corporation’s taxable year or        periods of limitations, and execute a        rules similar to those applicable to non-
years that ended in such taxable year or     waiver on behalf of the partners; or         TEFRA partnerships, as provided in
years of the shareholder. The reasonable        (iii) In the case of a domestic           paragraph (c)(4)(i)(B)(1) of this section.
belief statement must discuss the            partnership governed by the unified             (D) Application of general rule to S
application of the income and asset tests    audit and litigation procedures of           corporations. An S corporation that
to the foreign corporation and the           sections 6221 through 6233 (TEFRA            holds an interest in stock of a PFIC
factors, including those stated in           partnership), arrange for the tax matters    satisfies the waiver requirement of this
paragraph (d) of this section, that affect   partner (or any other person authorized      paragraph (c)(4) at the S corporation
the results of those tests.                  to enter into an agreement to extend the     level. For this purpose, the S
   (3) Who executes and files the            periods of limitations), as provided in      corporation must comply with rules
Protective Statement. The person that        section 6229(b), to execute a waiver on      similar to those applicable to non-
executes and files and Protective            behalf of all the partners.                  TEFRA partnerships, as provided in
Statement is the person that makes the          (2) Special rules—(i) Addition of         paragraph (c)(4)(i)(B)(1) of this section.
section 1295 election, as provided in        partner to non-TEFRA partnership. In         However, in the case of an S corporation
§ 1.1295–1T(d).                              the case of any individual who becomes       that was governed by the unified audit
   (4) Waiver of the periods of              a partner in a domestic partnership          corporate proceedings of sections 6241
limitations—(i) Time for and manner of       other than a TEFRA partnership (non-         through 6245 for any taxable year to
extending periods of limitations. (A) In     TEFRA partnership) in a taxable year         which a Protective Statement applies
general. A shareholder that files the        subsequent to the year in which the          (former TEFRA S corporation), the tax
Protective Statement with the                partnership filed a Protective Statement,    matters person (or any other person
Commissioner must extend the periods         the partner and the partnership must         authorized to enter into such an
of limitations on the assessment of all      comply with the rules applicable to          agreement), as was provided in sections
PFIC related taxes for all of the            non-TEFRA partnerships, as provided in       6241 through 6245, may execute a
shareholder’s taxable years to which the     paragraph (c)(4)(i)(B)(1) of this section,   waiver described in this paragraph (c)(4)
Protective Statement applies, as             by the due date, as extended, for the        that applies to such taxable year; for any
provided in this paragraph (c)(4). The       federal income tax return of the             other taxable year, the former TEFRA S
shareholder is required to execute the       partnership for the taxable year during      corporation must comply with rules
               Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations                                  21

similar to those applicable to non-            1294 to extend the time for payment, as       election in paragraph (g)(1) of this
TEFRA partnerships.                            provided in paragraph (g)(3)(ii) of this      section; or
   (E) Effect on waiver of complete            section, see sections 6503(i) and                (B) The waiver of the periods of
termination of a pass through entity or        6229(h).                                      limitations terminates (by reason of a
pass through entity’s business. The               (5) Time for and manner of filing a        court decision or other determination)
complete termination of a pass through         Protective Statement—(i) In general.          with respect to any taxable year before
entity described in paragraphs                 Except as provided in paragraph               the expiration of three years from the
(c)(4)(i)(B) through (D) of this section, or   (c)(5)(ii) of this section, a Protective      date of filing of an amended return for
a pass through entity’s trade or business,     Statement must be attached to the             that year pursuant to paragraph (g) of
will not terminate a waiver that applies       shareholder’s federal income tax return       this section.
to a partner, shareholder, or beneficiary.     for the shareholder’s first taxable year to      (7) Retention of Protective Statement
   (F) Application of general rule to          which the Protective Statement will           and information demonstrating
foreign partnerships, foreign trusts,          apply. The shareholder also must file a       reasonable belief. A shareholder that
domestic or foreign grantor trusts, and        copy of the Protective Statement with         files a Protective Statement must retain
foreign estates. A U.S. person that is a       the Philadelphia Service Center, P.O.         a copy of the Protective Statement and
partner or beneficiary of a foreign            21086, Philadelphia, PA 19114. The            its attachments and must, for each
partnership, foreign trust, or foreign         shareholder must file its return and the      taxable year of the shareholder to which
estate that holds an interest in stock of      copy of the Protective Statement by the       the Protective Statement applies, retain
a PFIC satisfies the waiver requirement        due date, as extended, for the return.        information sufficient to demonstrate
of this paragraph (c)(4) at the partner or        (ii) Special rule for taxable years        the shareholder’s reasonable belief that
beneficiary level. A U.S. person that is       ended before January 2, 1998. A               the foreign corporation was not a PFIC
treated under sections 671 through 679         shareholder may file a Protective             for the taxable year of the foreign
as the owner of the portion of a               Statement that applies to the                 corporation ending during each such
domestic or foreign trust that owns an         shareholder’s taxable year or years that      taxable year of the shareholder.
interest in PFIC stock also satisfies the
                                               ended before January 2, 1998, provided           (d) Reasonable belief—(1) In general.
waiver requirement at the owner level.
                                               the period of limitations on the              A foreign corporation is a PFIC for a
A waiver by a partner or beneficiary
                                               assessment of taxes for any such year         taxable year if the foreign corporation
applies only to that partner or
                                               has not expired (open year). The              satisfies either the income or asset test
beneficiary, and is not affected by a
                                               shareholder must file the Protective          of section 1296(a). To determine
complete termination of the entity or the
                                               Statement applicable to such open year        whether a shareholder had reasonable
entity’s trade or business.
   (ii) Terms of waiver—(A) Scope of           or years, as provided in paragraph            belief that the foreign corporation is not
waiver. The waiver of the periods of           (c)(5)(i) of this section, by the due date,   a PFIC under section 1296(a), the
limitations is limited to the assessment       as extended, for the shareholder’s return     shareholder must consider all relevant
of PFIC related taxes. If the period of        for the first taxable year ending after       facts and circumstances. Reasonable
limitations for a taxable year affected by     January 2, 1998.                              belief may be based on a variety of
a retroactive election has expired with           (6) Applicability of the Protective        factors, including reasonable asset
respect to the assessment of other non-        Statement—(i) In general. Except as           valuations as well as reasonable
PFIC related taxes, no adjustments,            otherwise provided in this paragraph          interpretations of the applicable
other than consequential changes, may          (c)(6), a Protective Statement applies to     provisions of the Code, regulations, and
be made by the Internal Revenue                the shareholder’s first taxable year for      administrative guidance regarding the
Service or by the shareholder to any           which the Protective Statement was            direct and indirect ownership of the
other item of income, deduction, or            filed and to each subsequent taxable          income or assets of the foreign
credit for that year. If the period of         year. The Protective Statement will not       corporation, the proper character of that
limitations for refunds or credits for a       apply to any taxable year of the              income or those assets, and similar
taxable year affected by a retroactive         shareholder during which the                  issues. Reasonable belief may be based
election is open only by virtue of the         shareholder does not own any stock of         on reasonable predictions regarding
assessment period extension and section        the foreign corporation or to any taxable     income to be earned and assets to be
6511(c), no refund or credit is allowable      year thereafter. Accordingly, if the          owned in subsequent years where
on grounds other than adjustments to           shareholder has not made a retroactive        qualifications of the foreign corporation
PFIC related taxes and consequential           election with respect to the previously       as a PFIC for the current taxable year
changes.                                       owned stock by the time the shareholder       will depend on the qualification of the
   (B) Period of Waiver. The extension of      reacquires stock of the foreign               corporation as a PFIC in a subsequent
the periods of limitations on the              corporation, the shareholder must file        year. Reasonable belief may be based on
assessment of PFIC related taxes will be       another Protective Statement to preserve      an analysis of generally available
effective for all of the shareholder’s         its right to make a retroactive election      financial information of the foreign
taxable years to which the Protective          with respect to the later acquired stock.     corporation. To determine whether a
Statement applies. In addition, the            For the rule that provides that a section     shareholder had reasonable belief that
waiver, to the extent it applies to the        1295 election made with respect to a          the foreign corporation was not a PFIC,
period of limitations for a particular         foreign corporation applies to stock of       the Commissioner may consider the size
year, will terminate with respect to that      that corporation acquired after a lapse in    of the shareholder’s interest in the
year no sooner than three years from the       ownership, see § 1.1295–1T(c)(2)(iii).        foreign corporation.
date on which the shareholder files an            (ii) Invalidity of the Protective             (2) Knowledge of law required.
amended return, as provided in                 Statement. A shareholder will be treated      Reasonable belief must be based on a
paragraph (g) of this section, for that        as if it never filed a Protective Statement   good faith effort to apply the Code,
year. For the suspension of the running        if—                                           regulations, and related administrative
of the period of limitations for the              (A) The shareholder failed to make a       guidance. Any person’s failure to know
collection of taxes for which a                retroactive election by the date              or apply these provisions will not form
shareholder has elected under section          prescribed for making the retroactive         the basis of reasonable belief.
22             Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations

   (e) Special rules for qualified             corporation (corporate filing) that the       reasonably relied on a qualified tax
shareholders—(1) In general. A                 foreign corporation—                          professional (including a tax
shareholder that is a qualified                  (A) Reasonably believes that it is not      professional employed by the
shareholder, as defined in paragraph           or should not constitute a PFIC for the       shareholder) who failed to identify the
(e)(2) of this section, for a taxable year     corporation’s taxable year; or                foreign corporation as a PFIC or failed
of the shareholder is not required to            (B) Is unable to conclude that it is not    to advise the shareholder of the
satisfy the reasonable belief requirement      or should not be a PFIC (due to certain       consequences of making, or failing to
of paragraph (b)(1) of this section or file    asset valuation or interpretation issues,     make, the section 1295 election. A
a Protective Statement to preserve its         or because PFIC status will depend on         shareholder will not be considered to
ability to make a retroactive election         the income or assets of the foreign           have reasonably relied on a qualified tax
with respect to such taxable year.             corporation in the corporation’s              professional if the shareholder knew, or
Accordingly, a qualified shareholder           subsequent taxable years) but                 reasonably should have known, that the
may make a retroactive election for any        reasonably believes that, more likely         foreign corporation was a PFIC and the
open taxable year in the shareholder’s         than not, it ultimately will not be a         availability of a section 1295 election, or
holding period. The retroactive election       PFIC.                                         knew or reasonably should have known
will be treated as made in the earliest          (3) Exceptions. Notwithstanding             that the qualified tax professional—
taxable year of the shareholder during         paragraph (e)(2)(ii) of this section, a         (A) Was not competent to render tax
which the foreign corporation qualified        shareholder will not be treated as a          advice with respect to the ownership of
as a PFIC (including a taxable year            qualified shareholder for a taxable year      shares of a foreign corporation; or
ending prior to January 2, 1998) and the       of the shareholder if the shareholder           (B) Did not have access to all relevant
shareholder will be treated as a               knew or had reason to know that a             facts and circumstances.
shareholder of a pedigreed QEF, as             corporate filing regarding the foreign          (ii) Shareholder deemed to have not
defined in § 1.1291–9(j)(2)(ii), provided      corporation’s PFIC status was                 reasonably relied on a qualified tax
the shareholder—                               inaccurate, or knew that the foreign          professional. For purposes of this
   (i) Has been a qualified shareholder        corporation was a PFIC for the taxable        paragraph (f)(2), a shareholder is
with respect to the foreign corporation        year of the foreign corporation ending        deemed to have not reasonably relied on
for all taxable years of the shareholder       with or within such taxable year of the       a qualified tax professional if the
included in the shareholder’s holding          shareholder. For purposes of this             shareholder was informed by the
period during which the foreign                paragraph, a shareholder will be treated      qualified tax professional that the
corporation was a PFIC, or in the case         as knowing that a foreign corporation         foreign corporation was a PFIC and of
of taxable years ending before January 2,      was a PFIC if the principal activity of       the availability of the section 1295
1998, the shareholder satisfies the            the foreign corporation, directly or          election and related tax consequences,
criteria of a qualified shareholder, for all   indirectly, is owning or trading a            but either chose not to make the section
such years; or                                 diversified portfolio of stock, securities,   1295 election or was unable to make a
   (ii) Has been a qualified shareholder,      or other financial contracts.                 valid section 1295 election.
or in the case of taxable years ending           (f) Special consent—(1) In general. A         (3) Prejudice to the interests of the
before January 2, 1998 satisfies the           shareholder that has not satisfied the        United States government—(1) General
criteria of a qualified shareholder, for all   requirements of paragraph (b) or (e) of       rule. Except as otherwise provided in
taxable years in its holding period            this section may request the consent of       paragraph (f)(3)(ii) of this section, the
before it filed a Protective Statement,        the Commissioner to make a retroactive        Commissioner will not grant consent
which Protective Statement is                  election for a taxable year of the            under paragraph (f) of this section if
applicable to all subsequent years,            shareholder provided the shareholder          doing so would prejudice the interests
beginning with the first taxable year in       satisfies the requirements set forth in       of the United States government. The
which the shareholder is not a qualified       this paragraph (f). The Commissioner          interests of the United States
shareholder.                                   will grant relief under this paragraph (f)    government are prejudiced if granting
   (2) Qualified shareholder. A                only if—                                      relief would result in the shareholder
shareholder will be treated as a                 (i) The shareholder reasonably relied       having a lower tax liability, taking into
qualified shareholder for a taxable year       on a qualified tax professional, within       account applicable interest charges, in
if the shareholder did not file a              the meaning of paragraph (f)(2) of this       the aggregate for all years affected by the
Protective Statement applicable to an          section;                                      retroactive election (other than by a de
earlier taxable year included in the             (ii) Granting consent will not              minimis amount) than the shareholder
shareholder’s holding period of the            prejudice the interests of the United         would have had if the shareholder had
stock of the foreign corporation               States government, as provided in             made the section 1295 election by the
currently held and—                            paragraph (f)(3) of this section;             election due date. The time value of
   (i) At all times during the taxable year      (iii) The shareholder requests consent      money is taken into account for
the shareholder owned, within the              under paragraph (f) of this section           purposes of this computation.
meaning of section 958, directly,              before a representative of the Internal         (ii) Elimination of prejudice to the
indirectly, or constructively, less than       Revenue Service raises upon audit the         interests of the United States
two percent of the vote and value of           PFIC status of the corporation for any        government. Notwithstanding the
each class of stock of the foreign             taxable year of the shareholder; and          general rule of paragraph (f)(3)(i) of this
corporation; and                                 (iv) The shareholder satisfies the          section, if granting relief would
   (ii) With respect to the taxable year of    procedural requirements set forth in          prejudice the interests of the United
the foreign corporation ending within          paragraph (f)(4) of this section.             States government, the Commissioner
the shareholder’s taxable year, the              (2) Reasonable reliance on a qualified      may, in the Commissioner’s sole
foreign corporation or U.S. counsel for        tax professional—(i) In general. Except       discretion, grant consent to make the
the foreign corporation indicated in a         as provided in paragraph (f)(2)(ii) of this   election provided the shareholder enters
public filing, disclosure statement or         section, a shareholder is deemed to have      into a closing agreement with the
other notice provided to U.S. persons          reasonably relied on a qualified tax          Commissioner that requires the
that are shareholders of the foreign           professional only if the shareholder          shareholder to pay an amount sufficient
              Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations                                 23

to eliminate any prejudice to the United     branch of the Associate Chief Counsel         of this section, or a shareholder that has
States government as a consequence of        (International) considering the request       been granted consent under paragraph
the shareholder’s inability to file          for relief under this paragraph (f) if,       (f) of this section, must make a
amended returns for closed taxable           while the shareholder’s request for           retroactive election in the manner
years.                                       consent is pending, the Internal              provided in Form 8621 for making a
   (4) Procedural requirements—(i)           Revenue Service begins an examination         section 1295 election, and must attach
Filing instructions. A shareholder           of the shareholder’s return for the           Form 8621 to an amended return for the
requests consent under paragraph (f) of      retroactive election year or for any          later of the retroactive election year or
this section to make a retroactive           subsequent taxable year during which          the earliest open taxable year of the
election by filing with the Office of the    the shareholder holds stock of the            shareholder. The shareholder also must
Associate Chief Counsel (International)      foreign corporation.                          file an amended return for each of its
a ruling request that includes the              (vi) Who requests special consent          subsequent taxable years affected by the
affidavits required by this paragraph        under this paragraph (f) and who enters       retroactive election. In each amended
(f)(4). The ruling request must satisfy      into a closing agreement. The person          return the shareholder must redetermine
the requirements, including payment of       that requests consent under this              its income tax liability for that year to
the user fee, for ruling requests filed      paragraph (f) is the person that makes        take into account the assessment of PFIC
with that office.                            the section 1295 election, as provided in     related taxes. If the period of limitations
   (ii) Affidavit from shareholder. The      § 1.1295–1T(d). If a shareholder is           for the assessment of taxes for a taxable
shareholder, or a person authorized to       required to enter into a closing              year affected by the retroactive election
sign a federal income tax return on          agreement with the Commissioner, as           has expired except to the extent the
behalf of the shareholder, must submit       described in paragraph (f)(3)(ii) of this     waiver of limitations, described in
a detailed affidavit describing the events   section, rules similar to those under         paragraph (c)(4) of this section, has
that led to the failure to make a section    paragraphs (c)(4)(i) (B) through (E) of       extended such period, no adjustments,
1295 election by the election due date,      this section apply for purposes of            other than consequential changes, may
and to the discovery thereof. The            determining the person that enters into       be made to any other items of income,
shareholder’s affidavit must describe the    the closing agreement.                        deduction, or credit in that year. In
engagement and responsibilities of the          (g) Time for and manner of making a        addition, the shareholder must pay all
qualified tax professional as well as the    retroactive election—(1) Time for             taxes and interest owing by reason of
extent to which the shareholder relied       making a retroactive election—(i) In          the PFIC and QEF status of the foreign
on the tax professional. The shareholder     general. Except as otherwise provided         corporation in those years (except to the
must sign the affidavit under penalties      in paragraph (g)(1)(ii) of this section, a    extent a section 1294 election extends
of perjury. An individual who signs for      shareholder must make a retroactive           the time to pay the taxes and interest).
an entity must have personal knowledge       election, in the manner provided in           A shareholder that filed a Protective
of the facts and circumstances at issue.     paragraph (g)(2) of this section, on or       Statement must attach to Form 8621
   (iii) Affidavits from other persons.      before the due date, as extended, for the     filed with each amended return a
The shareholder must submit detailed         shareholder’s return—                         representation that the shareholder,
affidavits from individuals having              (A) In the case of a shareholder that      until the taxable year in which it
knowledge or information about the           makes a retroactive election pursuant to      determined or reasonably should have
events that led to the failure to make a     paragraph (b) or (e) of this section, for     determined that the foreign corporation
section 1295 election by the election        the taxable year in which the                 was a PFIC, reasonably believed, within
due date, and to the discovery thereof.      shareholder determines or reasonably          the meaning of paragraph (d) of this
These individuals must include the           should have determined that the foreign       section, that the foreign corporation was
qualified tax professional upon whose        corporation was a PFIC; or                    not a PFIC in the taxable year for which
advice the shareholder relied, as well as       (B) In the case of a shareholder that      the amended return is filed, and in all
any individual (including an employee        obtains the consent of the Commissioner       other taxable years to which the
of the shareholder) who made a               pursuant to paragraph (f) of this section     Protective Statement applies. A
substantial contribution to the return’s     for the taxable year in which such            shareholder that entered into a closing
preparation, and any accountant or           consent is granted.                           agreement must comply with the terms
attorney, knowledgeable in tax matters,         (ii) Transition rule. A shareholder that   of that agreement, as provided in
who advised the shareholder with             files a Protective Statement for a taxable    paragraph (f)(3)(ii) of this section, to
regard to its ownership of the stock of      year described in paragraph (c)(5)(ii) of     eliminate any prejudice to the United
the foreign corporation. Each affidavit      this section may make a retroactive           States government’s interests, as
must describe the individual’s               election by the due date, as extended,        described in paragraph (f)(3) of this
engagement and responsibilities as well      for the return for the first taxable year     section.
as the advice concerning the tax             ended after January 2, 1998 even if the          (3) Who makes the retroactive
treatment of the foreign corporation that    shareholder determined or should have         election. The person that makes the
that individual provided to the              determined that the foreign corporation       retroactive election is the person that
shareholder. Each affidavit also must        was a PFIC for a year described in            makes the section 1295 election, as
include the individual’s name, address,      paragraph (c)(5)(ii) of this section at any   provided in § 1.1295–1T(d). A partner,
and taxpayer identification number, and      time on or before January 2, 1998.            shareholder, or beneficiary for which a
must be signed by the individual under          (iii) Ownership not required at time       pass through entity, as described in
penalties of perjury.                        retroactive election is made. The             paragraphs (c)(4)(i)(B) through (D) of
   (iv) Other information. In connection     shareholder need not own shares of the        this section, filed a Protective Statement
with a request for consent under this        foreign corporation at the time the           may make a retroactive election, if the
paragraph (f), a shareholder must            shareholder makes a retroactive election      pass through entity completely
provide any additional information           with respect to the foreign corporation.      terminates its business or otherwise
requested by the Commissioner.                  (2) Manner of making a retroactive         ceases to exist.
   (v) Notification of Internal Revenue      election. A shareholder that has satisfied       (4) Other elections—(i) Section
Service. The shareholder must notify the     the requirements of paragraph (b) or (e)      1291(d)(2) election. If the foreign
24             Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations

corporation for which the shareholder           (2) Transition rule. If the time for                 DEPARTMENT OF THE TREASURY
makes a retroactive election will be         making an election under this section,
treated as an unpedigreed QEF, as            as provided in paragraph (b) of this                    Internal Revenue Service
defined in § 1.1291–9(j)(2)(iii), with       section, expired before January 2, 1998,
respect to the shareholder, the                                                                      26 CFR Parts 40 and 48
                                             a shareholder that applied rules similar
shareholder may make an election             to the rules of section 1291(d)(2)(A) and               [TD 8748]
under section 1291(d)(2) to purge its        § 1.1291–10 to an election under this
holding period of the years or parts of                                                              RIN 1545–AU53
                                             section made with respect to a
years before the effective date of the       corporation that was a CFC during its
retroactive election. If the qualification                                                           Gasoline and Diesel Fuel Excise Tax;
                                             last taxable year as a PFIC under section               Special Rules for Alaska; Definitions
date, within the meaning of § 1.1291–        1296(a) may file an amended return for
9(e) or 1.1291–10(e), falls in a taxable     the taxable year that includes the                      AGENCY:  Internal Revenue Service (IRS),
year for which the period of limitations                                                             Treasury.
                                             termination date, as defined in
has expired, the shareholder may treat                                                               ACTION: Final regulations.
                                             paragraph (a) of this section, and apply
the first day of the retroactive election
year as the qualification date. The          the rules of section 1291(d)(2)(B) and
                                                                                                     SUMMARY:    This document contains final
shareholder may make a section               § 1.1291–9 at any time before the
                                                                                                     regulations relating to the application of
1291(d)(2) election at the time that it      expiration of the period of limitations                 the diesel fuel excise tax to fuel used in
makes the retroactive election, but no       for the assessment of taxes for that                    Alaska. This document also contains
later than two years after the date that     taxable year.                                           final regulations relating to the gasoline
the amended return in which the                (3) Effective date. The rules of this                 and diesel fuel excise tax definitions.
retroactive election is made is filed. For   paragraph are effective as of January 2,                The regulations implement certain
the requirements for making a section        1998.                                                   changes made by the Omnibus Budget
1291(d)(2) election, see §§ 1.1291–9 and                                                             Reconciliation Act of 1993 and the
1.1291–10.                                   PART 602—OMB CONTROL NUMBERS                            Small Business Job Protection Act of
   (ii) Section 1294 election. A             UNDER THE PAPERWORK                                     1996. They affect certain enterers,
shareholder may make an election             REDUCTION ACT                                           refiners, retailers, terminal operators,
under section 1294 to extend the time                                                                throughputters, wholesale distributors,
for payment of tax on the shareholder’s        Par. 14. The authority citation for part              and users.
pro rata shares of the ordinary earnings     602 continues to read as follows:                       DATES: These regulations are effective
and net capital gain of the foreign                                                                  January 2, 1998. For dates of
                                                 Authority: 26 U.S.C. 7805.
corporation reported in the                                                                          applicability of these regulations, see
shareholder’s amended return, and              Par. 15. In § 602.101, paragraph (c) is               §§ 48.4082–5(h) and 48.6715–1(a)(3).
section 6621 interest attributable to such   amended by adding entries in numerical                  FOR FURTHER INFORMATION CONTACT:
tax, but only to the extent the tax and      order to the table to read as follows:                  Frank Boland, (202) 622–3130 (not a
interest are attributable to earnings that                                                           toll-free call).
have not been distributed to the             § 602.101    OMB Control numbers.
shareholder. The shareholder must            *        *    *      *       *                          SUPPLEMENTARY INFORMATION:
make a section 1294 election for a               (c) * * *                                           Background
taxable year at the time that it files its
amended return for that year, as                                                                        Section 4081 imposes a tax on certain
                                                 CFR part of section where        Current OMB        removals, entries, and sales of diesel
provided in paragraph (g)(1) of this              identified and described         control No.
section. For the requirements for making                                                             fuel. However, under section 4082, tax
a section 1294 election, see § 1.1294–1T.                                                            is not imposed if, among other
   (h) Effective date. The rules of this        *        *               *             *       *     conditions, the diesel fuel is indelibly
section are effective as of January 2,       1.1295–1T ...............................   1545–1555   dyed in accordance with Treasury
1998.                                        1.1295–3T ...............................   1545–1555   regulations. Section 1801 of the Small
                                                                                                     Business Job Protection Act of 1996
   Par. 13. Section 1.1297–3T(c) is
                                                  *          *        *           *          *       amends section 4082 to create an
added to read as follows:
                                                                                                     exception to the dyeing requirement
§ 1.1297–3T Deemed sale election by a        Michael P. Dolan,                                       that effectively applies only to diesel
United States person that is a shareholder                                                           fuel that is removed, entered, or sold in
of a passive foreign investment company      Deputy Commissioner of Internal Revenue.
                                                                                                     Alaska.
(temporary).                                   Approved: December 15, 1997.                             Temporary regulations (TD 8693)
*     *     *     *     *                    Donald C. Lubick,                                       relating to this change were published
  (c) Application of deemed dividend         Acting Assistant Secretary of the Treasury.             in the Federal Register on December 17,
election rules.—(1) In general. A            [FR Doc. 97–33985 Filed 12–31–97; 8:45 am]              1996 (61 FR 66215) along with a notice
shareholder of a former PFIC, within the     BILLING CODE 4830–01–P
                                                                                                     of proposed rulemaking (REG–247678–
meaning of § 1.1291–9(j)(2)(iv), that was                                                            96) cross-referencing the temporary
a controlled foreign corporation, within                                                             regulations (61 FR 66246). The notice of
the meaning of section 957(a) (CFC),                                                                 proposed rulemaking also proposed
during its last taxable year as a PFIC                                                               other changes to the gasoline and diesel
under section 1296(a), may apply the                                                                 fuel excise tax regulations that were not
rules of section 1291(d)(2)(B) and                                                                   contained in the temporary regulations.
§ 1.1291–9 to an election under section                                                                 A public hearing was neither
1297(b)(1) and this section made by the                                                              requested nor held. After consideration
time and in the manner provided in                                                                   of written comments, the proposed
paragraph (b) of this section.                                                                       regulations are adopted as revised by
               Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations                                    25

this Treasury decision. Comments and          Special Analyses                               Par. 4. Section 48.4081–1 is amended
revisions are discussed below.                                                            as follows:
                                                It has been determined that this
                                                                                             1. Paragraph (b) is amended by:
Explanation of Provisions                     Treasury decision is not a significant         a. Adding a definition in alphabetical
                                              regulatory action as defined in EO          order; and
   The proposed regulations provide a
                                              12866. Therefore, a regulatory                 b. Revising the definition of terminal.
definition of kerosene for purposes of
                                              assessment is not required. It also has        2. Paragraph (c)(1)(i) is amended by
the diesel fuel tax. Several
                                              been determined that section 553(b) of      removing the language ‘‘any mixture’’
commentators questioned this proposal.
                                              the Administrative Procedure Act (5         and adding ‘‘any taxable fuel’’ in its
Because the IRS is continuing its review
                                              U.S.C. chapter 5) does not apply to these   place and by removing the language
of this issue, the final regulations do not
                                              regulations and, because these              ‘‘and that consists of’’ and adding ‘‘by
define kerosene. However, a definition
                                              regulations do not impose a collection      mixing’’ in its place.
may be included in a future Treasury
                                              of information on small entities, the          3. Paragraph (d) is revised.
decision.
                                              Regulatory Flexibility Act (5 U.S.C.           The addition and revisions read as
   The proposed regulations also include      chapter 6) does not apply. Therefore, a
changes to the effective date of other                                                    follows:
                                              Regulatory Flexibility Analysis is not
proposed regulations that were                required. Pursuant to section 7805(f) of    § 48.4081–1    Taxable fuel; definitions.
published in the Federal Register on          the Internal Revenue Code, the notice of    *      *     *    *     *
March 14, 1996 (61 FR 10490). Those           proposed rulemaking preceding these            (b) * * *
regulations propose requirements              regulations was submitted to the Chief         Aviation gasoline means all special
relating to dye injection equipment and       Counsel for Advocacy of the Small           grades of gasoline that are suitable for
are not being finalized at this time.         Business Administration for comment         use in aviation reciprocating engines, as
However, the IRS appreciates the              on its impact on small business.            described in ASTM Specification D 910
concern expressed by several                                                              and Military Specification MIL–G–5572.
commentators that, as revised, the            Drafting Information                        The ASTM specification may be
proposed effective dates still would not        The principal author of these             obtained from the American Society for
give taxpayers sufficient time to comply      regulations is Frank Boland, Office of      Testing and Materials and the military
with the proposed requirements. Thus,         Assistant Chief Counsel (Passthroughs       specification from the Standardization
the final dye injection regulations will      and Special Industries). However, other     Document Order Desk at the addresses
provide a longer period of time between       personnel from the IRS and Treasury         provided in paragraph (c)(2)(i) of this
the publication date and the effective        Department participated in their            section.
date than was proposed.                       development.                                *      *     *    *     *
   In response to comments, these final                                                      Terminal means a taxable fuel storage
regulations modify the definition of          List of Subjects in 26 CFR Parts 40 and
                                              48                                          and distribution facility that is supplied
terminal to exclude an otherwise                                                          by pipeline or vessel and from which
qualifying facility that stores only taxed      Excise taxes, Reporting and               taxable fuel may be removed at a rack.
gasoline and taxed, undyed diesel fuel.       recordkeeping requirements.                 However, the term does not include any
As a result of this modification, tax will                                                facility at which gasoline blendstocks
not be imposed again when the fuel is         Adoption of Amendments to the
                                              Regulations                                 are used in the manufacture of products
removed from this type of facility.                                                       other than finished gasoline and from
   The final regulations generally adopt        Accordingly, 26 CFR parts 40 and 48       which no gasoline is removed. Also,
as proposed the provisions dealing with       are amended as follows:                     effective January 2, 1998, the term does
diesel fuel that is removed, entered, or                                                  not include any facility operated by a
sold in Alaska. However, several              PART 40—EXCISE TAX PROCEDURAL               taxable fuel registrant if all of the
comments suggested that the definition        REGULATIONS                                 finished gasoline and diesel fuel (other
of qualified dealer in the proposed                                                       than diesel fuel dyed in accordance
regulations was too narrow and                  Paragraph 1. The authority citation
                                              for part 40 continues to read in part as    with § 48.4082–1(b)) stored at the
prevented unlicensed vendors from                                                         facility has been previously taxed under
selling diesel fuel for exempt uses. In       follows:
                                                                                          section 4081 upon removal from a
response, the final regulations expand          Authority: 26 U.S.C. 7805 * * *           refinery or terminal.
the definition of qualified dealer to
include unlicensed diesel fuel retailers      § 40.6011(a)–1   [Amended]                  *      *     *    *     *
                                                 Par. 2. Section 40.6011(a)–1(b)(2)(vi)      (d) Effective date. This section is
that are registered by the IRS under
                                              is amended by removing the language ‘‘a     applicable January 1, 1994, except that
specified conditions. As a result of this
                                              taxable fuel registrant’’ and adding        in paragraph (b) of this section the
modification, many retailers that serve
                                              ‘‘registered under section 4101’’ in its    definition of aviation gasoline and the
remote communities in Alaska will be
                                              place.                                      third sentence in the definition of
able to buy diesel fuel tax free for resale
                                                                                          terminal are effective January 2, 1998.
for nontaxable uses.
   The final regulations also make minor      PART 48—MANUFACTURERS AND
                                                                                          § 48.4082–5T    [Redesignated as § 48.4082–
modifications to existing gasoline and        RETAILERS EXCISE TAXES                      5]
diesel fuel regulations. For example,           Par. 3. The authority citation for part     Par. 5. Section 48.4082–5T is
existing regulations generally require        48 is amended by removing the entry for     redesignated as § 48.4082–5 and the
gasoline and diesel fuel refund claims to     § 48.4082–5T and adding an entry in         language ‘‘(temporary)’’ is removed from
be filed with the same service center         numerical order to read in part as          the section heading.
where the claimant’s income tax return        follows:                                      Par. 6. Section 48.4082–5, as
is filed. Because all excise tax refund                                                   redesignated, is amended as follows:
                                                Authority: 26 U.S.C. 7805 * * *
claims are now processed at the                                                             1. Paragraph (b) is amended by
Cincinnati Service Center, this                 Section 48.4082–5 also issued under       revising the definition of qualified
regulatory provision is removed.              26 U.S.C. 4082. * * *                       dealer.
26             Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations

  2. Paragraphs (f) and (g) are                 § 48.6715–2T    [Removed]                     extension established the deadline at
redesignated as paragraphs (g) and (h),           Par. 11. Section 48.6715–2T is              December 14, 1997, but because that
respectively.                                   removed.                                      date fell on a Sunday, the deadline
  3. A new paragraph (f) is added.                Approved: November 6, 1997.                 became the following Monday,
  4. Paragraph (h), as redesignated, is                                                       December 15, 1997. In the November 20,
                                                Michael P. Dolan,
revised.                                                                                      1997 document, EPA indicated that it
                                                Acting Commissioner of Internal Revenue.
  The addition and revisions read as                                                          was reserving its option to extend the
                                                Donald C. Lubick,                             date for final action by all or part of the
follows:                                        Acting Assistant Secretary of the Treasury.   remaining four months of the six-month
§ 48.4082–5   Diesel fuel; Alaska               [FR Doc. 97–33988 Filed 12–31–97; 8:45 am]    extension period provided under
*      *      *     *    *                      BILLING CODE 4830–01–P                        section 307(d)(10).
   (b) * * *                                                                                     EPA is today extending the deadline
                                                                                              for an additional three days, to
   Qualified dealer means any person
                                                ENVIRONMENTAL PROTECTION                      December 18, 1997. In the November 20,
that holds a qualified dealer license
                                                AGENCY                                        1997 document, EPA justified the
from the state of Alaska or has been
                                                                                              second one-month extension as
registered by the district director as a
                                                40 CFR Part 52                                necessary in part to allow the agency,
qualified retailer. The district director
                                                                                              working with the section 126 petitioners
will register a person as a qualified           [FRL–5937–7]
                                                                                              and other interested parties, to conclude
retailer only if the district director—
                                                Final Determination to Extend Deadline        the process for determining an
   (1) Determines that the person, in the                                                     appropriate schedule for action on the
course of its trade or business, regularly      for Promulgation of Action on Section
                                                126 Petitions                                 section 126 petitions. This schedule
sells diesel fuel for use by its buyer in                                                     would include, as important elements,
a nontaxable use; and                           AGENCY:  Environmental Protection             timetables for proposed rulemaking, a
   (2) Is satisfied with the filing, deposit,   Agency (EPA).                                 public hearing, and a public comment
payment, and claim history for all              ACTION: Final rule.                           period. In this manner, the extension
federal taxes of the person and any                                                           furthered the purposes of section
related person.                                 SUMMARY:   The EPA is extending by an         307(d)(10) by promoting public
*      *      *     *    *                      additional three-day period the deadline      participation in the rulemaking process.
   (f) Registration. With respect to each       for taking final action on petitions that        EPA believes that these same reasons
person that has been registered as a            eight States have submitted to require        continue to apply to favor another, brief
qualified retailer by the district director,    EPA to make findings that sources             extension, at this time. In particular,
the rules of § 48.4101–1(g), (h), and (i)       upwind of those States contribute             EPA seems to be in the final stages of
apply.                                          significantly to nonattainment problems       finalizing with the section 126
                                                in those States. Under the Clean Air Act      petitioners an appropriate schedule for
*      *      *     *    *
                                                (CAA), EPA is authorized to grant this        section 126 rulemaking. Accordingly,
   (h) Effective date. This section is          time extension if EPA determines that
applicable with respect to diesel fuel                                                        EPA again concludes today that
                                                the extension is necessary, among other       extending the date for action on the
removed or entered after December 31,           things, to meet the purposes of the Act’s
1996. A person registered by the district                                                     section 126 petitions for another three
                                                rulemaking requirements. By this              days is necessary.
director as a qualified retailer before         document, EPA is making that
April 2, 1998 may be treated, to the                                                             As EPA indicated in its previous
                                                determination.                                notices, EPA, even with today’s action,
extent the district director determines
                                                EFFECTIVE DATE: This action is effective      continues not to use the entire six
appropriate, as a qualified dealer for the
                                                as of December 15, 1997.                      months provided under section
period before that date.
                                                FOR FURTHER INFORMATION CONTACT:              307(d)(10) for the extension. EPA
§ 48.6416(b)(4)–1   [Removed]                   Howard J. Hoffman, Office of General          continues to reserve the right to apply
  Par. 7. Section 48.6416(b)(4)-1 is            Counsel, MC–2344, 401 M St., SW,              the remaining period, or a portion
removed.                                        Washington, D.C. 20460, (202) 260–            thereof, as an additional extension, if
                                                5892.                                         necessary, immediately following the
§ 48.6421–3   [Amended]                                                                       conclusion of the three-day period, or to
                                                SUPPLEMENTARY INFORMATION:
  Par. 8. In § 48.6421–3, paragraph                                                           apply the remaining time to the period
(d)(2) is amended by removing the last          I. Background                                 following EPA’s proposed rulemaking.
sentence.                                          Today’s action follows closely EPA’s       II. Final Action
§ 48.6427–3   [Amended]
                                                final actions taken by notice dated
                                                October 22, 1997 (62 FR 54769) and            A. Rule
   Par. 9. In § 48.6427–3, paragraph            November 20, 1997 (62 FR 61914).                Today, EPA is determining, under
(d)(2) is amended by removing the last          Familiarity with those documents is           CAA section 307(d)(10), that an
sentence.                                       assumed, and background information           additional three-day period is necessary
   Par. 10. In § 48.6715–1, paragraph           in them will not be repeated here.            to assure the development of an
(a)(3) is revised to read as follows:              In the November 20, 1997 document,         appropriate schedule for rulemaking on
                                                EPA extended by one month, pursuant           the section 126 petitions, which
§ 48.6715–1 Penalty for misuse of dyed
diesel fuel.                                    to its authority under CAA section            schedule would allow EPA adequate
                                                307(d)(10), the time-frame for taking         time to prepare a notice for proposal
   (a) * * *                                    final action on petitions submitted by        that will best facilitate public comment,
   (3) The alteration or attempted              Connecticut, Maine, Massachusetts,            as well as allow the public sufficient
alteration occurs in an exempt area of          New Hampshire, New York,                      time to comment. Under this extension,
Alaska after September 30, 1996.                Pennsylvania, Rhode Island, and               the date for action on each of the section
*      *    *      *    *                       Vermont under CAA section 126. This           126 petitions is December 18, 1997.
               Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations                                  27

B. Notice-and-Comment Under the                has determined that these requirements       DEPARTMENT OF TRANSPORTATION
Administrative Procedures Act (APA)            do not apply to today’s action because
  This document is a final agency              this rulemaking (i) is not a Federal         National Highway Traffic Safety
action, but may not be subject to the          mandate—rather, it simply extends the        Administration
notice-and-comment requirements of             date for EPA action on a rulemaking;
                                                                                            49 CFR Part 571
the APA, 5 U.S.C. 553(b). EPA believes         and (ii) contains no regulatory
that because of the limited time               requirements that might significantly or     [Docket No. NHTSA–97–3145]
provided to make a determination that          uniquely affect small governments.           RIN No. 2127–AB85
the deadline for action on the section
126 petitions should be extended,              F. Regulatory Flexibility Act
                                                                                            Federal Motor Vehicle Safety
Congress may not have intended such a            Under the Regulatory Flexibility Act       Standards; Head Impact Protection
determination to be subject to notice-         (RFA), 5 U.S.C. 600 et seq., EPA must
and-comment rulemaking. However, to                                                         AGENCY:  National Highway Traffic
                                               propose a regulatory flexibility analysis    Safety Administration (NHTSA),
the extent that this determination is
                                               assessing the impact on small entities of    Department of Transportation (DOT).
subject to notice-and-comment
rulemaking, EPA invokes the good cause         any rule subject to the notice-and-          ACTION: Correcting amendments.
exception pursuant to the APA, 5 U.S.C.        comment rulemaking requirements.
553(b)(3)(B). Providing notice and             Because this action is exempt from such      SUMMARY:   On April 8, 1997, (62 FR
comment would be impracticable                 requirements, as described above, it is      16718) NHTSA published a final rule
because of the limited time provided for       not subject to RFA.                          amending Standard No. 201, ‘‘Occupant
making this determination, and would                                                        Protection in Interior Impact,’’ to
                                               G. Submission to Congress and the            include another phase-in option, allow
be contrary to the public interest             General Accounting Office
because it would divert agency                                                              manufacturers to carry forward credits
resources from the critical substantive                                                     for vehicles certified to the free-motion
                                                 Under 5 U.S.C. 801(a)(1)(A), added by
review of the section 126 petitions.                                                        headform impact requirements prior to
                                               the Small Business Regulatory
                                                                                            the beginning of the phase-in period,
C. Effective Date Under the APA                Enforcement Fairness Act of 1996             exclude buses with a GVWR of more
                                               (SBREFA), EPA submitted, by the date         than 3,860 kilograms (8,500 pounds),
  Today’s action will be effective on
                                               of publication of this rule, a report        specify that all attachments to the
December 15, 1997. Under the APA, 5
U.S.C. 553(d)(3), agency rulemaking            containing this rule and other required      vehicle upper interior components are
may take effect before 30 days after the       information to the U.S. Senate, the U.S.     to remain in place during compliance
date of publication in the Federal             House of Representatives and the             testing, and make other changes to the
Register if the agency has good cause to       Comptroller General of the General           test procedure to clarify some areas of
mandate an earlier effective date.             Accounting Office. This rule is not a        confusion. This document corrects
Today’s action—a deadline extension—           ‘‘major rule’’ as defined by 5 U.S.C.        minor errors in S2 and S8.12(a)(1) of
must take effect immediately because its       804(2).                                      Standard No. 201 (49 CFR 571.201).
purpose is to move back by a three-day                                                      DATES: The amendments are effective on
                                               H. Paperwork Reduction Act
period the December 15, 1997 deadline                                                       January 2, 1998.
for the section 126 petitions. Moreover,         This rule does not contain any             FOR FURTHER INFORMATION CONTACT: The
EPA intends to use immediately the             information collection requirements          following persons at the NHTSA, 400
new extension period to continue to            which require OMB approval under the         Seventh Street, SW, Washington, DC
develop an appropriate schedule for            Paperwork Reduction Act (44 U.S.C.           20590.
ultimate action on the section 126             3501 et seq.)                                   For non-legal issues: Dr. William Fan,
petitions, and to continue to develop the                                                   Office of Crashworthiness, NPS–11,
technical analysis needed to develop the       I. Judicial Review                           telephone (202) 366–4922, facsimile
notice of proposed rulemaking. These                                                        (202) 366–4329, electronic mail
reasons support an effective date prior           Under CAA section 307(b)(1), a
                                                                                            ‘‘bfan@nhtsa.dot.gov’’.
to 30 days after the date of publication.      petition to review today’s action may be
                                                                                               For legal issues: Steve Wood, Office of
                                               filed in the Court of Appeals for the        the Chief Counsel, NCC–20, telephone
D. Executive Order 12866                       District of Columbia within 60 days of       (202) 366–2992, facsimile (202) 366–
   The Office of Management and Budget         January 2, 1998.                             3820, electronic mail
has exempted this regulatory action
                                                 Dated: December 15, 1997.                  ‘‘swood@nhtsa.dot.gov’’.
from Executive Order 12866 review.
                                               Carol M. Browner,                            SUPPLEMENTARY INFORMATION:
E. Unfunded Mandates                           Administrator.
   Under the Unfunded Mandates                                                              I. Background
                                               [FR Doc. 97–34199 Filed 12–31–97; 8:45 am]
Reform Act of 1995, 2 U.S.C. 1501 et           BILLING CODE 6560–50–P
                                                                                               Federal Motor Vehicle Safety
seq., EPA must undertake various                                                            Standard No. 201 ‘‘Occupant Protection
actions in association with proposed or                                                     in Interior Impact,’’ is intended to
final rules that include a Federal                                                          reduce deaths and injuries resulting
mandate that may result in estimated                                                        from occupant impacts with vehicle
costs of $100 million or more to the                                                        interiors. On April 8, 1997, NHTSA
private sector or to State, local, or tribal                                                published a final rule (62 FR 16718)
governments in the aggregate. In                                                            amending Standard No. 201 to (1)
addition, before EPA establishes any                                                        include another phase-in option, (2)
regulatory requirements that may                                                            allow manufacturers to carry forward
significantly or uniquely affect small                                                      credits for vehicles certified to the free-
governments, EPA must have developed                                                        motion headform impact requirements
a small government agency plan. EPA                                                         prior to the beginning of the phase-in
28            Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Rules and Regulations

period, (3) exclude buses with a GVWR       from the requirements of S6. The second        Accordingly, 49 CFR Part 571 is
of more than 3,860 kilograms (8,500         correction amends 49 CFR 571.201,            corrected by making the following
pounds), (4) specify that all attachments   S8.12(a)(1) to clarify the location of the   correcting amendments:
to the vehicle upper interior               rearmost head center of gravity for the
components are to remain in place           front outboard seating position (CG-F2)      PART 571—[AMENDED]
during compliance testing, and (5) make     and make the regulatory text consistent
other changes to the test procedure to      with the definition of the seating             1. The authority citation for part 571
clarify some areas of confusion. This       reference point. As published,               of title 49 continues to read as follows:
rule corrects minor errors in the           S8.12(a)(1) called for locating the head       Authority: 49 U.S.C. 322, 30111, 30115,
previous final rule.                        center of gravity with the seat in its       30117, and 30166; delegation of authority at
  Since the publication of the April        rearmost adjustment position. NHTSA          49 CFR 1.50.
1997 final rule, NHTSA received two         notes that a seat may be capable of            2. S2 and S8.12(a)(1) of 49 CFR
petitions for reconsideration from: (1)     adjustment to positions both forward         571.201 are corrected to read as follows:
The American Automobile                     and rearward of the normal design
Manufacturers Association (AAMA) and        positions used for driving or riding. The    § 571.201 Standard No. 201; Occupant
(2) ASC, Incorporated. NHTSA will           agency did not intend that an extreme        protection in interior impact.
respond to those petitions through a        rearward adjustment, which is outside        *     *     *    *     *
notice to be published in the Federal       the range of adjustment for normal use         S2. Application. This standard
Register later this year.                   by drivers or passengers, be used for        applies to passenger cars and to
II. Summary of the Corrections              locating the head center of gravity.         multipurpose passenger vehicles,
                                            Accordingly, S8.12(a)(1) is being            trucks, and buses with a GVWR of 4,536
   NHTSA has discovered a few               corrected so that location of the head
discrepancies between the preamble and                                                   kilograms or less, except that the
                                            center of gravity may be based on the        requirements of S6 do not apply to
the regulatory text of the April 1997       seat being adjusted to its rearmost
final rule that require corrections.                                                     buses with a GVWR of more than 3,860
                                            normal design position.                      kilograms.
NHTSA is making those corrections              As stated above, these amendments
through this notice.                        are effective upon publication of this       *     *     *    *     *
   The corrections are not substantive.     notice. These amendments are merely            S8.12 * * *
The first correction is in the wording of   technical corrections of the final rule        (a) * * *
49 CFR 571.201, S2. ‘‘Application’’ to      that was published on April 8, 1997.           (1) Location of rearmost CG–F (CG–
make the section to be consistent with      They impose no new substantive               F2). For front outboard designated
the statement in the preamble of the        requirements. Therefore, NHTSA finds         seating positions, the head center of
final rule. It is clearly stated in the     for good cause that any notice of            gravity with the seat in its rearmost
preamble that requirements of S6 do not     proposed rulemaking and opportunity          normal design driving or riding position
apply to buses with a GVWR of more          for comment on these amendments are          (CG–F2) is located 160 mm rearward
than 3,860 kilograms (8,500 pounds).        not necessary. Because of the non-           and 660 mm upward from the seating
The regulatory text incorrectly             substantive nature of the amendments,        reference point.
indicates, however, that the                NHTSA also finds for good cause that
requirements of S6 do not apply to                                                       *     *     *    *     *
                                            making the rule effective upon                 Issued on December 4, 1997.
buses with a GVWR of 3,860 kilograms        publication is in the public interest.
(8,500 pounds) or less. As indicated by                                                  Ricardo Martinez,
the preamble, NHTSA intended that           List of Subjects in 49 CFR Part 571          Administrator.
buses with a GVWR greater than 3,860          Imports, Incorporation by reference,       [FR Doc. 97–34052 Filed 12–31–97; 8:45 am]
kilograms (8,500 pounds) be excluded        Motor vehicle safety, Motor vehicles.        BILLING CODE 4910–59–P
federal register
                   Friday
                   January 2, 1998




                   Part II

                   Department of
                   Transportation
                   Federal Aviation Administration

                   14 CFR Parts 91, 121, 125, and 129
                   Repair Assessment for Pressurized
                   Fuselages; Proposed Rule
                   Proposed Advisory Circular (AC) 120–XX,
                   Repair Assessment of Pressurized
                   Fuselages; Notice




                                                        125
126                Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

DEPARTMENT OF TRANSPORTATION               FOR FURTHER INFORMATION CONTACT:               Any person may obtain a copy of this
                                           Dorenda Baker, Manager, Aging Aircraft      NPRM by submitting a request to the
Federal Aviation Administration            Program, ANM–109, FAA Transport             Federal Aviation Administration, Office
                                           Airplane Directorate, Aircraft              of Rulemaking, ARM–1, 800
14 CFR Parts 91, 121, 125, and 129                                                     Independence Avenue SW.,
                                           Certification Service, 1601 Lind Avenue
                                           SW., Renton, WA 98055–4056;                 Washington, D.C. 20591, or by calling
[Docket No. 29104; Notice No. 97–16]       telephone (425) 227–2109, facsimile         (202) 267–9677. Communications must
                                           (425) 227–1100.                             identify the notice number of this
RIN 2120–AF81                                                                          NPRM. Persons interested in being
                                           SUPPLEMENTARY INFORMATION:                  placed on a mailing list for future
Repair Assessment for Pressurized          Comments Invited                            rulemaking documents should request
Fuselages                                                                              from the Office of Public Affairs,
                                             Interested persons are invited to         Attention: Public Inquiry Center, APA–
AGENCY: Federal Aviation                   participate in this proposed rulemaking     230, 800 Independence Ave SW.,
Administration (FAA), DOT.                 by submitting such written data, views,     Washington, D.C. 20591, or by calling
ACTION: Notice of proposed rulemaking.     or arguments as they may desire.            (202) 267–3484, a copy of Advisory
                                           Comments relating to the                    Circular No. 11–2A, Notice of Proposed
SUMMARY: This proposed rulemaking          environmental, energy, federalism, or       Rulemaking Distribution System, which
would require incorporation of repair      economic impact that might result from      describes the application procedure.
assessment guidelines for the fuselage     adoption of the proposals in this notice
pressure boundary (fuselage skins and      are also invited. Substantive comments      Background
pressure webs) of certain transport        should also be accompanied by cost             This proposal, to require the
category airplane models into the FAA-     estimates. Commenters should identify       incorporation of repair assessment
approved maintenance or inspection         the regulatory docket or notice number      guidelines into the maintenance or
program of each operator of those          and submit comments in triplicate to        inspection program for certain transport
airplanes. This action is the result of    the Rules Docket address specified          category airplanes, follows from
concern for the continued operational      above. All comments received on or          commitments made by the FAA and the
safety of airplanes that are approaching   before the closing date for comments        aviation community in June 1988 to
or have exceeded their design service      will be considered by the Administrator     address the issues concerning the safety
goal. The purpose of the repair            before taking action on this proposed       of aging transport airplanes.
assessment guidelines is to establish a    rulemaking. The proposals contained in         In April 1988, a high-cycle transport
damage-tolerance based supplemental        this notice may be changed in light of      airplane enroute from Hilo to Honolulu,
inspection program for repairs to detect   the comments received. All comments         Hawaii, suffered major structural
damage, which may develop in a             received will be available in the Rules     damage to its pressurized fuselage
repaired area, before that damage          Docket for examination by interested        during flight. This accident was
degrades the load carrying capability of   persons, both before and after the          attributed in part to the age of the
the structure below the levels required    closing date for comments. A report         airplane involved. The economic benefit
by the applicable airworthiness            summarizing each substantive public         of operating certain older technology
standards.                                 contact with FAA personnel concerned        airplanes has resulted in the operation
                                           with this rulemaking will be filed in the   of many such airplanes beyond their
DATES: Comments must be submitted on
                                           docket. Commenters wishing the FAA to       previously projected retirement age.
or before April 2, 1998.                                                               Because of the problems revealed by the
                                           acknowledge receipt of their comments
ADDRESSES: Comments on this                submitted in response to this notice        accident in Hawaii and the continued
document may be mailed in triplicate       must include a self-addressed, stamped      operation of older airplanes, both the
to: Federal Aviation Administration,       postcard on which the following             FAA and industry generally agreed that
Office of the Chief Counsel, Attention:    statement is made: ‘‘Comments to            increased attention needed to be
Rules Docket (AGC–200), Docket No.         Docket No. 29104. The postcard will be      focused on the aging fleet and on
29104, 800 Independence Avenue SW.,        date stamped and returned to the            maintaining its continued operational
Washington, DC 20591; or delivered in      commenter.                                  safety.
triplicate to: Room 915G, 800                                                             In June 1988, the FAA sponsored a
Independence Avenue SW.,                   Availability of the NPRM                    conference on aging airplanes. As a
Washington, DC 20591. Comments               An electronic copy of this document       result of that conference, an aging
delivered must be marked Docket No.        may be downloaded using a modem and         aircraft task force was established in
29104. Comments may also be                suitable communications software from       August 1988 as a sub-group of the
submitted electronically to: 9–NPRM–       the FAA regulations section of the          FAA’s Research, Engineering, and
CMTS@faa.dot.gov. Comments may be          Fedworld electronic bulletin board          Development Advisory Committee,
examined in Room 915G weekdays,            service (telephone: 703–321–3339), the      representing the interests of the aircraft
except Federal holidays, between 8:30      online Federal Register database            operators, aircraft manufacturers,
a.m. and 5:00 p.m. In addition, the FAA    through GPO Access (telephone: 202–         regulatory authorities, and other
is maintaining an information docket of    512–1661), or the FAA’s Aviation            aviation representatives. The task force,
comments in the Transport Airplane         Rulemaking Advisory Committee               then known as the Airworthiness
Directorate (ANM–100), Federal             Bulletin Board service (telephone: 202–     Assurance Task Force (AATF), set forth
Aviation Administration, Northwest         267–5948).                                  five major elements of a program for
Mountain Region, 1601 Lind Avenue            Internet users may reach the FAA’s        keeping the aging fleet safe. For each
SW., Renton, WA 98055–4056.                web page at http://www.faa.gov or           airplane model in the aging transport
Comments in the information docket         GPO’s Federal Register web page at          fleet, (1) select service bulletins
may be examined weekdays, except           http://www.access.gpo.gov/su docs for       describing modifications and
Federal holidays, between 7:30 a.m. and    access to recently published rulemaking     inspections necessary to maintain
4:00 p.m.                                  documents.                                  structural integrity; (2) develop
                  Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                             127

inspection and prevention programs to       The Aviation Rulemaking Advisory          The Concern Posed By Older Repairs
address corrosion; (3) develop generic      Committee                                    The basic structure of each of the
structural maintenance program                                                        large jet transports that would be
guidelines for aging airplanes; (4)           The ARAC was formally established
                                            by the FAA on January 22, 1991 (56 FR     affected by this proposed rule was
review and update the Supplemental                                                    required at the time of original
Structural Inspection Documents (SSID)      2190), to provide advice and
                                            recommendations concerning the full       certification to meet the applicable
which describe inspection programs to                                                 regulatory standards for fatigue or fail-
detect fatigue cracking; and (5) assess     range of the FAA’s safety-related
                                            rulemaking activity. This advice was      safe strength. Repairs and modifications
damage-tolerance of structural repairs.                                               to this structure were also required to
Structures Task Groups sponsored by         sought to develop better rules in less
                                                                                      meet these same standards.
the Task Force were assigned the task of    overall time using fewer FAA resources
                                                                                         These early fatigue or fail-safe
developing these elements into usable       than are currently needed. The
                                                                                      requirements did not provide for timely
programs.                                   committee provides the opportunity for
                                                                                      inspection of critical structure so that
                                            the FAA to obtain firsthand information
   Today the Task Force, which has been                                               damaged or failed components could be
                                            and insight from interested parties
reestablished as the Airworthiness                                                    dependably identified and repaired or
                                            regarding proposed new rules or           replaced before a hazardous condition
Assurance Working Group (AAWG) of           revisions of existing rules.
the Aviation Rulemaking Advisory                                                      developed. In 1978 a new certification
                                              There are over 60 member                requirement called damage tolerance
Committee (ARAC), has completed its
                                            organizations on the committee,           was introduced to assure the continued
work on the first four elements. This
                                            representing a wide range of interests    structural integrity of transport category
proposed rulemaking addresses the fifth
                                            within the aviation community.            airplanes certificated after that time.
element, the assessment of repair
                                            Meetings of the committee are open to     This concept was adopted as an
damage tolerance.
                                            the public, except as authorized by       amendment to § 25.571 by Amendment
Related Regulatory Activity                 section 10(d) of the Federal Advisory     25–45 (43 FR 46242), and for existing
                                            Committee Act.                            designs, guidance material based on this
   In addition to the initiatives                                                     rule was published in 1981 as Advisory
                                              The ARAC establishes working groups
previously discussed, there are other                                                 Circular (AC) 91–56, Supplemental
                                            to develop proposals to recommend to
activities associated with FAA’s Aging                                                Structural Inspection Program for Large
                                            the FAA for resolving specific issues.
Aircraft Program. These include FAA’s                                                 Transport Category Airplanes.
                                            Tasks assigned to working groups are
response to the Aging Aircraft Safety                                                    Damage tolerance is a structural
                                            published in the Federal Register.
Act and future rulemaking to mandate        Although working group meetings are       design and inspection methodology
corrosion prevention and control            not generally open to the public, all     used to maintain safety considering the
programs for all airplanes used in air      interested parties are invited to         possibility of metal fatigue or other
transportation.                             participate as working group members.     structural damage (i.e., safety is
   The Aging Aircraft Safety Act of 1991    Working groups report directly to the     maintained by adequate structural
(Pub. L. 49 U.S.C. 44717) instructed the    ARAC, and the ARAC must concur with       inspection until the damage is repaired).
Administrator to prescribe regulations      a working group proposal before that      The underlying principle for damage
that ensure the continuing airworthiness    proposal can be presented to the FAA as   tolerance is that the initiation and
of aging aircraft through inspections and   an advisory committee                     growth of structural fatigue damage can
reviews of the maintenance records of       recommendation.                           be anticipated with sufficient precision
each aircraft an air carrier uses in air                                              to allow inspection programs to safely
                                              The activities of the ARAC will not,    detect damage before it reaches a critical
transportation. In response to the Act,     however, circumvent the public
the FAA published notice 93–14 on                                                     size. A damage-tolerance evaluation
                                            rulemaking procedures. After an ARAC      entails the prediction of sites where
October 5, 1993 (58 FR 51944). The FAA      recommendation is received and found
has reviewed the public comments to                                                   fatigue cracks are most likely to initiate
                                            acceptable by the FAA, the agency         in the airplane structure, the prediction
that Notice and anticipates regulatory      proceeds with the normal public
action in the near future based on those                                              of the crack trajectories and rates of
                                            rulemaking procedures. Any ARAC           growth under repeated airplane
comments and other considerations.          participation in a rulemaking package     structural loading, the prediction of the
   In addition, the FAA has found that      will be fully disclosed in the public     size of the damage at which strength
some operators do not have a                docket.                                   limits are exceeded, and an analysis of
programmatic approach to corrosion            By Federal Register notice dated        the potential opportunities for
prevention and control programs             November 30, 1992 (57 FR 56627), the      inspection of the damage as it
(CPCP). In its accident investigation       AATF was placed under the auspices of     progresses. This information is used to
report (NTSB/AAR–89/03) on the Aloha        the Aviation Rulemaking Advisory          establish an inspection program for the
accident, the NTSB recommended that         Committee (ARAC) and renamed as the       structure that, if rigorously followed,
the FAA mandate a comprehensive and         Airworthiness Assurance Working           will be able to detect cracking that may
systematic CPCP. Therefore, the FAA is      Group. One of the specific tasks          develop before it precipitates a major
considering rulemaking to mandate           assigned to the AAWG was to develop       structural failure. A damage-tolerant
CPCPS for all airplanes used in air         recommendations concerning whether        structure is one in which damage would
transportation. As part of that             new or revised requirements and           be detected by reliance on normally
deliberation, the FAA is considering the    compliance methods for structural         performed maintenance and inspection
corrosion prevention and control            repair assessments of existing repairs    actions long before it becomes
programs recommended by the AATF            should be initiated and mandated for      hazardous.
and adopted by the FAA through              the Airbus A300; BAC 1–11; Boeing            The evidence to date is that when all
Airworthiness Directives (ADs); those       707/720, 727, 737, 747; Douglas DC–8,     critical structure is included, the
ADs affect all of the airplanes affected    DC–9/MD–80, DC–10; Fokker F–28; and       damage-tolerant concept, and the
by this proposal.                           Lockheed L–1011 airplanes.                supplemental inspection programs that
128               Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

are based on it, provide the best            repairs using the original repair data,         • Repairs that exhibit structural
assurance of continued structural            repairs may be of concern as time-in-         distress should be replaced before
integrity that is currently available. In    service increases for the following           further flight.
order to apply this concept to existing      reasons:                                        To identify the scope of the overall
transport airplanes, beginning in 1984,         1. As airplanes age, both the number       program, fleet data were required. This
the FAA issued a series of                   and age of the existing repairs increase.     resulted in the development of a five-
Airworthiness Directives (AD’s)              Along with this increase in the number        step program to develop factual data for
requiring compliance with the first          of and age of repairs is the possibility of   the development of the rule. The five-
supplemental inspection programs             unforeseen repair interaction,                step AAWG program consisted of:
resulting from application of this           autogenous failure, or other damage             • Development of model specific
concept to existing airplanes. Nearly all    occurring in the repaired area. The           repair assessment guidelines using
of the airplane models affected by this      continued operational safety of these         AAWG repair criteria.
proposed rule are now covered by such                                                        • Completion of a survey of a number
                                             airplanes depends primarily on a
AD’s. Generally, these AD’s require that                                                   of operators’ airplanes to assess fuselage
                                             satisfactory maintenance program
operators incorporate Supplemental                                                         skin repairs, and to validate the
                                             (inspections conducted at the right time,
Structural Inspection Documents                                                            approach of the manufacturer’s repair
                                             in the right place, using the most
(SSID’s) into their maintenance                                                            assessment guidelines.
                                             appropriate technique). To develop this         • Determination of the need for and
programs for the affected airplanes.         program, a damage tolerance evaluation
These documents were derived from                                                          the development of a world-wide
                                             of repairs to flight-critical structure is    survey.
damage-tolerance assessments of the          essential. The longer an airplane is in
originally certificated type designs for                                                     • Collection and assessment of results
                                             service, the more important this              to determine further necessary actions.
these airplanes. For this reason, the
majority of AD’s written for the SID
                                             evaluation and a subsequent inspection          • Development of specific
                                             program become.                               manufacturer/operator/FAA actions.
program did not attempt to address
                                                2. The practice of damage-tolerance          Early in the development of this task,
issues relating to the damage tolerance
                                             methodology has evolved gradually over        each manufacturer began to prepare
of repairs that had been made to the
                                             the last 20 plus years. Some repairs          model specific repair assessment
airplanes. The objective of this proposed
                                             described in the airplane manufacturers’      guidelines. When sufficiently
rule is to provide that same level of
assurance for areas of the structure that    Structural Repair Manuals (SRMs) were         developed, these draft guidelines were
have been repaired.                          not designed to current standards.            shared with the operators to get
   Repairs are a concern on older            Repairs accomplished in accordance            feedback on acceptability and
airplanes because of the possibility that    with the information contained in the         suggestions for improvement. The
they may develop, cause, or obscure          early versions of the SRMs may require        operators stressed the need for
metal fatigue, corrosion, or other           additional inspections if evaluated           commonality in approach and ease of
damage during service. This damage           using the current methodology.                use of the guidelines. They also
might occur within the repair itself or in      3. Because a regulatory requirement        expressed the need for guidelines that
the adjacent structure and might             for damage tolerance was not applied to       could be used on the shop floor without
ultimately lead to structural failure. The   airplane designs type certificated before     engineering assistance and without
damage-tolerance evaluation of a repair      1978, the damage-tolerance                    extensive training.
would be used in an assessment               characteristics of repairs may vary             Meanwhile, the AAWG conducted
program to establish an appropriate          widely and are largely unknown.               two separate surveys of existing repairs
inspection program, or a replacement                                                       on airplanes to collect necessary data.
                                             Development of Recommendation                 The first survey was conducted in
schedule if the necessary inspection
program is too demanding or not                To address the ARAC assignment on           March 1992 on certain large transport
possible. The objective of the repair        repairs, the AAWG tasked the                  category airplanes being held in storage.
assessment is to assure the continued        manufacturers to develop repair               Teams, comprised of engineering
structural integrity of the repaired and     assessment guidelines requiring specific      representatives from various
adjacent structure based on damage-          maintenance programs to maintain the          organizations, including FAA’s Aircraft
tolerance principles.                        damage-tolerance integrity of the basic       Certification and Flight Standards
   In general, repairs present a more        airframe. The following criteria were         offices, operators, and manufacturers,
challenging problem to solve than the        developed to assist the manufacturers in      surveyed 356 external fuselage skin
original structure because they are          the development of that guidance              repairs on 30 airplanes of 6 types. Using
unique and tailored in design to correct     material:                                     repair classification criteria developed
particular damage to the original                                                          by the individual airplane
                                               • Specific repair size limits for which
structure. Whereas the performance of                                                      manufacturers, the teams concluded
                                             no assessment is necessary should be
the original structure may be predicted                                                    that the general quality of the repairs
                                             selected for each model of airplane.
from tests and from experience on other                                                    appeared good. Forty percent of the
airplanes in service, the behavior of a        • Repairs that do not conform to SRM        repairs were adequate, requiring no
repair and its effect on the fatigue         standards must be reviewed and may            supplemental inspections, and sixty
characteristics of the original structure    require further action.                       percent needed a more comprehensive
are generally not known to the same            • Repairs must be reviewed where the        damage-tolerance based assessment,
extent as for the basic unrepaired           repair has been installed in accordance       with the possibility that supplemental
structure.                                   with SRM data that have been                  inspections might be needed. Some
   The available service record and          superseded or rendered inactive by new        determining factors on the need for
surveys of out-of-service and in-service     damage-tolerant designs.                      further assessment were the size of the
airplanes have indicted that existing          • Repairs in close proximity to other       repair and its proximity to other repairs.
repairs perform well. Although the           repairs or modifications require review       While the survey sample size was very
cause of an airplane accident has never      to determine their impact on the              small compared to the total population
been attributed to properly applied          continued airworthiness of the airplane.      of transport airplanes type certificated
                   Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                                 129

prior to 1978, it provided objective          which the greatest concern exists as to      repair assessment guidelines, with
information on the quality and damage-        the status of primary structure repairs.     required post modification/repair
tolerance characteristics of existing         Derivatives of the original airplanes        inspection programs as required. A list
airplane repairs.                             models are covered to the extent that the    of other structural Service Bulletins will
   In 1994, the AAWG requested that the       structure has not been upgraded to meet      be provided in the model specific repair
manufacturers conduct a second survey         damage tolerance requirements.               assessment guidelines with associated
on airplane repairs to validate the 1992         Those transport category airplanes        inspection thresholds and repeat
results and to provide additional             that have been certificated to regulatory    intervals. The manufacturers have
information relative to the estimated         standards that include the requirements      agreed to complete their review of
cost of the assessment program. The           for damage tolerant structure under          Service Bulletin related skin repairs in
manufacturers were requested to visit         § 25.571 of 14 CFR part 25, as amended       conjunction with the initial SRM
airlines operating their products and to      by Amendment 25–45, are not included.        updates.
conduct surveys on airplanes in heavy         These later requirements make it                These agreements notwithstanding,
maintenance. An additional 35                 incumbent on the operating certificate       there is still a possibility that the
airplanes were surveyed in which 695          holder to return the structure to the        requirements in the repair assessment
repairs were evaluated. This survey was       original certification basis by installing   guidelines will not agree with that in an
expanded to include all areas of the          only those repairs that meet the             AD, especially if the AD was written to
airframe. The evaluation revealed             airplane’s damage-tolerant certification     address a modification to the airplane
substantially similar results to the 1992     basis. The AAWG, in its final report on      made by someone other than the
results in which forty percent of the         this subject, did recommend continued        original manufacturer. Federal Aviation
repairs were classified as adequate, and      monitoring of repairs on the newer           Regulations would require that
sixty percent of the repairs required         airplanes, with the possibility of           compliance be shown with both the AD
consideration for additional                  additional rulemaking if conditions          and this proposed rule. Such dual
supplemental inspection during service.       warrant. (A copy of the AAWG’s final         compliance can be avoided in the longer
In addition, only a small number of           report is included in the public docket      term by working with the manufacturer,
repairs (less than 10 percent) were           for this rulemaking.)                        if that is the source of difficulty, or by
found on portions of the airframe other          As a result of the AAWG activities,       securing an Alternative Method of
than the external fuselage skin.              the manufacturers have recognized the        Compliance (AMOC) to the AD. In the
   The AAWG proposed that the repair          need for, and made a commitment to           short term, compliance with the earlier
assessment be initially limited to the        develop, for each affected airplane          threshold, shorter repeat inspection
fuselage pressure boundary (fuselage          model, a repair assessment guidelines        interval or more stringent rework/
skins and bulkhead webs); if necessary,       document and a Structural Repair             replace schedule would always
future rulemaking would address the           Manual, updated to include the results       constitute compliance with the less
remaining primary structure. This             of a damage-tolerance assessment. When       stringent requirement. Thus, the
limitation is based on two                    referring to these documents and related     operator would not be faced with an
considerations.                               actions in this proposed rule, the FAA       unresolvable conflict.
   First, the fuselage is more sensitive to   is referring to actions the manufacturers       The AATF originally recommended
structural fatigue than other airplane        have agreed to take.                         that the use of repair assessment
structure because its normal operating           It was also recognized by the AAWG        guidelines be mandated by
loads are closer to its limit design loads.   that repair assessment guidelines would      Airworthiness Directive. The FAA
Stresses in a fuselage are primarily          add to, or in some cases appear to be in     concluded that an unsafe condition
governed by the pressure relief valve         conflict with, existing repair approval      necessitating AD action had not been
settings of the environmental control         data. All repairs assessed under this        established for repairs, and this position
system, and these are less variable from      proposed rule should have been               is supported by both repair surveys.
flight to flight than the gust or maneuver    previously approved by the FAA using         However, the FAA also considered, and
loads that typically determine the            an FAA-approved SRM, an FAA-                 the AAWG agreed, that the long term
design stresses in other structure.           approved Service Bulletin, or a repair       concern with repairs on older airplanes,
Second, the fuselage is more prone to         scheme approved by an FAA Designated         as described earlier, does warrant
damage from ground service equipment          Engineering Representative or an SFAR        regulatory action, and this proposed
than other structure and requires repair      36 authorization holder. To avoid the        rule addresses that concern.
more often. The result of the second          appearance of conflicts between FAA             The AAWG also recognized that the
survey described above supports the           approved data sources, the                   concerns discussed above for the safety
conclusion that repairs to the fuselage       manufacturers have agreed to update the      of existing repairs would also apply to
are far more frequent than to any other       affected SRMs, as well as repairs            the long-term safety of future repairs to
structure.                                    identified in Service Bulletins, to          these airplanes. Therefore, the AAWG
   This proposed rule would only apply        determine requirements for                   considered that new repairs should also
to eleven large transport category            supplemental inspections, if not already     be subject to damage-tolerance
airplane models. (In the original ARAC        addressed.                                   assessments. It is expected that most
task, the 707 and 720 were counted as            Structural modifications and repairs      new repairs will be installed in
one model. This proposed rule                 mandated by Airworthiness Directives         accordance with an FAA-approved SRM
addresses the 707 and 720 models              do not always contain instructions for       that has been updated to include this
separately due to their different flight      future supplemental inspection               damage-tolerance assessment. However,
cycle implementation times.) The              requirements. The manufacturers have         in the event that a new repair is
reason for this limitation is that the        agreed to evaluate the need for post         installed for which no such assessment
original tasking to the ARAC limited the      modification inspections for these           has been made, or is available, the
scope of the work to the eleven oldest        mandated modifications and repairs. A        repair assessment guidelines prepared
models of large transport category            list of Service Bulletins that are the       to meet the requirements of this
airplanes then in regular service. This       subject of Airworthiness Directives will     proposal should be used. The intent of
tasking identified those airplanes for        be contained in the model specific           this proposed rule is that all repairs to
130               Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

the fuselage pressure boundary will be         Category A: A permanent repair for which       The general section of each SRM,
evaluated for damage-tolerance, and that    the baseline zonal inspection (BZI), (typical   Chapter 51, will contain brief
any resulting inspection schedule will      maintenance inspection intervals assumed to     descriptions of damage tolerance
                                            be performed by most operators), is adequate
be specified and the work                                                                   considerations, categories of repairs,
                                            to ensure continued airworthiness
accomplished, regardless of when, or by     (inspectability) equal to the unrepaired        description of baseline zonal
whom the repair was installed.              surrounding structure.                          inspections, and the repair assessment
                                               Category B: A permanent repair that          logic diagram. Chapter 53 of the SRM
Repair Assessment Guidelines                requires supplemental inspections to ensure     for pressurized fuselage skin will be
   The next step in the AAWG’s program      continued airworthiness.                        updated to identify repair categories and
for this task was to develop a repair          Category C: A temporary repair that will     related information.
assessment methodology that is effective    need to be rewarded or replaced prior to an       In updating each SRM, existing
                                            established time limit. Supplemental            location-specific repairs should be
in evaluating the continued                 inspections may be necessary to ensure
airworthiness of existing repairs for the   continued airworthiness prior to this limit.    labeled with appropriate repair category
fuselage pressure boundary on affected                                                      identification (A, B, or C), and specific
transport category airplane models.            This methodology is being generated          inspection requirements for B and C
Older airplane models may have many         by the airplane manufacturers. Model            repairs should also be provided as
                                            specific repair assessment guidelines           applicable.
structural repairs, so the efficiency of
                                            will be prepared by the manufacturers             Structural Repair Manual descriptions
the assessment procedure is an
                                            for the eleven aging airplane models.           of generic repairs will also contain
important consideration. In the past,
                                            Uniformity and similarity of these repair       repair category considerations regarding
evaluation of repairs for damage-
                                            assessment procedures between models            size, zone, and proximity. Detailed
tolerance would require direct
                                            is important to simplify operator               information for determination of
assistance from the manufacturer.
                                            workload. The manufacturers have                inspection requirements will be
Considering that each repair design is
                                            spent considerable time over the last           provided in separate repair assessment
different, that each airplane model is
                                            four years to achieve commonality of            guidelines documents for each model.
different, that each area of the airplane
                                            the repair assessment process. The              Repairs which were installed in
is subjected to a different loading         inspection intervals contained in the
environment, and that the number of                                                         accordance with a once current SRM,
                                            FAA-approved model specific                     but which have now been superseded
engineers qualified to perform a            guidelines documents are based on
damage-tolerance assessment is small,                                                       by a new damage-tolerant design, will
                                            residual strength, crack growth, and            require review. Such superseded repairs
the size of an assessment task conducted    inspectability evaluations. The
in that way would be unmanageable.                                                          may be reclassified to Category B or C,
                                            manufacturers are endeavoring to make           requiring additional inspections and/or
Therefore, a new approach was               the inspection methods and intervals
developed.                                                                                  rework.
                                            compatible with typical operator
   Since repair assessment results will     maintenance practice. Thus, internal            Repair Assessment Process
depend on the model specific structure      inspections would be acceptable at ‘‘D-           There are two principle techniques
and loading environment, the                check’’ intervals, or equivalent cycle          that can be used to accomplish the
manufacturers were tasked to create an      limit, while simpler external                   repair assessment. The first technique
assessment methodology for the types of     inspections could be accommodated at            involves a three stage procedure. This
repairs expected to be found on each        multiple ‘‘C-check’’ intervals, or              technique could be well suited for
affected airplane model. Since the          equivalent cycle limit. If the inspection       operators of small fleets. The second
records on most of these repairs are not    method and intervals for a given repair         technique involves the incorporation of
readily available, locating the repairs     are not compatible with the operator’s          the repair assessment guidelines as part
will necessitate surveying the structure    maintenance schedule, the repair could          of an operator’s routine maintenance
of each airplane. A survey form was         be replaced with a more damage-                 program. This approach could be well
created that may be used to record key      tolerant repair.                                suited for operators of large fleets and
repair design features needed to               The model specific repair assessment         would evaluate repairs at predetermined
accomplish a repair assessment. Airline     guidelines documents are scheduled to           planned maintenance visits as part of
personnel not trained as damage-            be published no later than July 1, 1997,        the maintenance program.
tolerance specialists can use the form to   and will require approval by the FAA            Manufacturers and operators may
document the configuration of each          Aircraft Certification Office (ACO)             develop other techniques, which would
observed repair.                            having cognizance over the type                 be acceptable as long as they fulfill the
   Using the information from the survey    certificate. Once approved, this material       objectives of this proposed rule, and are
form as input data, the manufacturers       can also be used for evaluating the             FAA approved.
have developed simplified methods to        damage-tolerance characteristics of new           The first technique generally involves
determine the damage tolerance              repairs for continued airworthiness.            the execution of the following three
characteristics of the surveyed repairs.       In order to further facilitate the           stages:
Although the repair assessments should      assessment process, the manufacturers
be performed by well trained personnel      have agreed to update model specific            Stage 1—Data Collection
familiar with the model specific repair     SRMs to reflect damage tolerance repair           This stage specifies what structure
assessment guidelines, these methods        considerations. The goal is to complete         should be assessed for repairs and
enable an engineer or technician, not       these updates by the first revision cycle       collects data for further analysis. If a
trained as a damage-tolerance specialist,   of the model specific SRM, after the            repair is on a structure in an area of
to perform the repair assessment            release of the associated repair                concern, the analysis continues,
without the assistance of the               assessment guidelines document.                 otherwise the repair does not require
manufacturer.                               Consistent with the result of the               classification per this program.
   From the information on the survey       surveys, only fuselage pressure                   Repair assessment guidelines for each
form, it is also possible to classify       boundary repairs are under                      model will provide a list of structure for
repairs into one of three categories:       consideration in this proposal.                 which repair assessments are required.
                   Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                                  131

Some manufacturers have reduced this           program completes the repair                was concluded that the repair
list by determining the inspection             assessment process for the first            assessment needed to be implemented
requirements for critical details. If the      technique.                                  sometime before a specific model
requirements are equal to normal                  The second technique would involve       reached its DSG. Based on this logic, the
maintenance checks (e.g., BZI checks),         setting up a repair maintenance program     manufacturers and operators established
those details were excluded from this          to evaluate all fuselage pressure           an upper bound for an assessment to be
list.                                          boundary repairs at each predetermined      completed and then reduced it to
   Repair details are collected for further    maintenance visit to confirm that they      establish an ‘‘implementation time,’’
analysis in Stage 2. Repairs that do not       are permanent. This technique would         defined as 75 percent of DSG in terms
meet the static strength requirements or       require the operator to choose an           of flight cycles.
are in a bad condition are immediately         inspection method and interval in              Therefore, under this approach,
identified, and corrective actions must        accordance with the FAA-approved            incorporation of the repairs assessment
be taken before further flight.                repair assessment guidelines. The           guidelines into an airplane’s
                                               repairs whose inspection requirements       maintenance or inspection program
Stage 2—Repair Categorization                  are fulfilled by the chosen inspection      ideally should be accomplished before
  The repair categorization is                 method and interval would be inspected      an airplane accumulates 75 percent of
accomplished by using the data                 in accordance with the regular FAA-         DSG. After the guidelines are
gathered in Stage 1 to answer simple           approved maintenance program. Any           incorporated into the maintenance or
questions regarding structural                 repair that is not permanent, or whose      inspection program, operators should
characteristics.                               inspection requirements are not fulfilled   begin the assessment process for
  If the maintenance program is at least       by the chosen inspection method and         existing fuselage repairs within the
as rigorous as the BZI identified in the       interval, would either be: (1) Upgraded     flight cycle limit specified in the FAA-
manufacturer’s model specific repair           to allow utilization of the chosen          approved model specific repair
assessment guidelines, well designed           inspection method and interval, or (2)      assessment guidelines. There are three
repairs in good condition meeting size         individually tracked to account for the     deadlines for beginning the repair
and proximity requirements are                 repair’s unique inspection method and       assessment process, depending on the
Category A. Simple condition and               interval requirements. This process is      cycle age of the airplane on the effective
design criteria questions are provided in      then repeated at the chosen inspection      date of the rule.
Stage 2 to define the lower bounds of          interval.
Category B and Category C repairs. The            Repairs added between the                1. Airplane Cycle Age Equal to or less
process continues for Category B and C         predetermined maintenance visits,           than Implementation Time on the Rule
repairs.                                       including interim repairs installed at      Effective Date
                                               remote locations, would be required            The operator would be required to
Stage 3—Determination of Structural            either to have a threshold greater than     incorporate the guidelines in its
Maintenance Requirements                       the length of the predetermined             maintenance or inspection program by
  The supplemental inspection and/or           maintenance visit or to be tracked          the flight cycle implementation time, or
replacement requirements for Category          individually to account for the repair’s    one year after the effective date of the
B and C repairs are determined in this         unique inspection method and interval       rule, whichever occurs later. The
stage. Inspection requirements for the         requirements. This would ensure the         assessment process would begin (e.g.,
repair are determined by calculation or        airworthiness of the structure until the    accomplishment of Stage 1) on or before
by using predetermined values provided         next predetermined maintenance visit,       the cycle limit specified in the repair
by the manufacturer, or other values           at which time the repair would be           assessment guidelines (generally
obtained using an FAA-approved                 evaluated as part of the repair             equivalent to a ‘‘D’’ check) after
method.                                        maintenance program.                        incorporation of the guidelines.
  In evaluating the first supplemental            Whichever technique is used, there
inspection, Stage 3 will define the            may be some repairs that cannot easily      2. Airplane Cycle Age greater than the
inspection threshold in flight cycles          be upgraded to Category A for cost,         Implementation Time but less than the
measured from the time of repair               downtime, or technical reasons. Such        DSG on the Rule Effective Date
installation. If the time of installation of   repairs will require supplemental              The operator would be required to
the repair is unknown and the airplane         inspections, and each operator should       incorporate the guidelines in its
has exceeded the assessment                    make provisions for this when               maintenance or inspection program
implementation times or has exceeded           incorporating the repair assessment         within one year of the rule effective
the time for first inspection, the first       guidelines into its maintenance             date. The assessment process would
inspection should occur by the next ‘‘C-       program.                                    begin (e.g., accomplishment of Stage 1)
check’’ interval, or equivalent cycle                                                      on or before the cycle limit in the repair
                                               Repair Assessment Implementation
limit after the repair data is gathered                                                    assessment guidelines (generally
                                               Time
(Stage 1).                                                                                 equivalent to a ‘‘D’’ check), not to
  An operator may choose to                       The implementation time for the          exceed the cycle limit computed by
accomplish all three stages at once, or        assessment of existing repairs is based     adding the DSG to the cycle limit
just Stage 1. In the latter case, the          on the findings of the repair surveys and   equivalent of a ‘‘C’’ check (also specified
operator would be required to adhere to        fatigue damage considerations. The          in the repair assessment guidelines)
the schedule specified in the FAA-             repair survey findings indicated that all   after incorporation of the guidelines.
approved model specific repair                 repairs reviewed appeared to be in good
assessment guidelines for completion of        structural condition. This tended to        3. Airplane Cycle Age greater than the
Stages 2 and 3.                                validate the manufacturer’s assumptions     DSG on the Rule Effective Date
  Incorporating the maintenance                in designing both the repair and the           The operator would be required to
requirements for Category B and C              basic structure. Since the manufacturer     incorporate the guidelines in its
repairs into an operator’s individual          had based the design stress levels on a     maintenance or inspection program
airplane maintenance or inspection             chosen Design Service Goal (DSG), it        within one year of the rule effective
132               Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

date. The assessment process would             a. A list of Service Bulletins that are   using the manufacturer’s model specific
begin (e.g., accomplishment of Stage 1)     the subject of AD’s will be contained in     repair assessment guidelines, that
on or before the cycle limit specified in   the model specific repair assessment         determination should be documented
the repair assessment guidelines            guidelines with required post                and submitted to the operator’s PMI or
(equivalent to a ‘‘C’’ check) after         modification/repair inspection               other cognizant airworthiness inspector
incorporation of the guidelines.            programs, as required.                       for approval. For all other repairs, a
  In each of these three cases, the            b. A list of other structural Service     separate program would need to be
assessment process would have to be         Bulletins will be provided in the model      developed. Third, the modification may
completed, the inspections conducted,       specific repair assessment guidelines        have been made so recently that no
and any necessary corrective action         with associated inspection threshold         repair assessment guidelines would be
taken, all in accordance with the           and repeat intervals.                        needed for many years. Compliance
schedule specified in the FAA-approved         6. The repair assessment guidelines       with this proposed rule could be shown
repair assessment guidelines.               provided by the manufacturer do not          by establishing the DSG for the new
                                            generally apply to structure modified by     modified structure, calculating an
Discussion of the Proposed Rule             a Supplemental Type Certificate (STC).       implementation time that is equal to
  This proposed rule is intended to         The operator, however, would still be        three quarters of that DSG, and then
ensure that a comprehensive repairs         responsible, under this proposed rule, to    adding a statement to the operations
assessment for damage-tolerance be          provide repair assessment guidelines         specifications that repair assessment
completed for fuselage pressure             applicable to the entire fuselage external   guidelines would be incorporated into
boundary repairs, and that the resulting    pressure boundary that meets the             the maintenance program by that time.
inspections, modifications and              program objectives specified in              If the modified structure is very similar
corrective actions (if any) be              Advisory Circular 121–XX. This means         to the original, then the DSG for the
accomplished in accordance with the         that the operator should develop,            modified structure may also be very
model specific repair assessment            submit, and gain FAA approval of             similar. No repair assessment guidelines
guidelines. To comply with this, the        guidelines to evaluate repairs to such       would be needed until 75 percent of
operator would need to consider the         structure.                                   that goal is reached. For example, in the
                                               It is recognized that operators do not    case of a large cargo door, such
following:
                                            usually have the resources to determine      installations are often made after the
  1. The means by which the FAA-
                                            a DSG or to develop repair assessment        airplane has reached the end of its
approved repair assessment guidelines
                                            guidelines, even for a very simple piece     useful life as a passenger-carrying
are incorporated into a certificate         of structure. The FAA expects the STC
holder’s FAA-approved maintenance or                                                     airplane. For new structure, the clock
                                            holder to assist the operators in            would start on repair assessment at the
inspection program, as would be             preparing the required documents. If the
required by the proposed rule, is subject                                                time of installation. Further, since the
                                            STC holder is out of business, or is         DSG is measured in cycles, and cargo
to approval by the certificate holder’s     otherwise unable to provide assistance,
principal maintenance inspector (PMI)                                                    operation usually entails fewer
                                            the operator would have to acquire the       operational cycles than passenger
or other cognizant airworthiness            FAA-approved guidelines
inspector.                                                                               operations, the due date for
                                            independently. To keep the airplanes in      incorporation of the repair assessment
  2. The repair assessment guidelines       service, it is always possible for           guidelines for that structure could be
must be approved by the FAA Aircraft        operators, individually or as a group, to    many years away.
Certification Office (ACO) having           hire the necessary expertise to develop         Compliance with this proposed rule
cognizance over the type certificate of     and gain approval of repair assessment       would require that conditions such as
the airplane.                               guidelines and the associated DSG.           those described above be properly
  3. This rule would not impose any         Ultimately, the operator remains             documented in each operator’s FAA-
new reporting requirements; however,        responsible for the continued safe           approved maintenance program;
normal reporting required under 14 CFR      operation of the airplane.                   however, the cost of doing so should not
121.703 would still apply.                     The cost and difficulty of developing     be significant. There should be very few
  4. This rule would not impose any         guidelines for modified structure may        examples where the STC holder is
new FAA recordkeeping requirements.         be less than that for the basic airplane     unavailable, and the operators must bear
However, as with all maintenance, the       structure for three reasons. First, the      the cost of developing a complete repair
current operating regulations (e.g., 14     only modifications made by persons           assessment guidelines document.
CFR 121.380) already impose                 other than the manufacturer that are of      Guidance on how to comply with this
recordkeeping requirements that would       concern in complying with this               aspect of the proposed rule is also
apply to the actions required by this       proposed rule are those that affect the      discussed in the accompanying
proposed rule. When incorporating the       fuselage pressure boundary. Of those         Advisory Circular 120–XX.
repair assessment guidelines into its       that do affect this structure, many are         7. An operator’s repair assessment
approved maintenance program, each          small enough to qualify as Category A        program would have to include damage-
operator should address the means by        repairs under the repair assessment          tolerance assessments for new repairs.
which it will comply with these             guidelines, based solely on their size.      Repairs made in accordance with the
recordkeeping requirements. That            Second, if the modified structure is         revised version of the SRM would
means of compliance, along with the         identical, or very similar, to the           already have a damage-tolerance
remainder of the program, would be          manufacturer’s original structure, then      assessment performed; otherwise, the
subject to approval by the cognizant        only a cursory investigation may be          manufacturer’s repair assessment
PMI or other cognizant airworthiness        necessary. In such cases, the                guidelines could be used for this
inspector.                                  manufacturer’s repair assessment             purpose, or operators may develop other
  5. The scope of the assessment is         guidelines may be shown to be                methods as long as they achieve the
limited to repairs on the fuselage          applicable with few, if any, changes. If     same objectives.
pressure boundary (fuselage skins and       the operator determines that a repair to        8. Once the airworthiness inspector
pressure webs).                             modified structure can be evaluated          having oversight responsibilities is
                   Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                               133

satisfied that the operator’s continued      Order 12866; (2) is not ‘‘significant’’ as   rule. Nevertheless, airplanes designed
airworthiness maintenance or                 defined in DOT’s Policies and                and certificated to older technology are
inspection program contains all of the       Procedures; (3) would not have a             operated beyond their original design
elements of the FAA-approved repair          significant impact on a substantial          service objectives, and the FAA has
assessment guidelines, the                   number of small entities; and (4) would      determined that the repair assessment
airworthiness inspector would approve        not constitute a barrier to international    program to ensure the continued
an operation specification(s) or             trade. These analyses, available in the      airworthiness of these aging airplanes
inspection program revision. This            docket, are summarized below.                could prevent structural failure and
would have the effect of requiring use                                                    resulting accidents. The benefits of the
of the approved repair assessment            Regulatory Evaluation Summary                proposed rule, therefore, are based on
guidelines.                                  Costs and Benefits                           the avoidance of such accidents.
   In summary, based on discussions                                                         The FAA estimates that the
                                                The proposed rule would result in
with representatives of the affected                                                      prevention of an accident resulting in
                                             costs to the manufacturers and operators
industry, recommendations from ARAC,                                                      the loss of an average affected airplane
                                             of the affected airplanes and to the FAA.
and a review of current rules and                                                         and half its passengers and crew would
                                             Costs to manufacturers would include
regulations affecting repair of primary                                                   result in present value benefits of $46.8
structure, the FAA recognizes the need       revising the Structural Repair Manuals,      million, assuming that the accident
for a repairs assessment program to be       developing repair assessment                 would otherwise have occurred midway
incorporated into the maintenance            guidelines, and developing and               through the analysis period. The FAA
program for certain transport category       conducting training programs for             cannot predict the number of accidents
airplanes.                                   Original Equipment Manufacturers’            that would be prevented by this
   The proposed rule would prohibit the      Engineers, airplane operators’               proposed rule. Based on one such
operation of certain transport category      inspectors, and the FAA’s PMIs or other      prevented loss, however, the FAA has
airplanes operated under 14 CFR parts        cognizant airworthiness inspector. Costs     determined that the proposed rule
91, 121, 125, and 129 beyond a specified     to operators would include inspector         would be cost-beneficial.
compliance time, unless the operator of      training, integrating the assessment
those airplanes had incorporated FAA-        program into the maintenance program         Regulatory Flexibility Determination
approved repair assessment guidelines        for each airplane model, assessing and          The Regulatory Flexibility Act of 1980
applicable to the fuselage pressure          subsequently inspecting repairs, and         (RFA) was enacted by Congress to
boundary in its operation                    maintaining records. Cost to the FAA         ensure that small entities are not
specification(s) or approved inspection      would include PMI/other cognizant            unnecessarily and disproportionately
program, as applicable.                      airworthiness inspector training and         burdened by government regulations.
                                             review/approval of assessment                The RFA requires a Regulatory
FAA Advisory Material                        programs.                                    Flexibility Analysis if the proposed or
   In addition to the amendments                The FAA estimates that the total cost     final rule would have significant
proposed in this notice, the ARAC has        to all affected manufacturers would be       economic impact, either detrimental or
developed Advisory Circular 120–XX,          $43.3 million over the years 1995            beneficial, on a substantial number of
‘‘Repair Assessment of Pressurized           through 2020, or $26.9 million               small entities. FAA Order 2100.14A,
Fuselages.’’ This AC would provide           discounted to present value. The             Regulatory Flexibility Criteria and
guidance for operators of the affected       equivalent annualized cost would be          Guidance, prescribes standards for
transport category airplanes on how to       $2.3 million. Although this proposed         complying with RFA review
incorporate FAA-approved repair              rule would not directly impose any           requirements in FAA rulemaking
assessment guidelines into their FAA-        costs on manufacturers, the FAA              actions. The Order defines ‘‘small
approved maintenance or inspection           recognizes that manufacturers have           entities’’ in terms of thresholds,
program. Public comments concerning          incurred, and will continue to incur,        ‘‘significant economic impact’’ in terms
the proposed AC are invited by separate      costs in order to develop and provide        of annualized cost thresholds, and
notice published elsewhere in this issue     data to operators that will enable them      ‘‘substantial number’’ as a number
of the Federal Register.                     to comply with the proposal. The FAA         which is not less than eleven and which
                                             has chosen to attribute these costs to the   is more than one-third of the small
Regulatory Evaluation                        proposed rule, beginning in 1995. The        entities subject to the proposed or final
   Changes to federal regulations must       total cost to airplane operators would be    rule.
undergo several economic analyses.           $25.5 million over the years 1997               The proposed rule would affect
First, Executive Order 12866 directs         through 2020, or $10.2 million               Boeing Commercial Airplane Group,
Federal agencies to promulgate new           discounted to present value. The             Douglas Aircraft Company, Lockheed
regulations or modify existing               equivalent annualized cost would be          Aeronautical Systems Company, Airbus,
regulations only if the potential benefits   $893,622. The total costs to the FAA         British Aerospace, and Fokker Aircraft
to society justify its costs. Second, the    would be $516,000, or $324,358               B.V. Order 2100.14A specifies a size
Regulatory Flexibility Act of 1980           discounted to present value. The             threshold for classification as a small
requires agencies to analyze the             equivalent annualized cost would be          manufacturer as 75 or fewer employees.
economic impact of regulatory changes        $28,280. The total cost of the proposed      Since none of these manufacturers has
on small entities. Finally, the Office of    rule to all affected entities would be       75 or fewer employees, the proposed
Management and Budget directs                $69.3 million, or $37.5 million              rule would not have a significant
agencies to assess the effects of            discounted to present value. The             economic impact on a substantial
regulatory changes on international          equivalent annualized cost would be          number of small manufacturers.
trade. In conducting these assessments,      $3.2 million.                                   The proposed rule would also affect
the FAA has determined that this                The cause of an airplane accident has     operators of certain U.S.-registered
proposed rule: (1) Would generate            never been attributed to a properly          B707/720, B727, B737, B747, DC–8, DC–
benefits exceeding its costs and is not      applied repair to the airplane models        9/MD80, DC–10, L–1011, A300, BAC 1–
‘‘significant’’ as defined in Executive      that would be affected by the proposed       11 and F28 airplanes. Order 2100.14A
134               Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

specifies a size threshold for               3213) requires the Administrator, when          Authority: 49 U.S.C. 106(g), 40103, 40113,
classification as a small operator as        modifying regulations in Title 14 of the      40120, 44101, 44111, 44701, 44709, 44711,
ownership of 9 or fewer aircraft. The        CFR in a manner affecting intrastate          44712, 44715, 44716, 44717, 44722, 46306,
annualized cost thresholds for               aviation in Alaska, to consider the           46315, 46316, 46502, 46504, 46506–46507,
                                                                                           47122, 47508, 47528–47531.
significant impact, expressed in 1995        extent to which Alaska is not served by
dollars, are $119,900 for a scheduled air    transportation modes other than                 2. A new § 91.410 is added to read as
carrier whose fleet of airplanes have        aviation, and to establish such               follows:
seating capacities of over 60, $67,000 for   regulatory distributions as he or she
                                                                                           § 91.410 Repair assessment for
other scheduled air carriers, and $4,700     considers appropriate. Because this           pressurized fuselages.
for an unscheduled operator. The FAA         proposed rule would apply to the
                                                                                              No certificate holder may operate an
examined the annualized costs of the         operation of certain transport category
                                                                                           Airbus Model A300, British Aerospace
proposed rule to ‘‘small’’ operators of      airplanes under parts 91, 121, 125, and
                                                                                           Model BAC 1–11, Boeing Model 707,
the current fleet of affected airplanes      129 of Title 14, if could, if adopted,
                                                                                           720, 727, 737 or 747, McDonnell
and determined that no small operator’s      affect intrastate aviation in Alaska. The
                                                                                           Douglas Model DC–8, DC–9/MD–80 or
annualized cost would exceed the             FAA therefore specifically requests
                                                                                           DC–10, Fokker Model F28, or Lockheed
threshold of $4,700. Therefore, the          comments on whether there is
                                                                                           Model L–1011 airplane beyond the
proposed rule would not have a               justification for applying the proposed
                                                                                           applicable flight cycle implementation
significant impact on a substantial          rule differently to intrastate operations
                                                                                           time specified in the following
number of small operators.                   in Alaska.
                                                                                           paragraphs, or [a date one year after the
International Trade Impact Assessment        Conclusion                                    effective date of the amendment],
   The proposed rule would not                  Because the proposed repair                whichever occurs later, unless repair
constitute a barrier to international        assessment programs are not expected to       assessment guidelines applicable to the
trade, including the export of American      result in substantial economic cost, the      fuselage pressure boundary (fuselage
airplanes to foreign countries and the       FAA has determined that this proposed         skin and bulkhead webs) that have been
import of foreign airplanes into the         regulations is not a significant              approved by the FAA Aircraft
United States.                               regulatory action under Executive Order       Certification Office (ACO) having
                                             12866. The FAA has also determined            cognizance over the type certificate for
Federalism Implications                                                                    the affected airplane are incorporated
                                             that this proposal is not significant
   The regulations proposed herein will      under DOT Regulatory Policies and             within its inspection program:
not have substantial direct effects on the   Procedures (44 FR 11034, February 25,            (a) For the A300, the flight cycle
States, or on the relationship between       1979). In addition, the FAA certifies that    implementation time is:
the national government and the States,      this proposal, if adopted, will not have         (1) Model B2, 36,000 flights.
or on the distribution of power and          a significant economic impact, positive          (2) Model B4–100, 30,000 flights
responsibility among the various levels      or negative, on a substantial number of       above the window line, and 36,000
of the government. Therefore, in             small entities under the criteria of the      flights below the window line.
accordance with Executive Order 12612,       Regulatory Flexibility Act, since none           (3) Model B4–200, 25,500 flights
it is determined that this proposed rule     are affected. An initial evaluation of this   above the window line, and 34,000
would not have significant federalism        proposal, including a Regulatory              flights below the window line.
implications to warrant the preparation      Flexibility Determination and an                 (b) For all models of the BAC 1–11,
of a Federalism Assessment.                  International Trade Impact Analysis,          the flight cycle implementation time is
                                             has been placed in the docket. A copy         60,000 flights.
International Civil Aviation                                                                  (c) For all models of the Boeing 707,
Organization (ICAO) and Joint Aviation       may be obtained by contacting the
                                                                                           the flight cycle implementation time is
Regulations                                  person identified under the caption FOR
                                                                                           15,000 flights.
                                             FURTHER INFORMATION CONTACT.
  In keeping with U.S. obligations                                                            (d) For all models of the Boeing 720,
under the Convention on International        List of Subjects                              the flight cycle implementation time is
Civil Aviation, it is FAA policy to                                                        23,000 flights.
                                             14 CFR Part 91
comply with ICAO Standards and                                                                (e) For all models of the Boeing 727,
Recommended Practices to the                   Aircraft, Aviation safety,                  the flight cycle implementation time is
maximum extent practicable. The FAA          Maintenance, Rebuilding, Pressurized          45,000 flights.
has determined that this proposed rule       fuselage repair and alteration.                  (f) For all models of the Boeing 737,
would not conflict with any                  14 CFR Parts 121, 125, and 129                the flight cycle implementation time is
international agreement of the United                                                      60,000 flights.
                                               Air carriers, Aircraft, Aviation safety,       (g) For all models of the Boeing 747,
States.
                                             Pressurized fuselage repair assessment,       the flight cycle implementation time is
Paperwork Reduction Act                      Safety, Transportation.                       15,000 flights.
  There are no new requirements for          The Proposed Amendment                           (h) For all models of the Douglas DC–
information collection associated with                                                     8, the flight cycle implementation time
                                               In consideration of the foregoing, the      is 30,000 flights.
this proposed rule that would require
                                             Federal Aviation Administration                  (i) For all models of the Douglas DC–
approval from the Office of Management
                                             proposes to amend 14 CFR parts 91,            9/MD–80, the flight cycle
and Budget pursuant to the Paperwork
                                             121, 125, and 129 of the Federal              implementation time is 60,000 flights.
Reduction Act of 1995 (44 U.S.C.
                                             Aviation Regulations as follows:                 (j) For all models of the Douglas DC–
3507(d)).
                                             PART 91—GENERAL OPERATING AND                 10, the flight cycle implementation time
Regulations Affecting Intrastate                                                           is 30,000 flights.
Aviation in Alaska                           FLIGHT RULES
                                                                                              (k) For all models of the Lockheed L–
  Section 1205 of the FAA                      1. The authority citation for part 91       1011, the flight cycle implementation
Reauthorization Act of 1996 (110 Stat.       continues to read:                            time is 27,000 flights.
                    Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                                     135

   (l) For the Fokker F–28 Mark 1000,             (h) For all models of the Douglas DC–          (c) For all models of the Boeing 707,
1000C, 2000, 3000, 3000C, and 4000, the        8, the flight cycle implementation time        the flight cycle implementation time is
flight cycle implementation time is            is 30,000 flights.                             15,000 times.
60,000 flights.                                   (i) For all models of the Douglas DC–          (d) For all models of the Boeing 720,
                                               9/MD–80, the flight cycle                      the flight cycle implementation time is
PART 121—OPERATING                             implementation time is 60,000 flights.         23,000 times.
REQUIREMENTS: DOMESTIC, FLAG,                     (j) For all models of the Douglas DC–          (e) For all models of the Boeing 727,
AND SUPPLEMENTAL OPERATIONS                    10, the flight cycle implementation time       the flight cycle implementation time is
                                               is 30,000 flights.                             45,000 flights.
  1. The authority citation for part 121                                                         (f) For all models of the Boeing 737,
continues to read:                                (k) For all models of the Lockheed L–
                                                                                              the flight cycle implementation time is
                                               1011, the flight cycle implementation
  Authority: 49 U.S.C. 106(g), 40113, 40119,                                                  60,000 flights.
44101, 44701–44702, 44705, 44709–44711,
                                               time is 27,000 flights.                           (g) For all models of the Boeing 747,
44713, 44716–44717, 44722, 44901, 44903–          (l) For the Fokker F–28 Mark 1000,          the flight cycle implementation time is
44904, 44912, 46105.                           1000C, 2000, 3000, 3000C, and 4000, the        15,000 flights.
                                               flight cycle implementation time is               (h) For all models of the Douglas DC–
  2. A new § 121.370 is added to read
                                               60,000 flights.                                8, the flight cycle implementation time
as follows:
                                                                                              is 30,000 flights.
§ 121.370 Repair assessment for                PART 125—CERTIFICATION AND                        (i) For all models of the Douglas DC–
pressurized fuselages.                         OPERATIONS: AIRPLANES HAVING A                 9/MD–80, the flight cycle
   No certificate holder may operate an        SEATING CAPACITY OF 20 OR MORE                 implementation time is 60,000 flights.
Airbus Model A300, British Aerospace           PASSENGERS OR A MAXIMUM                           (j) For all models of the Douglas DC–
Model BAC 1–11, Boeing Model 707,              PAYLOAD CAPACITY OF 6,000                      10, the flight cycle implementation time
720, 727, 737 or 747, McDonald Douglas         POUNDS OR MORE                                 is 30,000 flights.
Model DC–8, DC–9/MD–80 or DC–10,                                                                 (j) For all models of the Lockheed L–
                                                 1. The authority citation for part 125
Fokker Model F28, or Lockheed Model                                                           1011, the flight cycle implementation
                                               continues to read:
L–1011 airplane beyond the applicable                                                         time is 27,000 flights.
                                                 Authority: 49 U.S.C. 106(g), 40113, 44701–      (l) For the Fokker F–28 Mark 1000,
flight cycle implementation time               44702, 44705, 44710–44711, 44713, 44716–
specified in the following paragraphs, or                                                     1000C, 2000, 3000, 3000C, and 4000, the
                                               44717, 44722.                                  flight cycle implementation time is
[a date one year after the effective date
of the amendment], whichever occurs              2. A new § 125.248 is added to read          60,000 flights.
later, unless its operation specifications     as follows:
                                                                                              PART 129—OPERATIONS: FOREIGN
have been revised to reference repair          § 125.248 Repair assessment for                AIR CARRIERS AND FOREIGN
assessment guidelines applicable to the        pressurized fuselages.                         OPERATORS OF U.S.-REGISTERED
fuselage pressure boundary (fuselage                                                          AIRCRAFT ENGAGED IN COMMON
                                                  No certificate holder may operate an
skin and bulkhead webs), and those                                                            CARRIAGE
                                               Airbus Model A300, British Aerospace
guidelines are incorporated in its
                                               Model BAC 1–11, Boeing Model 707,                1. The authority citation for part 129
maintenance program. The repair
                                               720, 727, 737 or 747, McDonnell                continues to read:
assessment guidelines must be approved
                                               Douglas Model DC–8, DC–9/MD–80 or
by the FAA Aircraft Certification Office                                                        Authority: 49 U.S.C. 106(g), 40104–40105,
                                               DC–10, Fokker Model F28, or Lockheed
(ACO) having cognizance over the type                                                         40113, 40119, 44701–44702, 44712, 44716–
                                               Model L–1011 beyond the applicable
certificate for the affected airplane.                                                        44717, 44722, 44901–44904, 44906.
   (a) For the A300, the flight cycle          flight cycle implementation time
                                               specified in the following paragraphs or         2. A new § 129.32 is added to read as
impelementation time is:                                                                      follows:
   (1) Model B2, 36,000 flights.               [a date one year after the effective date
   (2) Model B4–100, 30,000 flights            of the amendment], whichever occurs            § 129.32 Repair assessment for
above the window line, and 36,000              later, unless its operation specifications     pressurized fuselages.
flights below the window line.                 have been revised to reference repair             No certificate holder may operate an
   (3) Model B4–200, 25,500 flights            assessment guidelines applicable to the        Airbus Model A300, British Aerospace
above the window line, and 34,000              fuselage pressure boundary (fuselage           Model BAC 1–11, Boeing Model 707,
flights below the window line.                 skin and bulkhead webs), and those             720, 727, 737 or 747, McDonnell
   (b) For all models of the BAC 1–11,         guidelines are incorporated in its             Douglas Model DC–8, DC–9/MD–80 or
the flight cycle implementation time is        maintenance program. The repair                DC–10, Fokker Model F28, or Lockheed
60,000 flights.                                assessment guidelines must be approved         Model L–1011 beyond the applicable
   (c) For all models of the Boeing 707,       by the FAA Aircraft Certification Office       flight cycle implementation time
the flight cycle implementation time is        (ACO) having cognizance over the type          specified in the following paragraphs, or
15,000 flights.                                certificate for the affected airplane.         [a date one year after the effective date
   (d) For all models of the Boeing 720,          (a) For the A300, the flight cycle          of the amendment], whichever occurs
the flight cycle implementation time is        implementation time is:                        later, unless its operation specifications
23,000 flights.                                   (1) Model B2, 36,000 flights.               have been revised to reference repair
   (e) For all models of the Boeing 727,          (2) Model B4–100, 30,000 flights            assessment guidelines applicable to the
the flight cycle implementation time is        above the window line, and 36,000              fuselage pressure boundary (fuselage
45,000 flights.                                flights below the window line.                 skin and bulkhead webs), and those
   (f) For all models of the Boeing 737,          (3) Model B4–200, 25,500 flights            guidelines are incorporated in its
the flight cycle implementation time is        above the window line, and 34,000              maintenance program. The repair
60,000 flights.                                flights below the window line.                 assessment guidelines must be approved
   (g) For all models of the Boeing 747,          (b) For all models of the BAC 1–11,         by the FAA Aircraft Certification Office
the flight cycle implementation time is        the flight cycle implementation time is        (ACO) having cognizance over the type
15,000 flights.                                60,000 times.                                  certificate for the affected airplane.
136               Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

   (a) For the A300, the flight cycle         (e) For all models of the Boeing 727,      (k) For all models of the Lockheed L–
implementation time is:                    the flight cycle implementation time is    1011, the flight cycle implementation
   (1) Model B2, 36,000 flights.           45,000 flights.                            time is 27,000 flights.
   (2) Model B4–100, 30,000 flights           (f) For all models of the Boeing 737,
above the window line, and 36,000                                                        (l) For the Fokker F–28 Mark 1000,
                                           the flight cycle implementation time is
flights below the window line.             60,000 flights.                            1000C, 2000, 3000, 3000C, and 4000, the
   (3) Model B4–200, 25,500 flights           (g) For all models of the Boeing 747,   flight cycle implementation time is
above the window line, and 34,000          the flight cycle implementation time is    60,000 flights.
flights below the window line.             15,000 flights.                              Issued in Washington, D.C. on December
   (b) For all models of the BAC 1–11,        (h) For all models of the Douglas DC–   22, 1997.
the flight cycle implementation time is    8, the flight cycle implementation time    Thomas E. McSweeney,
60,000 flights.                            is 30,000 flights.
   (c) For all models of the Boeing 707,      (i) For all models of the Douglas DC–   Director, Aircraft Certification Service.
the flight cycle implementation time is    9/MD–80, the flight cycle                  [FR Doc. 97–34166 Filed 12–31–97; 8:45 am]
15,000 flights.                            implementation time is 60,000 flights.     BILLING CODE 4910–13–M
   (d) For all models of the Boeing 720,      (j) For all models of the Douglas DC–
the flight cycle implementation time is    10, the flight cycle implementation time
23,000 flights.                            is 30,000 flights.
                     Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                  137

DEPARTMENT OF TRANSPORTATION              proposed AC by submitting such written      or other cognizant airworthiness
                                          data, views, or arguments as they may       inspector.
Federal Aviation Administration           desire. Commenters must identify the           3. Recommended schedule for
                                          title of the AC and submit comments in      accomplishing the repair assessment.
Proposed Advisory Circular (AC) 120–      duplicate to the address specified above.   The repair assessment activity should be
XX, Repair Assessment of Pressurized      All comments received on or before the      completed in accordance with the
Fuselages                                 closing date for comments will be           schedule in the FAA Approved Repair
AGENCY:   Federal Aviation                considered by the Transport Airplane        Assessment Guidelines for each of the
Administration (FAA), DOT.                Directorate before issuing the final AC.    affected airplanes. Any necessary
ACTION: Notice of proposed advisory       Discussion                                  corrective actions to be taken as a result
circular.                                                                             of the evaluation would be incorporated
                                             Advisory Circular (AC) 120–xx,
                                                                                      into the FAA-approved maintenance or
SUMMARY: This notice invites pubic        Repair Assessment of Pressurized
                                                                                      inspection program.
comment on a proposed Advisory            Fuselages, has been written to provide
                                          guidance on how to incorporate FAA-            4. New Repairs. The operator would
Circular (AC) which provides guidance
                                          approved repair assessment guidelines       have to assess new repairs using the
as to acceptable means of accomplishing
                                          into an operator’s FAA-approved             assessment guidelines, unless the new
the requirements of a proposed rule on
                                          maintenance or inspection program as        repairs are accomplished according to
the subject of repair assessment of
                                          proposed in [insert notice number],         structural repair manuals, or any other
pressurized fuselages published
                                          published elsewhere in this issue of the    equivalent method that incorporates
elsewhere in the issue of the Federal
                                          Federal Register. The draft AC provides     damage tolerance methods of design and
Register
                                          proposed guidance as to acceptable          evaluation. The aircraft manufacturers
DATES: Comments must be received on                                                   of the affected models are updating their
or before April 2, 1998.                  means of accomplishing the
                                          requirements of the rule. The following     structural repair manuals to address
ADDRESSES: Send all comments on the                                                   damage tolerance methodology. FAA
                                          is a summary of the contents of the AC:
proposed AC to: Dorenda Baker,               1. Repair Assessment Process.            Advisory Circular 25.1529–1,
Manager, Aging Aircraft Program,          Assessment of existing repairs installed    ‘‘Instructions for Continued
ANM–109, FAA Transport Airplane           on the fuselage pressure boundary of        Airworthiness of Structural Repairs on
Directorate, Aircraft Certification       affected airplanes will establish a         transport Airplanes,’’ provides guidance
Service, 1601 Lind Ave SW., Renton,       damage-tolerance based structural           for installing new damage tolerance
WA 98055–4056. Comments may be            inspection program and replacement          based repairs.
examined at the above address between     times, where needed. Utilizing the             5. Sale and Transfer of Airplanes.
7:30 a.m. and 4:00 p.m. weekdays,         repair assessment guidelines developed      Before an airplane is added to an
except Federal holidays.                  by the manufacturers of the affected        operator’s operations specifications, a
FOR FURTHER INFORMATION CONTACT:          airplanes, two principle techniques         program for accomplishment of the
Pat Siegrist, Regulations Branch, ANM–    have been identified that can be used to    repair assessment should be established.
114, FAA Transport Airplane               accomplish the repair assessment.
Directorate, Aircraft Certification                                                      6. Repairs to Structural Modification
                                             2. Implementation. The proposed rule     Certified by a Supplemental Type
Service, 1601 Lind Avenue SW.,            would require the repair assessment
Renton, WA 98055–4056; telephone                                                      Certificate (STC). The operator would
                                          guidelines to be approved by the            need to establish a repair assessment
(425) 227–2126.                           Aircraft Certification Office having        program for structure modified by an
SUPPLEMENTARY INFORMATION:                cognizance over the type certificate for    STC.
                                          the affected airplane. The means by
Comments Invited                          which the repair assessment guidelines        Issued in Washington, D.C. on December
                                                                                      22, 1997.
  A copy of the subject AC may be         would be incorporated into the FAA-
obtained by contacting the person         approved maintenance or inspection          Thomas E. McSweeny,
named above under FOR FURTHER             program would be subject to the             Director, Aircraft Certification Service.
INFORMATION CONTACT. Interested           approval of the certificate holder’s        [FR Doc. 97–34159 Filed 12–31–97; 8:45 am]
persons are invited to comment on the     principle maintenance inspector (PMI)       BILLING CODE 4910–13–M
                                                                                                                                      29

Proposed Rules                                                                                 Federal Register
                                                                                               Vol. 63, No. 1

                                                                                               Friday, January 2, 1998



This section of the FEDERAL REGISTER             SUPPLEMENTARY INFORMATION:                    changes required by E–FOIA. The
contains notices to the public of the proposed                                                 proposed rule provides for multitrack
issuance of rules and regulations. The
                                                 Section-by-Section Analysis
                                                                                               processing. Fast-track processing will
purpose of these notices is to give interested      The Electronic Freedom of                  apply to records that are easily
persons an opportunity to participate in the     Information Act Amendments of 1996            identifiable by the Freedom of
rule making prior to the adoption of the final   (E–FOIA), Public Law 104–231,
rules.                                                                                         Information office staff (FOIA/PA Unit)
                                                 amended the Freedom of Information            and that have already been cleared for
                                                 Act (FOIA), 5 U.S.C. 552. Among other         release to the public. Fast-track requests
                                                 things, E–FOIA requires agencies to           will be handled as expeditiously as
FEDERAL DEPOSIT INSURANCE                        promulgate regulations that provide for
CORPORATION                                                                                    possible, in the order in which they are
                                                 expedited processing of certain requests      received.
12 CFR Part 309                                  for records and permits agencies to              All information requests that do not
                                                 promulgate regulations that provide for       meet the fast-track processing standards
RIN 3064–AC10                                    multitrack processing of requests.            will be handled under regular
                                                 Changes are proposed to 12 CFR part           processing procedures. A requester who
Disclosure of Information                        309 to comply with the E–FOIA                 desires fast-track processing but whose
AGENCY:  Federal Deposit Insurance               requirements for expedited processing.        request does not meet those standards
Corporation (FDIC).                              The FDIC also is proposing to                 may contact the FOIA/PA Unit staff to
ACTION: Proposed rule.                           implement multitrack processing. In           narrow the request so that it will qualify
                                                 addition, the FDIC is proposing changes
                                                                                               for fast-track processing. The statutory
SUMMARY: The FDIC proposes to amend              to the section on fees and fee waivers,
                                                                                               time limit for regular-track processing
its regulations governing the public             and portions of this part have been
                                                                                               would be extended to twenty business
disclosure of information to reflect             reorganized and streamlined.
                                                    Section 309.1 has been expanded to         days, pursuant to E–FOIA, from the
recent changes to the Freedom of                                                               previous ten business days.
Information Act (FOIA) as a result of the        clarify the purpose and scope of the
                                                 various sections found within part 309.          Expedited processing may be
enactment of the Electronic Freedom of                                                         provided where a requester has
Information Act Amendments of 1996               Section 309.4 has been streamlined by
                                                 eliminating the lengthy list of various       demonstrated a compelling need for the
(E–FOIA). Among other things, this                                                             records, or where the FDIC has
proposed rule implements expedited               offices to contact for different categories
                                                 of publicly available records and,            determined to expedite the response.
and ‘‘multi-track’’ FOIA processing                                                            The time limit for expedited processing
procedures; implements the processing            instead, identifying the FDIC’s public
                                                 reading room, or ‘‘Public Information         is set at ten business days, with
deadlines and appeal rights created by                                                         expedited procedures available for an
E–FOIA; and describes the expanded               Center’’, and the FDIC World Wide Web
                                                 page as primary sources of FDIC               appeal of the FDIC’s determination not
range of records available to the public                                                       to provide expedited processing. Under
through the FDIC’s Public Reading                information. This section also describes
                                                 the information that is made available        E–FOIA, there are only two types of
Room and the FDIC’s Internet World                                                             circumstances that can meet the
Wide Web page.                                   for inspection or copying, either in the
                                                 FDIC’s reading room or over the               compelling need standard: Where
DATES: Comments must be submitted on                                                           failure to obtain the records
or before February 2, 1998.                      Internet, as required by E–FOIA. The
                                                 FDIC notes that the records provided          expeditiously could pose an imminent
ADDRESSES: Send written comments to                                                            threat to the life or physical safety of a
                                                 over the Internet cover a much smaller
Robert E. Feldman, Executive Secretary,          scope than those available in the FDIC’s      person, or where the requester is a
Attention: Comments/OES, Federal                 reading room because the E–FOIA               person primarily engaged in
Deposit Insurance Corporation, 550 17th          requirement to provide records over the       disseminating information and there is
Street NW, Washington, DC 20429.                 Internet covers only records created by       an urgency to inform the public
Comments may be hand delivered to the            the FDIC after November 1, 1996.              concerning actual or alleged agency
guard station at the rear of the 17th            However, the FDIC is increasing the           activity. For ease of administration and
Street Building (located on F Street), on        resources available over the Internet on      consistency, the proposal uses the term
business days between 7:00 a.m. and              the FDIC World Wide Web page found            ‘‘representative of the news media’’, to
5:00 p.m. (Fax number: (202) 898–3838;           at: http://www.fdic.gov. The FDIC also        describe a person primarily engaged in
Internet address: comments@fdic.gov).            publishes a pamphlet entitled ‘‘Symbol        disseminating information, because this
Comments may be inspected and                    of Confidence’’ which describes the           term is used for the FOIA fee schedule,
photocopied in the FDIC Public                   FDIC’s structure and lists sources to         and thus, is known to those familiar
Information Center, Room 100, 801 17th           contact for information about the FDIC        with FOIA and the FDIC’s rules. To
Street N.W., Washington D.C. 20429,              or other assistance. The ‘‘Symbol of          demonstrate a compelling need, a
between 9:00 a.m. and 4:30 p.m. on               Confidence’’ is available on the FDIC         requester must submit a certified
business days.                                   World Wide Web page. Copies may also          statement, a sample of which may be
FOR FURTHER INFORMATION CONTACT:                 be obtained through the FDIC’s Public         obtained from the FOIA/PA Unit.
Valerie J. Best, Assistant Executive             Information Center.                              Section 309.5(f) contains the FOIA fee
Secretary, Office of the Executive                  Section 309.5 describes the FDIC’s         schedules and the standards for waiver
Secretary, (202) 898–3812; Linda Rego,           procedures for processing FOIA                of fees. The fee schedule provisions
Senior Attorney, Legal Division, (202)           requests. This section has been               have been revised to clarify that the
898–7408.                                        extensively revised to reflect the            processing time of a FOIA request does
30                Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

not begin in cases (1) where advance         publication. This does not affect the        circumstances. Section 309.7 outlines
payment is required until payment is         deadline for the public to comment to        procedures for serving a subpoena or
received, or (2) where a person has          the FDIC on the proposed regulation.         other legal process to obtain information
requested a waiver of the fees and has         Title of collection: Requests for          maintained by the FDIC.
not agreed to pay the fees if the waiver     records pursuant to the Freedom of             3. Section 309.2(e) is revised to read
request is denied.                           Information Act.                             as follows:
                                               Summary of the collection: The name,
Regulatory Flexibility Act Analysis          address and telephone number of the          § 309.2   Definitions.
   Pursuant to section 605(b) of the         requester; a statement whether the           *      *    *     *     *
Regulatory Flexibility Act (5 U.S.C. 601,    requester is an educational institution,        (e) The term record includes records,
et seq.), the FDIC certifies that the        noncommercial scientific institution, or     files, documents, reports,
proposed rule will not have a significant    news media representative; a statement       correspondence, books, and accounts, or
economic impact on a substantial             agreeing to pay applicable fees or           any portion thereof, in any form the
number of small entities. These              requesting a waiver or reduction of fees;    FDIC regularly maintains them.
amendments simplify some of the              and the form or format of responsive         *      *    *     *     *
procedures regarding release of              information requested, if other than            4. Section 309.4 is revised to read as
information and require disclosure of        paper copies.                                follows:
information in certain instances in            Respondents: Persons who desire to
accordance with law. The requirements        obtain records pursuant to the Freedom       § 309.4   Publicly available records.
to disclose apply to the FDIC; therefore,    of Information Act.                             Many records are available upon
they should not have a significant           Estimate of Annual Burden:                   request or are available for public
economic impact on a substantial               Number of requests—1,000.                  inspection as noted below. To the extent
number of small entities.                      Time required to prepare a request—        permitted by law, the FDIC may delete
                                                  15 minutes.                             identifying details when it makes
Paperwork Reduction Act Analysis
                                               Total annual burden hours—250              available or publishes a final opinion,
   The collection of information                  hours.                                  final order, statement of policy,
contained in this proposed rule is found                                                  interpretation or staff manual or
at 12 CFR 309.5(c) and has been              List of Subjects in 12 CFR Part 309
                                                                                          instruction. If redaction is necessary, the
submitted to the Office of Management          Banks, banking, Credit, Freedom of         FDIC will, to the extent technically
and Budget (OMB) for review and              information, Privacy.                        feasible, indicate the amount of material
approval in accordance with the                For the reasons set forth in the           deleted at the place in the record where
requirements of the Paperwork                preamble, the Federal Deposit Insurance      such deletion is made unless that
Reduction Act of 1995 (PRA) (44 U.S.C.       Corporation is proposing to amend title      indication in and of itself will
3501 et seq.). Comments are invited on:      12, chapter III, of the Code of Federal      jeopardize the purpose for the redaction.
(a) Whether the collection of                Regulations as follows:                      If applicable, fees for furnishing records
information is necessary for the proper                                                   under this section are as set forth in
performance of the FDIC’s functions,         PART 309—DISCLOSURE OF                       § 309.5(f) except that all categories of
including whether the information has        INFORMATION                                  requesters shall be charged duplication
practical utility; (b) the accuracy of the                                                costs.
estimates of the burden of the                 1. The authority citation for part 309
                                             continues to read as follows:                   (a) FDIC World Wide Web page. (1)
information collection; (c) ways to                                                       The following types of documents
enhance the quality, utility, and clarity       Authority: 5 U.S.C. 552; 12 U.S.C. 1819   created on or after November 1, 1996,
of the information to be collected; and      ‘‘Seventh’’ and ‘‘Tenth’’.
                                                                                          may be found on the FDIC World Wide
(d) ways to minimize the burden of the         2. Section 309.1 is revised to read as     Web page located at:
information collection on respondents,       follows:                                     http://www.fdic.gov:
including through the use of automated                                                       (i) Final opinions, including
collection techniques or other forms of      § 309.1   Purpose and scope.                 concurring and dissenting opinions, as
information technology.                        This part sets forth the basic policies    well as final orders and written
   Comments should be addressed to the       of the Federal Deposit Insurance             agreements, made in the adjudication of
Office of Information and Regulatory         Corporation regarding information it         cases;
Affairs, Office of Management and            maintains and the procedures for                (ii) Statements of policy and
Budget, Attention: Desk Officer              obtaining access to such information.        interpretations adopted by the Board of
Alexander Hunt, New Executive Office         Section 309.2 sets forth definitions         Directors that are not published in the
Building, Room 3208, Washington, DC          applicable to this part 309. Section         Federal Register;
20503, with copies of such comments to       309.3 describes the types of information        (iii) Administrative staff manuals and
Steven F. Hanft, Assistant Executive         and documents typically published in         instructions to staff that affect the
Secretary (Regulatory Analysis), Federal     the Federal Register. Section 309.4          public;
Deposit Insurance Corporation, Room          explains how to access public records           (iv) Copies of all records released to
F–4080, 550 17th Street NW,                  maintained on the Federal Deposit            any person under § 309.5 that, because
Washington, DC 20429. All comments           Insurance Corporation’s World Wide           of the nature of their subject matter, the
should refer to part 309. OMB is             Web page and in the Federal Deposit          FDIC has determined are likely to be
required to make a decision concerning       Insurance Corporation’s Public               requested again;
the collections of information contained     Information Center or ‘‘PIC’’, and              (v) A general index of the records
in the proposed regulations between 30       describes the categories of records          referred to in paragraph (a)(4) of this
and 60 days after the publication of this    generally found there. Section 309.5         section.
document in the Federal Register.            implements the Freedom of Information           (2) Information published on the
Therefore, a comment to OMB is best          Act (5 U.S.C. 552). Section 309.6            World Wide Web page is not subject to
assured of having its full effect if OMB     authorizes the discretionary disclosure      the fees provision of § 309.5(f), and is
receives it within 30 days of this           of exempt records under certain limited      freely accessible.
                    Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                                    31

   (b) Public Information Center. (1) The      professional education, and an                identifying a maximum fee that is
FDIC maintains a Public Information            institution of vocational education,          acceptable to the requester, or a request
Center or ‘‘PIC’’ that contains Corporate      which operates a program or programs          for a waiver or reduction of fees that
records that the Freedom of Information        of scholarly research.                        satisfies paragraph (f)(1)(x) of this
Act requires be made available for                (5) Noncommercial scientific               section; and
regular inspection and copying, as well        institution means an institution that is         (iv) The preferred form and format of
as any records or information the FDIC,        not operated on a commercial basis as         any responsive information requested, if
in its discretion, has regularly made          that term is defined in paragraph (a)(1)      other than paper copies.
available to the public. The PIC has           of this section, and which is operated           (3) A request for identifiable records
extensive materials of interest to the         solely for the purpose of conducting          shall reasonably describe the records in
public, including many Reports,                scientific research, the results of which     a way that enables the FDIC’s staff to
Summaries and Manuals used or                  are not intended to promote any               identify and produce the records with
published by the Corporation that are          particular product or industry.               reasonable effort and without unduly
available for inspection and copying.             (6) Representative of the news media       burdening or significantly interfering
   (2) The PIC is open from 9:00 am to         means any person primarily engaged in         with any of the FDIC’s operations.
5:00 pm, Monday through Friday,                gathering news for, or a free-lance              (c) Defective requests. The FDIC need
excepting Federal holidays. It is located      journalist who can demonstrate a              not accept or process a request that does
at 801 17th Street, NW, Washington, DC         reasonable expectation of having his or       not reasonably describe the records
20006. The PIC may be reached during           her work product published or                 requested or that does not otherwise
business hours by calling (800) 276–           broadcast by, an entity that is organized     comply with the requirements of this
6003.                                          and operated to publish or broadcast          part. The FDIC may return a defective
   (3) The PIC makes efforts to publish        news to the public. The term news             request, specifying the deficiency. The
records and information of the FDIC on         means information that is about current       requester may submit a corrected
the World Wide Web page, located at            events or that would be of current            request, which will be treated as a new
http://www.fdic.gov.                           interest to the general public.               request.
   (4) The FDIC encourages the public to          (7) Review means the process of               (d) Processing requests—(1) Receipt of
explore the wealth of resources                examining records located in response         requests. Upon receipt of any request
available at the FDIC Public Information       to a request for records to determine         that satisfies paragraph (b) of this
Center and on the Web page designated          whether any portion of any record is          section, the FOIA/PA Unit, Office of the
in paragraph (b)(3) of this section.           permitted to be withheld as exempt            Executive Secretary, shall assign the
   5. Section 309.5 is revised to read as      information. It includes processing any       request to the appropriate processing
follows:                                       record for disclosure, e.g., doing all that   schedule pursuant to this section. The
                                               is necessary to excise them or otherwise      date of receipt for any request, including
§ 309.5   Procedures for requesting records.                                                 one that is addressed incorrectly or that
                                               prepare them for release.
   (a) Definitions. For purposes of this          (8) Search includes all time spent         is referred by another agency, is the date
section:                                       looking for material that is responsive to    the Office of the Executive Secretary
   (1) Commercial use request means a          a request, including page-by-page or          actually receives the request.
request from or on behalf of a requester       line-by-line identification of material          (2) Multi-track processing. (i) The
who seeks records for a use or purpose         within records. Searches may be done          FDIC provides different levels of
that furthers the commercial, trade, or        manually and/or by computer using             processing for categories of requests
profit interests of the requester or the       existing programming.                         under this part. Requests for records
person on whose behalf the request is             (b) Making a request for records. (1)      that are readily identifiable by the Office
made. In determining whether a request         The request shall be submitted in             of the Executive Secretary and that have
falls within this category, the FDIC will      writing to the Office of the Executive        already been cleared for public release
determine the use to which a requester         Secretary:                                    may qualify for fast-track processing. All
will put the records requested and seek           (i) By completing the online request       other requests shall be handled under
additional information as it deems             form located on the FDIC World Wide           normal processing procedures, unless
necessary.                                     Web page, found at http://                    expedited processing has been granted
   (2) Direct costs means those                www.fdic.gov;                                 pursuant to paragraph (d)(3) of this
expenditures the FDIC actually incurs in          (ii) By facsimile clearly marked           section.
searching for, duplicating, and, in the        Freedom of Information Act Request to            (ii) The FDIC will make the
case of commercial requesters,                 (202) 898–8778; or                            determination whether a request
reviewing records in response to a                (iii) By sending a letter to the Office    qualifies for fast-track processing. A
request for records.                           of the Executive Secretary, ATTN:             requester may contact the FOIA/PA Unit
   (3) Duplication means the process of        FOIA/PA Unit, 550 17th Street, NW,            to learn whether a particular request has
making a copy of a record necessary to         Washington, DC 20429.                         been assigned to fast-track processing. If
respond to a request for records or for           (2) The request shall contain the          the request has not qualified for fast-
inspection of original records that            following information:                        track processing, the requester will be
contain exempt material or that cannot            (i) The name and address of the            given an opportunity to refine the
otherwise be directly inspected. Such          requester, an electronic mail address, if     request in order to qualify for fast-track
copies can take the form of paper copy,        available, and the telephone number at        processing. Changes made to requests to
microfilm, audiovisual records, or             which the requester may be reached            obtain faster processing must be in
machine readable records (e.g., magnetic       during normal business hours;                 writing.
tape or computer disk).                           (ii) Whether the requester is an              (3) Expedited processing. Where a
   (4) Educational institution means a         educational institution, noncommercial        person requesting expedited access to
preschool, a public or private                 scientific institution, or news media         records has demonstrated a compelling
elementary or secondary school, an             representative;                               need for the records, or where the FDIC
institution of undergraduate or graduate          (iii) A statement agreeing to pay the      has determined to expedite the
higher education, an institution of            applicable fees, or a statement               response, the FDIC shall process the
32                 Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

request as soon as practicable. To show       determination is expected to be                responsive records electronically if a
a compelling need for expedited               dispatched; or                                 substantial portion of the request is in
processing, the requester shall provide a        (B) Such alternative time period as         electronic format. If the information
statement demonstrating that:                 agreed to by the requester or as               requested is made pursuant to the
   (i) The failure to obtain the records on   reasonably determined by the FDIC              Privacy Act of 1974, 5 U.S.C. 552a, it
an expedited basis could reasonably be        when the FDIC notifies the requester           will not be sent by electronic means
expected to pose an imminent threat to        that the request cannot be processed in        unless reasonable security measures can
the life or physical safety of an             the specified time limit.                      be provided.
individual; or                                   (iii) Unusual circumstances may arise          (f) Fees—(1) General rules. (i) Persons
   (ii) The requester can establish that      when:                                          requesting records of the FDIC shall be
they are primarily engaged in                    (A) The records are in facilities, such     charged for the direct costs of search,
information dissemination as their main       as field offices or storage centers, that      duplication, and review as set forth in
professional occupation or activity, and      are not located at the FDIC’s                  paragraphs (f)(2) and (f)(3) of this
there is urgency to inform the public of      Washington office;                             section, unless such costs are less than
the government activity involved in the          (B) The records requested are               the FDIC’s cost of processing the
request; and                                  voluminous or are not in close                 requester’s remittance.
   (iii) The requester’s statement must be    proximity to one another; or                      (ii) Requesters will be charged for
certified to be true and correct to the          (C) There is a need to consult with         search and review costs even if
best of the person’s knowledge and            another agency or among two or more            responsive records are not located or, if
belief and explain in detail the basis for    components of the FDIC having a                located, are determined to be exempt
requesting expedited processing.              substantial interest in the                    from disclosure.
   (4) Denial of expedited processing. A      determination.                                    (iii) Multiple requests seeking similar
requester seeking expedited processing           (7) Response to request. In response to     or related records from the same
will be notified whether expedited            a request that satisfies the requirements      requester or group of requesters will be
processing has been granted within ten        of paragraph (b) of this section, a search     aggregated for the purposes of this
(10) working days of the receipt of the       shall be conducted of records                  section.
request. If the requester is denied           maintained by the FDIC in existence on            (iv) If the FDIC determines that the
expedited processing, the requester may       the date of receipt of the request, and a      estimated costs of search, duplication,
file an appeal pursuant to the                review made of any responsive                  or review of requested records will
procedures set forth in paragraph (h) of      information located. The FDIC shall            exceed the dollar amount specified in
this section, and the FDIC shall respond      notify the requester of:                       the request, or if no dollar amount is
to the appeal within ten (10) working            (i) The FDIC’s determination of the
                                                                                             specified, the FDIC will advise the
days after receipt of the appeal.             request;
                                                                                             requester of the estimated costs (if
   (5) Priority of responses. Consistent         (ii) The reasons for the determination;
                                                 (iii) If the response is a denial of an     greater than the FDIC’s cost of
with sound administrative process the
                                              initial request or if any information is       processing the requester’s remittance).
FDIC processes requests in the order
                                              withheld, the FDIC will advise the             The requester must agree in writing to
they are received in the separate
                                              requester in writing:                          pay the costs of search, duplication, and
processing tracks. However, in the
                                                 (A) If the denial is in part or in whole;   review prior to the FDIC initiating any
agency’s discretion, or upon a court
                                                 (B) The name and title of each person       records search.
order in a matter to which the FDIC is
                                              responsible for the denial (when other            (v) If the FDIC estimates that its
a party, a particular request may be
                                              than the person signing the                    search, duplication, and review costs
processed out of turn.
   (6) Notification. (i) The time for         notification);                                 will exceed $250.00, the requester must
response to requests will be 20 working          (C) The exemptions relied on for the        pay an amount equal to 20 percent of
days except:                                  denial; and                                    the estimated costs prior to the FDIC
   (A) In the case of expedited treatment        (D) The right of the requester to           initiating any records search.
under paragraph (d)(3) of this section;       appeal the denial to the FDIC’s General           (vi) The FDIC shall ordinarily collect
   (B) Where the running of such time is      Counsel within 30 business days                all applicable fees under the final
suspended for the calculation of a cost       following receipt of the notification, as      invoice before releasing copies of
estimate for the requester if the FDIC        specified in paragraph (h) of this             requested records to the requester.
determines that the processing of the         section.                                          (vii) The FDIC may require any
request may exceed the requester’s               (e) Providing responsive records. (1)       requester who has previously failed to
maximum fee provision or if the charges       Copies of requested records shall be sent      pay the charges under this section
are likely to exceed $250 as provided for     to the requester by regular U.S. mail to       within 30 calendar days of mailing of
in paragraph (f)(1)(v) of this section;       the address indicated in the request,          the invoice to pay in advance the total
   (C) Where the running of such time is      unless the requester elects to take            estimated costs of search, duplication,
suspended for the payment of fees             delivery of the documents at the FDIC          and review. The FDIC may also require
pursuant to paragraphs (d)(6)(i)(B) and       or makes other acceptable arrangements,        a requester who has any charges
(f)(1) of this section; or                    or the FDIC deems it appropriate to send       outstanding in excess of 30 calendar
   (D) In unusual circumstances, as           the documents by another means.                days following mailing of the invoice to
defined in 5 U.S.C. 552(a)(6)(B).                (2) The FDIC shall provide a copy of        pay the full amount due, or demonstrate
   (ii) In unusual circumstances as           the record in any form or format               that the fee has been paid in full, prior
referred to in paragraph (d)(6)(i)(D) of      requested if the record is readily             to the FDIC initiating any additional
this section, the time limit may be           reproducible by the FDIC in that form or       records search.
extended for a period of:                     format, but the FDIC need not provide             (viii) The FDIC may begin assessing
   (A) Ten (10) working days as provided      more than one copy of any record to a          interest charges on unpaid bills on the
by written notice to the requester,           requester.                                     31st day following the day on which the
setting forth the reasons for the                (3) By arrangement with the requester,      invoice was sent. Interest will be at the
extension and the date on which a             the FDIC may elect to send the                 rate prescribed in section 3717 of title
                   Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                                                33

31 of the United States Code and will          apportioned to the search. The fee for a         (iii) The fees implemented in the
accrue from the date of the invoice.           computer printout is the actual cost.         December or Interim Notice will be
   (ix) The time limit for the FDIC to         The fees for computer supplies are the        effective 30 days after issuance.
respond to a request will not begin to         actual costs. The FDIC may, at its               (5) Use of contractors. The FDIC may
run until the FDIC has received the            discretion, establish and charge a fee for    contract with independent contractors
requester’s written agreement under            computer searches based upon a                to locate, reproduce, and/or disseminate
paragraph (f)(1)(iv) of this section, and      reasonable FDIC-wide average rate for         records; provided, however, that the
advance payment under paragraph (f)(1)         central processing unit operating costs       FDIC has determined that the ultimate
(v) or (vii) of this section, or payment of    and the operator’s basic rate of pay plus     cost to the requester will be no greater
outstanding charges under paragraph            16 percent to cover employee benefit          than it would be if the FDIC performed
(f)(1)(vii) or (viii) of this section.         costs.                                        these tasks itself. In no case will the
   (x) As part of the initial request, a          (iii) Duplication of records. (A) The      FDIC contract out responsibilities which
requester may ask that the FDIC waive          per-page fee for paper copy                   the Freedom of Information Act (FOIA)
or reduce fees if disclosure of the            reproduction of documents is the              (5 U.S.C. 552) provides that the FDIC
records is in the public interest because      average FDIC-wide cost based upon the         alone may discharge, such as
it is likely to contribute significantly to    reasonable direct costs of making such        determining the applicability of an
public understanding of the operations         copies.                                       exemption or whether to waive or
or activities of the government and is            (B) For other methods of reproduction      reduce fees.
not primarily in the commercial interest       or duplication, the FDIC will charge the         (g) Exempt information. A request for
of the requester. Determinations as to a       actual direct costs of reproducing or         records may be denied if the requested
waiver or reduction of fees will be made       duplicating the documents.                    record contains information which falls
by the Executive Secretary (or designee)          (iv) Review of records. The FDIC will      into one or more of the following
and the requester will be notified in          charge commercial use requesters for          categories.1 If the requested record
writing of his/her determination. A            the review of records at the time of          contains both exempt and nonexempt
determination not to grant a request for       processing the initial request to             information, the nonexempt portions
a waiver or reduction of fees under this       determine whether they are exempt             which may reasonably be segregated
paragraph may be appealed to the               from mandatory disclosure at the basic        from the exempt portions will be
FDIC’s General Counsel (or designee)           rate of pay of the employee making the        released to the requester. If redaction is
pursuant to the procedure set forth in         search plus 16 percent to cover               necessary, the FDIC will, to the extent
paragraph (h) of this section.                 employee benefit costs. Where a single        technically feasible, indicate the amount
   (2) Chargeable fees by category of          class of personnel (e.g., all clerical, all   of material deleted at the place in the
requester. (i) Commercial use requesters       professional, or all executive) is used       record where such deletion is made
shall be charged search, duplication and       exclusively, the FDIC, at its discretion,     unless that indication in and of itself
review costs.                                  may establish and charge an average rate      will jeopardize the purpose for the
   (ii) Educational institutions, non-         for the range of grades typically             redaction. The categories of exempt
commercial scientific institutions and         involved. The FDIC will not charge at         records are as follows:
news media representatives shall be            the administrative appeal level for              (1) Records that are specifically
charged duplication costs, except for the      review of an exemption already applied.       authorized under criteria established by
first 100 pages.                               When records or portions of records are       an Executive Order to be kept secret in
   (iii) Requesters not described in           withheld in full under an exemption           the interest of national defense or
paragraph (f)(2) (i) or (ii) of this section   which is subsequently determined not          foreign policy and are in fact properly
shall be charged the full reasonable           to apply, the FDIC may charge for a           classified pursuant to such Executive
direct cost of search and duplication,         subsequent review to determine the            Order;
except for the first two hours of search       applicability of other exemptions not            (2) Records related solely to the
time and first 100 pages of duplication.       previously considered.                        internal personnel rules and practices of
   (3) Fee schedule. The dollar amount            (v) Other services. Complying with         the FDIC;
of fees which the FDIC may charge to           requests for special services, other than        (3) Records specifically exempted
records requesters will be established by      a readily produced electronic form or         from disclosure by statute, provided that
the Chief Financial Officer of the FDIC        format, is at the FDIC’s discretion. The      such statute:
(or designee). The FDIC may charge fees        FDIC may recover the full costs of               (i) Requires that the matters be
that recoup the full allowable direct          providing such services to the requester.     withheld from the public in such a
costs it incurs. Fees are subject to              (4) Publication of fee schedule and        manner as to leave no discretion on the
change as costs change.                        effective date of changes. (i) The fee        issue; or
   (i) Manual searches for records. The        schedule is made available on the FDIC           (ii) Establishes particular criteria for
FDIC will charge for manual searches           World Wide Web page, found at                 withholding or refers to particular types
for records at the basic rate of pay of the    http://www.fdic.gov.                          of matters to be withheld;
employee making the search plus 16                (ii) The fee schedule will be set forth       (4) Trade secrets and commercial or
percent to cover employee benefit costs.       in the ‘‘Notice of Federal Deposit            financial information obtained from a
Where a single class of personnel (e.g.,       Insurance Corporation Records Fees’’          person that is privileged or confidential;
all clerical, all professional, or all         issued in December of each year or in            (5) Interagency or intra-agency
executive) is used exclusively, the FDIC,      such ‘‘Interim Notice of Federal Deposit      memoranda or letters that would not be
at its discretion, may establish and           Insurance Corporation Records Fees’’ as          1 Classification of a record as exempt from
charge an average rate for the range of        may be issued. Copies of such notices         disclosure under the provisions of this paragraph
grades typically involved.                     may be obtained at no charge from the         (g) shall not be construed as authority to withhold
   (ii) Computer searches for records.         Office of the Executive Secretary, FOIA/      the record if it is otherwise subject to disclosure
The fee for searches of computerized           PA Unit, 550 17th Street, NW,                 under the Privacy Act of 1974 (5 U.S.C. 552a) or
                                                                                             other federal statute, any applicable regulation of
records is the actual direct cost of the       Washington, D.C. 20429, and are               FDIC or any other federal agency having
search, including computer time,               available on the Web page as noted in         jurisdiction thereof, or any directive or order of any
computer runs, and the operator’s time         paragraph (f)(4)(i) of this section.          court of competent jurisdiction.
34                 Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

available by law to a private party in           (ii) The name and title of each person      Railroad Retirement Board, 844 Rush
litigation with the FDIC;                     responsible for the denial (if other than      Street, Chicago, Illinois 60611, (312)
   (6) Personnel, medical, and similar        the person signing the notification);          751–4513, TDD (312) 754–4701.
files (including financial files) the            (iii) The exemptions relied upon for        SUPPLEMENTARY INFORMATION: Section
disclosure of which would constitute a        the denial in the case of initial requests     200.3 of the Board’s regulations
clearly unwarranted invasion of               for records; and                               currently purports to list all Board
personal privacy;                                (iv) The right to judicial review of the    forms. This listing is not required by
   (7) Records compiled for law               denial under the FOIA.                         any authority currently in effect and is
enforcement purposes, but only to the            (4) If a requester is appealing for         out-of-date.
extent that the production of such law        denial of expedited treatment, the FDIC          Section 200.3 also contains a table
enforcement records:                          will notify the appellant within 10            which lists Board forms, their OMB
   (i) Could reasonably be expected to        business days after receipt of the appeal      information control numbers, and where
interfere with enforcement proceedings;       of the FDIC’s disposition.                     the information collection is found in
   (ii) Would deprive a person of a right        (i) Records of another agency. If a         the text of the Code of Federal
to a fair trial or an impartial               requested record is the property of            Regulations. Such tables are not
adjudication;                                 another federal agency or department,          required since the Board lists the OMB
   (iii) Could reasonably be expected to      and that agency or department, either in       control number on its forms and in the
constitute an unwarranted invasion of         writing or by regulation, expressly            text of any regulation requiring
personal privacy;                             retains ownership of such record, upon         information collection. See 5 CFR
   (iv) Could reasonably be expected to       receipt of a request for the record the        1320.3(f).
disclose the identity of a confidential       FDIC will promptly inform the requester          The revised regulation will provide
source, including a state, local, or          of this ownership and immediately shall        that Board forms may be obtained from
foreign agency or authority or any            forward the request to the proprietary         Board headquarters or from local Board
private institution which furnished           agency or department either for                offices.
records on a confidential basis;              processing in accordance with the                The Board, with the agreement of the
   (v) Would disclose techniques and          latter’s regulations or for guidance with      Office of Management and Budget, has
procedures for law enforcement                respect to disposition.                        determined that this is not a significant
investigations or prosecutions, or would        By Order of the Board of Directors.          regulatory action under Executive Order
disclose guidelines for law enforcement                                                      12866; therefore, no regulatory impact
                                                Dated at Washington, D.C., this 9th day of
investigations or prosecutions if such        December 1997.                                 analysis is required. There are no
disclosure could reasonably be expected                                                      information collections associated with
                                              Federal Deposit Insurance Corporation.
to risk circumvention of the law; or                                                         this rule.
   (vi) Could reasonably be expected to       Robert E. Feldman,
endanger the life or physical safety of       Executive Secretary.                           List of Subjects in 20 CFR Part 200
any individual;                               [FR Doc. 97–34037 Filed 12–31–97; 8:45 am]
                                                                                               Railroad employees, Railroad
   (8) Records that are contained in or       BILLING CODE 6714–01–P
                                                                                             retirement.
related to examination, operating, or                                                          For the reasons set out in the
condition reports prepared by, on behalf                                                     preamble, Part 200, Title 20, Chapter II,
of, or for the use of the FDIC or any         RAILROAD RETIREMENT BOARD                      of the Code of Federal Regulations is
agency responsible for the regulation or                                                     proposed to be amended as follows:
supervision of financial institutions; or     20 CFR Part 200
   (9) Geological and geophysical             RIN: 3220–AB33                                 PART 200—GENERAL
information and data, including maps,                                                        ADMINISTRATION
concerning wells.                             General Administration
   (h) Appeals. (1) Appeals should be                                                          1. The authority citation for part 200
addressed to the Office of the Executive      AGENCY:  Railroad Retirement Board.            continues to read as follows:
Secretary, FDIC, 550 17th Street, NW,         ACTION: Proposed rule.                         Authority: 45 U.S.C. 231f(b)(5) and 45 U.S.C.
Washington, DC 20429.                                                                        362; § 200.4 also issued under 5 U.S.C. 552;
                                              SUMMARY:   The Railroad Retirement
   (2) A person whose initial request for                                                    § 200.5 also issued under 5 U.S.C. 552a;
                                              Board (Board) proposes to revise its           § 200.6 also issued under 5 U.S.C. 552b;
records under this section, or whose
                                              regulations to eliminate the list of Board     § 200.7 also issued under 31 U.S.C. 3717.
request for a waiver of fees under
                                              forms and their descriptions found
paragraph (f)(1)(x) of this section, has                                                        2. Section 200.3, ‘‘Designation of
                                              therein. The Board also proposes to
been denied, either in part or in whole,                                                     forms and display of assigned OMB
                                              remove the tables which cross-reference
has the right to appeal the denial to the                                                    control numbers,’’ is revised to read as
                                              Board forms to OMB information
FDIC’s General Counsel (or designee)                                                         follows: § 200.3 Obtaining forms from
                                              collection control numbers and sections
within 30 business days after receipt of                                                     the Railroad Retirement Board.
                                              in the Code of Federal Regulations. The
notification of the denial. Appeals of                                                          Forms used by the Board, including
                                              purpose of these proposed revisions is
denials of initial requests or for a waiver                                                  applications for benefits and
                                              to eliminate either out-of-date
of fees must be in writing and include                                                       informational publications, may be
                                              information or information already
any additional information relevant to                                                       obtained from the Board’s headquarters
                                              provided elsewhere in a more usable
consideration of the appeal.                                                                 at 844 Rush Street, Chicago, Illinois
   (3) Except in the case of an appeal for    fashion.
                                                                                             60611, and from local Board offices.
expedited treatment under paragraph           EFFECTIVE DATE: Comments must be
                                              received by March 3, 1998.                       Dated: December 19, 1997.
(d)(3) of this section, the FDIC will                                                          By Authority of the Board.
notify the appellant in writing within 20     ADDRESSES: Secretary to the Board,
business days after receipt of the appeal     Railroad Retirement Board, 844 Rush            Beatrice Ezerski,
and will state:                               Street, Chicago, Illinois 60611.               Secretary to the Board.
   (i) Whether it is granted or denied in     FOR FURTHER INFORMATION CONTACT:               [FR Doc. 97–34186 Filed 12–31–97; 8:45 am]
whole or in part;                             Thomas W. Sadler, Senior Attorney,             BILLING CODE 7905–01–P
                  Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                                   35

DEPARTMENT OF THE TREASURY                   SUPPLEMENTARY INFORMATION:                   1996, by a State long-term care plan
                                             Background                                   under section 7702B(f) of the Code, the
Internal Revenue Service                                                                  terms of the plan on that date are treated
                                                This document contains proposed           as a contract meeting the long-term care
26 CFR Part 1                                amendments to the Income Tax                 insurance requirements of that State.
                                             Regulations (26 CFR part 1) to provide          Section 321(f)(4) of HIPAA provides
[REG–109333–97]                              rules under section 7702B of the             that for purposes of applying sections
                                             Internal Revenue Code of 1986 (the           101(f), 7702, and 7702A of the Code,
RIN 1545–AV56
                                             ‘‘Code’’). Section 7702B was added by        neither the issuance of a rider that is
Qualified Long-Term Care Insurance           sections 321 and 325 of the Health           treated as a qualified long-term care
Contracts                                    Insurance Portability and                    insurance contract nor the addition of
                                             Accountability Act of 1996 (Pub. L.          any provision required to conform any
AGENCY: Internal Revenue Service (IRS),      104–191, 110 Stat. 1936, 2054 and 110        other long-term care rider to the
Treasury.                                    Stat. at 2063) (‘‘HIPAA’’). Notice 97–31,    requirements applicable to a qualified
ACTION: Notice of proposed rulemaking        1997–21 I.R.B. 5 (May 6, 1997), provides     long-term care insurance contract is
and notice of public hearing.                interim guidance on certain provisions       treated as a modification or material
                                             of section 7702B and other provisions of     change of the contract.
SUMMARY: This document contains              the Code added or amended by HIPAA.
proposed regulations relating to                                                          Explanation of Provisions
consumer protection with respect to          Explanation of Statutory Provisions
                                                                                            The proposed regulations provide
qualified long-term care insurance              Section 7702B establishes the tax         guidance concerning:
contracts and relating to events that will   treatment for qualified long-term care
                                             insurance contracts. Sections 7702B(a)       • the consumer protection requirements
be considered material changes with
                                             (1) and (3) provide that a qualified long-     that apply to qualified long-term care
respect to long-term care insurance
                                             term care insurance contract is treated        insurance contracts under sections
contracts issued prior to January 1,
                                             as an accident and health insurance            7702B(g), 7702B(b)(1)(F), and 4980C
1997. Changes to the applicable law
                                             contract and that any employer plan            of the Code; and
were made by the Health Insurance
                                             providing coverage under a qualified         • the grandfather provisions of section
Portability and Accountability Act of
                                             long-term care insurance contract is           321(f)(2) of HIPAA under which pre-
1996. The regulations affect issuers of
                                             treated as an accident or health plan          1997 contracts are treated as qualified
long-term care insurance contracts and
                                             with respect to that coverage.                 long-term care insurance contracts if
individuals entitled to receive payments
                                                Section 7702B(a)(2) provides that           certain conditions are met.
under these contracts. The regulations
are necessary to provide these taxpayers     amounts (other than policyholder               The standards in the proposed
with guidance needed to comply with          dividends and premium dividends)             regulations are based on safe harbors
these changes.                               received under a qualified long-term         that were originally set forth in Notice
                                             care insurance contract are generally        97–31. They reflect comments made by
DATES: Written comments must be
                                             excludable from gross income as              consumer representatives, issuers of
received by April 2, 1998. Outlines of
                                             amounts received for personal injuries       long-term care insurance, independent
topics to be discussed at the public
                                             and sickness.                                sales agents, State regulators of long-
hearing scheduled for May 13, 1998,
                                                Section 213(d)(1)(D) was amended by       term care insurance, and others. The
must be received by April 2, 1998.
                                             section 322 of HIPAA to provide that         proposed regulations are intended to
ADDRESSES: Send submissions to:              eligible long-term care premiums as          provide clear and workable rules to
CC:DOM:CORP:R (REG–109333–97),               defined in section 213(d)(10) are            assist those who want to ensure that a
room 5226, Internal Revenue Service,         deductible medical expenses.                 contract issued before 1997 retains its
POB 7604, Ben Franklin Station,                 Under section 7702B(b)(1)(F), a           status as a qualified long-term care
Washington, DC 20044. Submissions            qualified long-term care insurance           insurance contract.
may be hand delivered between the            contract must meet the consumer
hours of 8 a.m. and 5 p.m. to                                                             Notice 97–31
                                             protection provisions of section
CC:DOM:CORP:R (REG–109333–97),               7702B(g). In addition, section 4980C            Notice 97–31 was issued to provide
Courier’s Desk, Internal Revenue             imposes an excise tax on issuers of          interim standards for taxpayers to use in
Service, 1111 Constitution Avenue NW,        qualified long-term care insurance           interpreting the new long-term care
Washington, DC. Alternatively,               contracts that do not provide further        provisions and to facilitate operation of
taxpayers may also submit comments           consumer protections.                        the insurance market by avoiding the
electronically via the Internet by              Section 7702B of the Code applies to      need to amend contracts. For example,
selecting the ‘‘Tax Regs’’ option on the     contracts issued after December 31,          Notice 97–31 includes interim guidance
IRS Home Page, or by submitting              1996. Section 321(f)(2) of HIPAA treats      on the determination of whether an
comments directly to the IRS Internet        a contract issued before January 1, 1997,    individual is a ‘‘chronically ill
site at http://www.irs.ustreas.gov/prod/     as a qualified long-term care insurance      individual,’’ including safe harbor
tax regs/comments.html. The public           contract under section 7702B(b) of the       definitions of the terms ‘‘substantial
hearing will be held in room 2615,           Code, and services provided or               assistance,’’ ‘‘hands-on assistance,’’
Internal Revenue Building, 1111              reimbursed under such a contract as          ‘‘standby assistance,’’ ‘‘severe cognitive
Constitution Avenue NW, Washington,          qualified long-term care services under      impairment,’’ and ‘‘substantial
DC.                                          section 7702B(c) of the Code, provided       supervision.’’ The standards contained
FOR FURTHER INFORMATION CONTACT:             the contract met the long-term care          in Notice 97–31 include interim
Concerning the regulations, Katherine        requirements of the State in which the       guidance on both the consumer
A. Hossofsky, (202) 622–3477;                contract was sitused at the time the         protection provisions and the scope of
concerning submissions and the               contract was issued. Section 321(f)(2) of    the statutory grandfather provisions that
hearing, LaNita VanDyke, (202) 622–          HIPAA also provides that in the case of      apply to long-term care insurance
7190 (not toll-free numbers).                an individual covered on December 31,        contracts issued before 1997.
36                 Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

Consumer Protection Requirements               term care insurance contract, the issue                 (3) a reduction in premiums due to the
   Under sections 7702B(b)(1)(F),              date of the contract is the date the group              purchase of a long-term care insurance
7702B(g), and 4980C, qualified long-           contract was issued. As a result,                       policy by a member of the
term care insurance contracts and              coverage for an individual who joins a                  policyholder’s family; (4) any reduction
issuers of those contracts are required to     grandfathered group long-term care                      in coverage (with correspondingly lower
satisfy certain provisions of the model        insurance contract on or after January 1,               premiums) made at the request of a
act and model regulation promulgated           1997, is accorded the same treatment                    policyholder; (5) the addition, without
by the National Association of Insurance       under section 321(f)(2) as is accorded                  an increase in premiums, of alternative
Commissioners (NAIC) for long-term             coverage for those who joined the group                 forms of benefits that may be selected by
                                               before that date.                                       the policyholder; (6) the purchase of a
care insurance as of January 1993. The
                                                  For purposes of applying section                     rider to increase benefits under a pre-
requirements relate to guaranteed
                                               321(f)(2) of HIPAA to long-term care                    1997 contract if the rider would
renewability, unintentional lapse,
                                               insurance contracts issued before                       constitute a qualified long-term care
disclosure, prohibitions against post-
                                               January 1, 1997, a material change in the               insurance contract if it were a separate
claims underwriting, inflation
                                               contract generally is considered the                    contract; 2 (7) the deletion of a rider or
protection, and prohibitions against pre-
                                               issuance of a new contract. Notice 97–                  provision of a contract (called an HHS
existing conditions exclusions and
                                               31 provides that a material change                      rider) that prohibited coordination of
probationary periods. Section 4980C
                                               includes any change in the terms of the                 benefits with Medicare; and (8) the
imposes an excise tax on an issuer of a
                                               contract altering the amount or timing of               effectuation of a continuation or
qualified long-term care insurance
                                               any item payable by the policyholder (or                conversion of coverage right under a
contract if, after 1996, the issuer fails to
                                               certificate holder), the insured, or the                group contract following an individual’s
satisfy certain requirements, including
                                               insurance company. Notice 97–31 also                    ineligibility for continued coverage
requirements relating to application
                                               provides that the exercise of an option                 under the group contract.
forms, reporting, marketing,
                                               or right granted to a policyholder under                   The proposed regulations include
appropriateness of recommended
                                               a qualified long-term care insurance                    examples illustrating certain of these
purchase, standard format outline of
                                               contract as in effect on December 31,                   standards. The exceptions to the general
coverage, delivery of a shopper’s guide,
                                               1996, does not constitute a material                    rule that a material change results in the
right to return, outline of coverage, and
                                               change.1                                                issuance of a new contract apply solely
incontestability. Most of these
                                                  After Notice 97–31 was issued,                       for purposes of determining whether a
requirements are based on the NAIC
                                               commentators recommended that                           pre-1997 insurance contract is treated as
model act and regulation.
                                               certain common practices should not                     a qualified long-term care insurance
   The proposed regulations reflect the
                                               cause long-term care insurance contracts                contract under section 7702B.3
standards that were set forth in Notice                                                                   Comments are requested on these
                                               issued before January 1, 1997, to lose
97–31. For example, the consumer                                                                       standards, including (1) whether the
                                               their grandfathered status. In response
protection requirements will be                                                                        material change rules in the proposed
                                               to these comments, the proposed
considered satisfied if a contract                                                                     regulations should be limited to pre-
                                               regulations provide additional
complies with State law in a State that                                                                1997 long-term care insurance contracts
                                               exceptions to the general rule that a
has adopted the related NAIC model or                                                                  that cannot have cash surrender value;
                                               material change in a long-term care
a more stringent version of the model.                                                                 (2) whether there are any conditions
                                               insurance contract issued before January
Pre-1997 Long-Term Care Insurance              1, 1997, will be considered the issuance                under which the expansion of coverage
Contracts                                      of a new contract.                                      under a group long-term care insurance
                                                  • The proposed regulations provide                   contract in connection with a corporate
   Section 321(f)(2) of HIPAA provides
                                               that the exercise of any right provided                 merger, acquisition or similar
that a contract issued before January 1,
                                               to a policyholder (i.e., a right that can               transaction should not constitute a
1997, is treated as a qualified long-term
                                               be exercised without the issuer’s                       material change; and (3) whether the
care insurance contract if the contract
                                               consent and without other conditions,                   extension of a group long-term care
met the ‘‘long-term care insurance
                                               such as underwriting) or the addition of                contract to a collective bargaining unit
requirements of the State’’ in which the
                                               any right that is required by State law                 is a material change in all cases. For
contract was sitused at the time it was
                                               to be provided to the policyholder will
issued. Under the proposed regulations,
                                               not be treated as a material change to a                   2 Thus for example, the only coverage provided
the date on which a long-term care                                                                     under the rider must be coverage for qualified long-
                                               long-term care insurance contract.
insurance contract other than a group
                                                  • In addition, the proposed                          term care services and the purchase must satisfy the
long-term care insurance contract is                                                                   consumer protection requirements of section
                                               regulations provide that the following                  7702B(g) of the Code. (This would not include
issued is generally the date assigned to
                                               practices will not be treated as material               protections that apply only the first time a contract
the contract by the insurance company.                                                                 is purchased, i.e., subsections (g)(2)(A)(i)(III), (V),
                                               changes for purposes of section 7702B:
In no event is the issue date earlier than                                                             (VII) (other than section 6B of the NAIC model
                                               (1) Any change in the mode of premium
the date on which the policyholder                                                                     regulation), and (X), (g)(3), and (g)(4) of section
                                               payment, such as a change from paying                   7702B. Similarly, subsections (c)(1)(A)(i) and (c)(2)
submitted a signed application for
                                               premiums monthly to quarterly; (2) any                  of section 4980C would apply only the first time a
coverage to the insurance company. In                                                                  contract is purchased.)
                                               classwide increase or decrease in
addition, if the period between the date                                                                  3 The exceptions depart from the definition of
                                               premiums for contracts that have been
of application and the date on which the                                                               material change that would apply for purposes of
                                               issued on a guaranteed renewable basis;                 other sections of the Code, including sections 7702,
long-term care insurance contract
                                                                                                       7702A, 101(f), and 264. These exceptions are
actually becomes effective is                    1 The definition of material change in Notice 97–     consistent with the purpose of section 7702B,
substantially longer than under the            31 is narrower than the definition of material          which has the effect of expanding the tax benefits
insurance company’s usual business             change for purposes of other sections of the Code.      for certain long-term care insurance contracts. By
practice, then the issue date is the date      For example, the exercise of an option in a life        contrast, sections 7702, 7702A, 101(f), and 264, for
                                               insurance contract results in the loss of               example, limit the tax benefits associated with
the contract becomes effective. For            grandfathering under section 7702 if the option         certain insurance products and, unlike pre-1997
purposes of applying the grandfather           only guarantees terms that are likely to be available   long-term care insurance contracts, apply to
rule of section 321(f)(2) to a group long-     when the option is exercised.                           contracts with a substantial investment orientation.
                   Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                                  37

example, should the extension of a            discussed and the time to be devoted to      application forms and replacement
group long-term care contract to a            each topic by April 2, 1998.                 coverage, reporting requirements, filing
bargaining unit after 1997 be treated as         A period of 10 minutes will be            requirements for marketing, standards
a material change if the bargaining           allotted to each person for making           for marketing, appropriateness of
agreement for the unit has not been           comments.                                    recommended purchase, standard
renewed since before the group contract          An agenda showing the scheduling of       format outline of coverage, delivery of a
was first adopted?                            the speakers will be prepared after the      shopper’s guide, right to return, outline
   Comments also are requested on what        deadline for receiving outlines has          of coverage, certificates under group
the effective date of the final regulations   passed. Copies of the agenda will be         plans, policy summary, monthly reports
should be. It is intended that the            available free of charge at the hearing.     on accelerated death benefits, and
regulations will not be effective until       Drafting Information                         incontestability period.
after the end of a specified period                                                           (b) Coordination with State
following adoption of the final                 The principal author of these              requirements—(1) Contracts issued in a
regulations. Taxpayers may rely on            regulations is Katherine A. Hossofsky,       State that imposes more stringent
these proposed regulations for guidance       Office of Assistant Chief Counsel            requirements. If a State imposes a
pending the issuance of final                 (Financial Institutions & Products).         requirement that is more stringent than
regulations. If, and to the extent, future    However, other personnel from the IRS        the analogous requirement imposed by
guidance is more restrictive than the         and Treasury Department participated         section 7702B(g) or 4980C, then, under
guidance in these proposed regulations,       in their development.                        section 4980C(f), compliance with the
the future guidance will be applied           List of Subjects in 26 CFR Part 1            more stringent requirement of State law
without retroactive effect. In addition,                                                   is considered compliance with the
until further notice, taxpayers may             Income taxes, Reporting and                parallel requirement of section 7702B(g)
continue to rely on Notice 97–31.             recordkeeping requirements.                  or 4980C. The principles of paragraph
                                              Proposed Amendments to the                   (b)(3) of this section apply to any case
Special Analyses
                                              Regulations                                  in which a State imposes a requirement
  It has been determined that this notice                                                  that is more stringent than the
                                                Accordingly, 26 CFR part 1 is
of proposed rulemaking is not a                                                            analogous requirement imposed by
                                              proposed to be amended as follows:
significant regulatory action as defined                                                   section 7702B(g) or 4980C (as described
in EO 12866. Therefore, a regulatory          PART 1—INCOME TAXES                          in this paragraph (b)(1)), but in which
assessment is not required. It has also                                                    there has been a failure to comply with
been determined that section 553(b) of          Paragraph 1. The authority citation        that State requirement.
the Administrative Procedure Act (5           for part 1 continues to read in part as         (2) Contracts issued in a State that
U.S.C. chapter 5) does not apply to these     follows:                                     has adopted the model provisions. If a
regulations, and because the regulations        Authority: 26 U.S.C. 7805 * * *            State imposes a requirement that is the
do not impose a collection of                                                              same as the parallel requirement
                                                Par. 2. Sections 1.7702B–1 through
information on small entities, the                                                         imposed by section 7702B(g) or 4980C,
                                              1.7702B–2 are added to read as follows:
Regulatory Flexibility Act (5 U.S.C.                                                       compliance with that requirement of
chapter 6) does not apply. Pursuant to        § 1.7702B–1   Consumer protection            State law is considered compliance with
section 7805(f) of the Internal Revenue       provisions.                                  the parallel requirement of section
Code, this notice of proposed                   (a) In general. Under sections             7702B(g) or 4980C, and failure to
rulemaking will be submitted to the           7702B(b)(1)(F), 7702B(g), and 4980C,         comply with that requirement of State
Chief Counsel for Advocacy of the Small       qualified long-term care insurance           law is considered failure to comply with
Business Administration for comment           contracts and issuers of those contracts     the parallel requirement of section
on its impact on small business.              are required to satisfy certain provisions   7702B(g) or 4980C.
Comments and Public Hearing                   of the Long-Term Care Insurance Model           (3) Contracts issued in a State that
                                              Act (Model Act) and Long-Term Care           has not adopted the model provisions or
  Before these proposed regulations are       Insurance Model Regulation (Model            more stringent requirements. If a State
adopted as final regulations,                 Regulation) promulgated by the               has not adopted the Model Act, the
consideration will be given to any            National Association of Insurance            Model Regulation, or a requirement that
comments that are submitted timely to         Commissioners (NAIC), as adopted as of       is the same as or more stringent than the
the IRS (a signed original and eight (8)      January 1993. The requirements for           analogous requirement imposed by
copies). All comments will be available       qualified long-term care insurance           section 7702B(g) or 4980C, then the
for public inspection and copying.            contracts under sections 7702B(b)(1)(F)      language, caption, format, and content
  A public hearing has been scheduled         and 7702B(g) relate to guaranteed            requirements imposed by sections
for May 13, 1998, at 10 a.m., in room         renewal or noncancellability,                7702B(g) and 4980C with respect to
2615, Internal Revenue Building, 1111         prohibitions on limitations and              contracts, applications, outlines of
Constitution Avenue NW, Washington,           exclusions, extension of benefits,           coverage, policy summaries, and notices
DC. Because of access restrictions,           continuation or conversion of coverage,      will be considered satisfied for a
visitors will not be admitted beyond the      discontinuance and replacement of            contract subject to the law of that State
Internal Revenue Building lobby more          policies, unintentional lapse, disclosure,   if the language, caption, format, and
than 15 minutes before the hearing            prohibitions against post-claims             content are substantially similar to those
starts.                                       underwriting, minimum standards,             required under the parallel provision of
  The rules of 26 CFR 601.601(a)(3)           inflation protection, prohibitions against   the Model Act or Model Regulation.
apply to the hearing.                         pre-existing conditions exclusions and       Only nonsubstantive deviations are
  Persons that wish to present oral           probationary periods, and prior              permitted in order for language, caption,
comments at the hearing must submit           hospitalization. The requirements for        format, and content to be considered
written comments by April 2, 1998 and         qualified long-term care insurance           substantially similar to the requirements
submit an outline of the topics to be         contracts under section 4980C relate to      of the Model Act or Model Regulation.
38                Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

§ 1.7702B–2 Special rules for pre-1997      coverage under the group contract             benefits that may be selected by the
long-term care insurance contracts.         becomes effective.                            policyholder;
   (a) Scope. The definitions and special      (iii) Exchange of contract or material        (G) The addition of a rider (including
provisions of this section apply solely     change in a contract treated as a new         any similarly identifiable amendment)
for purposes of determining whether an      issuance. For purposes of this paragraph      to a pre-1997 long-term care insurance
insurance contract (other than a            (b)(3)—                                       contract in any case in which the rider,
qualified long-term care insurance             (A) A contract issued in exchange for      if issued as a separate contract of
contract described in section 7702B(b)      an existing contract after December 31,       insurance, would itself be a qualified
and any regulations issued thereunder)      1996, is considered a contract issued         long-term care insurance contract under
is treated as a qualified long-term care    after that date;                              section 7702B and any regulations
insurance contract for purposes of the         (B) Any material change (as defined in     issued thereunder (including the
Internal Revenue Code.                      paragraph (b)(4) of this section) in a        consumer protection provisions in
   (b) Pre-1997 long-term care insurance    contract is treated as the issuance of a      section 7702B(g) to the extent applicable
contracts.—(1) In general. A pre-1997       new contract with an issue date no            to the addition of a rider);
long-term care insurance contract is        earlier than the date the material change        (H) The deletion of a rider or
treated as a qualified long-term care       goes into effect; and                         provision of a contract (often referred to
insurance contract, regardless of              (C) If a material change occurs with       as an HHS rider) that prohibited
whether the contract satisfies section      regard to one or more, but fewer than         coordination of benefits with Medicare;
7702B(b) and any regulations issued         all, of the certificates evidencing           and
thereunder.                                 coverage under a group contract, then            (I) The effectuation of a continuation
   (2) Pre-1997 long-term care insurance    the insurance coverage under the              or conversion of coverage right provided
contract defined. A pre-1997 long-term      changed certificates is treated as            under a group contract following an
care insurance contract is any insurance    coverage under a newly issued group           individual’s ineligibility for continued
contract with an issue date before          contract (and the insurance coverage          coverage under the group contract.
January 1, 1997, that met the long-term     provided by any unchanged certificate            (5) Examples. The following examples
care insurance requirements of the State    continues to be treated as coverage           illustrate the principles of this
in which the contract was sitused on the    under the original group contract).           paragraph (b):
issue date. For this purpose, the long-        (4) Material change. (i) In general. For
                                                                                             Example 1. (i) On December 3, 1996, A, an
term care insurance requirements of the     purposes of paragraph (b)(3) of this          individual, submits a signed application to
State are the State laws (including         section, except as provided in paragraph      an insurance company to purchase a nursing
statutory and administrative law) that      (b)(4)(ii) of this section, a material        home contract that meets the long-term care
are intended to regulate insurance          change means—                                 insurance requirements of the State in which
coverage that constitutes ‘‘long-term          (A) A change in the terms of a             the contract is sitused. The insurance
care insurance’’ (as defined in section 4   contract that alters the amount or timing     company decides on December 20, 1996, that
of the National Association of Insurance    of an item payable by the policyholder        it will issue the contract, and assigns
Commissioners (NAIC) Long-Term Care         (or certificate holder), the insured, or      December 20, 1996, as the issue date for the
                                                                                          contract. Under the terms of the contract, A’s
Insurance Model Act, as in effect on        the insurance company;
                                                                                          insurance coverage becomes effective on
August 21, 1996), regardless of the            (B) A substitution of the insured          January 1, 1997. The company delivers the
terminology used by the State in            under an individual contract; or              contract to A on January 3, 1997. A has the
describing the insurance coverage.             (C) A change (other than an                right to return the contract within 15 days
   (3) Issue date of a contract. (i) In     immaterial change) in the eligibility for     following delivery for a refund of all
general. The issue date of a contract is    membership in the group covered under         premiums paid.
the issue date assigned to the contract     a group contract.                                (ii) Under paragraph (b)(3)(i) of this
by the insurance company, but in no            (ii) Exceptions. For purposes of this      section, the issue date of the contract is
event is the issue date earlier than the    paragraph (b)(4), the following changes       December 20, 1996. Thus, the contract is a
                                                                                          pre-1997 long-term care insurance contract
date the policyholder submitted a           are not treated as a material change:
                                                                                          that is treated as a qualified long-term care
signed application for coverage to the         (A) A policyholder’s exercise of any       insurance contract.
insurance company. However, if the          right provided under the terms of the            Example 2. (i) The facts are the same as in
period between the date the signed          contract as in effect on December 31,         Example 1, except that the insurance
application is submitted to the             1996, or a right required by applicable       coverage under the contract does not become
insurance company and the date              State law to be provided to the               effective until March 1, 1997. Under the
coverage under the contract actually        policyholder;                                 insurance company’s usual business practice,
becomes effective is substantially longer      (B) A change in the mode of premium        the period between the date of the
than under the insurance company’s          payment (for example, a change from           application and the date the contract
                                                                                          becomes effective is 30 days or less.
usual business practice, then the issue     monthly to quarterly premiums);                  (ii) Under paragraph (b)(3)(i) of this
date is the date coverage under the            (C) In the case of a policy that is        section, the issue date of the contract is
contract becomes effective (if this is      guaranteed renewable or                       March 1, 1997. Thus, the contract is not a
later than the issue date assigned to the   noncancellable, a classwide increase or       pre-1997 long-term care insurance contract,
contract by the insurance company). A       decrease in premiums;                         and, accordingly, the contract must meet the
policyholder’s right to return a contract      (D) A reduction in premiums due to         requirements of section 7702B(b) and any
within a ‘‘free-look’’ period following     the purchase of a long-term care              regulations issued thereunder to be a
delivery for a full refund of any           insurance contract by a family member         qualified long-term care insurance contract.
premiums paid is not taken into account     of the policyholder;                             Example 3. (i) B, an individual, is the
                                                                                          policyholder under a long-term care
in determining the contract’s issue date.      (E) A reduction in coverage (with a        insurance contract purchased in 1995. On
   (ii) Special rule for group contracts.   corresponding reduction in premiums)          June 15, 2000, the insurance coverage and
The issue date of a group contract          made at the request of a policyholder;        premiums under the contract are increased
(including any certificate issued              (F) The addition, without an increase      by agreement between B and the insurance
thereunder) is the date on which            in premiums, of alternative forms of          company.
                     Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                                    39

   (ii) Under paragraph (b)(4)(i)(A) of this       qualified electing fund (QEF). The            Comments on the collection of
section, a change in the terms of a contract       temporary regulations also provide          information should be sent to the Office
that alters the amount or timing of an item        guidance for shareholders that wish to      of Management and Budget, Attn: Desk
payable by the policyholder or the insurance       make a section 1295 election that will      Officer for the Department of the
company is a material change in the contract.
Thus, B’s coverage is treated as coverage
                                                   apply on a retroactive basis (retroactive   Treasury, Office of Information and
under a contract issued on June 15, 2000,          election). The temporary regulations        Regulatory Affairs, Washington, DC
and, accordingly, the contract must meet the       also include a rule concerning the          20503, with copies to the Internal
requirements of section 7702B(b) and any           taxation under section 1291 of an           Revenue Service, Attn: IRS Reports
regulations issued thereunder in order to be       exempt organization that is a               Clearance Officer, T:FP, Washington, DC
a qualified long-term care insurance contract.     shareholder of a PFIC that is not a         20224. Comments on the collection of
   Example 4. (i) C, an individual, is the         pedigreed QEF. This rule was originally     information should be received by
policyholder under a long-term care                proposed in 1992. The text of the           March 3, 1998. Comments are
insurance contract purchased in 1994. At that      temporary regulations also serves as the    specifically requested concerning:
time and through December 31, 1996, the            text of these proposed regulations. In        Whether the proposed collection of
contract met the long-term care insurance                                                      information is necessary for the proper
requirements of the State in which the
                                                   addition, this document proposes
contract was sitused. In 1996, the policy was      amendments to proposed regulation           performance of the functions of the
amended to add a provision requiring the           § 1.1296–4(e), concerning the treatment     Internal Revenue Service, including
policyholder to be offered the right to            of interbank deposits as loans for          whether the information will have
increase dollar limits for inflation every three   purposes of the exception to passive        practical utility;
years (without the policyholder being              income characterization of income             The accuracy of the estimated burden
required to pass a physical or satisfy any         derived in the active conduct of a          associated with the proposed collection
other underwriting requirements). During           banking business. This document also        of information (see below);
2002, C elects to increase the amount of           provides notice of a public hearing on        How the quality, utility, and clarity of
insurance coverage (with a resulting               these proposed regulations.                 the information to be collected may be
premium increase) pursuant to the inflation                                                    enhanced;
protection provision.                              DATES: Written comments must be
                                                   received by April 2, 1998. Requests to        How the burden of complying with
   (ii) Under paragraph (b)(4)(ii)(A) of this                                                  the proposed collection of information
section, an increase in the amount of              speak and outlines of oral comments to
                                                   be discussed at the public hearing          may be minimized, including through
insurance coverage at the election of the
policyholder (without the insurance                scheduled for April 16, 1998, must be       the application of automated collection
company’s consent and without underwriting         received by March 26, 1998.                 techniques or other forms of information
or other limitations on the policyholder’s                                                     technology; and
                                                   ADDRESSES: Send submissions to:
rights) pursuant to a pre-1997 inflation                                                         Estimates of capital or start-up costs
                                                   CC:DOM:CORP:R (REG–115795–97),              and costs of operation, maintenance,
protection provision does not constitute a
material change in the contract. Thus, C’s         room 5226, Internal Revenue Service,        and purchase of services to provide
contract continues to be a pre-1997 long-term      POB 7604, Ben Franklin Station,             information.
care insurance contract that is treated as a       Washington, DC 20044. Submissions             The collection of information in this
qualified long-term care insurance contract.       may be hand delivered between the           proposed regulation is in proposed
Michael P. Dolan,                                  hours of 8 a.m. and 5 p.m. to:              regulation §§ 1.1295–1(f), 1.1295–1(g),
Deputy Commissioner of Internal Revenue.           CC:DOM:CORP:R (REG–115795–97),              1.1295–3(c), and 1.1295–3(g). The
[FR Doc. 97–33986 Filed 12–31–97; 8:45 am]
                                                   Courier’s Desk, Internal Revenue            information required in § 1.1295–1 (f)
                                                   Service, 1111 Constitution Avenue, NW,      and (g) will notify the Internal Revenue
BILLING CODE 4830–01–U
                                                   Washington, DC. Alternatively,              Service that certain shareholders have
                                                   taxpayers may submit comments               made the section 1295 election, and will
DEPARTMENT OF THE TREASURY                         electronically via the Internet by          enable the Internal Revenue Service to
                                                   selecting the ‘‘Tax Regs’’ option on the    determine if a shareholder is satisfying
Internal Revenue Service                           IRS Home Page, or by submitting             the election and annual reporting
                                                   comments directly to the IRS Internet       requirements and is reporting income as
26 CFR Part 1                                      site at http://www.irs.ustreas.gov/prod/    required under section 1293.
                                                   tax        regs/comments.html. The            The information required in proposed
[REG–115795–97]
                                                   public hearing will be held in Room         regulation § 1.1295–3(c) will notify the
RIN 1545–AV39                                      3313, Internal Revenue Service, 1111        IRS that certain shareholders of foreign
                                                   Constitution Avenue, NW, Washington,        corporations have filed a Protective
General Rules for Making and                       DC.                                         Statement to preserve their ability to
Maintaining Qualified Electing Fund                FOR FURTHER INFORMATION CONTACT:            make a retroactive section 1295 election,
Elections                                          Concerning the regulations, Gayle           and that those shareholders have
AGENCY:  Internal Revenue Service (IRS),           Novig, (202) 622–3840; concerning           extended the periods of limitations for
Treasury                                           submissions and the hearing,                their taxable years to which the
                                                   Evangelista Lee, (202) 622–7190 (not        Protective Statement will apply. The
ACTION: Notice of proposed rulemaking
                                                   toll-free numbers).                         information will enable the IRS to verify
by cross-reference to temporary
regulations and notice of public hearing.          SUPPLEMENTARY INFORMATION:                  that the shareholders filing the
                                                                                               Protective Statement had the requisite
SUMMARY: In the Rules and Regulations              Paperwork Reduction Act                     reasonable belief at the time they filed
section of this issue of the Federal                 The collection of information             the statement. The information required
Register, the IRS is issuing temporary             contained in this notice of proposed        in proposed regulation § 1.1295–3(g)
regulations that provide guidance to a             rulemaking has been submitted to the        will notify the IRS that a shareholder
passive foreign investment company                 Office of Management and Budget for         has made the retroactive election and, in
(PFIC) shareholder that makes the                  review in accordance with the               the case of a shareholder that filed a
election under section 1295 (section               Paperwork Reduction Act of 1995 (44         Protective Statement, that the
1295 election) to treat the PFIC as a              U.S.C. 3507(d)).                            shareholder’s waiver of the periods of
40                Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

limitations will terminate within three    Section 1296                                 information in this notice of proposed
years of making the election. The            On April 28, 1995, proposed                rulemaking under 5 U.S.C. § 603. This
information will enable the Service to     regulations were published providing         analysis is set forth below under the
verify that the requirements for making    guidance for the exceptions to passive       heading ‘‘Initial Regulatory Flexibility
a retroactive election have been           income characterization of certain           Analysis.’’
satisfied.                                 income derived by active foreign banks       Initial Regulatory Flexibility Analysis
   The collection of information and       and foreign security dealers provided in
responses to these collections of                                                          This initial analysis is provided
                                           section 1296 (b)(2)(A) and (b)(3),           pursuant to the Regulatory Flexibility
information are mandatory. The likely      respectively. The proposed section 1296      Act (5 U.S.C. chapter 6). The major
respondents are individuals, businesses,   regulations reflect comments received        objective of the proposed regulations is
and other for-profit organizations.        with respect to Notice 89–81, 1989–2         to provide guidance to PFIC
   An agency may not conduct or            C.B. 399. That notice established tests      shareholders that wish to elect under
sponsor, and a person is not required to   for determining whether a foreign            section 1295 to treat their PFICs as
respond to, a collection of information    corporation qualified for the active         QEFs, and provide guidance to those
unless the collection of information       foreign bank exception. The notice           PFICs about the requirements imposed
displays a valid control number            specifically stated that interbank           on them. The legal basis for these
assigned by the Office of Management       deposits would not be treated as loans       requirements is contained in sections
and Budget.                                made in the ordinary course of a             1293, 1294, and 1295. The IRS and
   Books or records relating to a          banking business.                            Treasury are not aware of any federal
collection of information must be            After consideration of the comments        rules that duplicate, overlap, or conflict
retained as long as their contents may     received with respect to the Notice, the     with the proposed regulations.
become material in the administration      IRS and Treasury determined that                The recordkeeping and reporting
of any internal revenue law. Generally,    interbank deposits were made and             requirements of the proposed
tax returns and tax return information     accepted in the ordinary course of a         regulations enable the Internal Revenue
are confidential, as required by 26        banking business, and therefore should       Service to identify those taxpayers that
U.S.C. 6103.                               be treated as such for purposes of           are treating their PFICs as QEFs; to
                                           section 1296(b)(2)(A). Accordingly,          verify that those U.S. taxpayers are
   Estimated total annual reporting/
                                           proposed regulation § 1.1296–4(d)(3)         currently including their shares of QEF
recordkeeping burden: 623 hours.
                                           specifically includes interbank deposits     earnings in income, as required in
   The estimated annual burden per         with other deposits for purposes of          section 1293 of the Internal Revenue
respondent varies from 15 minutes to       determining whether the foreign              Code; to be informed of those QEF
three hours, depending on individual       corporation satisfies the deposit-taking     shareholders that are not paying their
circumstances, with an estimated           requirements of § 1.1296–4(d). Also in       section 1293 tax liability because they
average of 29 minutes.                     response to comments, proposed               made the section 1294 election to defer
   Estimated number of respondents:        regulation § 1.1296–4(e) is clarified to     the time for payment; to identify those
1,290.                                     specifically provide that interbank          shareholders of foreign corporations that
   Estimated annual frequency of           deposits made with banks in the              are preserving their right to make a
responses: Annually or one time only.      ordinary course of business constitute       retroactive section 1295 election; to
                                           loans for purposes of § 1.1296–4. This       identify those shareholders making
Background                                 clarification is favorable to taxpayers,     retroactive elections and verify that they
Sections 1291, 1293, 1295, and 1297        and is proposed to be effective for          are satisfying the requirements of a
                                           taxable years beginning after December       retroactive election; and, in the case of
  Temporary regulations in the Rules       31, 1994. It is also proposed that           shareholders that have filed Protective
and Regulations section of this issue of   taxpayers may apply it to a taxable year     Statements, the dates by which the
the Federal Register amend the Income      beginning after December 31, 1986,           shareholders’ extensions of periods of
Tax Regulations (26 CFR part 1) relating   provided it is consistently applied to       limitations will terminate.
to sections 1291, 1293, 1295, and 1297.    that taxable year and all subsequent            These proposed regulations will affect
The temporary regulations contain rules    taxable years. The dates for applying        those small entities that are PFICs, at
concerning the taxation of exempt          proposed regulation § 1.1296–4(e)            least one shareholder of which makes
organizations under section 1291,          coincide with the dates for which            the section 1295 election. The proposed
elections under section 1295 to treat      § 1.1296–4 is proposed to be effective.      regulations also will affect those small
passive foreign investment companies       See proposed regulation § 1.1296–4(k).       entities that are PFIC shareholders that
as qualified electing funds (QEFs), the                                                 make the section 1295 election. The IRS
calculation of net capital gain for        Special Analyses                             and Treasury believe that affected small
purposes of section 1293, and the            It has been determined that this notice    entities generally will be small
inclusion of the pro rata shares of the    of proposed rulemaking is not a              businesses, as local governments are not
earnings and profits of QEFs held          significant regulatory action as defined     likely to invest in PFICs. Also, few, if
through pass through entities. The         in Executive Order 12866. Therefore, a       any, affected small entities likely will be
temporary regulations amend § 1.1297–      regulatory assessment is not required.       tax exempt organizations, because only
3T, permitting in certain cases the        Pursuant to section 7805(f) of the           a tax exempt entity that is taxable under
application of the rules of section        Internal Revenue Code, this notice of        subchapter F on dividends received
1291(d)(2)(B) to an election made under    proposed rulemaking will be submitted        from the PFIC generally would need to
section 1297(b)(1).                        to the Chief Counsel for Advocacy of the     consider making the section 1295
  The text of those temporary              Small Business Administration for            election.
regulations also serves as the text of     comment on its impact on small                  The collections of information in
these proposed regulations. The            business. It has been determined that an     these proposed regulations would
preamble to the temporary regulations      initial regulatory flexibility analysis is   impact a small entity that is treated as
explains the temporary regulations.        required for the collection of               a QEF principally by requiring the
                  Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                                     41

entity to calculate annually its ordinary    Information Statement or the Annual          written comments by April 2, 1998, and
earnings and net capital gain according      Intermediary Statement received as well      submit an outline of the topics to be
to federal income tax accounting             as a copy of their filings for each year     discussed and the time to be devoted to
principles, as required by section 1293,     to which the section 1295 election           each topic (signed original and eight (8)
and report that information to its           applies. In addition, the proposed           copies) by March 26, 1998.
shareholders that are U.S. persons. With     regulations impose a lesser burden on           A period of 10 minutes will be
the enactment of section 1(h), the QEF       small shareholders, typically                allotted to each person for making
also must calculate each type of long        individuals and small entities, to           comments.
term capital gain that it derived and the    preserve their right to make a retroactive      An agenda showing the schedule of
applicable rates of tax for proper           election and a lesser burden of making       speakers will be prepared after the
inclusion of the QEF’s net capital gain      a retroactive election. A small entity       deadline for receiving outlines has
by the QEF shareholders. Alternatively,      that owns less than five percent of each     passed. Copies of the agenda will be
the regulations permit the QEF to            class of stock of a foreign corporation      available free of charge at the hearing.
provide its shareholders with its books,     and satisfies other requirements is not
records and other documents necessary        required to file a Protective Statement to   Drafting Information
for the shareholders to calculate the        preserve its right to make a retroactive       The principal authors of the proposed
ordinary earnings and net capital gain       election with respect to the foreign         regulations are Gayle Novig and Judith
amounts. This alternative will enable a      corporation. Similarly, a small entity       Cavell Cohen, of the Office of the
small entity that is a QEF to avoid the      potentially has fewer amended returns        Associate Chief Counsel (International).
burden of calculating its net capital gain   to file to make a retroactive election       Other personnel from the IRS and
by providing its shareholders with           than a shareholder that filed a Protective   Treasury Department also participated
information with which the                   Statement. These changes in election         in the development of these regulations.
shareholders can make the calculations.      requirements are illustrative of IRS
  The economic impact of other               efforts to minimize burden, particularly     List of Subjects in 26 CFR Part 1
collections of information contained in      with respect to small entities.                Income taxes, Reporting and
these proposed regulations would fall           An estimate of the number of small        recordkeeping requirements.
on a small entity that is a shareholder      entities that would be affected by these
of a PFIC for which it has made the          regulations is unavailable. In any event,    Proposed Amendments to the
section 1295 election or that is a pass      the enactment in 1997 of the mark-to-        Regulations
through entity to which an interest          market election for PFIC shareholders          Accordingly, 26 CFR part 1 is
holder transferred stock subject to a        and the elimination of the overlap in        proposed to be amended as follows:
section 1295 election. The economic          certain cases of subpart F and the PFIC
impact would result primarily from the       provisions, will reduce the number of        PART 1—INCOME TAXES
reporting and recordkeeping                  small entities that would be affected by
requirements pertaining to (1) the                                                          Paragraph 1. The authority citation
                                             these regulations.                           for part 1 continues to read in part as
manner for making the section 1295              None of the significant alternatives
election and the annual election                                                          follows:
                                             considered in drafting these regulations
requirements; (2) the calculation by the     would have significantly altered the           Authority: 26 U.S.C. 7805 * * *
shareholder (rather than the QEF) of the     economic impact of the collections of          Par. 2. Section 1.1291–1 is added to
QEF’s ordinary earnings and net capital      information on small entities. In            read as follows:
gain according to federal income tax         considering the significant alternatives       [The text of this proposed section is
principles, and its pro rata shares          that would be permissible under the          the same as the text of § 1.1291–1T
thereof; (3) a request for consent to        Code and would enable the IRS to             published elsewhere in this issue of the
revoke a section 1295 election; (4) the      ensure compliance with the Code, the         Federal Register.]
preservation of the right to make a          IRS and Treasury concluded that the            Par. 3. Section 1.1293–1 is added to
retroactive election under section 1295;     alternatives generally would impose          read as follows:
(5) a request for consent to make a          equal or greater burdens.
retroactive election; (6) making a                                                        § 1.1293–1 Current taxation of income
retroactive election, including filing       Comments and Public Hearing                  from qualified electing funds.
amended returns for the affected taxable       Before these proposed regulations are        [The text of this proposed section is
years; and (7) providing interest holders    adopted as final regulations,                the same as the text of § 1.1293–1T
with PFIC statements and other               consideration will be given to any           published elsewhere in this issue of the
information received by an intermediary      written comments (a signed original and      Federal Register.]
shareholder.                                 eight (8) copies) that are submitted           Par. 4. Section 1.1295–1 is added to
  The proposed regulations reduce the        timely to the IRS. All comments will be      read as follows:
burden under existing rules for making       available for public inspection and
the section 1295 election for all            copying.                                     § 1.1295–1   Qualified electing funds.
taxpayers, including small businesses          A public hearing has been scheduled          [The text of this proposed section is
and other small entities. Unlike the         for April 16, 1998, at 10 a.m., in room      the same as the text of § 1.1295–1T
current requirements provided in Notice      2615, Internal Revenue Building, 1111        published elsewhere in this issue of the
88–125, the proposed regulations only        Constitution Avenue, NW, Washington,         Federal Register.]
require electing shareholders to file        DC. Because of access restrictions,            Par. 5. Section 1.1295–3 is added to
Form 8621 to make the section 1295           visitors will not be admitted beyond the     read as follows:
election, thereby eliminating the            Internal Revenue lobby more than 15
shareholder election statement as well       minutes before the hearing starts.           § 1.1295–3   Retroactive elections.
as the requirement to file a copy of the       The rules of 26 CFR 601.601(a)(3)            [The text of this proposed section is
PFIC Annual Information Statement.           apply to the hearing.                        the same as the text of § 1.1295–3T
The proposed regulations only require          Persons that wish to present oral          published elsewhere in this issue of the
shareholders to retain the PFIC Annual       comments at the hearing must submit          Federal Register.]
42                   Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

  Par. 6. In § 1.1297–3, paragraph (c) is    DATES:   Written comments and requests         Regulations were proposed in 1995 1
added to read as follows:                    for a public hearing must be received by    with respect to many of the issues
                                             April 2, 1998.                              arising under section 72(p)(2). The
§ 1.1297–3 Deemed sale election by a                                                     preamble to the 1995 proposed
United States person that is a shareholder   ADDRESSES: Send submissions to:
of a passive foreign investment company.     CC:DOM:CORP:R (REG–209476–82),              regulations requested comments on
                                             room 5226, Internal Revenue Service,        whether further guidance should be
   [The text of this proposed paragraph                                                  provided on certain issues that were not
(c) is the same as the text of § 1.1297–     POB 7604, Ben Franklin Station,
                                             Washington, DC 20044. Submissions           addressed. Following publication of the
3T(c) published elsewhere in this issue                                                  1995 proposed regulations, comments
of the Federal Register.]                    may be hand delivered between the
                                             hours 8 a.m. and 5 p.m. to:                 were received and a public hearing was
   Par. 7 Section 1.1296–4(e) as                                                         held on June 28, 1996. One of the issues
proposed at 60 FR 20922 (April 28,           CC:DOM:CORP:R (REG–209476–82),
                                             Courier’s Desk, Internal Revenue            on which comments were requested and
1995) is amended by adding a sentence                                                    received was the effect of a deemed
at the end of the paragraph to read as       Service, 1111 Constitution Avenue NW,
                                             Washington, DC. Alternatively,              distribution on the tax treatment of
follows:                                                                                 subsequent distributions from a plan
                                             taxpayers may submit comments
§ 1.1296–4 Characterization of certain       electronically via the Internet by          (such as whether a participant has tax
banking income of foreign banks as           selecting the ‘‘Tax Regs’’ option on the    basis as a result of a deemed
passive.                                     IRS Home Page, or by submitting             distribution). After reviewing the
*      *    *     *     *                    comments directly to the IRS Internet       written comments and comments made
   (e) Lending activities test. * * * An                                                 at the public hearing, these new
                                             site at http://www.irs.ustreas.gov/prod/
interbank deposit made in the ordinary                                                   proposed regulations address this issue.
                                             tax regs/comments.html.
course of a corporation’s banking                                                           These new proposed regulations
                                             FOR FURTHER INFORMATION CONTACT:            provide that once a loan is deemed
business will be treated as a loan for       Concerning the regulations Vernon S.        distributed under section 72(p), the
purposes of this section. For the            Carter, (202) 622–6070; concerning          interest that accrues thereafter on that
effective date of this paragraph (e), see    submissions or requests to speak at the     loan is not included in income.2
paragraph (k) of this section.               hearing, La Nita VanDyke, (202) 622–        Further, because the loan amount is
Michael P. Dolan,                            7190 (not toll-free numbers).               treated as distributed for purposes of
Deputy Commissioner of Internal Revenue.                                                 section 72, neither the income that
[FR Doc. 97–33984 Filed 12–31–97; 8:45 am]   SUPPLEMENTARY INFORMATION:
                                                                                         resulted from the deemed distribution
BILLING CODE 4830–01–U                       Background                                  nor the interest that accrues thereafter
                                               This document contains proposed           increases the participant’s investment in
                                             amendments to the Proposed Income           the contract (tax basis) for purposes of
DEPARTMENT OF THE TREASURY                                                               section 72.
                                             Tax Regulations (26 CFR Part 1) under
                                                                                            For example, assume that, after a loan
Internal Revenue Service                     section 72 of the Internal Revenue Code
                                                                                         has been made from a defined
                                             of 1986 (Code). These amendments
                                                                                         contribution plan to a participant, a
26 CFR Part 1                                provide additional guidance concerning
                                                                                         deemed distribution occurs as a result of
                                             the tax treatment of loans that are
[REG–209476–82]                                                                          failure to make timely loan repayments
                                             deemed to be distributed under section
RIN 1545–AE41
                                                                                         (e.g., the repayments were not to be
                                             72(p).
                                                                                         made by payroll withholding 3). The
Loans to Plan Participants                   Explanation of Provisions                   participant’s total account then consists
                                                                                         of non-loan assets and a receivable for
AGENCY: Internal Revenue Service (IRS),         Section 72(p)(1)(A) provides that a
                                                                                         the loan balance. At separation from
Treasury.                                    loan from a qualified employer plan
                                                                                         employment, the participant’s vested
                                             (including a contract purchased under a
ACTION: Notice of proposed rulemaking.
                                             qualified employer plan) to a participant      1 Proposed § 1.72(p)–1 (EE–106–82) was

SUMMARY:   This document amends              or beneficiary is treated as received as    published in the Federal Register (60 FR 66233) on
proposed Income Tax Regulations under        a distribution from the plan for            December 21, 1995.
section 72(p) of the Internal Revenue        purposes of section 72 (a deemed               2 This treatment applies for purposes of

                                             distribution). Section 72(p)(1)(B)          determining the amount taxable under section 72
Code relating to loans made from a                                                       (including application of return of tax basis).
qualified employer plan to plan              provides that an assignment or pledge of    However, as discussed below, the loan is still
participants or beneficiaries. Section       (or an agreement to assign or pledge)       considered outstanding for purposes of determining
72(p) was added by section 236 of the        any portion of a participant’s or           the maximum amount of any subsequent loan to the
                                             beneficiary’s interest in a qualified       participant under section 72(p)(2)(A). Even though
Tax Equity and Fiscal Responsibility                                                     interest continues to accrue on the outstanding loan
Act of 1982, and amended by the              employer plan is treated as a loan from     and is taken into account for purposes of
Technical Corrections Act of 1982, the       the plan.                                   determining the maximum amount of any
Deficit Reduction Act of 1984, the Tax          Section 72(p)(2) provides that section   subsequent loan, this additional interest is not
                                             72(p)(1) does not apply to the extent       treated as an additional loan that results in a further
Reform Act of 1986 and the Technical                                                     deemed distribution for purposes of section 72(p).
and Miscellaneous Revenue Act of 1988.       certain conditions are satisfied.              3 With respect to coverage under Title I of the

These regulations provide guidance to        Specifically, under section 72(p)(2), a     Employee Retirement Income Security Act of 1974,
the public with respect to section 72(p),    loan from a qualified employer plan to      the Department of Labor has advised the Service
                                             a participant or beneficiary is not         that an employer’s tax-sheltered annuity program
and affect administrators of, participants                                               would not necessarily fail to satisfy the
in, and beneficiaries of qualified           treated as a distribution from the plan     Department’s regulation at 29 CFR 2510.3–2(f)
employer plans that permit participants      if the loan satisfies requirements          merely because the employer permits employees to
or beneficiaries to receive loans from the   relating to the term of the loan and the    make repayments of loans made in connection with
                                             repayment schedule, and to the extent       the tax-sheltered annuity program through payroll
plan (including loans from section                                                       deductions as part of the employer’s payroll
403(b) contracts and other contracts         the loan satisfies certain limitations on   deduction system, if the program operates within
issued under qualified employer plans).      the amount loaned.                          the limitations set by that regulation.
                   Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                                     43

account balance is reduced (offset) by        plan is not permitted to apply the new        guidance will be applied without
the loan amount and the remaining             proposed regulations to the loan unless       retroactive effect.
account balance is distributed in a lump      the plan reported, in Box 1 of Form
                                                                                            Special Analyses
sum to the participant. In this case, in      1099–R, a gross distribution with
addition to the income that previously        respect to the loan that is at least equal      It has been determined that this notice
arose as a result of the deemed               to the amount required by the 1995            of proposed rulemaking is not a
distribution due to the failure to make       proposed regulations (referred to as the      significant regulatory action as defined
timely payments on the loan, the              initial default amount in the new             in EO 12866. Therefore, a regulatory
participant would have a taxable              proposed regulations) for a taxable year      assessment is not required. It has also
distribution at separation from               that is not later than the latest year that   been determined that section 553(b) of
employment for the remaining account          would be permitted under the 1995             the Administrative Procedure Act (5
balance reflecting the non-loan assets        proposed regulations. In such a case, the     U.S.C. chapter 5) does not apply to these
that are distributed in a lump sum (with      plan may apply the new proposed               regulations, and because the regulation
no tax basis as a result of the prior         regulations to the loan even though, in       does not impose a collection of
deemed distribution of the loan               the past, the plan reported deemed            information on small entities, the
amount). The offset of the loan balance       distributions with respect to the loan in     Regulatory Flexibility Act (5 U.S.C.
(i.e., the offset of the loan receivable by   a manner that is not consistent with the      chapter 6) does not apply. Pursuant to
the loan amount) would be disregarded         new proposed regulations.                     section 7805(f) of the Internal Revenue
for purposes of section 72 because the           If a plan does apply the new proposed      Code, this notice of proposed
loan had previously been deemed               regulations to a pre-regulatory effective     rulemaking will be submitted to the
distributed as a result of the failure to     date loan that has been deemed                Chief Counsel for Advocacy of the Small
make timely payments on the loan.             distributed, then the plan, in its            Business Administration for comment
   A loan that is deemed distributed          subsequent reporting and withholding,         on its impact on small business.
under section 72 is nevertheless              must not attribute investment in the
outstanding for other purposes until the                                                    Comments and Requests for a Public
                                              contract (tax basis) to the participant       Hearing
loan obligation is satisfied (e.g., by cash   based upon the initial default amount.
repayment or by offset against the            For example, a plan that reported               Before these proposed regulations are
participant’s accrued benefit). Q&A–13        income for the initial default amount         adopted as final regulations,
of the 1995 proposed regulations lists        plus all interest accruing thereafter as a    consideration will be given to any
other differences between a deemed            result of the default and made                written comments that are submitted
distribution and a loan offset. In            corresponding increases in the                timely (preferable a signed original and
addition, for purposes of calculating the     participant’s tax basis would comply          eight copies) to the IRS. All comments
maximum permitted amount of any                                                             will be available for public inspection
                                              with this consistency rule by reducing
subsequent loan, a loan that has been                                                       and copying. A public hearing will be
                                              the participant’s tax basis by an amount
deemed distributed is considered                                                            scheduled if requested in writing by a
                                              equal to the initial default amount.
outstanding until the loan obligation has                                                   person that timely submits written
                                              However, a special rule applies if a plan
been satisfied.                                                                             comments. If a public hearing is
   The proposed regulations also provide      had increased a participant’s tax basis
                                              by the initial default amount and, just       scheduled, notice of the date, time and
that if a participant makes any cash                                                        place for the hearing will be published
repayments on a loan after the loan is        before the first actual distribution made
                                              after the plan switches to applying the       in the Federal Register.
deemed distributed, the repayments
increase the participant’s tax basis in       new proposed regulations to the loan,         Drafting Information
the plan in the same manner as if the         the sum of the participant’s tax basis          The principal author of these
repayments were after-tax contributions.      immediately before the switch plus any        regulations is Vernon S. Carter, Office of
However, such repayments are not              increase in basis thereafter is less than     Associate Chief Counsel (Employee
treated as after-tax contributions for        the initial default amount (as a result of    Benefits and Exempt Organizations).
purposes of section 401(m) or                 intervening distributions). In this case, a   However, other personnel from the IRS
415(c)(2)(B).                                 loan transition amount equal to the           and Treasury Department participated
   These regulations are proposed to          amount by which the initial default           in their development.
become effective for loans made on or         amount exceeds the participant’s tax
after the first January 1 that is at least    basis is treated as remaining outstanding     List of Subjects in 26 CFR Part 1
6 months after the date the regulations       and that amount is includible in the            Income taxes, Reporting and
are published as final regulations in the     participant’s income at the time of the       recordkeeping requirements.
Federal Register (the regulatory              next actual distribution from the plan to
effective date). These regulations also       the participant. The proposed                 Amendments to the Previously
revise the proposed effective date for the    regulations include examples                  Proposed Regulations
1995 proposed regulations, so that the        illustrating the application of the             Accordingly, 26 CFR part 1 is
same proposed effective date would            consistency rule.                             proposed to be amended as follows:
apply to the 1995 proposed regulations           Comments are requested on whether
and these proposed regulations.               the final regulations should include          PART 1—INCOME TAXES
   Generally, a plan is permitted to          further guidance relating to plan loans         Paragraph 1. The authority citation
apply the new proposed regulations to         made to participants before the               for part 1 continues to read, in part, as
loans made before the regulatory              regulatory effective date.                    follows:
effective date. However, the regulations         Taxpayers may rely on these proposed
include a special consistency rule            regulations for guidance pending the            Authority: 126 U.S.C. 7805. * * *
applicable if there has been any deemed       issuance of final regulations. If, and to       Par. 2. Section 1.72(p)–1 of the
distribution of the loan before the date      the extent, future guidance is more           proposed regulations published
the plan switches to the new proposed         restrictive than the guidance in these        December 21, 1995, (60 FR 66233) is
regulations for the loan. In this event, a    proposed regulations, the future              amended as follows:
44                 Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

  1. Q&A–19 is redesignated as Q&A–           treated as after-tax contributions for          the loan beginning on any January 1, but
21.                                           other purposes, including sections              only if the plan reported, in Box 1 of
  2. New Q&A–19 and Q&A–20 are                401(m) and 415(c)(2)(B).                        Form 1099–R, for a taxable year no later
added.                                           (b) Example. The following example           than the latest taxable year that would
  3. Q&A–21, as redesignated, is              illustrates the rules in paragraph (a) of       be permitted under this section, a gross
revised.                                      this Q&A–20 and is based on the                 distribution of an amount at least equal
  The additions and revision read as          assumptions described in                        to the initial default amount. For
follows:                                      ASSUMPTIONS FOR EXAMPLES:                       purposes of this section, the initial
§ 1.72(p)-1 Loans treated as distributions.      Example. (a) A participant receives a        default amount is the amount that
                                              $20,000 loan on January 1, 1999, to be repaid   would be reported as a gross
*      *     *    *     *                                                                     distribution under Q&A–4 and Q&A–10
   Q–19: If there is a deemed                 in 20 quarterly installments of $1,245 each.
                                              On December 31, 1999, the outstanding loan      of this section and the transition date is
distribution under section 72(p), is the      balance ($19,179) is deemed distributed as a    the January 1 on which a plan begins
interest that accrues thereafter on the       result of a failure to make quarterly           applying Q&A–19 and Q&A–20 of this
amount of the deemed distribution an          installment payments that were due on           section to a loan.
indirect loan for income tax purposes?        September 30, 1999 and December 31, 1999.          (iii) If a plan applies Q&A–19 and
   A–19: (a) General rule. Except as          On June 30, 2000, the participant repays        Q&A–20 of this section to such a loan,
provided in paragraph (b) of this Q&A–        $5,147 (which is the sum of the three           then the plan, in its reporting and
19, a deemed distribution of a loan is        installment payments that were due on
                                              September 30, 1999, December 31, 1999, and
                                                                                              withholding on or after the transition
treated as a distribution for purposes of                                                     date, must not attribute investment in
section 72. Therefore, a loan that is         March 31, 2000, with interest thereon to June
                                              30, 2000, plus the installment payment that     the contract (tax basis) to the participant
deemed to be distributed under section                                                        or beneficiary based upon the initial
                                              was due on June 30, 2000). Thereafter, the
72(p) ceases to be an outstanding loan        participant resumes making the installment      default amount.
for purposes of section 72, and the           payments of $1,245 from September 30, 2000         (iv) This paragraph (c)(2)(iv) applies
interest that accrues thereafter under the    through December 31, 2003. The loan             if—
plan on the amount deemed distributed         repayments made after December 31, 1999            (A) The plan attributed investment in
is disregarded in applying section 72 to      through December 31, 2003 total $22,577.        the contract (tax basis) to the participant
the participant or beneficiary. Even             (b) Because the participant repaid $22,577   or beneficiary based on the deemed
though interest continues to accrue on        after the deemed distribution that occurred     distribution of the loan;
the outstanding loan (and is taken into       on December 31, 1999, the participant has          (B) The plan subsequently made an
                                              investment in the contract (tax basis) equal
account for purposes of determining the                                                       actual distribution to the participant or
                                              to $22,577 as of December 31, 2003.
tax treatment of any subsequent loan in                                                       beneficiary before the transition date;
accordance with paragraph (b) of this            Q–21: When is the effective date of          and
Q&A–19), this additional interest is not      section 72(p) and these regulations?               (C) Immediately before the first actual
treated as an additional loan (and, thus,        A–21: (a) Statutory effective date.          distribution made on or after the
does not result in an additional deemed       Section 72(p) generally applies to              transition date, the initial default
distribution) for purposes of section         assignments, pledges, and loans made            amount (or, if less, the amount of the
72(p). However, a loan that is deemed         after August 13, 1982.                          investment in the contract so attributed)
distributed under section 72(p) is not           (b) Regulatory effective date. This          exceeds the sum of the participant’s or
considered distributed for all purposes       section applies to assignments, pledges,        beneficiary’s investment in the contract
of the Internal Revenue Code. See Q&A–        and loans made on or after the first            (tax basis) immediately before the
11 through Q&A–16 of this section.            January 1 that is at least 6 months after       transition date plus any increase in the
   (b) Exception for purposes of applying     the date of publication of the final            participant’s or beneficiary’s investment
section 72(p)(2)(A) to a subsequent loan.     regulations in the Federal Register (the        in the contract (tax basis) on or after the
A loan that is deemed distributed under       regulatory effective date).                     transition date. If this paragraph
section 72(p) (including interest                (c) Loans made before the regulatory         (c)(2)(iv) applies, the plan must treat the
accruing thereafter) and that has not         effective date—(1) General rule. A plan         excess (the loan transition amount) as a
been repaid (such as by a plan loan           is permitted to apply Q&A–19 and                loan amount that remains outstanding
offset) is considered outstanding for         Q&A–20 of this section to a loan made           and must include the excess in the
purposes of applying section 72(p)(2)(A)      before the regulatory effective date (and       participant’s or beneficiary’s income at
to determine the maximum amount of            after the statutory effective date in           the time of the actual distribution.
any subsequent loan to the participant        paragraph (a) of this Q&A–21) if there             (3) Examples. The rules in paragraph
or beneficiary.                               has not been any deemed distribution of         (c)(2) of this Q&A–21 are illustrated by
   Q–20: Is a participant’s tax basis in      the loan before the transaction date or         the following examples, which are
the plan increased if the participant         if the conditions of paragraph (c)(2) of        based on the assumptions described in
repays the loan after a deemed                this Q&A–21 are satisfied with respect          ASSUMPTIONS FOR EXAMPLES (and,
distribution?                                 to the loan.                                    except as specifically provided in the
   A–20: (a) Repayments after deemed             (2) Consistency transition rule for          examples, also assume that no
distribution. Yes, if the participant or      certain loans deemed distributed before         distributions are made to the participant
beneficiary repays the loan after a           the regulatory effective date. (i) The          and that the participant has no
deemed distribution of the loan under         rules in this paragraph (c)(2) apply to a       investment in the contract with respect
section 72(p), then, for purposes of          loan made before the regulatory                 to the plan). Example 1, Example 2, and
section 72(e), the participant’s or           effective date (and after the statutory         Example 4 illustrate the application of
beneficiary’s investment in the contract      effective date in paragraph (a) of this         these rules to a plan that, before the
(tax basis) under the plan increases by       Q&A–21) if there has been any deemed            transition date, did not treat interest
the amount of the cash repayments that        distribution of the loan before the             accruing after the initial deemed
the participant or beneficiary makes on       transition date.                                distribution as resulting in additional
the loan after the deemed distribution.          (ii) The plan is permitted to apply          deemed distributions under section
However, loan repayments are not              Q&A–19 and Q&A–20 of this section to            72(p). Example 3 illustrates the
                    Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                                                45

application of these rules to a plan that,        distribution. Thus, as of December 31, 1998,       that time, the plan’s records reflect an offset
before the transition date, treated               the total taxable amount reported by the plan      of the loan amount against the loan
interest accruing after the initial deemed        as a result of the deemed distribution is          receivable in the participant’s account and a
distribution as resulting in additional           $16,000 and the plan’s records show that the       distribution of $180,000 in cash.
                                                  participant’s tax basis is $26,000. As of             (b) For the year 2000, the plan must report
deemed distributions under section
                                                  January 1, 1999, the plan decides to apply         a gross distribution of $180,000 in Box 1 of
72(p).                                            Q&A–19 of this section to the loan.
                                                                                                     Form 1099–R and a taxable amount of
   Example 1. (a) In 1995, when a                 Accordingly, it reduces the participant’s tax
                                                                                                     $164,590 in Box 2 of Form 1099–R ($180,000
participant’s account balance under a plan is     basis by the initial default amount of
$50,000, the participant receives a loan from     $20,000, so that the participant’s remaining       minus the remaining tax basis of $15,410).
the plan. The participant makes the required      tax basis in the plan is $6,000. Thereafter, the      Example 4. (a) The facts are the same as
repayments until 1996 when there is a             amount of the outstanding loan is not treated      in Example 1, except that in 1997, after the
deemed distribution of $20,000 as a result of     as part of the account balance for purposes        deemed distribution, the participant receives
a failure to repay the loan. For 1996, as a       of section 72. The participant attains age         a $10,000 hardship distribution. At the time
result of the deemed distribution, the plan       591⁄2 in the year 2000 and receives a              of the hardship distribution, the participant’s
reports, in Box 1 of Form 1099–R, a gross         distribution of the full account balance under     account balance under the plan totals
distribution of $20,000 (which is the initial     the plan consisting of $60,000 in cash and         $50,000. For 1997, the plan reports, in Box
default amount in accordance with paragraph       the loan receivable. At that time, the plan’s      1 of Form 1099–R, a gross distribution of
(c)(2)(ii) of Q&A–21 of this section) and, in     records reflect an offset of the loan amount       $10,000 and, in Box 2 of Form 1099–R, a
Box 2 of Form 1099–R, a taxable amount of         against the loan receivable in the                 taxable amount of $6,000 (the $10,000 actual
$20,000. The plan then records an increase        participant’s account and a distribution of
                                                                                                     distribution minus $4,000 of tax basis
in the participant’s tax basis for the same       $60,000 in cash.
                                                                                                     ($10,000 times ($20,000/$50,000)) allocated
amount ($20,000). Thereafter, the plan               (b) For the year 2000, the plan must report
                                                  a gross distribution of $60,000 on Box 1 of        to this actual distribution). The plan then
disregards, for purposes of section 72, the
interest that accrues on the loan after the       Form 1099–R and a taxable amount of                records a decrease in tax basis equal to
1996 deemed distribution. Thus, as of             $54,000 in Box 2 of Form 1099–R.                   $4,000, so that the participant’s remaining
December 31, 1998, the total taxable amount          Example 3. (a) In 1990, when a                  tax basis as of December 31, 1997 totals
reported by the plan as a result of the deemed    participant’s account balance in a plan is         $16,000 ($20,000 minus $4,000). After 1996,
distribution is $20,000 and the plan’s records    $100,000, the participant receives a loan of       the plan disregards, for purposes of section
show that the participant’s tax basis is the      $50,000 from the plan. The participant makes       72, the interest that accrues on the loan after
same amount ($20,000). As of January 1,           the required loan repayments until 1992            the 1996 deemed distribution. Thus, as of
1999, the plan decides to apply Q&A–19 of         when there is a deemed distribution of             December 31, 1998, the total taxable amount
this section to the loan. Accordingly, it         $28,919 as a result of a failure to repay the      reported by the plan as a result of the deemed
reduces the participant’s tax basis by the        loan. For 1992, as a result of the deemed          distribution plus the 1997 actual distribution
initial default amount of $20,000, so that the    distribution, the plan reports, in Box 1 of        is $26,000 and the plan’s records show that
participant’s remaining tax basis in the plan     Form 1099–R, a gross distribution of $28,919       the participant’s tax basis is $16,000. As of
is zero. Thereafter, the amount of the            (which is the initial default amount in
                                                                                                     January 1, 1999, the plan decides to apply
outstanding loan is not treated as part of the    accordance with paragraph (c)(2)(ii) of Q&A–
                                                                                                     Q&A–19 of this section to the loan.
account balance for purposes of section 72.       21 of this section) and, in Box 2 of Form
The participant attains age 59–1⁄2 in the year    1099–R, a taxable amount of $28,919. For           Accordingly, it reduces the participant’s tax
2000 and receives a distribution of the full      1992, the plan also records an increase in the     basis by the initial default amount of
account balance under the plan consisting of      participant’s tax basis for the same amount        $20,000, so that the participant’s remaining
$60,000 in cash and the loan receivable. At       ($28,919). Each year thereafter through 1998,      tax basis in the plan is reduced from $16,000
that time, the plan’s records reflect an offset   the plan reports a gross distribution equal to     to zero. However, because the $20,000 initial
of the loan amount against the loan               the interest accruing that year on the loan        default amount exceeds $16,000, the plan
receivable in the participant’s account and a     balance, reports a taxable amount equal to         records a loan transition amount of $4,000
distribution of $60,000 in cash.                  the interest accruing that year on the loan        ($20,000 minus $16,000). Thereafter, the
   (b) For the year 2000, the plan must report    balance reduced by the participant’s tax basis     amount of the outstanding loan, other than
a gross distribution of $60,000 on Box 1 of       allocated to the gross distribution, and           the $4,000 loan transition amount, is not
Form 1099–R and a taxable amount of               records a net increase in the participant’s tax    treated as part of the account balance for
$60,000 in Box 2 of Form 1099–R.                  basis equal to that taxable amount. As of          purposes of section 72. The participant
   Example 2. The facts are the same as in        December 31, 1998, the taxable amount              attains age 591⁄2 in the year 2000 and receives
Example 1, except that in 1996, immediately       reported by the plan as a result of the loan       a distribution of the full account balance
prior to the deemed distribution, the             totals $44,329 and the plan’s records for          under the plan consisting of $60,000 in cash
participant’s account balance under the plan      purposes of section 72 show that the               and the loan receivable. At that time, the
totals $50,000 and the participant’s tax basis    participant’s tax basis totals the same amount
                                                                                                     plan’s records reflect an offset of the loan
is $10,000. For 1996, the plan reports, in Box    ($44,329). As of January 1, 1999, the plan
                                                                                                     amount against the loan receivable in the
1 of Form 1099–R, a gross distribution of         decides to apply Q&A–19 of this section.
                                                                                                     participant’s account and a distribution of
$20,000 (which is the initial default amount      Accordingly, it reduces the participant’s tax
in accordance with paragraph (c)(2)(ii) of        basis by the initial default amount of             $60,000 in cash.
Q&A–21 of this section) and reports, in Box       $28,919, so that the participant’s remaining          (b) In accordance with paragraph (c)(2)(iv)
2 of Form 1099–R, a taxable amount of             tax basis in the plan is $15,410 ($44,329          of Q&A–21 of this section, the plan must
$16,000 (the $20,000 deemed distribution          minus $28,919) as of December 31, 1999.            report in Box 1 of Form 1099–R a gross
minus $4,000 of tax basis ($10,000 times          Thereafter, the amount of the outstanding          distribution of $64,000 and in Box 2 of Form
($20,000/$50,000)) allocated to the deemed        loan is not treated as part of the account         1099–R a taxable amount for the participant
distribution). The plan then records an           balance for purposes of section 72. The            for the year 2000 equal to $64,000 (the sum
increase in tax basis equal to the $20,000        participant attains age 591⁄2 in the year 2000     of the $60,000 paid in the year 2000 plus
deemed distribution, so that the participant’s    and receives a distribution of the full account    $4,000 as the loan transition amount).
remaining tax basis as of December 31, 1996       balance under the plan consisting of               Michael P. Dolan,
totals $26,000 ($10,000 minus $4,000 plus         $180,000 in cash and the loan receivable
                                                                                                     Deputy Commissioner of Internal Revenue.
$20,000). Thereafter, the plan disregards, for    equal to the $28,919 outstanding loan
purposes of section 72, the interest that         amount in 1992 plus interest accrued               [FR Doc. 97–33983 Filed 12–31–97; 8:45 am]
accrues on the loan after the 1996 deemed         thereafter to the payment date in 2000. At         BILLING CODE 4830–01–M
46                Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

DEPARTMENT OF TRANSPORTATION                 market forces and product liability          C. Final Rule and Petitions for
                                             concerns have eliminated the need for        Reconsideration
National Highway Traffic Safety              its requirements. NHTSA rejected the            On March 21, 1996, NHTSA issued a
Administration                               possibility of extending the standard’s      final rule rescinding Standard No. 107
                                             specular gloss limitations to non-           (61 FR 11587). NHTSA concluded that
49 CFR Part 571                              metallic surfaces, and to the instrument     Standard No. 107 could be rescinded
[Docket No. NHTSA–97–3278]                   panel.                                       without adversely affecting safety. This
                                                In the NPRM, NHTSA stated its belief
RIN 2127–AF74                                                                             conclusion was based on the agency’s
                                             that market forces continue to favor
                                                                                          finding that vehicle manufacturers had
                                             matte finishes and surfaces for
Federal Motor Vehicle Safety                                                              established a practice of using
                                             components in the driver’s field of view,
Standards; Reflecting Surfaces                                                            nonglossy materials and matte finishes
                                             and are reinforced by product liability
                                             concerns. As evidence of the impact of       on unregulated components as well as
AGENCY: National Highway Traffic
                                             these factors, NHTSA cited the virtual       the components regulated by Standard
Safety Administration (NHTSA), DOT.
                                             disappearance of horn rings and              No. 107. Since manufacturers have
ACTION: Denial of petitions for                                                           elected to use nonglossy surfaces on
reconsideration.                             metallic windshield mountings and the
                                             use of matte finishes on unregulated         components not regulated by the
SUMMARY: This document denies two            components. The agency also noted that       standards, NHTSA concluded that
petitions for reconsideration of             nonmetallic materials are typically          rescinding Standard No. 107 would not
NHTSA’s March 1996 final rule                lighter weight than metallic ones.           result in the return of the glossy surfaces
rescinding the Federal Motor Vehicle            NHTSA concluded that as a result of       that prompted the agency to issue the
Safety Standard on reflecting surfaces.      the use of nonmetallic components in         standards. In reaching this conclusion,
Neither petitioner has raised any new        the driver’s field of view, glare from       NHTSA also noted that the virtual
issues nor presented any new evidence        those components has been                    elimination of metallic components
that were not considered in the final        substantially reduced. Increased use of      within the driver’s forward field of view
rule.                                        non-metallic materials (hard plastic or      had already reduced the effective scope
FOR FURTHER INFORMATION CONTACT: The         rubber) for parts such as windshield         of the standard ‘‘to the level of
following persons at the National            wiper arms and blades, steering wheel        insignificance.’’ 61 FR 11587.
                                             assembly hubs, and inside rearview              Subsequent to issuance of the final
Highway Traffic Safety Administration,
                                             mirror frame and mounting brackets,          rule, petitions for reconsideration were
400 Seventh Street, S.W., Washington,
                                             has virtually eliminated the metallic        submitted by the Center for Auto Safety
D.C. 20590.
   For technical issues: Mr. Richard Van     components that are regulated by the         (CAS) and Dr. Merrill Allen, neither of
Iderstine, Office of Crash Avoidance.        standard.                                    whom had commented on the NPRM.
Mr. Van Iderstine’s telephone number is         The decreasing tendency to use metal      CAS asserted that NHTSA’s rescission
(202) 366–5280, and his FAX number is        is also evident with respect to              of Standard No. 107 ‘‘cannot stand’’ for
(202) 366–4329.                              components not regulated by Standard         the following four reasons:
   For legal issues: Ms. Dorothy Nakama,     No. 107. Since 1987, vehicle interior           (1) NHTSA provided no satisfactory
Office of the Chief Counsel. Ms.             styling practices have favored a             basis and explanation for ‘‘reversing
Nakama’s telephone number is (202)           combination of hard plastic and other        course’’ and rescinding a safety
366–2992, and her FAX number is (202)        materials that do not reflect sufficient     standard.
366–3820.                                    light to create glare. NHTSA stated its         (2) NHTSA relied on factors Congress
                                             belief that market forces will continue to   did not intend NHTSA to consider,
SUPPLEMENTARY INFORMATION:                   favor these materials in the future.         which are not adequate substitutes for
I. Background                                   In the NPRM, NHTSA tentatively            continued enforcement of Standard No.
                                             concluded that although it believed          107. In particular, NHTSA’s reliance on
   Standard No. 107 was promulgated as                                                    ‘‘market forces’’ is ‘‘implausible and
                                             future market forces would favor
one of the initial Federal Motor Vehicle                                                  run[s] counter to the evidence in the
                                             nonreflecting surfaces, it was possible
Safety Standards (32 FR 2408, February                                                    rulemaking record.’’
                                             that motor vehicle designs, styles, and
3, 1967). The standard specified                                                             (3) There are ‘‘identified market
                                             preferred materials would change. If
reflecting surface requirements for                                                       segments’’ which are eager to supply an
                                             such changes should result in motor
certain ‘‘bright metal’’ components in                                                    apparent demand for bright metal
                                             vehicle components that may produce
the driver’s forward field of view: the                                                   interior components. Rescinding
                                             distracting glare in the driver’s line of
windshield wiper arms and blades,                                                         Standard No. 107 would encourage this
                                             sight, NHTSA stated that it ‘‘intends to
inside windshield mouldings, horn ring                                                    demand.
                                             review the situation’’ through its
and hub of the steering wheel assembly,                                                      (4) NHTSA’s final rule ignores
                                             statutory authority over safety related
and the inside rearview mirror frame                                                      information in the record reflecting the
                                             defects. 60 FR 32936.
and mounting bracket. The specular                                                        need to extend the Standard to reduce
gloss of the surface of these components     B. Comments                                  glare from currently unregulated sources
was required to be less than 40 units           Seven comments were received in           and is therefore ‘‘arbitrary, capricious,
when tested. (‘‘Specular gloss’’ refers to   response to the NPRM. All commenters         and an abuse of discretion.’’
the amount of light reflected from a test    supported the proposed rescission,              In making its first two arguments,
specimen.)                                   except for the Advocates for Highway         CAS relied on the legal standard for
II. Rescission of Standard No. 107           and Auto Safety (Advocates), and the         rescinding a Federal Motor Vehicle
                                             State of Connecticut (Connecticut). The      Safety Standard established in the 1983
A. Notice of Proposed Rulemaking             Insurance Institute for Highway Safety       U.S. Supreme Court decision Motor
  In a notice of proposed rulemaking         (IIHS) supported rescission but objected     Vehicle Manufacturers Association v.
published on June 26, 1995 (60 FR            to NHTSA’s reliance on product liability     State Farm Mutual Automobile
32935), NHTSA proposed to rescind            considerations and recall procedures as      Insurance Co., Inc. (463 U.S. 29)
Standard No. 107, on the grounds that        rationales for rescission.                   (hereafter cited as State Farm). NHTSA
                   Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                                    47

will address each of CAS’ assertions           the course of approximately 60                was no evidence of a visibility problem
below.                                         rulemaking notices, the requirement has       that warranted rulemaking.
                                               been imposed, amended, rescinded,                The agency could find no information
III. Review of CAS’ Petition                                                                 showing that dashboard reflections
                                               reimposed, and now rescinded again.’’
1. Legal Standard for Review                   (463 U.S. at 34) CAS tries to analogize       constituted a safety hazard. At the time
Established by the Supreme Court               the facts in the rescission of Standard       (i.e., in 1991), a search of the NHTSA
                                               No. 107 to the facts in State Farm, and       consumer complaint file found only 23
   In its petition for reconsideration,
                                               argues that the fact of rescinding            complaints that were related to light
CAS stated its view of the legal
                                               Standard No. 107 (i.e., a Standard that       refections from the dashboard in over
principles established in State Farm. In
                                               had been in effect for thirty years)          138,000 complaints (0.017 percent).
essence, CAS argues that NHTSA’s                                                             NHTSA determined that the
rescission of Standard No. 107 was             makes NHTSA’s actions ‘‘arbitrary and
                                               capricious.’’                                 insignificant number of complaints
‘‘arbitrary and capricious’’ and did not                                                     reinforced the agency’s prior
meet State Farm’s principles for                  In contrast to the facts in State Farm,
                                               the history of Standard No. 107 shows         determinations that there is no need to
rescinding a Federal motor vehicle                                                           expand the scope of Standard No. 107.
safety standard (FMVSS). In State Farm,        no pattern of frequent changes. Despite
                                               opportunities to do so, NHTSA has             Therefore, NHTSA found no safety need
the Supreme Court cited Citizens to                                                          to add to the components covered by
Preserve Overton Park v. Volpe (401            never determined that expanding
                                               Standard No. 107 would meet the need          Standard No. 107.
U.S. 402, 414 (1971)) to the effect that
an agency’s actions in promulgating            for safety. The rescinded Standard No.        B. NHTSA relied on Appropriate
motor vehicle safety standards may be          107 was the same Standard promulgated         Factors, including Market Forces, in
set aside if found to be ‘‘arbitrary,          in 1967.                                      Rescinding Standard No. 107
capricious, an abuse of discretion, or            In an NPRM dated November 13, 1987
                                                                                                In its second argument under State
otherwise not in accordance with law.’’        (52 FR 43628), NHTSA considered               Farm, CAS asserted that NHTSA relied
(463 U.S. at 41)                               whether to extend Standard No. 107’s          on factors that Congress did not intend
   The Supreme Court noted that                specular gloss limitations to non-            it to consider, which are not adequate
revoking a standard constitutes a              metallic surfaces. NHTSA considered           substitutes for continued enforcement of
reversal of the agency’s former views as       three issues: (1) Whether there are safety    Standard No. 107. In particular, CAS
to the proper course: ‘‘There is, then, at     benefits in retaining Standard No. 107;       pointed to the President’s Regulatory
least a presumption that those policies        (2) whether there is justification to         Reinvention Initiative as a factor
will be carried out best if the settled rule   apply the specular gloss requirement to       Congress did not intend NHTSA to
is adhered to.’’ (463 U.S. at 42)              non-metallic versions of the                  consider, and described NHTSA’s
Therefore, an agency changing its course       components already covered by                 reliance on ‘‘market forces’’ as
by rescinding a rule must supply ‘‘a           Standard No. 107; and (3) whether there       ‘‘implausible’’ and ‘‘counter to the
reasoned analysis for the change beyond        is a need to expand Standard No. 107          evidence in the rulemaking record.’’
that which may be required when an             to other component parts (such as                In State Farm, the Supreme Court
agency does not act in the first               instrument panel pads).                       cited the Permian Basin Area Rate Cases
instance.’’ (463 U.S. at 42)                      On the first issue, NHTSA concluded        (390 U.S. 747, 416 (1967)) for the
   At the same time, the Supreme Court         the Standard No. 107’s limits on highly       principle that an agency must be given
recognized that ‘‘regulatory agencies do       reflective components, (i.e., possible        latitude to ‘‘adapt their rules and
not establish rules of conduct to last         sources of glare), still addressed a safety   policies to the demands of changing
forever’’ (citing American Trucking            problem for drivers. On the second            circumstances.’’ (463 U.S. at 42).
Assns., Inc. v. Atchison, T. & S.F.R. Co.      issue, NHTSA proposed to extend the           NHTSA did not decide to rescind
(387 U.S. 397, 416 (1967)) and that an         standard to non-metallic components,          Standard No. 107 precipitously. It
agency must be given latitude to ‘‘adapt       tentatively determining that the problem      decided to rescind the Standard after
their rules and policies to the demands        posed by glossy non-metallic                  observing long-term changes in the
of changing circumstances’’ (citing            components was indistinguishable from         composition of components in vehicle
Permian Basin Area Rate Cases, 390             the problem posed by glossy metallic          interiors (whether or not the component
U.S. 747, 784 (1968)). (463 U.S. at 42)        components. On the third issue, NHTSA         was regulated by Standard No. 107). It
The Supreme Court further stated that          declined to propose extending Standard        used its knowledge of the motor vehicle
the presumption from which judicial            No. 107 to other vehicle components,          industry to determine that cost of
review should start is against changes in      since it found no data showing that           materials (a ‘‘market force’’) is an
current policy that are not justified by       glare from unregulated components has         important consideration for vehicle
the rulemaking record. (See 463 U.S. at        presented a safety problem.                   manufacturers, and would continue to
42)                                               In 1989, NHTSA terminated the              be so. NHTSA also noted that since
                                               rulemaking after finding no evidence to       rubber and plastics tend to cost and
A. NHTSA Has Not ‘‘Reversed Course’’           substantiate a safety problem with glare      weigh less than metals, vehicle
in Rescinding Standard No. 107                 from non-metallic surfaces. (54 FR            manufacturers would likely continue to
   The CAS’s first assertion under State       35011, August 23, 1989).                      use less expensive materials in the
Farm is that in rescinding Standard No.           In 1991, the CAS petitioned NHTSA          components specified in Standard No.
107, it has ‘‘revers[ed] course’’ without      to add the instrument panel surface as        107.
a satisfactory basis and explanation.          a newly regulated item in Standard No.           Although CAS cites the President’s
NHTSA, however, looks at the                   107. CAS believed that such an action         Regulatory Reinvention Initiative (RRI)
rescission of the Standard as the logical      would ‘‘significantly limit dashboard         as a factor that Congress did not intend
end result of the rulemaking history of        reflections in windshields’’, and limit       NHTSA to consider, the RRI only
Standard No. 107.                              ‘‘veiling glare’’ as a ‘‘major source of      provided NHTSA an opportunity to
   The Supreme Court described the             vision impairment.’’ NHTSA denied             revisit an important issue first raised in
rulemaking record of the Standard at           CAS’s petition (see 56 FR 40853, August       the 1987 NPRM: does Standard No. 107
issue in State Farm as follows: ‘‘Over         16, 1991), after determining that there       continue to address a safety problem for
48                Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules

drivers? NHTSA determined that the           steering wheel hub assemblies so that      Standard never prohibited sales of
answer was now no.                           the hubs cannot be made of ‘‘bright        aftermarket equipment, including the
   An updated search conducted in 1995       metal’’ if the air bags are to deploy      components specified in Standard No.
of NHTSA’s consumer complaint file           properly. The mirror frame and             107, that were made of bright metal that
found 52 complaints that were related to     mounting bracket are made out of           exceeded a specified specular gloss.
dashboard glare in over 241,000              plastic.                                   Further, even in a new vehicle, the
complaints (0.021 percent). The 0.021           NHTSA notes that in the almost thirty   Standard did not generally regulate
rate is about the same as the 1991           years that Standard No. 107 was in         ‘‘steering wheel surfaces,’’ it regulated
complaint rate of 0.017 percent. This        effect, vehicle manufacturers were not     only the hub of the steering wheel
updated search indicated the number of       prohibited from installing vehicle         assembly.
complaints related to dashboard glare        components (including those specified         Thus, even when Standard No. 107
continues to be minuscule.                   in Standard No. 107) made out of metals    was in effect, the Standard did not
   CAS also alleged in a December 17,        with a matte or burnished surface.         restrict equipment manufacturers,
1996 letter to NHTSA’s Administrator         Styling considerations have apparently     including VIP from selling shiny
that the count of 52 complaints of           never introduced such dull metals into     metallic steering wheels in the
veiling glare from the dash was              components in the line of sight of the     aftermarket, even if the steering wheel
understated. According to that letter,       driver or elsewhere in the vehicle         hubs did not meet the specular gloss
CAS had determined there were at least       interior in any significant volume. Lack   limitations of Standard No. 107.
150 complaints of veiling glare among        of dull metals indicates that regardless   (Whether a business could install a
the more than 241,000 complaints.            of styling and other cosmetic              shiny metallic steering wheel hub
Thus, instead of representing 0.021          considerations, vehicle manufacturers      without violating 49 U.S.C. § 30122, by
percent of complaints from the public,       are choosing to reduce costs by            making safety devices and elements
as acknowledged by NHTSA, CAS                minimizing metallic components in          inoperative, is not an issue within the
believed veiling glare actually              vehicles.                                  scope of this rulemaking. However,
represents 0.063 percent of the                 For these reasons, NHTSA’s rescission   NHTSA would not have had any
complaints NHTSA has received from           of Standard No. 107 was not arbitrary      authority over an owner installing a
the public.                                  and capricious but the result of a         shiny metallic steering wheel hub in his
   NHTSA used a standardized                 reasoned analysis, based on its            or her own vehicle.)
computer keyword search of its               observations of the new vehicle market.       CAS also pointed to the State of
complaints to arrive at its count of 52                                                 Connecticut’s comments (in response to
relevant complaints. Even if NHTSA           2. ‘‘Identified Market Segments’’ Have
                                                                                        the June 1996 NPRM) that small
were to accept the CAS count of 150          Obtained Bright Metal Parts in the
                                                                                        aftermarket parts manufacturers are
dashboard glare complaints as accurate,      Aftermarket Despite Standard No. 107
                                                                                        ‘‘quick to respond to market demands
the agency would still reiterate its            In addition to issues arising from      without fully evaluating all of the safety
previously-stated conclusion—so few          State Farm, CAS asserted that there are    aspects on which their component
complaints from the public about an          ‘‘identified market segments’’ with a      would have an affect.’’ Connecticut also
aspect of design that has never been         demand for bright metal interior           commented that states can require
regulated on any of the hundreds of          components. CAS stated its belief that     vehicles to be maintained in compliance
millions of vehicles on the road can         the demand includes components             with FMVSS’s to prevent such things as
reasonably be said to show there is no       regulated under Standard No. 107. CAS      bright metal windshield wiper blades to
need for the agency to expend its            asserted that at least one manufacturer    be installed. It argued reliance on the
limited resources to try to address          is eager to serve these markets and to     FMVSS ‘‘quells market demand before
dashboard glare, because the available       respond to this and any other such         the liability factors would surface.’’
evidence (NHTSA’s complaints)                consumer demand. But for Standard No.         In response to CAS’s comments about
indicate the public finds this to be an      107, CAS states that the manufacturer      Connecticut’s views, we first note that
insignificant safety problem.                (Vehicle Improvement Products (VIP))       CAS has not refuted the principal basis
   NHTSA saw no safety value in 1995         and others would freely serve these        for the rescission: The evident and
to continue to regulate components           markets. As evidence, CAS pointed to       universal practice by vehicle
(such as windshield wiper blades, the        VIP’s comment in response to the June      manufacturers of designing their
steering wheel hub and interior mirror       26, 1995 NPRM that there is a demand       vehicles to avoid the use of metallic (or
frame and mounting bracket) that still       for ‘‘polished and/or chrome plated        nonmetallic) components with glossy
exist on new motor vehicles. Observing       steering wheel surfaces’’ as a             surfaces, whether or not regulated.
the types of components actually used        contradiction to NHTSA’s assertion that    Based on that practice, we do not
in today’s vehicles, the agency              there is no market for bright metal        believe that there will be a demand for
concluded that none of those                 components.                                original equipment glossy components
components is a potential source of             NHTSA believes that CAS’s comment       on new vehicles. In the absence of any
reflecting surface distraction in the        does not acknowledge a difference in       demand, there would be unlikely to be
driver’s field of view.                      applicability of the Standard between      more than a negligible supply of those
   In new vehicles in the late 1990’s, the   the new vehicle manufacturer and the       components produced by aftermarket
inside windshield metal moldings and         after market equipment manufacturer.       manufacturers.
horn rings are no longer provided. As        Standard No. 107 applied to new               As earlier stated, when Standard 107
for the other specified components,          vehicles only, and did not regulate the    was in effect, the Standard did not
vehicle manufacturers have redesigned        actions of after market equipment          prohibit a business from manufacturing
windshield wiper arms and blades so          manufacturers. Standard No. 107            glossy metallic vehicle components for
that many of them are recessed below         applied to ‘‘passenger cars,               the aftermarket or prevent an individual
the view of the driver when not in use.      multipurpose passenger vehicles,           owner from installing, for example, a
The arms and blades are usually black        trucks, and buses.’’ The Standard          shiny steering wheel hub on his or her
and finished with a matte surface.           imposed restrictions on specified          vehicle. Even so, the agency is not
Manufacturers have placed air bags in        equipment in new vehicles. The             aware of any significant instances of
                  Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Proposed Rules                                     49

such manufacture or installation.           there is no evidence of any safety need       estimated that crashes will increase
Restrictions on equipment on registered     to extend the scope of Standard No. 107.      more than 10 to 15% by rescinding
vehicles and changes that owners may        In addition, as has been previously           Standard No. 107, but provided no
make on their own vehicles are matters      noted, there is no evidence in the record     information how he formulated this
of State law.                               of any significant use of unregulated         estimate. He urged NHTSA to reinstate
                                            components with glossy finishes by            Standard No. 107 and to amend the
3. Standard No. 107 Was Never
                                            vehicle manufacturers.                        Standard by specifying a black flock or
Intended to Address Glare Generally,           CAS also suggests that the agency’s        velvet finish on all motor vehicle dash
and the Standard Will Not Be                desire to reduce glare from shiny             panels, to minimize veiling glare.
Reinstated and Expanded to Address          metallic components arises from an
‘‘Veiling Glare’’                                                                            Dr. Allen has not raised any new
                                            underlying generalized concern about          issues or presented any new evidence
   CAS asserted that the Association of     interior compartment glare. CAS               not considered in previous rulemakings.
International Automobile                    therefore urges that Standard No. 107 be      As previously noted, the veiling glare
Manufacturer’s (AIAM) comment to the        reinstated and expanded to address            issue was addressed in 1991 by NHTSA
June 1995 NPRM, that since Standard         veiling glare, i.e., the reflection cast by   in response to a rulemaking petition
No. 107 ‘‘does not cover all components     light-hued and/or glossy surfaced             from CAS. NHTSA denied CAS’s
for which manufacturers have needed to      dashboards onto the windshield.               petition (56 FR 40843, August 16, 1991),
reduce glare,’’ and ‘‘[i]n the absence of      As previously noted, Standard No.          after determining that there was no
any concern [by NHTSA] that                 107 never regulated veiling glare. On         visibility problem which warranted
manufacturers have not addressed glare      August 16, 1991 (56 FR 40853), NHTSA          Federal rulemaking. Further, since
from these other components,’’ the          denied a petition from the CAS to             Standard No. 107 never regulated it,
Standard is not necessary, should have      amend Standard No. 107 by including           veiling glare is not germane to the
‘‘triggered alarm bells at the Agency as    the instrument panel surface as a             rescission of the Standard.
it contemplated rescinding the only         regulated item, limiting ‘‘veiling glare’’
standard regulating interior                as a ‘‘major source of vision                 V. Denial of Petitions for
compartment glare.’’                        impairment.’’ Since Standard No. 107          Reconsideration
   CAS appears to believe that NHTSA        did not regulate veiling glare, CAS’s           NHTSA has considered the issues
has not considered the issue of potential   comments on veiling glare are outside         raised in the petitions for
glare from sources other than the           the scope of this rulemaking action and       reconsideration filed by the CAS and by
components regulated in Standard No.        are not relevant to a petition for            Dr. Allen. Because they presented no
107. NHTSA does not agree, since the        reconsideration of rescission of              new evidence or issues, the petitions for
agency has in the past carefully looked     Standard No. 107.                             reconsideration are denied.
at glare issues outside of Standard No.
107. As earlier stated, the NPRM (60 FR     IV. Dr. Allen’s Petition                        Authority: 49 U.S.C. 322, 30111, 30115,
32935, June 26, 1995) outlined NHTSA’s         In a submission dated May 2, 1996,         30117, and 30166; delegation of authority at
past review of whether Standard No.         Dr. Merrill J. Allen, Professor Emeritus      49 CFR 1.50.
107’s specular gloss limitations should     of Optometry of Indiana University              Issued on: December 24, 1997.
be extended to non-metallic surfaces, or    (Bloomington, Indiana) petitioned             L. Robert Shelton,
to other vehicle components. A              NHTSA to reconsider rescinding                Associate Administrator for Safety
summary of this discussion was              Standard No. 107. Dr. Allen asserted          Performance Standards.
provided earlier. For the reasons           that ‘‘Standard No. 107 needs to be           [FR Doc. 97–34085 Filed 12–31–97; 8:45 am]
previously explained, NHTSA decided         strengthened, not rescinded.’’ He             BILLING CODE 4910–59–P
50

Notices                                                                                        Federal Register
                                                                                               Vol. 63, No. 1

                                                                                               Friday, January 2, 1998



This section of the FEDERAL REGISTER              explaining the decision to conduct an        be as specific as possible and may
contains documents other than rules or            environmental impact statement, and          address the adequacy of the statement or
proposed rules that are applicable to the         soliciting comments will be sent to          the merits of the alternatives discussed
public. Notices of hearings and investigations,   nearly 300 individuals, organizations        (see The Council on Environmental
committee meetings, agency decisions and          and government agencies who                  Quality Regulations for implementing
rulings, delegations of authority, filing of
                                                  responded to the original scoping dated      the procedural provisions of the
petitions and applications and agency
statements of organization and functions are      January 27, 1997. Individuals,               National Environmental Policy Act at 40
examples of documents appearing in this           organizations or other government            CFR 1503.3).
section.                                          agencies may request a copy of the              In addition, Federal court decisions
                                                  original scoping document and/or send        have established that reviewers of draft
                                                  additional comments by writing to the        environmental impact statements must
DEPARTMENT OF AGRICULTURE                         Salt Lake Ranger District.                   structure their participation in the
                                                     Issues identified since January 1997      environmental review of the proposal so
Forest Service                                    include effects on public safety, effects    that it is meaningful and alerts an
                                                  on Wilderness areas, effects of              agency to the reviewers’ position and
Wasatch Powderbird Guides Outfitter               snowpack stability testing on vegetation,    contentions. Vermont Yankee Nuclear
and Guide Special-Use Permit,                     effects on wildlife, including golden        Power Corp. v. NRDC, 435 U.S. 519, 533
Wasatch-Cache National Forest, Salt                                                            (1978). Environmental objections that
                                                  eagles and threatened, endangered and
Lake Ranger District, Salt Lake County,                                                        could have been raised at the draft stage
                                                  sensitive species, effects on the
Utah and Uinta National Forest,                                                                may be waived if not raised until after
                                                  economic viability of Wasatch
Pleasant Grove and Spanish Fork                                                                completion of the final environmental
                                                  Powderbird Guides and the local
Ranger Districts, Utah County, Utah                                                            impact statement. City of Angoon v.
                                                  economy and effects to other winter
AGENCY:Forest Service, USDA.                      recreationalists. Two preliminary            Hodel, (9th Circuit, 1986) and
ACTION:Notice of intent to prepare an             alternatives have been identified. The       Wisconsin Heritages, Inc. v. Harris, 490
Environmental Impact Statement (EIS).             proposed action alternative would            F. Supp. 1334, 1338 (E.D. Wis. 1980).
                                                  permit the aforementioned heli-skiing        The reason for this is to ensure that
SUMMARY: The Forest Service will                  operation with the following criteria: a     substantive comments and objections
prepare an environmental impact                   limit of 2 helicopters, a 5-year average     are made available to the Forest Service
statement on Wasatch Powderbird                   of 2400 skier days per year, a 5-year        at a time when it can meaningfully
Guides request for a five-year outfitter          average of 1200 skier days per year in       consider them and respond to them in
and guide special-use permit for guided           the Tri-Canyon (Mill Creek, Big, and         the final.
helicopter skiing activities on National          Little Cottonwood Canyons) terrain and         Dated: December 23, 1997.
Forest Land.                                      a 5-year average of 1000 explosives per      Michael Sieg,
DATES: Comments concerning the scope              year. The No Action alternative would        District Ranger.
of the analysis should be received in             eliminate helicopter skiing along the        [FR Doc. 97–34202 Filed 12–31–97; 8:45 am]
writing by January 30, 1998.                      Wasatch Front and require a change to        BILLING CODE 3410–11–M
ADDRESSES: Send written comments to               the current Forest Plan. Other
Michael Sieg, District Ranger, 6944               alternatives will look at use rotation
South 3000 East, Salt Lake City, Utah             methods to reduce conflict between           DEPARTMENT OF AGRICULTURE
84121.                                            heli-skiing operations and other winter
FOR FURTHER INFORMATION CONTACT: Rob              recreationalists.                            Grain Inspection, Packers and
Cruz, District Environmental                         The public is invited to submit           Stockyards Administration
Coordinator, (801) 943–9483.                      comments or suggestions to the address
                                                  above. Comments received from                Designation for Lima (OH) and the
SUPPLEMENTARY INFORMATION: Wasatch
                                                  individuals, groups and government           State of Virginia
Powderbird Guides, a current ‘‘Special
Use Permit’’ permittee, is proposing to           agencies received from the January 1997      AGENCY: Grain Inspection, Packers and
operate a heli-skiing operation for               scoping document will be incorporated        Stockyards Administration (GIPSA).
another five-years along the Wasatch              into this analysis. The responsible          ACTION: Notice.
Front of the Wasatch-Cache and Uinta              officials are Bernie Weingardt and Peter
National Forests. This proposal includes          Karp, Forest Supervisors. A draft EIS is     SUMMARY:    GIPSA announces the
elements on both public and private               anticipated to be filed in May 1998 and      designation of Lima Grain Inspection
lands. Elements include the landing of            the final EIS filed in September 1998.       Service, Inc., and the Virginia
helicopters to drop off and pick-up heli-            The comment period on the draft           Department of Agriculture and
skiers who are skiing across both public          environmental impact statement will be       Consumer Services (Virginia) to provide
and private land holdings. A complete             45 days from the date the                    official services under the United States
description of the proposal is available          Environmental Protection Agency’s            Grain Standards Act, as amended (Act).
from the Salt Lake Ranger District. This          notice of availability appears in the        EFFECTIVE DATE: February 1, 1998.
proposal was originally scoped in                 Federal Register. It is very important       ADDRESSES: USDA, GIPSA, Janet M.
January 1997, since then it was decided           that those interested in this proposed       Hart, Chief, Review Branch, Compliance
that there may be significant impacts,            action participate at that time. To be the   Division, STOP 3604, Room 1647–S,
therefore an environmental impact                 most helpful, comments on the draft          1400 Independence Avenue, SW,
statement is being completed. A letter            environmental impact statement should        Washington, DC 20250–3604.
                         Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                        51

FOR FURTHER INFORMATION CONTACT:              Environmental Quality Regulations (40            SUMMARY:   This notice announces a
Janet M. Hart, at 202–720–8525.               CFR Part 1500); and the Natural                  public comment period on a new Dairy
SUPPLEMENTARY INFORMATION:This action         Resources Conservation Service Rules (7          Options Pilot Program (DOPP) to be
has been reviewed and determined not          CFR Part 650), the Natural Resources             administered by the Risk Management
to be a rule or regulation as defined in      Conservation Service, U.S. Department            Agency (RMA) in conjunction with the
Executive Order 12866 and                     of Agriculture, gives notice that an             private sector. RMA plans to implement
Departmental Regulation 1512–1;               environmental impact statement is not            DOPP which would partially subsidize
therefore, the Executive Order and            being prepared for the repair of                 the purchase of put options for dairy
Departmental Regulation do not apply          Floodwater Retarding Structure 3 in the          producers. The objective of DOPP is to
to this action.                               Santa Cruz River Watershed.                      ascertain whether put options can
   In the August 1, 1997, Federal             FOR FURTHER INFORMATION CONTACT:                 provide producers with reasonable
Register (62 FR 41335), GIPSA asked           Rosendo Trevino III; State                       protection from the price risk. RMA is
persons interested in providing official      Conservationist; Natural Resources               soliciting comments on DOPP, the
services in the geographic areas              Conservation Service; 6200 Jefferson,            method used to select program
assigned to Lima and Virginia to submit       NE; Albuquerque, NM 87109–3734;                  participants, and its information
an application for designation.               telephone 505–761–4400.                          collections. RMA specifically requests
Applications were due by September 2,         SUPPLEMENTARY INFORMATION: The                   comments on the role of brokers as
1997. Lima and Virginia, the only             environmental assessment of this                 outlined in the Broker Agreement
applicants, each applied for designation      federally assisted action indicates that         contained in this Advanced Notice of
to provide official services in the entire    the project will not cause significant           Availability, whether the tasks required
area currently assigned to them.              local, regional, or national impacts on          of the brokers including responsibilities
   Since Lima and Virginia were the           the environment. As a result of these            listed in subsections 3(a) through 3(h),
only applicants, GIPSA did not ask for        findings, Rosendo Trevino III, State             are appropriate and whether there are
comments on the applicants.                   Conservationist, has determined that the         other cost-effective alternatives that
   GIPSA evaluated all available              preparation and review of an                     would satisfy the program’s need for
information regarding the designation         environmental impact statement are not           accurate reporting and oversight while
criteria in Section 7(f)(1)(A) of the Act     needed for this project.                         maintaining a significant role for the
and, according to Section 7(f)(1)(B),            The project purpose is flood                  private sector in the program. The RMA
determined that Lima and Virginia are         prevention. The action includes the              was established by Public Law 104–127,
able to provide official services in the      repair of one floodwater retarding dam.          on April 4, 1996.
geographic areas for which they applied.         The Notice of a Finding of No                 DATES: Submit data, comments or
Effective February 1, 1998, and ending        Significant Impact (FNSI) has been               opinions on or before February 2, 1998.
January 31, 2001, Virginia is designated      forwarded to the Environmental                   The comment period for information
to provide official services in the           Protection Agency and various Federal,           collections under the paperwork
geographic area specified in the August       State, and local agencies and interested         Reduction Act of 1995 continues
1, 1997, Federal Register. Effective          parties. A limited number of copies of           through March 3, 1998.
February 1, 1998, and ending January          the FNSI are available to fill single copy       ADDRESSES: Interested persons are
31, 1999, Lima is designated to provide       requests at the above address. Basic data        invited to submit written comments on
official services in the geographic area      developed during the environmental               the DOPP to Risk Management Agency,
specified in the August 1, 1997, Federal      assessment is on file and may be                 United States Department of
Register.                                     reviewed by contacting Rosendo                   Agriculture, Office of Insurance
   Interested persons may obtain official     Trevino III.                                     Services, 1400 Independence Avenue,
services by contacting Lima at 419–223–          No administrative action on                   S.W., STOP 0830, room 6739–S,
7866 and Virginia at 757–494–2464.            implementation of the proposal will be           Washington, D.C., 20250–0830. A copy
  Authority: Pub. L. 94–582, 90 Stat. 2867,   taken until 30 days after the date of this       of each response will be available for
as amended (7 U.S.C. 71 et seq.).             publication in the Federal Register.             public inspection and copying from 7:00
  Dated: December 10, 1997.                   (This activity is listed in the Catalog of       a.m. to 4:30 p.m. EDT, Monday through
Neil E. Porter,                               Federal Domestic Assistance under No.            Friday, except holidays, at the above
                                              10.904, Watershed Protection and Flood           address.
Director, Compliance Division.
                                              Prevention and is subject to the provisions of
[FR Doc. 97–33829 Filed 12–31–97; 8:45 am]    Executive Order 12372, which requires            FOR FURTHER INFORMATION CONTACT: Joe
BILLING CODE 3410–EN–P                        intergovernmental consultation with State        Connor, Financial Analyst, Reinsurance
                                              and local officials)                             Services Division, Risk Management
                                              Rosendo Trevino III,                             Agency, at the Washington, D.C. address
DEPARTMENT OF AGRICULTURE                     State Conservationist.                           listed above, telephone (202) 720–4232.
                                              [FR Doc. 97–34182 Filed 12–31–97; 8:45 am]       SUPPLEMENTARY INFORMATION:
Natural Resources Conservation
                                              BILLING CODE 3410–16–M
Service                                                                                        Paperwork Reduction Act of 1995
                                                                                                  The Risk Management Agency is
Santa Cruz River Watershed, Rio
                                              DEPARTMENT OF AGRICULTURE                        seeking comments on the following
Arriba County, New Mexico
                                                                                               Information Collection Request (ICR).
AGENCY:  Natural Resources                    Risk Management Agency                              Title: Dairy Options Pilot Program.
Conservation Service, USDA.                                                                       Respondents/Affected Entities: Parties
                                              Dairy Options Pilot Program                      affected by the information collection
ACTION: Notice of a Finding of No
Significant Impact.                           AGENCY: Risk Management Agency,                  requirements included in this advanced
                                              USDA.                                            notice are producers and brokers.
SUMMARY: Pursuant to Section 102(2)(c)                                                            Abstract: The dairy industry has
                                              ACTION: Advanced Notice of
of the National Environmental Policy                                                           recently witnessed unprecedented price
                                              Availability; Request for Comments.
Act of 1969; the Council on                                                                    volatility and, after 1999, will no longer
52                     Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

be eligible to receive USDA program           Comments regarding paperwork               Federalism, that this notice does not
benefits of any kind except export          reduction should be submitted to the         have sufficient federalism implications
incentives.                                 Desk Officer for Agriculture, Office of      to warrant the preparation of a
   The Federal Agricultural                 Information and Regulatory Affairs,          Federalism Assessment. The provisions
Improvement and Reform Act of 1996          Office of Management and Budget,             contained in this notice will not have a
(Act) authorized the Secretary of           Washington, D.C. 20503.                      substantial direct effect on States or
Agriculture to conduct, and RMA to            The Office of Management and Budget        their political subdivisions, or on the
administer, options pilot until             (OMB) is required to make a decision         distribution of power and
December 31, 2002. RMA appreciates          concerning the collections of                responsibilities among the various
the active interest and initiative shown    information contained in this notice         levels of government.
by the Coffee, Sugar, & Cocoa Exchange      between 30 and 60 days after
                                            submission to OMB. Therefore, a              Regulatory Flexibility Act
and the Chicago Mercantile Exchange in
the development of this program which       comment to OMB is best assured of              This notice will not have a significant
draws heavily from their ideas and          having full effect if OMB receives it        impact on a substantial number of small
input. If successful, the educational       within 30 days of publication. This does     entities. The provisions included in this
benefits of the DOPP to the producer        not affect the deadline for the public to    notice will not impact small entities to
will prepare the producer to manage         comment on the notice.                       a greater extent than large entities. All
price risk independently through the                                                     participants will be required to fill out
                                            Executive Order 12866                        an application and provide
commodities futures and options
markets.                                      OMB has determined this notice to be       documentary evidence of monthly
   Estimate of Burden: Public reporting     significant for the purposes of Executive    production for at least the previous six
burden for this collection of information   Order 12866 and, therefore, this notice      months. The amount of work required of
is estimated at 15 minutes per              has been reviewed by OMB.                    brokers will only increase slightly
participant because of the high degree of   Cost-Benefit Analysis                        because the information to determine
automation associated with the data                                                      the eligibility of producers and trading
                                               The program is designed to increase       activities is already collected by brokers
collection.
                                            the level of understanding of options        specializing in hedge positions and the
   Respondents: Producers and brokers.
                                            contracts as risk management tools           only additional burden is collecting the
   Estimated Number of Respondents:         among dairy producers and to explore
35,329.                                                                                  price for the sale of production and the
                                            their specific applicability to the dairy    electronic transmittal of this
   Estimated Number of Responses per        industry. The costs to the Government
Respondent: 2.                                                                           information. Therefore, this action is
                                            of options premium under the program         determined to be exempt from the
   Estimated Total Annual Burden on         are estimated to be about $10 million
Respondents: 16,951 hours.                                                               provisions of the Regulatory Flexibility
                                            annually. If successful, the program will    Act (5 U.S.C. 605) and no Regulatory
   The information to be collected          help create liquid markets in basic
includes an application (Form CCC–                                                       Flexibility Analysis was prepared.
                                            formula price (BFP) futures and options
320), a record of all trading activity on   contracts which would be sustained, in       Federal Assistance Program
the producer’s behalf and the actual        part, by the on-going hedging of output        This program is not currently listed in
prices obtained by the producer for the     price risk by dairy producers benefiting     the Catalog of Federal Domestic
production, and a voluntary survey. The     from the educational aspect of the           Assistance under No. 10.450.
information collected from the              program. Under that scenario, the
application, trading record and prices      benefits of the program would include        Executive Order 12372
received by the producer will be            furnishing producers with a viable price       This program is not subject to the
electronically submitted to FCIC by the     risk management alternative, exerting a      provisions of Executive Order 12372,
broker or brokerage firm. Potential         stabilizing influence on the dairy           which require intergovernmental
respondents to this information             industry, and contributing to the            consultation with State and local
collection are dairy producers, brokers,    Department’s goals of supporting market      officials. See the Notice related to 7 CFR
and brokerage firms. The information        oriented reforms in the agricultural         part 3015, subpart V, published at 48 FR
collected will be used to determine         sector.                                      29115, June 24, 1983.
producer eligibility, to track program
compliance and to evaluate the              Unfunded Mandates Reform Act of              Executive Order 12988
effectiveness of the hedge positions.       1995                                           This notice has been reviewed in
   Comments: RMA is requesting                 Title II of the Unfunded Mandates         accordance with Executive Order No.
comments on the following: (a) whether      Reform Act of 1995 (UMRA), Pub. L.           12988 on civil justice reform. The
the proposed collection of information      104–4, establishes requirements for          provisions of this notice will not have
is necessary for the proper performance     Federal agencies to assess the effects of    retroactive effect. The provisions of this
of the functions of the agency, including   their regulatory actions on State, local,    notice will preempt State and local laws
whether the information has practical       and tribal governments and the private       to the extent such State and local laws
utility; (b) the accuracy of the agency’s   sector. This notice contains no Federal      are inconsistent herewith. The
estimate of the burden of the proposed      mandates (under the regulatory               administrative appeal provisions
collection of information; (c) ways to      provisions of Title II of the UMRA) for      published at 7 CFR part 11 must be
enhance the quality, utility, and clarity   State, local, and tribal governments or      exhausted before action against RMA for
of the information to be collected; and     the private sector. Therefore, this notice   judicial review may be brought.
(d) ways to minimize the burden of the      is not subject to the requirements of
collection of information on                                                             Environmental Evaluation
                                            sections 202 and 205 of the UMRA.
respondents, including through the use                                                     This action is not expected to have
of automated collection techniques or       Executive Order 12612                        any significant impact on the quality of
other forms of information gathering          It has been determined under section       the human environment, health, and
technology.                                 6(a) of Executive Order 12612,               safety. Therefore, neither an
                       Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                    53

Environmental Assessment nor an                 The program will last six months for      Exchange Act that has entered into an
Environmental Impact Statement is            each round of participants. For example,     agreement with RMA to participate in
needed.                                      if registration and required training take   the program.
                                             place in December, the producer would           CME. Chicago Mercantile Exchange.
Background
                                             begin buying options in January. The            CSCE. Coffee, Sugar, and Cocoa
   Section 191 of the Federal                participant would be required to take        Exchange.
Agricultural Improvement and Reform          options positions at least two months in        Eligible markets. Commodity futures
Act of 1996 authorizes the Secretary of      the future to ensure some time in the        and options markets designated as
Agriculture to conduct a pilot program       position to allow for the educational        contract markets under the Commodity
for one or more agricultural                 benefits for the participant. Therefore,     Exchange Act (7 U.S.C. 1 et seq.).
commodities to determine the feasibility     the producer would purchase options             Exercise. The action taken by the
of the use of futures and options as risk    on the Basic Formula Price (BFP)             holders of a put option on a futures
management tools to protect producers        futures for any of the months from April     contract if they wish to sell the
from fluctuations in price, yield and        through September.                           underlying futures contract.
income. Accordingly, the Secretary has          In order to introduce the new trading        Expiration Date. The last date on
directed the RMA to develop the DOPP.        volume on to the markets slowly, each        which the put option may be exercised.
   The intent of this notice is to solicit   round of participants will commence             Futures contract. A contract to buy or
public comments on DOPP. DOPP will           trading at different times by state. RMA     sell a commodity on an eligible market
not be published as a proposed or final      will also consider other phase-in ideas.     at some point in the future.
rule unless the program is offered to all       The two exchanges where the BFP              Open outcry. Method of public
producers on a nationwide basis. DOPP        futures and put options are currently        auction required to make bids and offers
will be in effect when applications and      available are the CSCE and the CME.          in the trading pits, or rings, of
contracts are made available by RMA          The contracts on the two exchanges           commodity exchanges.
and producers are provided actual            differ with regard to quantity. Under the       Out-of-the-money. Put option whose
notice of availability.                      program, a participating producer will       strike price is less than the underlying
   DOPP is intended to offer a risk          be permitted to purchase contracts to        futures contract price.
management tool to dairy producers to        hedge between 200,000 and 600,000               Premium. The price of a put option
offset the unprecedented price               pounds of milk over a six-month period.      determined by open outcry. The
volatility, the elimination of price         Producers will be required to submit         premium does not include related
supports, and the current unavailability     documentation supporting their               brokerage commission fees.
of production insurance. DOPP will be        operation’s production of at least              Producer. An individual, entity, or
offered on a pilot basis to determine the    200,000 pounds of milk over a six-           joint operation, which as owner,
feasibility of using commodity futures       month period.                                operator, landlord, tenant, or
and options markets.                            RMA will enter into contracts with        sharecropper, is entitled to share in the
   The program represents a joint            producers and brokers who elect to           production available for marketing from
initiative between RMA and the private       participate in DOPP.                         the farm, or share in the proceeds
sector. DOPP was first proposed to RMA          Notice: The terms and provisions for
                                                                                          thereof.
by the Coffee, Sugar & Cocoa Exchange        the DOPP Producer Contract are as
                                                                                             Program. The Dairy Options Pilot
(CSCE). During the development of this       follows: United States Department of
                                                                                          Program.
program, the Chicago Mercantile              Agriculture, Risk Management Agency,
                                                                                             Put Option. A contract traded on
Exchange (CME) provided additional           Dairy Options Pilot Program Contract.
                                                Participation in the Dairy Options        eligible markets that gives the buyer the
recommendations. If successful, the                                                       right to sell the underlying futures
                                             Pilot Program is voluntary. Neither the
educational benefits of DOPP will                                                         contract at the strike price on or before
                                             United States, the Commodity Credit
prepare producers to manage their price                                                   the expiration date.
                                             Corporation, the Federal Crop Insurance
risk independently through the                                                               RMA. Risk Management Agency, an
                                             Corporation, the Risk Management
commodities futures and options                                                           agency of the United States Department
                                             Agency, the Department of Agriculture,
markets.                                                                                  of Agriculture.
                                             nor any other Federal agency is
   DOPP is scheduled for initial                                                             Sale. Transfer of title through the
                                             authorized to guarantee that participants
implementation in thirty-six counties                                                     selling of the value of the put option.
                                             in this pilot program will be better or
(six counties in each of six states). The                                                    Settlement price. The price of a
                                             worse off financially as a result of
program will be available in those states                                                 specific put option as published by the
                                             participation in the pilot program than
and counties as determined by RMA.                                                        exchange on which that contract trades
                                             the producer would have been if the
The participation limit per county is set                                                 at the end of each day’s trading.
                                             producer had not participated in the
at 150 producers, subject to adjustments                                                     Strike price. The price at which the
                                             pilot program.
as described below. Counties with a                                                       holders of a put option may choose to
higher number of participants signing-       1. Definitions                               sell the underlying futures contract.
up will have participants selected              Application. Form CCC–320 that is
through a lottery. Applicants who miss                                                    2. Eligibility
                                             required to be completed and signed by
the opportunity to participate the first     the producer before the producer is             (a) To be eligible for any benefits
time the program is offered will get         eligible to participate in this program.     under this contract, a producer must:
preference the next round. When a               Basic formula price. The price               (1) Be eligible for a production
county has fewer than the maximum            established by the Department of             flexibility contract, a marketing
number of participants, the excess           Agriculture, and provided to the             assistance loan or any other assistance
program vacancies will be pooled and         marketing order administrators to be         under the Federal Agricultural
distributed among counties where more        used to set regional minimum prices,         Improvement and Reform Act of 1996;
than the maximum number has signed           used in calculating the gains or losses         (2) Volunteer to participate in this
up. Producers wishing to participate in      under a put option.                          program;
the program must fill out an application        Broker. A broker or brokerage firm           (3) Operate a farm located in a county
(Form CCC–320).                              registered under the Commodities             selected for the pilot program; and
54                    Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

  (4) Have documented production            5. Restrictions and limitations             Service (IRS). All premiums that are
history of at least 200,000 pounds over       (a) Except as stated herein, total        paid by RMA on behalf of producers
the most recent six months.                 program participation will be limited to    participating in this program shall be
  (b) This program is available to                                                      reported to the IRS for the year of
                                            150 producers per county. If more
producers in states and counties as                                                     participation.
                                            participants are enrolled than the
designated by RMA.                                                                        Notice: The terms and conditions for
                                            county limit, a lottery will be held by
3. Responsibilities                         RMA to determine participants within a      the DOPP broker agreement are as
                                            county. If fewer than 150 participants      follows: United States Department of
   (a) Producers who elect to participate                                               Agriculture, Risk Management Agency,
in the program agree:                       are enrolled in a county, the number of
                                            unfilled participation slots will be        Broker Agreement for the Dairy Options
   (1) To attend not less than one                                                      Pilot Program.
training session conducted by RMA to        pooled and redistributed over counties
educate the producer on the program’s       where enrollment exceeds 150.               1. Definitions.
operation and the use of put options.         (b) The producer will be able to order       Application. Form CCC–320 that is
   (2) To buy put options on a minimum      put options from a broker after:            required to be completed and signed by
of 200,000 pounds of milk on an eligible      (1) Providing the broker with a           the producer before the producer is
market, through an eligible broker, at      completed copy of the application;          eligible to participate in this program.
some time over the first two months of        (2) Providing marketing receipts of the      Basic formula price. The price
the program’s six-month duration            producer’s monthly production for the       established by the Department of
beginning on the date the producer          most recent six month period; and           Agriculture, and provided to the
attends a training session;                   (3) The broker has received               marketing order administrators to be
   (3) That put options on no more than     verification from RMA of the producer’s     used to set regional minimum prices,
200,000 pounds of milk will be              selection as a program participant.         used in calculating the gains or losses
purchased for any one month under this        (c) If a producer who has participated    under a put option.
program;                                    in the program is not in compliance            Broker. A broker or brokerage firm
   (4) That the put options will be         with the provisions of this contract, the   registered under the Commodities
purchased at least two months before        producer will be required to repay any      Exchange Act that has entered into an
the put options expire.                     premiums paid by RMA on behalf of the
   (5) That the put options will be                                                     agreement with RMA to participate in
                                            producer, in addition to any damages        the program.
purchased at a strike price that is at      determined by RMA.                             CME. Chicago Mercantile Exchange.
least 25 cents out of the money;              (d) No put options purchased through
   (6) That no put options will be sold                                                    CSCE. Coffee, Sugar, and Cocoa
                                            this program shall be purchased at a        Exchange.
or exercised before four weeks prior to     premium that is more than 160 percent          Eligible markets. Commodity futures
the expiration date. (The producer may      of the previous day’s settlement
sell or exercise options purchased under                                                and options markets designated as
                                            premium.                                    contract markets under the Commodity
this program at any time over the four
weeks leading up to the expiration          6. Other                                    Exchange Act (7 U.S.C. 1 et seq.).
                                                                                           Exercise. The action taken by the
date.) If the producer exercises the put       (a) The National Futures Association,
option and holds the futures contract,                                                  holders of a put option on a futures
                                            on behalf of the Commodity Futures          contract if they wish to sell the
the producer assumes the risk of any        Trading Commission, maintains a
losses; and                                                                             underlying futures contract.
                                            current listing of brokers and brokerage       Expiration Date. The last date on
   (7) The producer shall keep detailed     firms who are licensed to conduct
records of each transaction including                                                   which the put option may be exercised.
                                            futures-related business. However, only        Futures contract. A contract to buy or
the purchase date and cost of each put      those brokers who have entered into an
option, the expiration date and month of                                                sell a commodity on an eligible market
                                            agreement with RMA will be eligible to      at some point in the future.
the put options, the producer’s cash        trade put options under this program.
market price for milk over the period of                                                   Open outcry. Method of public
                                            To obtain a list of brokers approved by     auction required to make bids and offers
participation in the program, the           RMA, contact RMA at (202) 720–0191.
difference between the cash market                                                      in the trading pits, or rings, of
                                               (b) To assist in the evaluation of the   commodity exchanges.
price and the BFP over the six-month        program, producers participating in the
duration of the program, whether the                                                       Out-of-the-money. Put option whose
                                            program may be asked to complete entry      strike price is less than the underlying
options were sold or exercised and, if      and exit surveys by RMA. While
sole or exercised, the date, and price of                                               futures contract price.
                                            completion of these surveys is                 Premium. The price of a put option
the futures contract on the date of sale
                                            voluntary, producers are encouraged to      determined by open outcry. The
or exercise.
   (c) A producer must establish an         do so in order that an accurate             premium does not include related
account with a broker to participate in     assessment may be made of this              brokerage commission fees. The
the program.                                program’s overall effectiveness.            premium is the maximum amount of
                                               (c) There may be tax consequences        potential loss to which the put option
4. Costs                                    with respect to participation in this       buyer may be subject.
   (a) The producer will pay 20 percent     program. Producers interested in               Producer. An individual, entity, or
of the premium of each put option.          participating in the program who have       joint operation, which as owner,
   (b) RMA shall pay transactions costs     questions regarding the tax issues          landlord, tenant, or sharecropper, is
equal to $30 per round turn and 80          associated with this program should         entitled to share in the production
percent of the premium.                     seek the advice of a competent tax          available for marketing from the farm, or
   (c) The broker will charge the           advisor who is familiar with put            share in the proceeds thereof.
producer’s account for 20 percent of the    options.                                       Program. The Dairy Options Pilot
premium per put option, and the                (d) RMA is required to report all        Program.
transaction costs and the balance of the    program payments issued on behalf of           Put Option. A contract traded on
premium will be billed to RMA.              producers to the Internal Revenue           eligible markets that gives the buyer the
                       Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                    55

right to sell the underlying futures            (2) Marketing receipts of the              (c) The broker will bill the transaction
contract at the strike price on or before    production history of the producer for at   costs and the balance of the premium to
the expiration date.                         least the most recent 6 month period;       RMA.
   RMA. Risk Management Agency, an           and
agency of the United States Department                                                   5. Restrictions and Limitations
                                                (3) The cash market price for the
of Agriculture.                              producer’s production at the time of          (a) If a broker participating in the
   Round turn. The broker’s service in       each order and liquidation.                 program through this agreement is not
transacting a single put option                 (c) Broker’s should not accept           in compliance with the provisions of
consisting of consultation services and      applications from any producer whose        this agreement, the broker will be
the purchase and liquidation (sale or        marketing receipts do not evidence          required to repay any transactions costs
exercise) of a put option, including the                                                 on the put options subsidized by RMA
                                             production of at least 200,000 pounds
subsequent sale of the underlying                                                        and traded by the broker under the
                                             over the most recent six months.
futures position if the put option is                                                    program, in addition to any damages
exercised.                                      (d) The broker must keep detailed
                                             records of each transaction including:      suffered by RMA.
   Sale. Transfer of title through the                                                     (c) No put options purchased through
selling of the value of the put option.         (1) The purchase date and premium
                                                                                         this program shall be purchased at a
   Settlement price. The price of a          for each put option;
                                                                                         premium that is more than 160 percent
specific put option as published by the         (2) The expiration date and month for    of the previous day’s settlement
exchange on which that contract trades       each put option;                            premium.
at the end of each day’s trading.               (3) The producer’s cash market price
   Strike Price. The price at which the      for the production at the time of each      6. Other
holders of a put option may choose to        order and liquidation;                         (a) To assist in the evaluation of the
sell the underlying futures contract.           (4) The difference between the cash      program, brokers participating in the
2. Eligibility                               market price and the BFP over the six       program may be asked to complete entry
                                             month duration of the program; and          and exit surveys by RMA. While
   (a) To be eligible for trade options
under this agreement, a broker must:            (5) Whether the options are sold or      completion of these surveys is
   (1) Be properly licensed and in good      exercised and, if sold or exercised, the    voluntary, brokers are encouraged to do
standing with the National Futures           date and price of the futures contract on   so in order that an accurate assessment
Association;                                 the date of sale or exercise.               may be made of this program’s overall
   (2) Volunteer to participate in this         (f) The broker must transmit to RMA,     effectiveness.
program; and                                 through electronic data transmission,          (b) RMA is required to report all
   (3) Execute this agreement and            the information contained on the            program payments issued on behalf of
comply with all its terms and                application and information specified in    producers to the Internal Revenue
conditions.                                  subsection (f). Brokers certify that        Service (IRS). All premiums that are
                                             systems used to transmit data will be       earned by producers participating in
3. Responsibilities                                                                      this program shall be reported to the IRS
                                             Year 2000 compliant, i.e., be able to
   (a) Brokers who elect to participate in   accurately process date/time data           for the year of participation.
the program agree to enforce the             (including, but not limited to,               Signed in Washington, D.C., on December
following program requirements with          calculating, comparing, and sequencing)     29, 1997.
respect to any producer participating in     from, into, and between the twentieth       Garland Westmoreland,
the program who might use the broker’s       and twenty-first centuries, and the years   Acting Administrator, Risk Management
services:                                    1999 and 2000 and leap year                 Agency.
   (1) To buy put options on a minimum       calculations, and to properly exchange      [FR Doc. 97–34189 Filed 12–31–97; 8:45 am]
of 200,000 pounds of milk on an eligible     date/time data with other information       BILLING CODE 3410–08–P
market at some time over the first two       technology. Data transmission
months of the program’s six-month            requirements and Year 2000 compliancy
duration beginning on the date the           guidelines are available upon request.
producer attends a training session                                                      DEPARTMENT OF COMMERCE
                                                (g) The broker can not conduct any
conducted by RMA;                            trades under this program on behalf of
   (2) That put options on no more than                                                  National Oceanic and Atmospheric
                                             any producer until notified by RMA that     Administration
200,000 pounds of milk shall be
                                             the producer has been accepted into the
purchased for any one month under this                                                   [I.D. 120497B]
                                             program.
program;
   (3) That put options will be purchased    4. Costs                                    Marine Mammals; Environmental
at least two months before the put                                                       Assessment on Preventing California
options expire;                                 (a) The broker will receive a
                                             transaction fee of $30 per round turn       Sea Lion Foraging and Predation on
   (4) That the put options will be                                                      Salmonids at the Willamette Falls,
purchased at a strike price that is at       from RMA. Any transactions costs
                                             agreed upon between the broker and a        Oregon
least 25 cents out of the money; and
   (5) No put options will be sold or        producer in excess of $30 will be the       AGENCY:  National Marine Fisheries
exercised before four weeks prior to the     sole responsibility of the producer and     Service (NMFS), National Oceanic and
expiration date. The producer may sell       not of RMA.                                 Atmospheric Administration (NOAA),
or exercise options purchased under             (b) The broker will charge the           Commerce.
this program at any time over the four       producer’s account for 20 percent of the    ACTION: Notice of availability and
weeks leading up to the expiration date.     premium per put option. The 20 percent      finding of no significant impact.
   (b) Brokers who participate in the        of the transaction for which the
program must collect from the producer:      producer is responsible is the sole         SUMMARY:   NMFS announces the
   (1) A signed copy of the application      responsibility of the producer and not of   availability of an Environmental
(Form CCC–320);                              RMA.                                        Assessment (EA) that examines the
56                      Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

environmental consequences of                 Oregon has not applied for this              firecrackers or other methods which
preventing California sea lion foraging       authority.                                   may inadvertently result in an increase
and predation on salmonids at the                Comment 2: The proposed action does       of predation in the long term because
Willamette Falls in Oregon. The               not address all of the potential factors     these methods have not been shown to
proposed action consists of non-lethal        causing depletion of salmonids in the        have lasting effectiveness in other
measures that are authorized under the        system. One commenter suggested that         applications.
Marine Mammal Protection Act                  causes of salmonid population decline           Response: Because sea lions are
(MMPA). NMFS has evaluated the                should be investigated, and another          opportunistic predators, predation
environmental consequences of the             recommended that NMFS and ODFW               patterns develop relative to animal
proposed action and has concluded that        evaluate and assess predation in             presence, prey availability, and
it is unlikely to result in any significant   comparison to other factors.                 vulnerability. Based on observations at
impacts on the human environment                 Response: The State is addressing         the Ballard Locks in Washington,
and, therefore, has made a finding of no      other factors that may be affecting the      different methods of sea lion removal
significant impact (FONSI).                   decline of salmonids in the Willamette       may be more or less effective in
                                              River basin; however, the principal          reducing sea lion presence or in
ADDRESSES: A copy of the final EA may
                                              cause for decline appears to be the          reducing the vulnerability of fish to
be obtained by writing to William Stelle,
                                              reduced ocean survival. The scope of         predation, depending upon the number
Jr., Regional Administrator, Northwest
                                              the EA and the proposed action, which        of animals involved and the location or
Region, NMFS, 7600 Sand Point Way                                                          circumstances of the predation. NMFS
                                              complements State efforts to address
NE, Seattle, WA 98115.                                                                     believes that the proposed action will
                                              other factors affecting salmonids, is
FOR FURTHER INFORMATION CONTACT: Joe          limited to addressing the increasing         prevent sea lion foraging and predation
Scordino (206)526–6143, or Tom Eagle          presence of California sea lions foraging    on salmonids at the Willamette Falls
(301)713–2322.                                at the Falls and the prevention of           because the number of sea lions to be
SUPPLEMENTARY INFORMATION: The                predation from escalating to a point         removed is still small, the patterns of
National Marine Fisheries Service, in         where it may impact salmonids,               predation do not appear well
cooperation with the Oregon State             especially if the salmonid stocks remain     established, and the area is
Department of Fish and Wildlife               low or decline further.                      geographically remote from where sea
(ODFW), prepared an EA that examines             Comment 3: The proposed action is         lions normally occur; thus, inseason
the environmental consequences of             consistent with general state fish and       replacement is unlikely. In contrast, the
three alternatives for preventing sea lion    wildlife authorities.                        alternative of taking no action to prevent
foraging and predation on returning              Response: NMFS agrees.                    foraging and predation will likely result
adult salmonids and outmigrating                 Comment 4: The EA does not show           in escalation of the problem because
smolts at Willamette Falls: (1) No            that predation has caused the decline of     animals already present will become
action; (2) non-lethal removal of             the runs or is likely to have caused a       more effective at catching salmonids at
California sea lions (proposed action);       negative effect on the run. Commenters       the site, and new animals will learn
and (3) lethal removal of sea lions           noted that the decline of steelhead and      these effective strategies as they arrive.
foraging at the Falls. The proposed           spring chinook salmon occurred before           Comment 7: An additional alternative
action is to implement a program of           sea lions could have had any noticeable      should be added to investigate the real
non-lethal measures to prevent sea lion       effect, and, therefore, actions to reduce    and primary cause of the fish run
predation at the Willamette Falls while       sea lion predation are unwarranted. One      declines (e.g., hatchery fish competition,
continuing to monitor the resource            commenter supported the no-action            fish passage problems due to
                                              alternative because sea lions are not the    construction and operation of the
conflict at this site. The proposed action
                                              cause of the decline.                        fishway and dam, water, and general
is authorized under section 109(h)(1)(C)
                                                 Response: NMFS agrees that sea lion       habitat degradation) and to implement
of the MMPA, which allows the non-
                                              predation is not the cause of the decline;   solutions to mitigate them.
lethal removal of nuisance marine                                                             Response: The scope of the proposed
                                              however, if action is not taken to
mammals by local, state, and Federal                                                       action is limited to preventing sea lion
                                              address increasing foraging by sea lions,
officials.                                                                                 predation; measures to address other
                                              predation may increase to a point where
   A draft EA was made available for a        predation is impacting salmonid stocks       causes of salmonid declines are
30-day public comment period. NMFS            in the Willamette River, especially if the   underway by the State, and a separate
published a notice in the Federal             number of returning adults remains low       alternative on such actions is
Register on March 13, 1997 (62 FR             or declines further.                         unnecessary and outside the scope of
11845), that announced the availability          Comment 5: An Environmental               this action. Natural production (wild
of the draft EA and requested public          Impact Statement (EIS) should be             spawning) of spring chinook is low,
comments. Seven public comments               prepared in order to provide a more          owing primarily to lost spawning
were received, and the EA was revised         comprehensive appraisal of this action.      habitat. As mitigation for lost wild
in response to the comments. A                   Response: An EIS is not required for      production, the majority of the spring
summary of the comments received and          this action because the environmental        chinook are hatchery produced.
responses to the comments are given           consequences of non-lethally removing        Hatchery produced spring chinook
here:                                         a few sea lions from the Willamette          originate from native stocks and are
   Comment 1: The situation at the            Falls area will not result in any            virtually indistinguishable from wild
Willamette Falls does not warrant lethal      significant impact to the environment.       spawners. Hatchery release practices
removal.                                         Comment 6: The removal (lethal or         and harvest regulations for hatchery
   Response: Lethal removal of sea lions      non-lethal) of sea lions could result in     steelhead are designed to minimize
at Willamette Falls is not proposed           increased predation. Commenters were         competition for available wild spawning
because it has not been authorized            concerned that the removed sea lions         habitat. Ocean productivity over the
under section 120 of the MMPA. Section        will be quickly replaced by other            past several years has been influenced
120 provides a process for a state to         animals. One commenter also was              by a multi-year climatic event (El Nino)
obtain authority for lethal removal, but      opposing the use of underwater               that has impacted ocean survival of
                        Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                    57

salmonid stocks, including those                 Response: The proposed action is to       pinnipeds are having a significant
returning to the Willamette.                  reduce or eliminate sea lion predation       negative impact on the status or
Nonetheless, if numbers remain low or         on salmonids and to prevent it from          recovery of salmonid populations that
decline further, the potential for sea lion   escalating to a point where it may           are listed under the Endangered Species
predation to have a significant impact        negatively impact salmonid runs at this      Act (ESA) or approaching listing.
remains real, and non-lethal removal          site. Predation is one of the factors           Comment 14: To effectively recover
actions are warranted.                        affecting survival of adult spawners, and    the salmonid populations, additional
   Comment 8: No actions should be            reduction or elimination of this             restrictions should be placed on
taken with sea lions until the proposed       mortality factor should, therefore,          commercial and recreational fisheries,
non-lethal deterrents are tested and an       contribute to the enhancement and            barriers to passage should be removed,
implementation plan is developed. The         recovery of the involved salmonid runs.      spawning habitat should be restored,
commenter recommended that an                    Comment 11: Neither the regulations       hatchery operations should be
independent group of pinniped and             nor the statute provides a definition of     improved, and power generating
fisheries biologists be established to        what constitutes a ‘‘nuisance animal,’’      operations should be evaluated. The
oversee the development of a                  and, lacking a definition, the commenter     commenter recommended that the
monitoring and research plan for              found it difficult to evaluate whether       burden to conserve fish stocks should be
evaluating the effectiveness of various       sea lions at Willamette Falls are a          distributed proportionately among all
non-lethal deterrents.                        nuisance animal.                             human causes before penalizing sea
   Response: NMFS has tested and                 Response: NMFS acknowledges that          lions for eating fish.
implemented the non-lethal deterrence         neither the statute nor the implementing        Response: The State is addressing
measures in pinniped interactions             regulations provide a specific definition    factors affecting the status of salmonid
elsewhere on the Pacific Coast, with no       for ‘‘nuisance’’ marine mammal.              populations, including restricting
discernable deleterious affects on            However, the legislative history of the      commercial and recreational fisheries.
California sea lions or serious injuries to   MMPA includes removal of seals from          Reducing or eliminating sea lion
personnel. Implementation of the              a fish ladder as an appropriate              predation will be complementary to
individual measures will be dependent         interpretation of the nuisance animal        other State efforts to enhance and
on available resources during a given         provision. Sea lions constitute a            restore salmonid runs. In regard to
season. NMFS will continue to request         nuisance at the Falls because their          barriers to passage, the Willamette Falls
assistance from independent experts           foraging and predatory behavior is           is a natural barrier to fish passage and
when necessary; however, the formation        contrary to the purpose of the fishway       the fishway was constructed to enhance
of an oversight committee is not              to pass fish upstream, and uncontrolled      adult passage to spawning habitat.
necessary or warranted for actions taken      predation at freshwater sites outside the       Comment 15: The design and
under section 109 of the MMPA.                normal habitat of sea lions, especially      construction of existing fishways should
   Comment 9: Non-lethal removal              where fish are congregated and               be re-evaluated to devise ways for
should not be authorized under section        vulnerable to predation, is contrary to      salmonid species to avoid sea lion
109 (h)(1)(C) because the EA does not         conservation efforts for recovering          predation.
specify the numbers of animals to be          depressed and declining fish stocks.            Response: Plans are underway to
taken, specify the exact methods to be           Comment 12: The EA incorrectly            modify the fishway to improve fish
used, specify the risk of injury or           states that Willamette Falls is outside      passage. An engineering evaluation of
mortality to individual animals, provide      the normal range of California sea lions.    the fishway was completed in 1992, and
evidence that sea lion predation is              Response: As the California sea lion      that report is now referenced in the EA.
adversely affecting fish passage, or          population has increased since the early     Fishway design and alteration
provide scientific data on the degree of      1970s, reports of animals occurring in       information were not included in the
impact of sea lion predation on the           areas previously not documented have         draft EA because contract work and
affected stocks.                              also increased. NMFS is not aware of         planning processes for fishway
   Response: Section 109(h)(1)(C) of the      any documented historical occurrence         maintenance and modification are
MMPA authorizes the taking of marine          of California sea lions at the Willamette    proceeding separately and are outside
mammals by public officials during the        Falls other than the sightings noted in      the scope of the EA. The area of focus
performance of their official duties. This    the EA and, therefore, considers the         for preventing sea lion foraging and
authorization does not require the            occurrence of sea lions far upriver at the   predation on salmonids is outside the
specification of the number of animals        Falls in a freshwater environment to be      fishway in adjacent areas including
to be taken, exact methods, degree of         beyond the normal range.                     below the Falls.
risk, or evidence that the animals to be         Comment 13: The nuisance                     Comment 16: The monitoring program
taken have exceeded some pre-                 determination is not appropriate             should have been implemented before
determined behavioral threshold.              because the effect of sea lions on fish      an EA was considered, rather than
However, some of these factors would          runs may be only negligible.                 basing the proposed action on
need to be considered for authorization          Response: Section 109 of the MMPA         undocumented observations.
for the lethal removal of individually        does not establish a threshold of damage        Response: The proposed action is
identifiable pinnipeds under section          that must be exceeded in order for a         based on results of observations by
120 of the MMPA.                              determination to be made on whether an       biologists in 1995 as well as on ODFW-
   Comment 10: The proposed action            animal is a nuisance. The non-lethal         conducted monitoring programs in 1996
does not appear likely to contribute to       removal measures proposed are to             and 1997 (as described in the EA),
the enhancement of Willamette River           reduce or eliminate sea lion predation       which documented sea lion predation
fish runs. One commenter stated that          on salmonids and to prevent it from          on steelhead and spring chinook.
non-lethal removal of sea lions can only      escalating to a point where it may              Comment 17: Introduced salmonid
give a false hope of salmonid recovery        negatively impact the fish runs. If lethal   runs do not warrant the conservation
because sea lions have not been               removal were to be used under section        protection of native runs.
determined to be negatively affecting         120 of the MMPA, then it would be               Response: Introduced salmonid runs
the fish runs.                                necessary to show that individual            in the Willamette basin, such as summer
58                      Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

steelhead, have been made possible by            Comment 22: The EA incorrectly              greater passage by spring chinook and
the improved fish passage conditions          states that sea lions have negatively          steelhead through fishway entrance 2,
afforded by the construction of the fish      affected steelhead at the Ballard Locks.       whereas fall chinook more frequently
passage facility. These fish have been           Response: Based on extensive studies        use fishway entrance 1. The EA has
added to increase and support fishing         since 1985, NMFS has determined that           been modified to provide this
opportunities in response to public           predation by sea lions is a principal          clarification.
demand. Sport fishing for salmonids is        factor affecting the spawning                     Comment 26: The goal of resource
a popular and economically significant        escapement of returning adult winter           managers should be the restoration of
industry in the Willamette River basin.       steelhead in the Lake Washington basin         native fish runs that have declined
The introduced runs have been                 (migrating through the Ballard Locks).         rather than reducing sea lion predation.
maintained over several decades               The determination is well documented              Response: NMFS and ODFW agree
without detrimental effect to native          in several EAs prepared by NMFS and            that the restoration and maintenance of
Willamette River basin salmonid runs          by the Washington Department of Fish           native fish populations are important
because of hatchery release practices         and Wildlife.                                  goals, and the State is active in
and harvest regulations. Timing of the           Comment 23: If sea lions are deterred       addressing these goals. Prevention of sea
two steelhead stocks overlap below the        from the area, it should be done in a          lion foraging in locations where
Falls, and sea lions are, therefore, likely   minimally invasive and humane                  declining runs are concentrated and
to intercept both native and non-native       manner. One commenter recommended              vulnerable does not conflict with this
stocks when foraging.                         that NMFS should limit the study and           goal.
   Comment 18: The methods of                 implementation of sea lion deterrence             Comment 27: The construction of
capturing and relocating sea lions are        measures to those that are humane and          dams is the single most likely cause for
inadequately described.                       realistically promising (e.g., alternative     salmonid declines, not sea lion
   Response: The EA has been revised to       barrier designs, expanded acoustic             predation.
provide additional information on             deterrence devices).                              Response: Dam construction in the
capture and translocation of sea lions.          Response: Section 109 of the MMPA           Willamette River basin has been
More detailed information on California       specifies that the taking of a marine          completed for decades, and salmonid
sea lion captures and relocation is           mammal by public officials during the          stocks have been maintained through
included in prior EAs prepared by             performance of their duties shall be           successful hatchery practices and
NMFS (referenced in the EA) for non-          accomplished in a humane manner. The           fishery regulation. Low ocean survival
lethal measures implemented at the            non-lethal measures included in the            conditions over an extended period
Ballard Locks, and these EAs are              proposed alternative are not expected to       have affected returns in recent years in
available to the public.                      cause mortality or serious injury and are      spite of stable hatchery production.
   Comment 19: The non-lethal options         intended to have the desired effect of            Comment 28: The capture and
should not be considered safe because         removing foraging sea lions from the           relocation of sea lions are unlikely to be
they have not been adequately tested.         area. Additional use of barrier gates in       successful and will not significantly
   Response: The non-lethal options           other entrances to the fish ladder will be     benefit salmonids passing through the
included in the proposed action have          considered if observations indicate that       Willamette Falls fishway. The
been used previously in other locations       sea lions are entering the fishway             commenters suggested new sea lions
and will be implemented under                 through those entrances. The use of            would probably replace those that have
protocols to ensure safety to sea lions as    acoustic deterrent devices is included in      been removed.
well as personnel involved. The               the proposed action.                              Response: NMFS agrees that previous
possibility of a sea lion mortality              Comment 24: The funds spent on sea          translocation efforts with California sea
resulting from the proposed measures is       lions should be used for such other            lions from the Ballard Locks have not
very remote.                                  factors as fish passage, competition with      been totally successful. However, due to
   Comment 20: The use of underwater          hatchery fish, and habitat concerns.           the distance inland to the Falls and the
firecrackers may deafen sea lions.               Response: The State is addressing           small numbers of animals found far
   Response: Observations at the Ballard      other factors that may be affecting            upriver, other sea lions may not
Locks show that individual sea lions          salmonids in the Willamette River              immediately replace animals that have
continue to respond to noise stimuli in       basin, and the removal of sea lions will       been deterred or removed from the area
spite of repeated exposures to                complement those efforts. Non-lethal           of the Falls.
firecrackers. Nonetheless, it is possible     removal measures will be combined                 Comment 29: Because experience
that a close exposure to an exploding         with the NMFS-funded sea lion                  with the use of the partially submerged
firecracker may cause temporary or            monitoring program to minimize costs.          cage trap is inadequate, raising concerns
possibly permanent deafness, so               Efforts to improve and update the              for the safety of personnel and the
dispatch of firecrackers should be used       fishway are proceeding under different         possible drowning of sea lions exist.
with caution.                                 funding.                                          Response: The trap design maintains
   Comment 21: Aversive conditioning             Comment 25: The EA should provide           open air space above the surface of the
should not be used because this               more information on why fish use               water to allow a captured animal to
technique did not successfully deter sea      fishway entrance 1 so much less than           surface and breathe, thereby negating a
lions at the Ballard Locks.                   other ladder entrances.                        concern for animals drowning. The trap
   Response: Aversive conditioning was           Response: It is difficult to fully assess   was successfully used to capture and
previously found to be ineffective for        passage through entrance 1 in                  handle an adult harbor seal without
use at the Ballard Locks because of           comparison with the other three fishway        mishap or injury.
difficulties in administering repeat          entrances because of fishway                      Comment 30: Active capture
treatments, which are necessary to            configuration. The different entrances         techniques will present high risk to sea
achieve lasting effect. This method has       have been constructed to provide               lions and humans.
been included in the proposed action          passage opportunities for fish under a            Response: Techniques that involve an
because repeat treatment opportunities        wide range of flow conditions. Passage         elevated level of risk for the animals,
may be available at Willamette Falls.         conditions during the spring result in         such as tangle nets and anesthetizing
                       Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                      59

drugs, are not proposed for use at           installed in entrance 1 to the fish ladder,   removal actions. The final EA includes
Willamette Falls because protocols for       sea lions were foraging on salmonids          a complete description of the finding of
their implementation in the moving           inside the fish ladder, thereby               no significant impact of the proposed
river environment have not been              preventing fish passage.                      action.
developed. The final EA has been                Comment 35: The EA should describe            Comment 40: The decline in winter
modified to clarify that active capture      the possibility that the California sea       steelhead from 1995 to 1996 was
using tangle nets in the river is not        lion population, with its population          reported as 72 percent, but it should be
proposed.                                    growth, may be poised for a population        62 percent.
   Comment 31: Non-lethal removal of         crash.                                           Response: The steelhead run declined
sea lions should not occur until the            Response: There is no evidence of          from 4,693 in 1995 to 1,801 in 1996,
salmonid stocks are threatened with          density dependent signals to indicate         which is a 62 percent decline. The EA
extinction by predation.                     that the sea lion population is               has been corrected.
   Response: Section 109 of the MMPA         approaching carrying capacity. When              Comment 41: The total time that sea
does not require that salmonid stocks        that occurs, the population will              lions were present in 1995 and an
must be approaching an endangered            fluctuate in response to factors that limit   estimate of total predation are not in the
status before non-lethal taking of sea       continued growth.                             EA.
lions can occur. The intent of the              Comment 36: The EA should explain             Response: Observations in 1995 were
proposed action is to be proactive and       why Willamette River chinook salmon           quite limited and no data were collected
prevent predation from increasing to a       are candidates for listing under the ESA.     on the total time spent foraging by sea
point where it may have a negative              Response: A coastwide status review        lions that year; therefore, no
impact on the salmonid stocks.               of chinook salmon on the Pacific coast        extrapolation of predation was
   Comment 32: The EA should provide         is in progress to determine the status of     attempted. An estimated kill rate for the
more detail on the dams, hatcheries,         chinook salmon populations with               limited time observed in 1995 is
rivers and tributaries, river flows over     respect to the ESA; therefore, until the      included in the EA.
time, fluctuations in salmonid               status review is completed, Willamette           Comment 42: The EA
populations, numbers of salmonids            River spring chinook are considered           mischaracterizes animal protection
using the locks, and suitable conditions     candidate species under the ESA. The          groups’ support for the no-action
for passage. The commenters also stated      EA has been modified to include this          alternative because the benefit is that
that it would be helpful if the document     clarification.                                sea lions would not be disturbed.
was expanded to explain the operation           Comment 37: The EA does not specify           Response: NMFS has received
of the locks, the paper mill and power       which run of steelhead was consumed           comments favoring no action to prevent
generation, and the allocation of water      by sea lions.                                 sea lion foraging and predation, and the
between fish passageways, and to                Response: Winter and summer                EA has been modified to reflect this.
provide more information on genetic          steelhead are present below the Falls            Comment 43: The EA incorrectly
relationships of runs, limiting factors on   concurrently, and observers are not able      states that the no-action alternative will
salmonid populations, water quality or       to differentiate steelhead when               likely result in a negative reaction by a
industrial outflows, redd counts, habitat    predation is observed.                        large sector of the public. The
considerations, harvest regulation, and         Comment 38: Summer steelhead are           commenter suggested that this applies
hatchery surpluses.                          hatchery-produced fish with no shortage       only to the opinions of fishers.
   Response: The EA has been modified        of availability; management strategies           Response: NMFS and ODFW have
to address additional background             can provide flexibility for the time          received numerous telephone calls from
information, and references that provide     being.                                        members of the public requesting that
more details have been incorporated in          Response: The focus of the proposed        the resource agencies take some action
the EA.                                      action is to prevent predation on winter      to remove sea lions from Willamette
   Comment 33: The information on fish       steelhead and spring chinook, and             Falls. The characterization of total
runs and passage should be presented in      summer steelhead are present during           representation in comparison to general
a tabular format for clarification.          the same period. Nonetheless, the             population has been deleted from the
   Response: The EA has been modified        summer steelhead population also has          EA.
to include tables on spring chinook and      declined in spite of hatchery production         Comment 44: The EA is not correct
steelhead runs and passage.                  due to reduced ocean survival                 that many people would resent their tax
   Comment 34: The EA does not               conditions that are also affecting winter     dollars being spent on hatchery
demonstrate that sea lions are having a      steelhead and spring chinook salmon. If       production that results in food only for
significant, deleterious effect on           ocean survival conditions do not              sea lions. The commenter felt that many
passage.                                     improve and run numbers continue to           people would resent tax dollars spent
   Response: Non-lethal removal of sea       decline, management options will              on non-lethal removal of sea lions.
lions from the fish passage facility are     continue to erode and hatchery                   Response: NMFS and ODFW have
authorized under section 109(h), which       operations could be jeopardized.              received numerous complaints from
does not require a demonstration that a         Comment 39: The EA incorrectly             members of the public regarding the
significant, deleterious effect is           states that there is no controversy or        past lack of action by resource agencies
occuring; however, NMFS and ODFW             uncertainty on the effects of the             to stop sea lions from feeding on
have investigated fish passage at the        proposed non-lethal removal measures.         salmonids at Willamette Falls while
Willamette Falls facility. Observations         Response: The proposed action is to        fisheries are being restricted and fish
suggested that sea lions were adversely      use non-lethal measures that have been        numbers are low. The EA has been
affecting fish passage by foraging at the    used and assessed at the Ballard Locks.       modified to indicate that comments
entrance to the fish ladder and              These actions have been demonstrated          have been received favoring no action as
preventing access, and consuming and         to have no adverse effect on California       well.
dispersing adult salmonids that were         sea lions, and, therefore, there is no           Comment 45: The EA should provide
attempting to enter the fishway to           scientific controversy or uncertainty on      more detailed information on the barrier
progress upstream. Until a barrier was       the effects of the proposed non-lethal        gate and its effectiveness. One
60                       Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

commenter noted that observations            reports. The revision, which was              Dated: December 24, 1997.
made at fishway entrance 1 indicate that     initiated in 1996 is now complete, and      Hilda Diaz-Soltero,
sea lions commonly forage at the face of     copies of the revised reports are           Director, Office of Protected Resources,
the barrier gate, and out to about 10 feet   available to the public.                    National Marine Fisheries Service.
(3.048 meters) below the barrier. One        ADDRESSES: Printed copies may be            [FR Doc. 97–34218 Filed 12-31-97; 8:45 am]
commenter questioned whether the             obtained by writing to one of the           BILLING CODE 3510–22–F
barrier gate could be expanded from          following: Chief, Marine Mammal
riverbank to riverbank to keep sea lions     Division, Office of Protected Resources,
out of area.                                 National Marine Fisheries Service, 1335     DEPARTMENT OF COMMERCE
   Response: The EA has been modified        East-West Highway, Silver Spring, MD
to include additional observations on        20910–3226, Attn: Stock Assessments;        National Oceanic and Atmospheric
the barrier gate. The barrier gate           Douglas P. DeMaster, Alaska Fisheries       Administration
prevents predation from occurring            Science Center (F/AKC), NMFS, 7600
within the fish ladder at fishway            Sand Point Way, Seattle, WA 98115–          [I.D. 122397G]
entrance 1, but it has not stopped sea       0070 regarding Alaska regional stock
lions from foraging at the face of the       assessments; James Lecky, Southwest         Pacific Fishery Management Council;
barrier and areas adjacent to the fish       Regional Office, NMFS, 501 West Ocean       Public Meeting
ladder entrance. The installation of         Boulevard, Long Beach, CA 90802–
barrier gates at other fish ladder                                                       AGENCY:   National Marine Fisheries
                                             4213, regarding Pacific regional stock
entrances will be assessed if foraging                                                   Service (NMFS), National Oceanic and
                                             assessments; or Gordon Waring,
inside those entrances is noted. A                                                       Atmospheric Administration (NOAA),
                                             Northeast Fisheries Science Center,
physical barrier across the Willamette                                                   Commerce.
                                             NMFS, 166 Water Street, Woods Hole,
River is not feasible or practical.          MA 02543–1097 regarding Atlantic            ACTION: Notice of public meeting (work
   ACTION: The EA has been modified          regional stock assessments.                 session).
as described in the responses to the         FOR FURTHER INFORMATION CONTACT:
comments. NMFS has evaluated the                                                         SUMMARY:    The Pacific Fishery
                                             Thomas C. Eagle, (301) 713–2322,            Management Council’s (Council)
environmental consequences of the            Douglas P. DeMaster, (206) 526–4045
alternatives and has concluded that the                                                  Salmon Technical Team (STT) will hold
                                             regarding Alaska regional stock             a work session which is open to the
proposed action is unlikely to result in     assessments; James Lecky, (562) 980–
any significant impacts on the human                                                     public.
                                             4020 regarding Pacific regional stock
environment and, therefore, has made a                                                   DATES: The work session will begin at
                                             assessments; or Gordon Waring, (508)
finding of no significant impact             495–2000 regarding Atlantic regional        10 a.m. on Tuesday, January 20, 1998,
(FONSI). The EA and FONSI have been          stock assessments.                          and continue from approximately 8 a.m.
prepared in accordance with National                                                     to 5 p.m. each day through Friday,
                                             SUPPLEMENTARY INFORMATION: Section
Environmental Policy Act (NEPA) and                                                      January 23, 1998.
                                             117 of the Marine Mammal Protection
with implementing regulations at 40          Act (MMPA) requires NMFS and the            ADDRESSES: The work session will be
CFR parts 1500 through 1508 and              U.S. Fish and Wildlife Service to           held at the Council office, 2130 SW
NOAA guidelines concerning                   prepare stock assessment reports for all    Fifth Avenue, Suite 224, Portland, OR
implementation of NEPA found in              marine mammal stocks that occur in          97201.
NOAA Administrative Order 216-6.             waters under the jurisdiction of the        FOR FURTHER INFORMATION CONTACT: Dr.
   Copies of the EA and FONSI are            United States. These reports must           John Coon, Salmon Management
available (See ADDRESSES).                   contain information regarding the           Coordinator; telephone: (503) 326–6352.
  Dated: December 22, 1997.
                                             distribution and abundance of the stock,    SUPPLEMENTARY INFORMATION: The
Hilda Diaz-Soltero,
                                             population growth rates and trends,         purpose of the STT work session is to
Director, Office of Protected Resources,     estimates of annual human-caused            draft the ‘‘Review of 1997 Ocean
National Marine Fisheries Service.
                                             mortality from all sources, descriptions    Salmon Fisheries.’’ The final report will
[FR Doc. 97–34145 Filed 12–31–97; 8:45 am]   of the fisheries with which the stock       be distributed to the public and
BILLING CODE 3510–22–F                       interacts, and the status of the stocks.    reviewed by the Council at its March
                                             NMFS completed the 1996 draft stock         1998 meeting in Millbrae, CA.
                                             assessment reports and made them               Although other issues not contained
DEPARTMENT OF COMMERCE                       available for public review and             in this agenda may come before this
National Oceanic and Atmospheric             comment on January 21, 1997 (62 FR          Team for discussion, in accordance with
Administration                               3005). During the public comment            the Magnuson-Stevens Fishery
                                             period and subsequent to it, NMFS           Conservation and Management Act,
[I.D. 122397E]                               consulted extensively with Scientific       those issues may not be the subject of
                                             Review Groups (SRGs), established also      formal Team action during this meeting.
Marine Mammals                               under the MMPA, to discuss their            Team action will be restricted to those
AGENCY:  National Marine Fisheries           comments, as well as the comments           issues specifically identified in the
Service (NMFS), National Oceanic and         received from the public. The results of    agenda listed in this notice.
Atmospheric Administration (NOAA),           the different SRG discussions and
                                             comments received from the public,          Special Accommodations
Commerce.
ACTION: Notice of availability of revised    conservation organizations, state, and        The work session is physically
marine mammal stock assessment               other Federal agencies were reviewed        accessible to people with disabilities.
reports.                                     and incorporated into these final reports   Requests for sign language
                                             as appropriate. The 1996 final marine       interpretation or other auxiliary aids
SUMMARY: NMFS has incorporated               mammal stock assessment reports have        should be directed to Mr. Eric Greene at
public comments into revisions of            now been completed and are available        (503) 326–6352 at least 5 days prior to
marine mammal stock assessment               for distribution.                           the work session date.
                         Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                             61

  Dated: December 23, 1997.                     auxiliary aids should be directed to Mr.         DATES:  Anyone wishing to object to the
Bruce C. Morehead,                              Eric Greene at (503) 326–6352 at least 5         grant of this license must file written
Acting Director, Office of Sustainable          days prior to the meeting date.                  objections, along with any supporting
Fisheries, National Marine Fisheries Service.     Dated: December 23, 1997.                      evidence, not later than March 3, 1998.
[FR Doc. 97–34146 Filed 12–31–97; 8:45 am]      Bruce C. Morehead,                               ADDRESSES: Written objections are to be
BILLING CODE 3510–22–F
                                                Acting Director, Office of Sustainable           filed with the Office of Naval Research,
                                                Fisheries, National Marine Fisheries Service.    ONR 00CC, Ballston Tower One, 800
                                                [FR Doc. 97–34147 Filed 12–31–97; 8:45 am]       North Quincy Street, Arlington, Virginia
DEPARTMENT OF COMMERCE                                                                           22217–5660.
                                                BILLING CODE 3510–22–F
                                                                                                 FOR FURTHER INFORMATION CONTACT:
National Oceanic and Atmospheric
                                                                                                 Mr. R. J. Erickson, Staff Patent Attorney,
Administration
                                                                                                 Office of Naval Research, ONR 00CC,
                                                DEPARTMENT OF DEFENSE
[I.D. 122397F]                                                                                   Ballston Tower One, 800 North Quincy
                                                Department of the Army                           Street, Arlington, Virginia 22217-5660,
Pacific Fishery Management Council;                                                              telephone (703) 696–4001.
Public Meeting                                  Army Science Board; Notice of Open                 Authority: 35 U. S. C. 207; 37 CFR Part
AGENCY:  National Marine Fisheries              Meeting                                          404; 32 CFR Part 746.
Service (NMFS), National Oceanic and              In accordance with Section 10(a)(2) of           Dated: December 19, 1997.
Atmospheric Administration (NOAA),              the Federal Advisory Committee Act               Michael I. Quinn,
Commerce.                                       (Pub. L. 92–463), announcement is                Lieutenant Commander, Judge Advocate
ACTION: Notice of public meeting.               made of the following Committee                  General’s Corps, U. S. Navy, Alternate Federal
                                                Meeting:                                         Register Liaison Officer.
SUMMARY: The Pacific Fishery
                                                                                                 [FR Doc. 97–34201 Filed 12-31-97; 8:45 am]
Management Council (Council) will                  Name of Committee: Army Science Board
                                                (ASB).                                           BILLING CODE 3810-FF-P
hold a meeting to discuss stock
assessment plans for 1998. The meeting             Date of Meeting: 13 & 14 January 1998.
                                                   Time of Meeting: 0830–1630, 13 Jan 98.
will be open to the public.
                                                0830–1300, 14 Jan 98.                            DEPARTMENT OF ENERGY
DATES: The meeting will begin on                   Place: CECOM HQ—Ft. Monmouth, NJ
January 12, 1998 at 1:00 p.m. (Pacific             Agenda: The Army Science Board’s (ASB)        Department of Energy (DOE)
Standard Time), and continue at 8 a.m.          Issue Group Study on ‘‘Army Avionics             Implementation Plan for
on January 13 until business is                 Modernization Methodologies’’ will meet for      Recommendation 97–2 of the Defense
completed.                                      briefings and discussions on Army avionics
                                                modernization methodologies, Army avionics
                                                                                                 Nuclear Facilities Safety Board
ADDRESSES: The meeting will be held at                                                           (DNFSB), Criticality Safety
                                                Science and Technology programs, and open
the Council office, 2130 SW Fifth
                                                systems architecture. These meetings will be     AGENCY:   Department of Energy.
Avenue, Suite 224, Portland, OR 97201.          open to the public. Any interested person
FOR FURTHER INFORMATION CONTACT:                may attend, appear before, or file statements    ACTION:   Notice.
Larry Six, Executive Director; telephone:       with the committee at the time and in the
                                                                                                 SUMMARY:    The Defense Nuclear
(503) 326–6352.                                 manner permitted by the committee. For
                                                further information, please call our office at   Facilities Safety Board published
SUPPLEMENTARY INFORMATION: The
                                                (703) 695–0781.                                  Recommendation 97–2, concerning
purpose of the meeting is to plan the                                                            criticality safety at defense nuclear
stock assessment process for groundfish         Wayne Joyner,
                                                                                                 facilities in the DOE complex, on May
species in 1998. The meeting will               Program Support Specialist, Army Science
                                                Board.                                           29, 1997 (62 FR 2918). Under section
consider revisions to the terms of                                                               315(e) of the Atomic Energy Act of 1954,
reference used for 1997 stock                   [FR Doc. 97–34181 Filed 12–31–97; 8:45 am]
                                                                                                 as amended, 42 U.S.C. 2286d(e), the
assessments, revise the goals and               BILLING CODE 3710–08–M
                                                                                                 Department of Energy must transmit an
objectives for the annual stock                                                                  implementation plan on
assessment cycle, develop a calendar for                                                         Recommendation 97–2 to the Defense
1998 stock assessment activities,               DEPARTMENT OF DEFENSE
                                                                                                 Nuclear Facilities Safety Board after
confirm the list of species to be assessed                                                       acceptance by the Secretary. The
in 1998, designate the resources and            Department of the Navy
                                                                                                 Department’s implementation plan was
personnel for the assessments and the           Notice of Intent to Grant Exclusive              sent to the DNFSB on December 12,
reviews, and discuss ways of improving          Patent License; U.S. Drug Testing, Inc.          1997, and is available for review in the
coordination of the process.                                                                     Department of Energy Public Reading
  Although other issues not contained           AGENCY: Department of the Navy, DoD.
                                                                                                 Rooms and on the internet site, http://
in this agenda may come before this             ACTION: Notice of intent to grant                dr.tis.doe.gov/.
Council for discussion, in accordance           exclusive license.
with the Magnuson-Stevens Fishery                                                                ADDRESSES: Send comments, data,
Conservation and Management Act,                SUMMARY:   The Department of the Navy            views, or arguments concerning the
those issues may not be the subject of          hereby gives notice of its intent to grant       implementation plan to: Department of
formal Council action during this               to U.S. Drug Testing, Inc., a revocable,         Energy, 1000 Independence Avenue,
meeting. Council action will be                 nonassignable, exclusive license in the          SW, Washington, D.C. 20585.
restricted to those issues specifically         United States and certain foreign                FOR FURTHER INFORMATION CONTACT: Dr.
identified in the agenda listed in this         countries to practice the Government             Robin Staffin, Deputy Assistant
notice.                                         owned invention described in U.S.                Secretary for Research and
                                                Patent No. 5,183,740, entitled ‘‘Flow            Development, Office of Defense
Special Accommodations                          Immunosensor Method and Apparatus,’’             Programs, Department of Energy, 1000
  The meeting is physically accessible          issued February 2, 1993, in the field of         Independence Avenue, SW, Washington
to people with disabilities. Requests for       saliva based human diagnostics.                  D.C. 20585.
62                       Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

   Issued in Washington, D.C., on December      Avenue, S.W.; Room 1E–245,                  the public comment session of the
23, 1997.                                       Washington, D.C. 20585, (202) 586–          meeting. Individuals may also register
Joseph Arango,                                  4400.                                       on January 21, 1998 at the meeting site.
Acting Departmental Representative to the       FOR FURTHER INFORMATION CONTACT:            Every effort will be made to hear all
Defense Nuclear Facilities Safety Board.        James T. Melillo, Special Assistant to      those wishing to speak to the Board, on
December 12, 1997.                              the Assistant Secretary for                 a first come, first serve basis. Those who
The Honorable John T. Conway,                   Environmental Management;                   call in and reserve time will be given
Chairman, Defense Nuclear Facilities Safety     Environmental Management Advisory           the opportunity to speak first. The
      Board, 625 Indiana Avenue, N.W., Suite    Board (EMAB), EM–22, 1000                   Board Co-Chairs are empowered to
      700, Washington, D.C. 20004.              Independence Avenue, S.W.,                  conduct the meeting in a fashion that
   Dear Mr. Chairman: We are pleased to                                                     will facilitate the orderly conduct of
                                                Washington, DC 20585, (202) 586–4400.
forward the Department’s Implementation
                                                The Internet address is:                    business.
Plan for Defense Nuclear Facilities Safety
Board’s Recommendation 97–2, Criticality        James.Melillo@em.doe.gov                    Transcripts and Minutes
Safety. This Plan addresses the need for        SUPPLEMENTARY INFORMATION: Purpose of
improved criticality safety practices and       the Board. The purpose of the Board is        A meeting transcript and minutes will
coherent programs to alleviate the potential    to provide the Assistant Secretary for      be available for public review and
adverse impacts on safety and productivity of   Environmental Management (EM) with          copying at the Freedom of Information
Department of Energy operations. It builds      advice and recommendations on issues        Public Reading Room, 1E–190, Forrestal
upon the successful actions taken in response                                               Building, 1000 Independence Avenue,
to Board Recommendation 93–2, The Need
                                                confronting the Environmental
                                                Management program, from the                S.W., Washington, DC 20585 between
for Critical Experiment Capability, which is                                                9:00 a.m. and 4:00 p.m., Monday
being implemented through the Nuclear           perspectives of affected groups and
                                                state, local, and tribal governments. The   through Friday, except Federal holidays.
Criticality Predictability Program. Because
the Implementation Plan for                     Board will help to improve the                Issued at Washington, DC on December 23,
Recommendation 97–2 incorporates ongoing        Environmental Management Program by         1997.
Nuclear Criticality Predictability Program      assisting in the process of securing        Rachel M. Samuel,
activities, I propose closure of                consensus recommendations, and              Deputy Advisory Committee Management
Recommendation 93–2.                            providing the Department’s numerous         Officer.
   To continue successful implementation of
Recommendation 93–2 and implement
                                                publics with opportunities to express       [FR Doc. 97–34195 Filed 12–31–97; 8:45 am]
Recommendation 97–2 in an integrated            their opinions regarding the                BILLING CODE 6450–01–P
fashion, the Department is taking steps to      Environmental Management Program.
ensure stable funding for these important       Tentative Agenda
crosscutting safety activities now and in the                                               DEPARTMENT OF ENERGY
outyears. We have established a responsible     Wednesday, January 21, 1998
line manager and identified necessary                                                       Federal Energy Regulatory
funding for fiscal years 1998 and 1999.         8:30 a.m. Co-Chairmen Open Public
                                                    Meeting                                 Commission
   The Implementation Plan was prepared by
a cross-organizational response team            8:45 a.m. Opening Remarks, Assistant        [Docket No. CP98–149–000]
reporting to the Assistant Secretary for            Secretary for Environmental
Defense Programs in coordination with other         Management                              El Paso Natural Gas Company; Notice
affected Headquarters and Field offices. Dr.    9:00 a.m. Technology Development            of Application
Robin Staffin, Deputy Assistant Secretary for       and Transfer Committee Report
Research and Development, Office of Defense     9:30 a.m. Privatization Committee           December 24, 1997.
Programs, will be the responsible manager for       Report                                     Take notice that on December 19,
implementing this plan. He can be reached       10:00 a.m. Science Committee Report         1997, El Paso Natural Gas Company (El
at (202) 586–7590.                                                                          Paso), Post Office Box 1492, El Paso,
                                                10:45 a.m. 2006 Strategic Planning
      Sincerely,                                                                            Texas 79978, filed in Docket No. CP98–
                                                    Committee Report
Federico Pena.˜                                                                             149–000 an application pursuant to
                                                11:15 a.m. Long-Term Stewardship
[FR Doc. 97–34196 Filed 12–31–97; 8:45 am]          Committee Report                        Section 7(c) of the Natural Gas Act for
BILLING CODE 6450–01–P                          11:45 a.m. Worker Health and Safety         a certificate of public convience and
                                                    Committee Report                        necessity to construct and operate the
                                                12:00 p.m. Lunch                            Bondad Expansion Project to alleviate a
DEPARTMENT OF ENERGY                            1:00 p.m. Board Business                    capacity constraint on El Paso’s system
                                                2:15 p.m. Public Comment Session            north of the Blanco plant in San Juan
Environmental Management Advisory               3:00 p.m. Meeting Adjourns                  County, New Mexico, all as more fully
Board                                                                                       set forth in the application which is on
                                                  A final agenda will be available at the
AGENCY:   Department of Energy.                 meeting.                                    file with the Commission and open to
ACTION:   Notice of open meeting.                                                           public inspection.
                                                Public Participation                           El Paso states that it proposes to
SUMMARY:   Pursuant to the provisions of           The meeting is open to the public.       construct and operate additional
the Federal Advisory Committee Act              Written statements may be filed with        compression facilities, with
(Public Law 92–463, 86 Stat. 770),              the Board either before or after the        appurtenances, at the existing Bondad
notice is hereby given of the following         meeting. Members of the public who          compressor station located on the
Advisory Committee meeting:                     wish to make oral statements pertaining     Ignacio to Blanco Line and Loop Line
  Name: Environmental Management                to agenda items should either contact       (Line Nos. 1205 and 1218, respectively)
Advisory Board.                                 James T. Melillo at the address or          (Ignacio Lines), in La Plata County,
  Date and Times: Wednesday, January            telephone number listed above, or call      Colorado, in order to restage the three
21, 1998, 8:30 a.m.—3:00 p.m.                   1–(800) 736–3282, the Center for            existing Solar Centaur centrifugal
  Place: U.S. Department of Energy/             Environmental Management                    compressor units and to replace each of
Forrestal Building, 1000 Independence           Information and register to speak during    the three gas turbine engines comprising
                        Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                     63

10,740 (ISO) horsepower with three gas        14, 1998, file with the Federal Energy      Commission or its designee on this
turbine engines comprising 15,900 (ISO)       Regulatory Commission, Washington,          application if no motion to intervene is
horsepower.                                   D.C. 20426, a motion to intervene or a      filed within the time required herein, if
   El Paso contends that the Bondad           protest in accordance with the              the Commission on its own review of
Expansion Project has been designed to        requirements of the Commission’s Rules      the matter finds that a grant of the
permit El Paso to transport 116,500 Mcf       of Practice and Procedure (18 CFR           certificate is required by the public
per day of additional quantities of gas       385.214 or 385.211) and the Regulations     convenience and necessity. If a motion
from receipt points along the Ignacio         under the Natural Gas Act (18 CFR           for leave to intervene is timely filed, or
Lines to an existing point near the           157.10). All protests filed with the        if the Commission on its own motion
existing Blanco plant located in San          Commission will be considered by it in      believes that a formal hearing is
Juan County, New Mexico.                      determining the appropriate action to be    required, further notice of such hearing
   El Paso estimates the cost of              taken but will not serve to make the        will be duly given.
constructing the Bondad Expansion             protestants parties to the proceeding.         Under the procedure herein provided
Project to be $3.6 million. El Paso           The Commission’s rules require that         for, unless otherwise advised, it will be
proposes to place the proposed facilities     protestors provide copies of their          unnecessary for El Paso to appear or be
in service by October 1, 1998.                protests or the party or parties directly   represented at the hearing.
   It is stated that based on the cost of     involved. Any person wishing to             Lois D. Cashell,
the proposed compression facilities, El       become a party to a proceeding or to        Secretary.
Paso has calculated a separate                participate as a party in any hearing       [FR Doc. 97–34175 Filed 12–31–97; 8:45 am]
incremental rate attributable to the cost     therein must file a motion to intervene     BILLING CODE 6717–01–M
of service for the proposed Bondad            in accordance with the Commission’s
Expansion Project. It is stated that the      Rules.
incremental reservation rate for the             A person obtaining intervene status      DEPARTMENT OF ENERGY
proposed project, which is referred to as     will be placed on the service list
the Bondad Facilities Reservation             maintained by the Secretary of the          Federal Energy Regulatory
Charge, is $0.67734 per dth, on a             Commission and will receive copies of       Commission
monthly basis. El Paso proposes the           all documents filed by the applicant and
calculated incremental rate (the                                                          [Docket No. CP90–1512–001]
                                              by every one of the intervenors. An
recourse rate) as the tariff rate             intervenor can file for rehearing of any    Mountain Fuel Supply Company;
applicable to firm transportation service     Commission order and can petition for       Notice of Petition To Amend
on the Bondad Expansion Project.              court review of any such order.
   In addition, it is stated that El Paso     However, an intervenor must submit          December 24, 1997.
has calculated a separate incremental         copies of comments or any other filing         Take notice that on December 19,
fuel charge, referred to as the Bondad        it makes with the Commission to every       1997, Mountain Fuel Supply Company
Facilities Fuel Charge, in which              other intervenor in the proceeding, as      (Mountain Fuel), 180 East First South
shippers receiving firm service on the        well as 14 copies with the Commission.      Street, Salt Lake City, Utah 84145, filed
Bondad Expansion Project will be                 A person does not have to intervene,     in Docket No. CP90–1512–001 a petition
assessed a proposed incremental fuel          however, in order to have comments          pursuant to Section 7(f) of the Natural
charge of 0.75 percent of quantities of       considered. A person, instead, may          Gas Act to amend its certificate issued
gas transported.                              submit two copies of comments to the        in Docket No. CP90–1512, authorizing a
   El Paso states that in support of the      Secretary of the Commission.                service area determination, all as more
Bondad Expansion Project, it has              Commenters will be placed on the            fully set forth in the petition on file with
entered into final, firm Transportation       Commission’s environmental mailing          the Commission and open to public
Service Agreements (TSAs) with Enron          list, will receive copies of                inspection.
Capital & Trade Resources Corp., Elm          environmental documents and will be            Mountain Fuel proposes to modify its
Ridge Resources, Inc. and Conoco, Inc.,       able to participate in meetings             service area by adding Box Elder, Weber
for the transportation of an additional       associated with the Commission’s            Davis, Salt Lake, Tooele and Utah
116,500 mcf per day of gas from any           environmental review process.               Counties, all located in Utah, and the
point of receipt on the Bondad System,        Commenters will not be required to          remainder of Cache County, Utah, that
including the Ignacio Receipt Point, to       serve copies of filed documents on all      is not part of Mountain Fuel’s existing
the Blanco Delivery Pont.                     other parties. However, commenters          service area. It is stated that the service
   El Paso states that the executed firm      will not receive copies of all documents    area presently consists of Franklin
TSAs applicable at the Bondad                 filed by other parties or issued by the     County, Idaho, and most of Cache
Expansion Project are subject to the          Commission and will not have the right      County, Utah. It is explained that the
provisions of Rate Schedule FT–1              to seek rehearing or appeal the             additional counties are located along the
contained in El Paso’s Volume No. 1–A,        Commission’s final order to a federal       Wasatch Front of northern Utah and
FERC Gas Tariff; however, pursuant to         court.                                      incorporate the Sunset, Porter’s Lane
Section 4.5 of the Tariff, the executed          The Commission will consider all         (Centerville), Little Mountain and
TSAs each contain a separate negotiated       comments and concerns equally,              Payson gate-station interconnects with
rate, rather than the proposed tariff rate,   whether filed by commenters or those        Questar Pipeline Company (Questar), an
applicable to the Bondad Expansion            requesting intervenor status.               interstate pipeline company, and the
Project. El Paso further states that the         Take further notice that, pursuant to    Hunter Park interconnect with Kern
rate negotiated with each of the three        the authority contained in and subject to   River Gas Transmission Company, an
shippers on the Project is a Total Daily      jurisdiction conferred upon the Federal     interstate pipeline company.
One-Part Rate per dth.                        Energy Regulatory Commission by                Mountain Fuel asserts that the
   Any person desiring to participate in      Sections 7 and 15 of the Natural Gas Act    additions to the service area are
the hearing process or to make any            and the Commission’s Rules of Practice      required to improve its operating
protest with reference to said                and procedure, a hearing will be held       flexibility for meeting customer
application should on or before January       without further notice before the           requirements in its northern Utah and
64                       Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

southern Idaho distribution area. It is      which is on file with the Commission         DEPARTMENT OF ENERGY
stated that Mountain Fuel has recently       and open to public inspection.
experienced operational problems                                                          Federal Energy Regulatory
                                                Natural states that it seeks NGA
because of declines in the Btu content                                                    Commission
                                             certification in order that it may be used
of gas received from Questar at its          to provide Part 284 Subpart G                [Docket No. EC98–21–000, et al.]
Hyrum Gate Station, which has been the
                                             transportation. Natural’s proposed
only source of gas serving customers in                                                   Alabama Power Company, et al.;
                                             quantities to be delivered at the existing
the existing service area. It is explained                                                Electric Rate and Corporate Regulation
that Mountain Fuel requires additional       point of delivery are 1,300 MMBtu/day.
                                             Natural states that the end use of gas is    Filings
supply sources for gas with higher Btu
content to provide reliable service to its   for Land O’Lakes, Inc. Natural states        December 23, 1997.
customers.                                   that it can provide the quantities of          Take notice that the following filings
   Any person desiring to be heard or to     natural gas without detriment or             have been made with the Commission:
make any protest with reference to said      disadvantage to its peak day and annual
                                             delivery capacity. Natural notes that the    1. Alabama Power Company
petition to amend should on or before
January 5, 1998, file with the Federal       total volume of gas to be delivered after    [Docket No. EC98–21–000]
Energy Regulatory Commission,                the facilities are certificated will not        Take notice that on December 4, 1997,
Washington, D.C. 20426, a motion to          exceed the total volume originally           Alabama Power Company (Alabama
intervene or a protest in accordance         capable of being delivered. Natural          Power), filed an application, pursuant to
with the requirements of the                 states that the facilities were placed in-   Section 203 of the Federal Power Act,
Commission’s Rules of Practice and           service on November 2, 1997. Natural         for approval of the sale of a 44kV
Procedure (18 CFR 385.214 or 385.211)        contends that it is currently providing      transmission substation to the City of
and the Regulations under the Natural        interruptible transportation service by      Hartford, Alabama (City). The facilities
Gas Act (18 CFR 157.10). All protests        means of the subject facilities under        are located in the City of Hartford,
filed with the Commission will be            Rate Schedule ITS.                           Geneva County, Alabama. The total
considered by it in determining the                                                       purchase price of the facilities to be sold
                                                Natural asserts that it obtained the
appropriate action to be taken but will                                                   and conveyed is $221,668.00.
not serve to make the Protestants parties    appropriate environmental clearances            Comment date: January 20, 1998, in
to the proceeding. Any person wishing        from the Oklahoma Historical Society,        accordance with Standard Paragraph E
to become a party to a proceeding or to      the United States Department of Interior     at the end of this notice.
participate as a party in any hearing        Fish and Wildlife Service, the
                                             Oklahoma Archaeological Survey, and          2. GPU Power, Inc.
therein must file a motion to intervene
in accordance with the Commission’s          the Department of the Army Corps of          [Docket No. EG98–20–000]
Rules.                                       Engineers for its proposed construction.        Take notice that on December 12,
Lois D. Cashell,                                Any person or the Commission’s staff      1997, GPU Power, Inc. (GPU Power or
Secretary.                                   may, within 45 days after issuance of        Applicant), of One Upper Pond Road,
[FR Doc. 97–34173 Filed 12–31–97; 8:45 am]   the instant notice by the Commission,        Parsippany, New Jersey 07054, filed
BILLING CODE 6717–01–M                       file pursuant to Rule 214 of the             with the Federal Energy Regulatory
                                             Commission’s Procedural Rules (18 CFR        Commission an application for
                                             385.214) a motion to intervene or notice     determination of exempt wholesale
DEPARTMENT OF ENERGY                         of intervention and pursuant to Section      generator status pursuant to Part 365 of
                                             157.205 of the Regulations under the         the Commission’s Regulations.
Federal Energy Regulatory                    Natural Gas Act (18 CFR 157.205) a              Applicant states that, through its
Commission                                                                                wholly-owned subsidiary, GPU Power
                                             protest to the request. If no protest is
                                             filed within the time allowed therefor,      Ireland, Inc., it intends to develop a base
[Docket No. CP98–144–000]                                                                 load peat-fired power plant to be located
                                             the proposed activity shall be deemed
Natural Gas Pipeline Company of                                                           in East Midlands, Ireland (the Facility).
                                             authorized effective the day after the
America; Notice of Request Under                                                          Applicant further states that all
                                             time allowed for filing a protest. If a
Blanket Authorization                                                                     electricity produced by the Facility will
                                             protest is filed and not withdrawn           be sold at wholesale to Electricity
December 24, 1997.                           within 30 days after the time allowed        Supply Board, a statutory corporation
   Take notice that on December 18,          for filing a protest, the instant request    with principal offices at 27 Lower
1997, Natural Gas Pipeline Company of        shall be treated as an application for       Fitzwilliam Street, Dublin 2, Ireland.
America (Natural), 701 East 22nd Street,     authorization pursuant to Section 7 of          Comment date: January 16, 1998, in
Lombard, Illinois 60148, filed in Docket     the Natural Gas Act.                         accordance with Standard Paragraph E
No. CP98–144–000 a request pursuant to       Lois D. Cashell,                             at the end of this notice. The
Sections 157.205 and 157.212(a) of the       Secretary.                                   Commission will limit its consideration
Commission’s Regulations under the           [FR Doc. 97–34174 Filed 12–31–97; 8:45 am]   of comments to those that concern the
Natural Gas Act (18 CFR 157.205 and          BILLING CODE 6717–01–M
                                                                                          adequacy or accuracy of the application.
157.212(a)) seeking NGA Section 7(c)                                                      3. Zhejiang Yong-Ke Thermal Power
certification to retain and operate an                                                    Corporation, Ltd.
existing 3-inch tap and dual 2-inch
meter originally authorized under                                                         [Docket No. EG98–21–000]
NGPA Section 311 to deliver gas to                                                          On December 15, 1997, Zhejiang
Land O’Lakes, Inc. in Beaver County,                                                      Yong-Ke Thermal Power Corporation
Oklahoma, under the blanket certificate                                                   Ltd. (ZY), by EDC Shaoxing Power Ltd.,
issued in Docket No. CP82–402–000, all                                                    c/o Enserch Development Corp., 1817
as more fully set forth in the request                                                    Wood Street, Dallas TX 75201, filed
                          Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                               65

with the Federal Energy Regulatory             A copy of the complaint was served       Company, Complainants and
Commission an application for               on respondent WPL and the Public            Petitioners, v. Ashburnham Municipal
determination of exempt wholesale           Service Commission of Wisconsin.            Light Department, Boylston Municipal
generator status pursuant to Part 365 of       Comment date: January 22, 1998, in       Light Department, Braintree Electric
the Commission’s Regulations.               accordance with Standard Paragraph E        Light Department, Chicopee Municipal
   ZY will own a 36 MW coal-fired,          at the end of this notice. Answers to the   Lighting Plant, Connecticut Municipal
cogeneration plant (the Facility) now       complaint shall be due on or before         Electric Cooperative, Danvers Electric
under construction in the Keqiao            January 22, 1998.                           Division, Eastern Maine Electric
Western Industrial Area, Shaoxing                                                       Cooperative, Inc., Georgetown
                                            6. Enron Power Marketing, Inc. v.
County, Zhejiang Province, PRC. The                                                     Municipal Light Department, Hingham
                                            Pennsylvania-New Jersey-Maryland
Facility will generate and sell electric                                                Municipal Light Plant, City of Holyoke
                                            Interconnection and PECO Energy
power at wholesale to the local utility                                                 Gas & Electric Department, Houlton
                                            Company
(the Shaoxing Administration of Power                                                   Water Company, Hudson Light & Power
Utilization, as subsidized by the 3-        [Docket No. EL98–12–000]
                                                                                        Department, Hull Municipal Lighting
Electricity Office of Shaoxing County          Take notice that on December 15,         Plant, Ipswich Municipal Light
People’s Government), and will sell         1997, Enron Power Marketing, Inc.           Department, Littleton Electric Light &
thermal energy to local businesses in the   (EMPI), filed a complaint and request       Water Department, Marblehead
Keqiao Western Industrial Area.             for expedited relief under Section 206 of   Municipal Light Department,
   Comment date: January 14, 1998, in       the Federal Power Act (FPA), 16 U.S.C.      Middleborough Gas & Electric
accordance with Standard Paragraph E        § 824e (1997). EPMI seeks an order
                                                                                        Department, Middleton Municipal Light
at the end of this notice. The              immediately directing the Pennsylvania-
Commission will limit its consideration                                                 Department, New Hampshire Electric
                                            New-Jersey Maryland Interconnection
of comments to those that concern the                                                   Cooperative, Inc., North Attleborough
                                            (PJM) and, if necessary, PECO Energy
adequacy or accuracy of the application.    Company (PECO) to enter into                Electric Department, Paxton Municipal
                                            transmission agreements with EPMI, as       Light Department, Peabody Municipal
4. Florida Power & Light Company                                                        Light Plant, Shrewsbury’s Electric Light
                                            required for the provision of network
[Docket No. EL98–8–000]                     integration transmission service, so that   Plant, Sterling Municipal Light
   Take notice that on December 15,         EPMI can serve its wholesale customer,      Department, Taunton Municipal
1997, Florida Power & Light Company         the National Railroad Passenger             Lighting Plant, Templeton Municipal
tendered for filing a Supplemental          Corporation (Amtrak). EPMI alleges that     Light Plant, Wakefield Municipal Light
Statement on Reciprocity in the above-      PJM has violated the FPA and its open-      Department, West Boylston Municipal
referenced docket.                          access transmission tariff by denying       Lighting Plant, Westfield Gas & Electric
   Comment date: January 15, 1998, in       network service to EPMI, and eligible       Light Department, and Wolfeboro
accordance with Standard Paragraph E        customer. EPMI alleges that PECO            Municipal Electric Dept.; Respondents
at the end of this notice.                  likewise has threatened to violate the      [Docket No. EL98–13–000]
                                            FPA, its open-access tariff and Order
5. The Wisconsin Public Power Inc.          No. 888 by denying EPMI access to             Take notice that on December 15,
System v. Wisconsin Power and Light         interconnection facilities required to      1997, Bangor Hydro-Electric Company,
Company                                     provide transmission service to Amtrak.     Cambridge Electric Light Company,
[Docket No. EL98–11–000]                    EPMI requests that the Commission           Central Maine Power Company, Central
   Take notice that on December 2, 1997,    grant relief on an expedited basis, and     Vermont Service Corporation, The
The Wisconsin Public Power Inc.             no later than March 31, 1998, so that       Connecticut Light and Power Company,
SYSTEM (WPPI), filed a complaint            EPMI can satisfy the requirements of the    Maine Public Service Company,
under Section 206 of the Federal Power      contract to provide electric service to     Montaup Electric Company, New
Act against Wisconsin Power and Light       Amtrak.                                     England Power Company, Public
Company (WPL). In the complaint,               Comment date: January 22, 1998, in       Service Company of New Hampshire,
WPPI alleges that WPL denied firm           accordance with Standard Paragraph E        and Western Massachusetts Electric
transmission service to WPPI because        at the end of this notice. Answers to the   Company (Sponsors) tendered for filing
WPL has reserved its entire share of firm   complaint shall be due on or before         a Complaint and Petition for
interface capacity on the Western           January 22, 1998.                           Investigation, Contract Modification,
Interface for its own company including     7. Bangor Hydro-Electric Company,           and Declaratory Order against
200 MW for its possible future load         Cambridge Electric Light Company,           Ashburnham Municipal Light
growth needs. The complaint alleges         Central Maine Power Company, Central        Department, Boylston Municipal Light
that WPL has engaged in a systematic        Vermont Service Corporation, The            Department, Braintree Electric Light
tariff violation, a violation of            Connecticut Light and Power Company,        Department, Chicopee Municipal
transmission service comparability, a       Maine Public Service Company,               Lighting Plant, Connecticut Municipal
breach of contract and an                   Montaup Electric Company, New               Electric Energy Cooperative, Danvers
anticompetitive withholding of              England Power Company, Public               Electric Division, Eastern Maine Electric
available transfer capacity from the        Service Company of New Hampshire,           Cooperative, Inc., Georgetown
market.                                     and Western Massachusetts Electric          Municipal Light Department, Hingham
66                     Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

Municipal Light Plant, City of Holyoke      9. Western Systems Power Pool                L.L.C. (hereinafter Supplier). The terms
Gas & Electric Department, Houlton          [Docket No. ER91–195–030]                    and conditions contained within this
Water Company, Hudson Light & Power                                                      Agreement are identical to the terms
                                               Take notice that on December 9, 1997,
Department, Hull Municipal Lighting                                                      and conditions contained with the Form
                                            the Western Systems Power Pool
Plant, Ipswich Municipal Light                                                           of Installed Capacity Allocation
                                            (WSPP), filed certain information to
Department, Littleton Electric Light &                                                   Agreement filed by PECO with the
                                            update its October 30, 1997, quarterly
Water Department, Marblehead                                                             Commission on October 3, 1997, at
                                            filing. This data is required by Ordering
Municipal Light Department,                                                              Docket No. ER98–28–000. This filing
                                            Paragraph (D) of the Commission’s June
Middleborough Gas & Electric                                                             merely submits an individual executed
                                            27, 1991, Order (55 FERC ¶ 61,495) and
Department, Middleton Municipal Light                                                    copy of the Installed Capacity
                                            Ordering Paragraph (C) of the
Department, New Hampshire Electric                                                       Obligation Allocation Agreement
                                            Commission’s June 1, 1992, Order On
Cooperative, Inc., North Attleborough                                                    between PECO and an alternate supplier
                                            Rehearing Denying Request Not To
Electric Department, Paxton Municipal                                                    participating in PECO’s Pilot.
                                            Submit Information, And Granting In
Light Department, Peabody Municipal                                                         Copies of the filing were served on the
                                            Part And Denying In Part Privileged
Light Plant, Shrewsbury Electric Light                                                   Supplier and the Pennsylvania Public
                                            Treatment. Pursuant to 18 CFR 385.211,
Plant, Sterling Municipal Light                                                          Utility Commission.
                                            WSPP has requested privileged
Department, Taunton Municipal                                                               Comment date: January 6, 1998, in
                                            treatment for some of the information
Lighting Plant, Templeton Municipal                                                      accordance with Standard Paragraph E
                                            filed consistent with the June 1, 1992,
Light Plant, Wakefield Municipal Light                                                   at the end of this notice.
                                            order. Copies of WSPP’s informational
Department, West Boylston Municipal         filing are on file with the Commission,      13. PECO Energy Company
Lighting Plant, Westfield Gas & Electric    and the non-privileged portions are
Light Department, and Wolfeboro                                                          [Docket No. ER98–843–000]
                                            available for public inspection.
Municipal Electric (Purchasers) arising                                                     Take notice that on November 28
under Purchase Contracts between the        10. Niagara Mohawk Power Corp.               1997, PECO Energy Company (PECO),
Sponsors and the Purchasers.                [Docket No. ER97–4568–001]                   filed an executed Transmission Agency
                                               Take notice that on December 5, 1997,     Agreement between PECO and DTE-
   The Purchase Contracts pertain to the
                                            Niagara Mohawk Power Corporation             CoEnergy L.L.C., (hereinafter Supplier).
purchase and sale of power and energy
                                            made a filing in compliance with the         The terms and conditions contained
from the nuclear steam generating plant                                                  within this Agreement are identical to
owned by Maine Yankee Atomic Power          Commission’s Order issued in this
                                            docket on November 7, 1997.                  the terms and conditions contained with
Company, which plant has been shut                                                       the Form of Transmission Agency
down. Sponsors seek an order from the          Comment date: January 6, 1998, in
                                            accordance with Standard Paragraph E         Agreement submitted to the
Commission declaring that the                                                            Commission on October 3, 1997, as part
Purchasers remain responsible for           at the end of this notice.
                                                                                         of the joint filing by the Pennsylvania
payments due under the Purchase             11. PECO Energy Company                      Public Utility Commission and the
Contracts and directing Purchasers to                                                    Pennsylvania PJM Utilities at Docket
                                            [Docket No. ER98–841–000]
make such payments. Sponsors also                                                        No. ER98–64–000. This filing merely
seek a modification of the Purchase            Take notice that on November 28,
                                            1997, PECO Energy Company (PECO),            submits an individual executed copy of
Contracts to extend the termination date                                                 the Transmission Agency Agreement
or otherwise to ensure that Sponsors        filed an executed Installed Capacity
                                            Obligation Allocation Agreement              between PECO and an alternative
may fully recover from Purchasers a                                                      supplier participating in PECO’s Retail
share of the costs of shutting down and     between PECO and Wheeled Electric
                                            Power Company (hereinafter Supplier).        Access Pilot Program.
decommissioning the Maine Yankee                                                            Copies of the filing were served on the
nuclear steam generating plant that is      The terms and conditions contained
                                            within this Agreement are identical to       Supplier and the Pennsylvania Public
proportionate to the Purchasers’                                                         Utility Commission.
entitlements to energy from the plant.      the terms and conditions contained with
                                            the Form of Installed Capacity                  Comment date: January 6, 1998, in
   Comment date: January 22, 1998, in       Allocation Agreement filed by PECO           accordance with Standard Paragraph E
accordance with Standard Paragraph E        with the Commission on October 3,            at the end of this notice.
at the end of this notice. Answers to the   1997, at Docket No. ER98–28–000. This        14. PECO Energy Company
complaint shall be due on or before         filing merely submits an individual
January 22, 1998.                           executed copy of the Installed Capacity      [Docket No. ER98–844–000]
                                            Obligation Allocation Agreement                 Take notice that on November 28,
8. Public Advocate, State of Maine v.                                                    1997, PECO Energy Company (PECO),
Maine Yankee Atomic Power Company           between PECO and an alternate supplier
                                            participating in PECO’s Pilot.               filed an executed Transmission Agency
[Docket No. EL98–14–000]                       Copies of the filing were served on the   Agreement between PECO and
                                            Supplier and the Pennsylvania Public         American Energy Solutions (hereinafter
   Take notice that on December 15,                                                      Supplier). The terms and conditions
                                            Utility Commission.
1997, Public Advocate State of Maine           Comment date: January 6, 1998, in         contained within this Agreement are
tendered for filing a complaint as to the   accordance with Standard Paragraph E         identical to the terms and conditions
justness, unreasonableness and              at the end of this notice.                   contained with the Form of
unlawfulness of charges, rates and                                                       Transmission Agency Agreement
contracts collected by Maine Yankee         12. PECO Energy Company
                                                                                         submitted to the Commission on
Atomic Power Company.                       [Docket No. ER98–842–000]                    October 3, 1997, as part of the joint
   Comment date: January 22, 1998, in          Take notice that on November 28,          filing by the Pennsylvania Public Utility
accordance with Standard Paragraph E        1997, PECO Energy Company (PECO)             Commission and the Pennsylvania PJM
at the end of this notice. Answers to the   filed an executed Installed Capacity         Utilities at Docket No. ER98–64–000.
complaint shall be due on or before         Obligation Allocation Agreement              This filing merely submits an individual
January 22, 1998.                           between PECO and DTE-CoEnergy                executed copy of the Transmission
                       Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                   67

Agency Agreement between PECO and            17. Cinergy Services, Inc.                  Point-to-Point Transmission Service
an alternative supplier participating in     [Docket No. ER98–847–000]
                                                                                         with Sonat Power Marketing L.P., under
PECO’s Retail Access Pilot Program.                                                      the Open Access Transmission Tariff to
                                                Take notice that on November 28,
   Copies of the filing were served on the                                               Eligible Purchasers dated July 14, 1997.
                                             1997, Cinergy Services, Inc. (Cinergy),
Supplier and the Pennsylvania Public                                                     This agreement supersedes the non-firm
                                             on behalf of its Operating Companies,
Utility Commission.                                                                      agreement accepted for filing January 8,
                                             The Cincinnati Gas & Electric Company
                                                                                         1997, in Docket No. ER97–681–000.
   Comment date: January 6, 1998, in         and PSI Energy, Inc., tendered for filing
                                                                                         Under the tendered Service Agreement,
accordance with Standard Paragraph E         an unexecuted Service Agreement for
                                                                                         Virginia Power will provide non-firm
at the end of this notice.                   service under Cinergy’s Power Sales
                                                                                         point-to-point service to the
                                             Tariff applicable to customers which
15. PECO Energy Company                                                                  Transmission Customer under the rates,
                                             Cinergy does not currently have existing
                                                                                         terms and conditions of the Open
[Docket No. ER98–845–000]                    authority to make sales at market based
                                                                                         Access Transmission Tariff.
                                             rates.
   Take notice that on November 28,             Cinergy requests an effective date          Copies of the filing were served upon
1997, PECO Energy Company (PECO),            thirty (30) days prior to the date of       Sonat Power Marketing L.P., the
filed an executed Installed Capacity         filing, consistent with the Commission’s    Virginia State Corporation Commission
Obligation Allocation Agreement              November 15, 1996, Order in ER96–           and the North Carolina Utilities
between PECO and American Energy             2506–000, 77 FERC ¶ 61,172 (1996).          Commission.
Solutions (hereinafter Supplier). The           Copies of the filing were served upon       Comment date: January 6, 1998, in
terms and conditions contained within        all parties listed in Attachment A of the   accordance with Standard Paragraph E
this Agreement are identical to the          Service Agreement as well as the State      at the end of this notice.
terms and conditions contained with the      Commissions of Alabama, Colorado,           20. Southern California Edison
Form of Installed Capacity Allocation        Connecticut, District of Columbia,          Company
Agreement filed by PECO with the             Kentucky, Illinois, Indiana, Iowa,
                                                                                         [Docket No. ER98–850–000]
Commission on October 3, 1997, at            Kansas, Florida, Georgia, Maryland,
Docket No. ER98–28–000. This filing          Massachusetts, Michigan, Minnesota,            Take notice that on November 28,
merely submits an individual executed        Missouri, Nebraska, New Jersey, New         1997, Southern California Edison
copy of the Installed Capacity               York, North Carolina, North Dakota,         Company, tendered for filing revisions
Obligation Allocation Agreement              Ohio, Oregon, Pennsylvania, Tennessee,      to firm transmission service rates
between PECO and an alternate supplier       Texas, Utah, Virginia, Washington and       between Edison and the City of
participating in PECO’s Pilot.               Wisconsin.                                  Riverside (Riverside), Rate Schedule
                                                Comment date: January 6, 1998, in        FERC Nos. 250.6, 250.8, 250.10, 250.15,
   Copies of the filing were served on the                                               250.21, 250.27, and 250.30.
Supplier and the Pennsylvania Public         accordance with Standard Paragraph E
                                             at the end of this notice.                     Edison is requesting waiver of the
Utility Commission.                                                                      Commission’s 60 day notice
   Comment date: January 6, 1998, in         18. Virginia Electric and Power             requirements and is requesting an
accordance with Standard Paragraph E         Company                                     effective date of December 1, 1997.
at the end of this notice.                   [Docket No. ER98–848–000]                      Copies of this filing were served upon
                                                Take notice that on November 28,         the Public Utilities Commission of the
16. PECO Energy Company
                                             1997, Virginia Electric and Power           State of California and all interested
[Docket No. ER98–846–000]                    Company (Virginia Power), tendered for      parties.
                                             filing a Service Agreement for Non-Firm        Comment date: January 6, 1998, in
   Take notice that on November 28,
                                             Point-to-Point Transmission Service         accordance with Standard Paragraph E
1997, PECO Energy Company (PECO),
                                             with Progress Power Marketing, Inc.,        at the end of this notice.
filed an executed Transmission Agency
Agreement between PECO and Wheeled           under the Open Access Transmission          21. Niagara Mohawk Power
Electric Power Company (hereinafter          Tariff to Eligible Purchasers dated July    Corporation
Supplier). The terms and conditions          14, 1997. Under the tendered Service
                                             Agreement, Virginia Power will provide      [Docket No. ER98–851–000]
contained within this Agreement are
identical to the terms and conditions        non-firm point-to-point service to the         Take notice that on November 28,
contained with the Form of                   Transmission Customer under the rates,      1997, Niagara Mohawk Power
Transmission Agency Agreement                terms and conditions of the Open            Corporation (Niagara Mohawk), filed
submitted to the Commission on               Access Transmission Tariff.                 Service Agreements for transmission
October 3, 1997, as part of the joint           Copies of the filing were served upon    and wholesale requirements services in
filing by the Pennsylvania Public Utility    Progress Power Marketing, Inc., the         conjunction with an electric retail
Commission and the Pennsylvania PJM          Virginia State Corporation Commission       access pilot program that was
Utilities at Docket No. ER98–64–000.         and the North Carolina Utilities            established by the New York Public
This filing merely submits an individual     Commission.                                 Service Commission effective November
executed copy of the Transmission               Comment date: January 6, 1998, in        1, 1997. The Service Agreements for
Agency Agreement between PECO and            accordance with Standard Paragraph E        transmission services are under Niagara
an alternative supplier participating in     at the end of this notice.                  Mohawk’s FERC Electric Tariff, Original
PECO’s Retail Access Pilot Program.                                                      Volume No. 3; Niagara Mohawk’s
                                             19. Virginia Electric and Power
                                                                                         customers are National Fuel Resources,
   Copies of the filing were served on the   Company
                                                                                         Advantage Energy, Inc., New Energy
Supplier and the Pennsylvania Public         [Docket No. ER98–849–000]                   Ventures—East, Agway Energy Services,
Utility Commission.                             Take notice that on November 28,         Wheeled Electric Power Company, Plum
   Comment date: January 6, 1998, in         1997, Virginia Electric and Power           Street Energy Marketing, Inc., and North
accordance with Standard Paragraph E         Company (Virginia Power), tendered for      American Energy Conservation, Inc. The
at the end of this notice.                   filing a Service Agreement for Non-Firm     Service Agreements for wholesale
68                     Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

requirements services are under Niagara      Operating Companies), tendered for          27. Central Power and Light Company,
Mohawk’s FERC Electric Tariff, Original      filing a Short-Term Firm Point-To-Point     West Texas Utilities Company, Public
Volume No. 4; Niagara Mohawk’s               Transmission Service Agreement              Service Company of Oklahoma and
customers are National Fuel Resources,       between Entergy Services, as agent for      Southwestern Electric Power Company
Advantage Energy, Inc., New Energy           the Entergy Operating Companies, and        [Docket No. ER98–857–000]
Ventures—East, Agway Energy Services,        MidAmerican Energy Company.
Wheeled Electric Power Company, Plum            Comment date: January 6, 1998, in           Take notice that on December 1, 1997,
Street Energy Marketing, Inc., and North     accordance with Standard Paragraph E        Central Power and Light Company
American Energy Conservation, Inc. The       at the end of this notice.                  (CPL), West Texas Utilities Company
Service Agreements have been modified                                                    (WTU), Public Service Company of
                                             25. Wisconsin Electric Power Company
by an order of the Commission in this                                                    Oklahoma (PSO), and Southwestern
proceeding dated November 7, 1997.           [Docket No. ER98–855–000]                   Electric Power Company (SWEPCO),
Revised Service Agreements will be              Take notice that on December 1, 1997,    (collectively, the CSW Operating
filed once the Commission has accepted       Wisconsin Electric Power Company            Companies), submitted for filing a
Niagara Mohawk’s compliance filing.          (Wisconsin Electric), tendered for filing   service agreement under which the CSW
   Comment date: January 6, 1998, in         an original Market Rate Sales and Resale    Operating Companies will provide
accordance with Standard Paragraph E         Transmission Tariff, forms of Service       point-to-point transmission services to
at the end of this notice.                   Agreement and Service Specifications,       SWEPCO in accordance with the CSW
                                             and Code of Conduct. The tariff             Operating Companies’ open access
22. The Washington Water Power               provides for the sale of energy and         transmission service tariff.
Company                                      capacity at market rates and for the           The CSW Operating Companies state
[Docket No. ER98–852–000]                    resale of transmission rights. Wisconsin    that the filing has been served on
   Take notice that on December 1, 1997,     Electric respectfully requests waiver of    SWEPCO and on the Public Utility
The Washington Water Power Company           any regulations that may be required to     Commission of Texas.
(WWP), tendered for filing with the          permit this tariff to become effective on
                                             January 31, 1998, sixty days from the          Comment date: January 6, 1998, in
Federal Energy Regulatory Commission                                                     accordance with Standard Paragraph E
an executed Confirmation Letter for          date of filing.
                                                Comment date: January 6, 1998, in        at the end of this notice.
interruptible firm transmission service
                                             accordance with Standard Paragraph E        28. Montaup Electric Company
between WWP and Avista Energy, Inc.
                                             at the end of this notice.
WWP requests that service under the                                                      [Docket No. ER98–861–000]
Confirmation Letter be given an              26. Tucson Electric Power Company
effective date of November 1, 1997.                                                         Take notice that on November 25,
                                             [Docket No. ER98–856–000]                   1997, Montaup Electric Company
   Copies of this filing were provided to
                                                Take notice that on December 1, 1997,    (Montaup), filed revisions to its open
the Idaho Public Utilities Commission
                                             Tucson Electric Power Company (TEP),        access transmission tariff providing for
and the Washington Utilities and
                                             tendered for filing the following service   inclusion in the formula rate of support
Transportation Commission.
                                             agreements for firm point-to-point          payments made by Montaup to other
   Comment date: January 6, 1998, in
                                             transmission service under Part II of its   New England Power Pool Participants
accordance with Standard Paragraph E
                                             Open Access Transmission Tariff filed       for support of those utilities’ Pool
at the end of this notice.
                                             in Docket No. OA96–140–000. TEP             Transmission Facilities. Montaup
23. Entergy Services, Inc.                   requests waiver of notice to permit the     requests that these tariff revisions be
[Docket No. ER98–853–000]
                                             service agreements to become effective      allowed to become effective on January
                                             as of the earliest date service             26, 1998.
   Take notice that on December 1, 1997,     commenced under the agreements. The
Entergy Services, Inc. (Entergy                                                             Comment date: January 6, 1998, in
                                             details of the service agreement are as
Services), on behalf of Entergy                                                          accordance with Standard Paragraph E
                                             follows:
Arkansas, Inc., Entergy Gulf States, Inc.,      1. Service Agreement for Firm Point-     at the end of this notice.
Entergy Louisiana, Inc., Entergy             to-Point Transmission Service with          29. Northeast Utilities Service
Mississippi, Inc., and Entergy New           Tucson Electric Power Company,
Orleans, Inc. (collectively, the Entergy                                                 [Docket No. ER98–862–000]
                                             Contracts & Wholesale Marketing dated
Operating Companies), tendered for           November 16, 1997. Service under this          Take notice that Northeast Utilities
filing a Non-Firm Point-To-Point             agreement commenced on November 1,          Service Company (NUSCO), on
Transmission Service Agreement               1997.                                       November 28, 1997, tendered for filing,
between Entergy Services, as agent for          2. Service Agreement for Firm Point-     changes to transmission rates under the
the Entergy Operating Companies, and         to-Point Transmission Service with          Northeast Utilities System Companies
MidAmerican Energy Company.                  Tucson Electric Power Company,              Open Access Transmission Service
   Comment date: January 6, 1998, in         Contracts & Wholesale Marketing dated       Tariff No. 9.
accordance with Standard Paragraph E         November 14, 1997. Service under this
at the end of this notice.                                                                  NUSCO states that the rates and
                                             agreement commenced on November 1,          charges reflect the removal of generator
24. Entergy Services, Inc.                   1997.                                       leads from transmission plant for
                                                3. Service Agreement for Firm Point-     ratemaking purposes and result in an
[Docket No. ER98–854–000]                    to-Point Transmission Service with          overall rate decrease for transmission
  Take notice that on December 1, 1997,      Enron Power Marketing, Inc. dated           service.
Entergy Services, Inc. (Entergy              November 7, 1997. Service under this
Services), on behalf of Entergy              agreement commenced on November 7,             NUSCO requests that the rate changes
Arkansas, Inc., Entergy Gulf States, Inc.,   1997.                                       become effective on February 1, 1998.
Entergy Louisiana, Inc., Entergy                Comment date: January 6, 1998, in           Comment date: January 6, 1998, in
Mississippi, Inc., and Entergy New           accordance with Standard Paragraph E        accordance with Standard Paragraph E
Orleans, Inc. (collectively, the Entergy     at the end of this notice.                  at the end of this notice.
                         Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                    69

Standard Paragraph                            2. Tampa Electric Company                    4. Idaho Power Company
  E. Any person desiring to be heard or       [Docket No. ER97–169–000]                    [Docket Nos. ER97–4021–000 and ER97–
to protest said filing should file a                                                       4023–000]
                                                 Take notice that on December 12,
motion to intervene or protest with the                                                       Take notice that on December 8, 1997,
                                              1997, Tampa Electric Company (Tampa
Federal Energy Regulatory Commission,                                                      Idaho Power Company (IPC), tendered
                                              Electric) filed a letter agreement with
888 First Street, N.E., Washington, D.C.                                                   for filing an amended filing with regard
                                              the Florida Municipal Power Agency
20426, in accordance with Rules 211                                                        to its Power Sale Agreement with
                                              (FMPA) that amends the letter of
and 214 of the Commission’s Rules of                                                       Truckee-Donner Public Utility District
                                              commitment between Tampa Electric
Practice and Procedure (18 CFR 385.211                                                     and the Network Integration
                                              and FMPA tendered previously in this
and 18 CFR 385.214). All such motions                                                      Transmission Agreement by Idaho
                                              docket.
or protests should be filed on or before                                                   Power on its Open-Access Transmission
the comment date. Protests will be               Comment date: January 9, 1998, in         Tariff.
considered by the Commission in               accordance with Standard Paragraph E            Comment date: January 9, 1998, in
determining the appropriate action to be      at the end of this notice.                   accordance with Standard Paragraph E
taken, but will not serve to make             3. Central Hudson Gas & Electric             at the end of this notice.
protestants parties to the proceeding.        Corporation; Consolidated Edison             5. Millennium Energy Corporation
Any person wishing to become a party          Company of New York, Inc.; Long
must file a motion to intervene. Copies       Island Lighting Company; New York            [Docket No. ER98–174–000]
of this filing are on file with the           State Electric & Gas Corporation;               Take notice that on December 11,
Commission and are available for public       Niagara Mohawk Power Corp.; Orange           1997, Millennium Energy Corporation
inspection.                                   and Rockland Utilities, Inc.; Rochester      (Millennium Energy) tendered for filing
Lois D. Cashell,                              Gas and Electric Corporation; New            an amendment and supplement to its
Secretary.                                    York Power Pool                              application filed October 15, 1997, for
[FR Doc. 97–34176 Filed 12–31–97; 8:45 am]                                                 waivers and blanket approvals under
                                              [Docket Nos. ER97–1523–000, OA97–470–        various regulations of the Commission
BILLING CODE 6717–01–P                        000, and ER97–4234–000 (Not Consolidated)]
                                                                                           and for an order accepting its FERC
                                                 Take notice that on December 19,          Electric Rate Schedule No. 1, to be
DEPARTMENT OF ENERGY                          1997, Central Hudson Gas & Electric          effective on the date of the
                                              Corporation, Consolidated Edison             Commission’s order accepting the Rate
Federal Energy Regulatory                     Company of New York, Inc., Long Island       Schedule for filing.
Commission                                    Lighting Company, New York State                Comment date: January 9, 1998, in
                                              Electric & Gas Corporation, Niagara          accordance with Standard Paragraph E
[Docket No. EG98–22–000, et al.]
                                              Mohawk Power Corporation, Orange             at the end of this notice.
El Segundo Power, LLC, et al.; Electric       and Rockland Utilities, Inc., and            6. Aurora Power Resources, Inc.
Rate and Corporate Regulation Filings         Rochester Gas and Electric Corporation
                                              (Member Systems) filed, pursuant to          [Docket No. ER98–573–000]
December 24, 1997.                            Section 205 of the Federal Power Act,           Take notice that on December 11,
  Take notice that the following filings      revisions to the following documents         1997, Aurora Power Resources, Inc.
have been made with the Commission:           filed on January 31, 1997, in the above-     (APRI), filed a supplement to its
1. El Segundo Power, LLC                      referenced proceedings as part of the        application for market-based rates as
                                              restructuring of the New York Power          power marketer. The supplemental
[Docket No. EG98–22–000]                      Pool:                                        information pertains to ownership of
   Take notice that on December 19,              1. Independent System Operator            APRI, business activities of the owners
1997, El Segundo Power, LLC, with its         Agreement and the Independent System         and a statement of non-affiliation of
principal office at 1221 Nicollet Mall,       Operator Tariff;                             APRI with any other entity.
Suite 700, Minneapolis, MN 55403, filed                                                       Comment date: January 9, 1998, in
with the Commission an application for           2. New York State Reliability Council     accordance with Standard Paragraph E
determination of exempt wholesale             Agreement;                                   at the end of this notice.
generator status pursuant to Part 365 of         3. Independent System Operator—
                                              New York State Reliability Council           7. Central Illinois Public Service
the Commission’s Regulations.                                                              Company
   Applicant states that it is a limited      Agreement; and
liability company organized under the            4. Independent System Operator—           [Docket No. ER98–858–000]
laws of the State of Delaware. Applicant      Transmission Provider Agreement.               Take notice that on December 1, 1997,
will be engaged directly and exclusively         In addition, the Member Systems filed     Central Illinois Public Service Company
in owning and operating an                    the New York Independent System              (CIPS), submitted one non-firm point-to-
approximately 1020 MW gas-fired               Operator Filing Definitions Document,        point service agreement and two
electric generating facility located at 301   supporting information and affidavits.       umbrella short-term firm transmission
Vista Del Mar Boulevard, El Segundo,                                                       service agreements, each dated
CA 90245. Electric energy produced by            The Member Systems state that the         November 21, 1997, establishing the
the facility will be sold at wholesale to     revised documents are being served on        following as customers under the terms
the Independent System Operator and           the parties to this proceeding and the       of CIPS’ Open Access Transmission
into the California Power Exchange.           New York State Public Service                Tariff, Tenaska Power Services Co., and
   Comment date: January 15, 1998, in         Commission, the Pennsylvania Public          Entergy Power Marketing Corp.
accordance with Standard Paragraph E          Utilities Commission and the New               CIPS requests an effective date of
at the end of this notice. The                Jersey Board of Public Utilities.            November 21, 1997, for the service
Commission will limit its consideration          Comment date: January 23, 1998, in        agreements. Accordingly, CIPS requests
of comments to those that concern the         accordance with Standard Paragraph E         waiver of the Commission’s notice
adequacy or accuracy of the application.      at the end of this notice.                   requirements. Copies of this filing were
70                     Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

served on the two customers and the          This filing merely submits an individual        Comment date: January 7, 1998, in
Illinois Commerce Commission.                executed copy of the Transmission            accordance with Standard Paragraph E
   Comment date: January 7, 1998, in         Agency Agreement between PP&L and            at the end of this notice.
accordance with Standard Paragraph E         an alternative supplier participating in
                                                                                          13. PP&L, Inc.
at the end of this notice.                   PP&L’s Retail Access Pilot Program.
                                                Copies of the filing were served on the   [Docket No. ER98–867–000]
8. Southern Company Services, Inc.
                                             Supplier and the Pennsylvania Public            Take notice that on December 1, 1997,
[Docket No. ER98–860–000]                    Utility Commission.                          PP&L, Inc. (PP&L), filed an executed
   Take notice that on November 26,             Comment date: January 7, 1998, in         Transmission Agency Agreement
1997, Southern Company Services, Inc.,       accordance with Standard Paragraph E         between PP&L and Energis Resources,
acting on behalf of Gulf Power               at the end of this notice.                   Incorporated (hereinafter Supplier). The
Company, filed an amended Service                                                         terms and conditions contained within
Agreement by and among itself, as agent      11. PP&L, Inc.                               this Agreement are identical to the
for Gulf Power Company, Gulf Power           [Docket No. ER98–865–000]                    terms and conditions contained with the
Company and the Florida Public                  Take notice that on December 1, 1997,     Form of Transmission Agency
Utilities Company (FPUC), on behalf of       PP&L, Inc. (PP&L), filed an executed         Agreement submitted to the
its Marianna Division, pursuant to           Transmission Agency Agreement                Commission on October 3, 1997, as part
which Gulf Power Company will make           between PP&L and Dupont Power                of the joint filing by the Pennsylvania
wholesale power sales to FPUC for a          Marketing, Inc., (hereinafter Supplier).     Public Utility Commission and the
term in excess of one (1) year.              The terms and conditions contained           Pennsylvania PJM Utilities at Docket
   Comment date: January 7, 1998, in                                                      No. ER98–64–000. This filing merely
                                             within this Agreement are identical to
accordance with Standard Paragraph E                                                      submits an individual executed copy of
                                             the terms and conditions contained with
at the end of this notice.                                                                the Transmission Agency Agreement
                                             the Form of Transmission Agency
                                             Agreement submitted to the                   between PP&L and an alternative
9. PP&L, Inc.
                                             Commission on October 3, 1997, as part       supplier participating in PP&L’s Retail
[Docket No. ER98–863–000]                                                                 Access Pilot Program.
                                             of the joint filing by the Pennsylvania
   Take notice that on December 1, 1997,     Public Utility Commission and the               Copies of the filing were served on the
PP&L, Inc. (PP&L), filed an executed         Pennsylvania PJM Utilities at Docket         Supplier and the Pennsylvania Public
Transmission Agency Agreement                No. ER98–64–000. This filing merely          Utility Commission.
between PP&L and QST Energy Trading                                                          Comment date: January 7, 1998, in
                                             submits an individual executed copy of
Inc., (hereinafter Supplier). The terms                                                   accordance with Standard Paragraph E
                                             the Transmission Agency Agreement
and conditions contained within this                                                      at the end of this notice.
                                             between PP&L and an alternative
Agreement are identical to the terms         supplier participating in PP&L’s Retail      14. PP&L, Inc.
and conditions contained with the Form       Access Pilot Program.
of Transmission Agency Agreement                                                          [Docket No. ER98–868–000]
                                                Copies of the filing were served on the
submitted to the Commission on                                                               Take notice that on December 1, 1997,
                                             Supplier and the Pennsylvania Public
October 3, 1997, as part of the joint                                                     PP&L, Inc. (PP&L), filed an executed
                                             Utility Commission.
filing by the Pennsylvania Public Utility                                                 Transmission Agency Agreement
Commission and the Pennsylvania PJM             Comment date: January 7, 1998, in         between PP&L and Delmarva Power &
Utilities at Docket No. ER98–64–000.         accordance with Standard Paragraph E         Light Company (hereinafter Supplier).
This filing merely submits an individual     at the end of this notice.                   The terms and conditions contained
executed copy of the Transmission            12. PP&L, Inc.                               within this Agreement are identical to
Agency Agreement between PP&L and                                                         the terms and conditions contained with
                                             [Docket No. ER98–866–000]
an alternative supplier participating in                                                  the Form of Transmission Agency
PP&L’s Retail Access Pilot Program.             Take notice that on December 1, 1997,     Agreement submitted to the
   Copies of the filing were served on the   PP&L, Inc. (PP&L), filed an executed         Commission on October 3, 1997, as part
Supplier and the Pennsylvania Public         Transmission Agency Agreement                of the joint filing by the Pennsylvania
Utility Commission.                          between PP&L, UGI Utilities, Inc. (UGI),     Public Utility Commission and the
   Comment date: January 7, 1998, in         and West Penn Power Company d/b/a            Pennsylvania PJM Utilities at Docket
accordance with Standard Paragraph E         Allegheny Power (Supplier). The terms        No. ER98–64–000. This filing merely
at the end of this notice.                   and conditions contained within this         submits an individual executed copy of
                                             Agreement are identical to the terms         the Transmission Agency Agreement
10. PP&L, Inc.                               and conditions contained with the Form       between PP&L and an alternative
[Docket No. ER98–864–000]                    of Transmission Agency Agreement             supplier participating in PP&L’s Retail
   Take notice that on December 1, 1997,     submitted to the Commission on               Access Pilot Program.
PP&L, Inc. (PP&L), filed an executed         October 3, 1997, as part of the joint           Copies of the filing were served on the
Transmission Agency Agreement                filing by the Pennsylvania Public Utility    Supplier and the Pennsylvania Public
between PP&L and UGI Power Supply,           Commission and the Pennsylvania PJM          Utility Commission.
Inc., (hereinafter Supplier). The terms      Utilities at Docket No. ER98–64–000.            Comment date: January 7, 1998, in
and conditions contained within this         This filing merely submits an individual     accordance with Standard Paragraph E
Agreement are identical to the terms         executed copy of the Transmission            at the end of this notice.
and conditions contained with the Form       Agency Agreement between PP&L, UGI
                                             and an alternative supplier participating    15. PP&L, Inc.
of Transmission Agency Agreement
submitted to the Commission on               in UGI’s Retail Access Pilot Program.        [Docket No. ER98–869–000]
October 3, 1997, as part of the joint           Copies of the filing were served on         Take notice that on December 1, 1997,
filing by the Pennsylvania Public Utility    UGI, the Supplier and the                    PP&L, Inc. (PP&L), filed an executed
Commission and the Pennsylvania PJM             Pennsylvania Public Utility               Transmission Agency Agreement
Utilities at Docket No. ER98–64–000.         Commission.                                  between PP&L and NorAm Energy
                       Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                     71

Management, Inc., (hereinafter               No. ER98–64–000. This filing merely             Comment date: January 7, 1998, in
Supplier). The terms and conditions          submits an individual executed copy of       accordance with Standard Paragraph E
contained within this Agreement are          the Transmission Agency Agreement            at the end of this notice.
identical to the terms and conditions        between PP&L and an alternative
                                                                                          20. PP&L, Inc.
contained with the Form of                   supplier participating in PP&L’s Retail
Transmission Agency Agreement                Access Pilot Program.                        [Docket No. ER98–874–000]
submitted to the Commission on                  Copies of the filing were served on the      Take notice that on December 1, 1997,
October 3, 1997, as part of the joint        Supplier and the Pennsylvania Public         PP&L, Inc. (PP&L), filed an executed
filing by the Pennsylvania Public Utility    Utility Commission.                          Transmission Agency Agreement
Commission and the Pennsylvania PJM             Comment date: January 7, 1998, in         between PP&L and DTE-CoEnergy,
Utilities at Docket No. ER98–64–000.         accordance with Standard Paragraph E         L.L.C., (hereinafter Supplier). The terms
This filing merely submits an individual     at the end of this notice.                   and conditions contained within this
executed copy of the Transmission                                                         Agreement are identical to the terms
Agency Agreement between PP&L and            18. PP&L, Inc.                               and conditions contained with the Form
an alternative supplier participating in     [Docket No. ER98–872–000]                    of Transmission Agency Agreement
PP&L’s Retail Access Pilot Program.                                                       submitted to the Commission on
                                                Take notice that on December 1, 1997,
   Copies of the filing were served on the                                                October 3, 1997, as part of the joint
                                             PP&L, Inc. (PP&L), filed an executed
Supplier and the Pennsylvania Public                                                      filing by the Pennsylvania Public Utility
                                             Transmission Agency Agreement
Utility Commission.                                                                       Commission and the Pennsylvania PJM
                                             between PP&L and Strategic Energy
   Comment date: January 7, 1998, in                                                      Utilities at Docket No. ER98–64–000.
                                             Partners Ltd., (hereinafter Supplier).
accordance with Standard Paragraph E                                                      This filing merely submits an individual
                                             The terms and conditions contained
at the end of this notice.                                                                executed copy of the Transmission
                                             within this Agreement are identical to
16. PP&L, Inc.                                                                            Agency Agreement between PP&L and
                                             the terms and conditions contained with
                                                                                          an alternative supplier participating in
[Docket No. ER98–870–000]                    the Form of Transmission Agency
                                                                                          PP&L’s Retail Access Pilot Program.
                                             Agreement submitted to the
   Take notice that on December 1, 1997,                                                     Copies of the filing were served on the
                                             Commission on October 3, 1997, as part
PP&L, Inc. (PP&L) filed an executed                                                       Supplier and the Pennsylvania Public
                                             of the joint filing by the Pennsylvania
Transmission Agency Agreement                                                             Utility Commission.
                                             Public Utility Commission and the
between PP&L and Allegheny Energy                                                            Comment date: January 7, 1998, in
                                             Pennsylvania PJM Utilities at Docket
Solutions, Inc., (hereinafter Supplier).                                                  accordance with Standard Paragraph E
                                             No. ER98–64–000. This filing merely
The terms and conditions contained                                                        at the end of this notice.
                                             submits an individual executed copy of
within this Agreement are identical to       the Transmission Agency Agreement            21. PP&L, Inc.
the terms and conditions contained with      between PP&L and an alternative
the Form of Transmission Agency                                                           [Docket No. ER98–875–000]
                                             supplier participating in PP&L’s Retail
Agreement submitted to the                   Access Pilot Program.                           Take notice that on December 1, 1997,
Commission on October 3, 1997, as part                                                    PP&L, Inc. (PP&L), filed an executed
of the joint filing by the Pennsylvania         Copies of the filing were served on the
                                                                                          Transmission Agency Agreement
Public Utility Commission and the            Supplier and the Pennsylvania Public
                                                                                          between PP&L and Southern Energy
Pennsylvania PJM Utilities at Docket         Utility Commission.
                                                                                          Retail Trading and Marketing, Inc.,
No. ER98–64–000. This filing merely             Comment date: January 7, 1998, in         (hereinafter Supplier). The terms and
submits an individual executed copy of       accordance with Standard Paragraph E         conditions contained within this
the Transmission Agency Agreement            at the end of this notice.                   Agreement are identical to the terms
between PP&L and an alternative              19. PP&L, Inc.                               and conditions contained with the Form
supplier participating in PP&L’s Retail                                                   of Transmission Agency Agreement
Access Pilot Program.                        [Docket No. ER98–873–000]
                                                                                          submitted to the Commission on
   Copies of the filing were served on the     Take notice that on December 1, 1997,      October 3, 1997, as part of the joint
Supplier and the Pennsylvania Public         PP&L, Inc. (PP&L) filed an executed          filing by the Pennsylvania Public Utility
Utility Commission.                          Transmission Agency Agreement                Commission and the Pennsylvania PJM
   Comment date: January 7, 1998, in         between PP&L and New Energy                  Utilities at Docket No. ER98–64–000.
accordance with Standard Paragraph E         Ventures, L.L.C., (hereinafter Supplier).    This filing merely submits an individual
at the end of this notice.                   The terms and conditions contained           executed copy of the Transmission
                                             within this Agreement are identical to       Agency Agreement between PP&L and
17. PP&L, Inc.
                                             the terms and conditions contained with      an alternative supplier participating in
[Docket No. ER98–871–000]                    the Form of Transmission Agency              PP&L’s Retail Access Pilot Program.
  Take notice that on December 1, 1997,      Agreement submitted to the                      Copies of the filing were served on the
PP&L, Inc. (PP&L) filed an executed          Commission on October 3, 1997, as part       Supplier and the Pennsylvania Public
Transmission Agency Agreement                of the joint filing by the Pennsylvania      Utility Commission.
between PP&L and GPU Advanced                Public Utility Commission and the               Comment date: January 7, 1998, in
Resources, Inc., (hereinafter Supplier).     Pennsylvania PJM Utilities at Docket         accordance with Standard Paragraph E
The terms and conditions contained           No. ER98–64–000. This filing merely          at the end of this notice.
within this Agreement are identical to       submits an individual executed copy of
                                                                                          22. Southern Company Services, Inc.
the terms and conditions contained with      the Transmission Agency Agreement
the Form of Transmission Agency              between PP&L and an alternative              [Docket No. ER98–876–000]
Agreement submitted to the                   supplier participating in PP&L’s Retail        Take notice that on December 2, 1997,
Commission on October 3, 1997, as part       Access Pilot Program.                        Alabama Power Company (APC), filed
of the joint filing by the Pennsylvania        Copies of the filing were served on the    proposed changes to Rate Schedule
Public Utility Commission and the            Supplier and the Pennsylvania Public         REA–1 of FERC Electric Tariff, Original
Pennsylvania PJM Utilities at Docket         Utility Commission.                          Volume No. 1, of Alabama Power
72                     Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

Company. The proposed changes will              Comment date: January 7, 1998, in        and Allegheny Energy Solutions, Inc.,
provide the affected customers a rate        accordance with Standard Paragraph E        (Supplier). The terms and conditions
reduction. In addition, the filing           at the end of this notice.                  contained within this Agreement are
proposes to revise Rate Schedule REA–                                                    identical to the terms and conditions
                                             25. PP&L, Inc.
1’s provisions for terminating service at                                                contained with the Form of
any given delivery point. APC has            [Docket No. ER98–879–000]                   Transmission Agency Agreement
requested an effective date of January 1,       Take notice that on December 1, 1997,    submitted to the Commission on
1997. The filing also contains               PP&L, Inc. (PP&L), filed an executed        October 3, 1997, as part of the joint
corresponding Statements of Consent          Transmission Agency Agreement               filing by the Pennsylvania Public Utility
from the affected Customers.                 between PP&L, UGI Utilities, Inc. (UGI),    Commission and the Pennsylvania PJM
   Comment date: January 7, 1998, in         and New Energy Partners, L.L.C.,            Utilities at Docket No. ER98–64–000.
accordance with Standard Paragraph E         (Supplier). The terms and conditions        This filing merely submits an individual
at the end of this notice.                   contained within this Agreement are         executed copy of the Transmission
                                             identical to the terms and conditions       Agency Agreement between PP&L, UGI
23. PP&L, Inc.
                                             contained with the Form of                  and an alternative supplier participating
[Docket No. ER98–877–000]                    Transmission Agency Agreement               in UGI’s Retail Access Pilot Program.
   Take notice that on December 1, 1997,     submitted to the Commission on                 Copies of the filing were served on
PP&L, Inc. (PP&L), filed an executed         October 3, 1997, as part of the joint       UGI, the Supplier and the Pennsylvania
Transmission Agency Agreement                filing by the Pennsylvania Public Utility   Public Utility Commission.
between PP&L and CNG Retail Services         Commission and the Pennsylvania PJM            Comment date: January 7, 1998, in
Corporation (hereinafter Supplier). The      Utilities at Docket No. ER98–64–000.        accordance with Standard Paragraph E
terms and conditions contained within        This filing merely submits an individual    at the end of this notice.
this Agreement are identical to the          executed copy of the Transmission           28. PP&L, Inc.
terms and conditions contained with the      Agency Agreement between PP&L, UGI
Form of Transmission Agency                  and an alternative supplier participating   [Docket No. ER98–882–000]
Agreement submitted to the                   in UGI’s Retail Access Pilot Program.          Take notice that on December 1, 1997,
Commission on October 3, 1997, as part          Copies of the filing were served on      PP&L, Inc. (PP&L), filed an executed
of the joint filing by the Pennsylvania      UGI, the Supplier and the Pennsylvania      Transmission Agency Agreement
Public Utility Commission and the            Public Utility Commission.                  between PP&L, UGI Utilities, Inc. (UGI),
Pennsylvania PJM Utilities at Docket            Comment date: January 7, 1998, in        and Delmarva Power d/b/a Connectiv
No. ER98–64–000. This filing merely          accordance with Standard Paragraph E        Energy (Supplier). The terms and
submits an individual executed copy of       at the end of this notice.                  conditions contained within this
the Transmission Agency Agreement            26. PP&L, Inc.                              Agreement are identical to the terms
between PP&L and an alternative                                                          and conditions contained with the Form
supplier participating in PP&L’s Retail      [Docket No. ER98–880–000]                   of Transmission Agency Agreement
Access Pilot Program.                           Take notice that on December 1, 1997,    submitted to the Commission on
   Copies of the filing were served on the   PP&L, Inc. (PP&L), filed an executed        October 3, 1997, as part of the joint
Supplier and the Pennsylvania Public         Transmission Agency Agreement               filing by the Pennsylvania Public Utility
Utility Commission.                          between PP&L, UGI Utilities, Inc. (UGI),    Commission and the Pennsylvania PJM
   Comment date: January 7, 1998, in         and DTE Co Energy L.L.C., (Supplier).       Utilities at Docket No. ER98–64–000.
accordance with Standard Paragraph E         The terms and conditions contained          This filing merely submits an individual
at the end of this notice.                   within this Agreement are identical to      executed copy of the Transmission
                                             the terms and conditions contained with     Agency Agreement between PP&L, UGI
24. PP&L, Inc.
                                             the Form of Transmission Agency             and an alternative supplier participating
[Docket No. ER98–878–000]                    Agreement submitted to the                  in UGI’s Retail Access Pilot Program.
  Take notice that on December 1, 1997,      Commission on October 3, 1997, as part         Copies of the filing were served on
PP&L, Inc. (PP&L), filed an executed         of the joint filing by the Pennsylvania     UGI, the Supplier and the Pennsylvania
Transmission Agency Agreement                Public Utility Commission and the           Public Utility Commission.
between PP&L and Enron Power                 Pennsylvania PJM Utilities at Docket           Comment date: January 7, 1998, in
Marketing, Inc., (hereinafter Supplier).     No. ER98–64–000. This filing merely         accordance with Standard Paragraph E
The terms and conditions contained           submits an individual executed copy of      at the end of this notice.
within this Agreement are identical to       the Transmission Agency Agreement
                                                                                         29. PP&L, Inc.
the terms and conditions contained with      between PP&L, UGI and an alternative
the Form of Transmission Agency              supplier participating in UGI’s Retail      [Docket No. ER98–883–000]
Agreement submitted to the                   Access Pilot Program.                         Take notice that on December 1, 1997,
Commission on October 3, 1997, as part          Copies of the filing were served on      PP&L, Inc. (PP&L), filed an executed
of the joint filing by the Pennsylvania      UGI, the Supplier and the Pennsylvania      Transmission Agency Agreement
Public Utility Commission and the            Public Utility Commission.                  between PP&L, UGI Utilities, Inc. (UGI)
Pennsylvania PJM Utilities at Docket            Comment date: January 7, 1998, in        and UGI Power Supply, Inc., (Supplier).
No. ER98–64–000. This filing merely          accordance with Standard Paragraph E        The terms and conditions contained
submits an individual executed copy of       at the end of this notice.                  within this Agreement are identical to
the Transmission Agency Agreement            27. PP&L, Inc.                              the terms and conditions contained with
between PP&L and an alternative                                                          the Form of Transmission Agency
supplier participating in PP&L’s Retail      [Docket No. ER98–881–000]                   Agreement submitted to the
Access Pilot Program.                          Take notice that on December 1, 1997,     Commission on October 3, 1997, as part
  Copies of the filing were served on the    PP&L, Inc. (PP&L), filed an executed        of the joint filing by the Pennsylvania
Supplier and the Pennsylvania Public         Transmission Agency Agreement               Public Utility Commission and the
Utility Commission.                          between PP&L, UGI Utilities, Inc. (UGI),    Pennsylvania PJM Utilities at Docket
                       Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                   73

No. ER98–64–000. This filing merely             Comment date: January 7, 1998, in        and Strategic Energy Partners Ltd.
submits an individual executed copy of       accordance with Standard Paragraph E        (Supplier). The terms and conditions
the Transmission Agency Agreement            at the end of this notice.                  contained within this Agreement are
between PP&L, UGI and an alternative                                                     identical to the terms and conditions
                                             32. PP&L, Inc.
supplier participating in UGI’s Retail                                                   contained with the Form of
Access Pilot Program.                        [Docket No. ER98–888–000]                   Transmission Agency Agreement
   Copies of the filing were served on          Take notice that on December 1, 1997,    submitted to the Commission on
UGI, the Supplier and the Pennsylvania       PP&L, Inc. (PP&L), filed an executed        October 3, 1997, as part of the joint
Public Utility Commission.                   Transmission Agency Agreement               filing by the Pennsylvania Public Utility
   Comment date: January 7, 1998, in         between PP&L, UGI Utilities, Inc. (UGI),    Commission and the Pennsylvania PJM
accordance with Standard Paragraph E         and Horizon Energy (Supplier). The          Utilities at Docket No. ER98–64–000.
at the end of this notice.                   terms and conditions contained within       This filing merely submits an individual
                                             this Agreement are identical to the         executed copy of the Transmission
30. PP&L, Inc.                               terms and conditions contained with the     Agency Agreement between PP&L, UGI
[Docket No. ER98–884–000]                    Form of Transmission Agency                 and an alternative supplier participating
                                             Agreement submitted to the                  in UGI’s Retail Access Pilot Program.
   Take notice that on December 1, 1997,                                                    Copies of the filing were served on
                                             Commission on October 3, 1997, as part
PP&L, Inc. (PP&L), filed an executed                                                     UGI, the Supplier and the Pennsylvania
                                             of the joint filing by the Pennsylvania
Transmission Agency Agreement                                                            Public Utility Commission.
                                             Public Utility Commission and the
between PP&L and Horizon Energy                                                             Comment date: January 7, 1998, in
                                             Pennsylvania PJM Utilities at Docket
Company (hereinafter Supplier). The                                                      accordance with Standard Paragraph E
                                             No. ER98–64–000. This filing merely
terms and conditions contained within                                                    at the end of this notice.
                                             submits an individual executed copy of
this Agreement are identical to the
                                             the Transmission Agency Agreement           35. Cinergy Capital & Trading, Inc.
terms and conditions contained with the
                                             between PP&L, UGI and an alternative
Form of Transmission Agency                                                              [Docket No. ER98–1063–000]
                                             supplier participating in UGI’s Retail
Agreement submitted to the                                                                  Take notice that on December 15,
                                             Access Pilot Program.
Commission on October 3, 1997, as part                                                   1997, Cinergy Capital & Trading, Inc.
                                                Copies of the filing were served on
of the joint filing by the Pennsylvania                                                  (CC&T), filed an amendment to its Rate
                                             UGI, the Supplier and the Pennsylvania
Public Utility Commission and the                                                        Schedule FERC No. 1. CC&T has
                                             Public Utility Commission.
Pennsylvania PJM Utilities at Docket                                                     requested a January 15, 1998, effective
                                                Comment date: January 7, 1998, in
No. ER98–64–000. This filing merely                                                      date for the amendment to Rate
                                             accordance with Standard Paragraph E
submits an individual executed copy of                                                   Schedule FERC No. 1.
                                             at the end of this notice.
the Transmission Agency Agreement                                                           Comment date: January 9, 1998, in
between PP&L and an alternative              33. PP&L, Inc.                              accordance with Standard Paragraph E
supplier participating in PP&L’s Retail      [Docket No. ER98–889–000]                   at the end of this notice.
Access Pilot Program.
                                                Take notice that on December 1, 1997,    36. Consumers Energy Company
   Copies of the filing were served on the
                                             PP&L, Inc. (PP&L) filed an executed         [Docket No. ER98–1117–000]
Supplier and the Pennsylvania Public
                                             Transmission Agency Agreement
Utility Commission.                                                                         Take notice that on December 15,
                                             between PP&L, UGI Utilities, Inc. (UGI),
   Comment date: January 7, 1998, in                                                     1997, Consumers Energy Company
                                             and CNG Retail Service Corporation
accordance with Standard Paragraph E                                                     (Consumers), filed Amendment No. 1, to
                                             (Supplier). The terms and conditions
at the end of this notice.                                                               its Power Sales Agreement with Edison
                                             contained within this Agreement are
                                                                                         Sault Electric Company.
31. PP&L, Inc.                               identical to the terms and conditions          Consumers has requested that this
                                             contained with the Form of                  filing be accepted retroactive to January
[Docket No. ER98–885–000]
                                             Transmission Agency Agreement               1, 1997, to coincide with the proposed
   Take notice that on December 1, 1997,     submitted to the Commission on              effective date of a concurrently filed
PP&L, Inc. (PP&L), filed an executed         October 3, 1997, as part of the joint       settlement agreement of transmission
Transmission Agency Agreement                filing by the Pennsylvania Public Utility   agreement issues.
between PP&L, UGI Utilities, Inc. (UGI),     Commission and the Pennsylvania PJM            Copies of the filing were served upon
and Energis Resources Incorporated           Utilities at Docket No. ER98–64–000.        Edison Sault Electric Company and the
(Supplier). The terms and conditions         This filing merely submits an individual    Michigan Public Service Commission.
contained within this Agreement are          executed copy of the Transmission              Comment date: January 7, 1998, in
identical to the terms and conditions        Agency Agreement between PP&L, UGI          accordance with Standard Paragraph E
contained with the Form of                   and an alternative supplier participating   at the end of this notice.
Transmission Agency Agreement                in UGI’s Retail Access Pilot Program.
submitted to the Commission on                  Copies of the filing were served on      Standard Paragraph
October 3, 1997, as part of the joint        UGI, the Supplier and the Pennsylvania        E. Any person desiring to be heard or
filing by the Pennsylvania Public Utility    Public Utility Commission.                  to protest said filing should file a
Commission and the Pennsylvania PJM             Comment date: January 7, 1998, in        motion to intervene or protest with the
Utilities at Docket No. ER98–64–000.         accordance with Standard Paragraph E        Federal Energy Regulatory Commission,
This filing merely submits an individual     at the end of this notice.                  888 First Street, N.E., Washington, D.C.
executed copy of the Transmission                                                        20426, in accordance with Rules 211
                                             34. PP&L, Inc.
Agency Agreement between PP&L, UGI                                                       and 214 of the Commission’s Rules of
and an alternative supplier participating    [Docket No. ER98–890–000]                   Practice and Procedure (18 CFR 385.211
in UGI’s Retail Access Pilot Program.          Take notice that on December 1, 1997,     and 18 CFR 385.214). All such motions
   Copies of the filing were served on       PP&L, Inc. (PP&L), filed an executed        or protests should be filed on or before
UGI, the Supplier and the Pennsylvania       Transmission Agency Agreement               the comment date. Protests will be
Public Utility Commission.                   between PP&L, UGI Utilities, Inc. (UGI),    considered by the Commission in
74                       Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

determining the appropriate action to be     which prioritizes action items if          recommended additional measures to
taken, but will not serve to make            adequate resources are not received.       minimize impacts to wetlands.
protestants parties to the proceeding.                                                    Dated: December 30, 1997.
                                             Final EISs
Any person wishing to become a party                                                    Cliff Rader,
must file a motion to intervene. Copies         ERP No. F–BLM–K65196–CA,
                                                                                        Environmental Protection Specialist, NEPA
of this filing are on file with the          Interlakes Special Recreation
                                                                                        Compliance Division, Office of Federal
Commission and are available for public      Management Area Plan,                      Activities.
inspection.                                  Implementation, Federal and Private
                                                                                        [FR Doc. 97–34226 Filed 12–31–97; 8:45 am]
Lois D. Cashell,                             Lands Issues, Shasta County, CA.
                                                                                        BILLING CODE 6560–50–P
Secretary.                                      Summary: EPA’s concerns were
[FR Doc. 97–34172 Filed 12–31–97; 8:45 am]   adequately addressed in the final EIS.
BILLING CODE 6717–01–P
                                             However, EPA recommended that the          ENVIRONMENTAL PROTECTION
                                             Record of Decision include the             AGENCY
                                             management plan implementation
                                             strategy.                                  [ER–FRL–5487–6]
ENVIRONMENTAL PROTECTION                        ERP No. F–BLM–K67042–CA, Castle
AGENCY                                       Mountain Mine Open Pit Heap Leach          Environmental Impact Statements;
                                             Gold Mine Expansion Project, Plan of       Notice of Availability
[ER–FRL–5458–7]                              Operations Modification and Mine and          Responsible Agency: Office of Federal
                                             Reclamation Plans Amendment,               Activities, General Information (202)
Environmental Impact Statements and          Approvals, San Bernardino County, CA.      564–7167 OR (202) 564–7153.
Regulations; Availability of EPA                Summary: The Final EIS addressed
Comments                                                                                Weekly receipt of Environmental Impact
                                             most of EPA’s concerns. EPA                   Statements
  Availability of EPA comments               recommended that the Record of             Filed December 22, 1997 Through
prepared December 15, 1997 Through           Decision include post-mining                  December 26, 1997
December 19, 1997 pursuant to the            monitoring of pit conditions for public    Pursuant to 40 CFR 1506.9.
Environmental Review Process (ERP),          and environmental safety.                  EIS No. 970491, Draft EIS, NPS, CA, NV,
under Section 309 of the Clean Air Act          ERP No. F–FAA–K51036–HI, Kahului           NM, P140, Coaxial Cable Removal
and Section 102(2)(c) of the National        Airport Master Plan Improvements,             Project, Plan Approval and Permits
Environmental Policy Act as amended.         Implementation, Funding and Approval          Issuance, Socorro, New Mexico to
Requests for copies of EPA comments          of Permits, Kahului, Maui County, HI.         Mojave, California, NM, CA and NV,
can be directed to the OFFICE OF                Summary:                                   Due: March 27, 1998, Contact: Joan
FEDERAL ACTIVITIES AT (202) 564–             Review of the Final EIS was not deemed        DeGraff (303) 969–2464. The above
7167. An explanation of the ratings          necessary. No formal comment letter           DEIS was received on 12–19–97. Due
assigned to draft environmental impact       was sent to the preparing agency.             to the Holiday Schedule, EISs
statements (EISs) was published in the          ERP No. F–FHW–K40205–CA, US 101            received on 12–19–97 are appearing
Federal Register dated April 11, 1997        Realignment Construction, near Cushing        in the 1–02–98 Federal Register with
(62 FR 16154).                               Creek from Mile Post 20.3 to 22.3 South       Review and Wait Periods calculated
                                             of Crescent City, Funding and COE             from the 12–24–97 Federal Register
Draft EISs                                   Permits, Del Norte County, CA.                date.
  ERP No. D–BLM–K67046–NV, Rating               Summary: Review of the Final EIS        EIS No. 970492, Final EIS, FHW, NC,
EC2, Olinghouse Mine Project,                was not deemed necessary. No formal           Fayetteville Outer Loop Project, US
Construction of Two Open Pits, Waste         comment letter was sent the preparing         401 to I–95 at the existing US 13
Dump, Haul Road and Cyanide Heap             agency.                                       Interchange, Funding and US COE
Leach Pads, Plan-of-Operation, Carson           ERP No. F–NPS–K61137–AZ, Organ             Section 10 and 404 Permit Issuance,
City, Washoe County, NV.                     Pipe Cactus National Monument                 City of Fayetteville, Cumberland
  Summary: EPA expressed                     General Management Plan and                   County, NC, Due: January 22, 1998,
environmental concerns that cyanide          Development Concept Plan                      Contact: Nicholas L. Graf (919) 856–
heap leach operations and overburden         Implementation, Portion of the Sonoran        4346.
piles could adversely impact surface or      Desert, Pima County, AZ.                      The above FEIS was received on 12–
groundwater, and recommended                    Summary: Review of the final EIS was    19–97.
specific design modifications and            not deemed necessary. No formal               Due to the Holiday Schedule, EISs
mitigation.                                  comment letter was sent to the             received on 12–19–97 are appearing in
  ERP No. D–IBR–K64016–CA, Rating            preparing agency.                          the 1–2–98 Federal Register with
LO1, Hamilton City Pumping Plant, Fish          ERP No. FS–COE–C36030–NJ, Green         Review and Wait Periods calculated
Screen Improvement Project, COE              Brook Sub-Basin Flood Control Plan,        from the 12–24–97 Federal Register
Section 10 and 404 Permits, Central          Updated Information concerning a           date.
Valley, Butte, Colusa, Glenn and             Revised Recommended Plan and               EIS No. 970493, Draft EIS, AFS, CA,
Tehama Counties, CA.                         Mitigation Plan, Implementation,              Payen, Pass Creek and English Range
  Summary: Because of the clear              Middlesex, Union and Somerset                 Allotments, Grazing Land
beneficial effects to endangered species.    Counties, NJ.                                 Management Plan, Implementation,
EPA concurred with the proposed                 Summary: EPA recommended that the          Tahoe National Forest, Sierraville
project and strongly supported the           Record of Decision recognized that the        Ranger District, Sierra and Nevada
Environmental Compliance and                 Cornell-Dubilies Electronices site has        Counties, CA, Due: February 17, 1998,
Mitigation Monitoring and Fish               been proposed for listing on the              Contact: Jerry Sirski (916) 994–3401.
Protection and Evaluation and                National Priorities List given potential   EIS No. 970494, Draft EIS, AFS, WA,
Monitoring Programs. EPA                     PCB contamination in Bound Brook and          White Pass Ski Area Expansion,
recommended that FEIS include a table        New Market Pond. In addition, EPA             Special-Use-Permit, Pigtail Basin and
                         Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                                     75

  Hogback Basin, Wenatchee and               consideration in assessing the chronic       situational exposure assessment
  Gifford, Pinchot National Forests,         health effects of eleven chemical            information, the summary health hazard
  Yakima and Lewis Counties, WA,             substances. (See FR Vol. 61 No. 64 p.        information in IRIS may be used as a
  Due: February 17, 1998, Contact: Jim       14570.) The Pilot program is near            source in evaluating potential public
  Pena (509) 653–2205.                       completion, and the Agency is                health risks from environmental
EIS No. 970495, Final EIS, FAA, MO,          preparing a new set of chemical health       contaminants.
  Lambert-St. Louis International            assessments for IRIS. The purpose of
                                             this notice is to communicate to the         The Pilot Program
  Airport (Lambert) Improvements,
  Construction and Operation, Airport        public the Agency’s plans, and solicit          As a consequence of analyzing the
  Layout Plan Approval, City of St.          scientific data and evaluations for          IRIS program and considering
  Louis, St. Louis County, MO, Due:          consideration in EPA’s new                   suggestions received about IRIS through
  February 02, 1998, Contact: Ms. Moira      assessments.                                 1995, the Agency tested some
  Keane (816) 426–4731.                      DATES: Please submit information in          improvements through a Pilot Program.
EIS No. 970496, Draft EIS, FRC, ND, IA,      response to this notice by March 3,          The Pilot focused on improving the
  MN, IL, lliance Natural Gas Pipeline       1998.                                        scientific consensus and review process
  Project, Construction and Operation,       ADDRESSES: Please send relevant              that precedes IRIS data base entries.
  Funding, NPDES Permit, COE Section         scientific information to the IRIS           EPA developed (or updated, for existing
  10 and 404 Permit, ND, MN, IA and          Submission Desk in accordance with the       entries) non-cancer and cancer
  IL, Due: February 17, 1998, Contact:       instructions provided under                  information for eleven Pilot substances.
  Paul McKee (202) 208–1088.                 ‘‘Submission of Information’’ in this        The Pilot process consisted of, (1) a call
EIS No. 970497, Final EIS, URC, UT,          notice.                                      for technical information on the eleven
  Provo River Restoration Project            FOR FURTHER INFORMATION CONTACT: For         substances from the public via a FR
  (PRRP), Riverine Habitat Restoration,      information on the IRIS program,             Notice, April 2, 1996, (2) a search of the
  Reconstruction and Realignment of          contact Amy Mills, National Center for       current literature, (3) development of
  the existing Provo River Channel and       Environmental Assessment (mail code          health assessments and draft IRIS
  Floodplain System between Jordanell        8623), U.S. Environmental Protection         summaries, (3) internal peer review (i.e.,
  Dam and Deer River Reservoir,              Agency, 401 M St. SW, Washington, DC         within EPA), (4) external peer review
  Wasatch County, UT, Due: February          20460, or call (202) 260–0569, or send       (i.e., outside EPA), (5) Agency
  26, 1998, Contact: Mark A. Holden          electronic mail inquiries to                 consensus review and management
  (801) 524–3146. The US Department          mills.amy@epamail.epa.gov. For general       approval within EPA, (6) preparation of
  of the Interior is a Joint Lead Agency     questions about access to IRIS, the          final IRIS summaries and supporting
  for the above Project along with the       content of IRIS, or how to submit            documents, and (7) entry of summaries
  Utah Reclamation Mitigation and            information in response to this notice,      into the IRIS data base. The last stage is
  Conservation Commission (URC).             please call the Risk Information Hotline     currently underway for most of the Pilot
                                             at (513) 569–7254. For scientific issues     substances.
  Dated: December 30, 1998.
                                             contact Terry Harvey, National Center           EPA’s evaluation of the Pilot provided
Cliff Rader,                                                                              the basis for designing the operation of
Environmental Protection Specialist, NEPA
                                             for Environmental Assessment, 26
                                             Martin Luther King Drive, Cincinnati,        the future IRIS program. For example,
Compliance Division, Office of Federal                                                    the Agency standardized (1) the
Activities.                                  OH 45268, or call (513) 569–7531, or
                                             send electronic mail inquiries to            solicitation of scientific information
[FR Doc. 97–34227 Filed 12–31–97; 8:45 am]                                                from the public via a FR notice, (2) the
BILLING CODE 6560–50–U
                                             harvey.terry@epamail.epa.gov.
                                                                                          use of the ‘‘Toxicological Review’’ as a
                                             SUPPLEMENTARY INFORMATION:                   preferred support document for IRIS
                                             Background                                   entries which combines cancer and
ENVIRONMENTAL PROTECTION
                                                                                          noncancer assessments, and (3) the use
AGENCY                                          The Integrated Risk Information
                                                                                          of rigorous external peer review
                                             System (IRIS) is an EPA data base
[FRL–5945–3]                                                                              procedures for IRIS summaries and
                                             containing Agency consensus scientific
                                                                                          Toxicological Reviews. The final
Integrated Risk Information System           positions on potential adverse human
                                                                                          Agency consensus review process,
(IRIS); Announcement of 1998                 health effects that may result from
                                                                                          while still being tested, is replacing the
Program; Request for Information             chronic (or lifetime) exposure to
                                                                                          former ‘‘CRAVE’’ and ‘‘RfD/RfC Work
                                             environmental contaminants. IRIS
                                                                                          Groups’’.
AGENCY: U.S. Environmental Protection        currently provides health effects
                                                                                             The following substances were
Agency.                                      information on over 500 specific
                                                                                          reviewed under the Pilot Program:
ACTION: Notice; Announcement of IRIS         chemical substances.
1998 Program and request for scientific         IRIS contains chemical-specific                              Name                            CAS. No.
information on chronic health effects of     summaries of qualitative and
chemical substances.                         quantitative health information in           Arsenic ......................................     7440–38–2
                                             support of the first two steps of the risk   Bentazon ...................................      25057–89–0
SUMMARY: The Integrated Risk                 assessment process, i.e., hazard             Beryllium ...................................      7440–41–7
Information System (IRIS) is a data base     identification and dose-response             Chlordane .................................       12789–03–6
of the United States Environmental           evaluation. IRIS information includes        Chromium:
Protection Agency (EPA) that contains        the reference dose for non-cancer health       Cr (III) ....................................   16065–83–1
                                                                                            Cr (VI) ....................................    18540–29–9
EPA scientific consensus positions on        effects resulting from oral exposure, the
                                                                                            Total Cr .................................       7440–47–3
potential human health effects from          reference concentration for non-cancer       Cumene ....................................          98–82–8
environmental contaminants. On April         health effects resulting from inhalation     Methyl methacrylate ..................               80–62–6
2, 1996 EPA announced the IRIS Pilot         exposure, and the carcinogen                 Diphenylmethane diisocyanate                        101–68–8
Program and solicited scientific             assessment for both oral and inhalation      Naphthalene ..............................           91–20–3
information from the public for              exposure. Combined with specific             Tributyltin oxide .........................          56–35–9
76                                 Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

                 Name                         CAS. No.                     Name                           CAS No.     Also note that if you have submitted
                                                                                                                      certain information previously then
Vinyl chloride ............................    75–01–4   Ethylene glycol butyl ether .......              111–76–2    there is no need to resubmit that
                                                                                                                      information. Information from the
   A cancer assessment for                               Information requested on new                                 public is being solicited for 60 days via
polychlorinated biphenyls (PCBs) and                     assessments                                                  this notice.
an oral noncancer assessment for                           The following IRIS health assessments                         Similar to the process described in the
trinitrobenzene were also added to IRIS                  have recently begun or will be started in                    FR Notice for the IRIS Pilot,
during the Pilot period. The IRIS                        FY 1998, with completion expected                            submissions will be handled in a three-
summaries and support documents for                      between late FY 1998 and early FY                            step process:
the substances listed above are now                      2000. It is for these substances that the                       1. First, interested parties should
provided on the IRIS web site at                         Agency is primarily requesting                               simply provide a list (submission
www.epa.gov/iris, or will be provided                    information from the public for                              inventory), briefly identifying all the
shortly. This publicly-available web site                consideration in the assessment.                             information they wish to submit to the
will be the primary location for all new                                                                              IRIS Submission Desk. The list should
IRIS summaries and Toxicological                                           Name                           CAS No.     specify by name and CAS (Chemical
Reviews.                                                                                                              Abstract Registry) number the chemical
                                                         Boron ........................................   7440–42–8   substance(s) to which the information
New Starts and Completions for FY                        Bromate ....................................     7758–01–2
1998                                                                                                                  pertains, state the type of assessment
                                                         Chloral hydrate .........................          75–87–6
                                                         Chloroform ................................        67–66–3   that is being addressed (e.g.,
  EPA will continue building and                         Dichloroacetic acid ....................           79–43–6   carcinogenicity), and describe briefly
updating the IRIS data base utilizing the                1,3-Dichloropropene .................             542–75–6   the information being submitted for
experiences gained from the IRIS Pilot.                  Formaldehyde ...........................           50–00–0   consideration. Where possible,
The Agency recognizes that many of the                   Lindane .....................................      58–89–9   documents should be listed in scientific
assessments on IRIS need updating to                     Nitrobenzene .............................         98–95–3   citation format, that is, author(s), title,
incorporate new scientific information                   Pentachlorophenol ....................             87–86–5   journal, and date. A cover letter should
                                                         Polychlorinated biphenyls
and methodologies. Further, many                           (PCBs)—[noncancer
                                                                                                                      state that the correspondence is an IRIS
additional substances are candidates for                   endpoints] ..............................      1336–36–3   Submission, describe in general terms
adding to IRIS. However, due to limited                  Styrene ......................................    100–42–5   the purpose of the submission, and
resources in the Agency to address the                   Tetrachloroethylene ..................            127–18–4   include names, addresses, and
spectrum of needs, a list of priority                    Tetrahydrofuran ........................          109–99–9   telephone numbers of persons to contact
substances was developed internally by                   Toxaphene ................................       8001–35–2   for additional information on the
EPA for attention in FY 1998. The                        Trichloroethylene ......................           79–01–6   submission. Three copies of the
following lists of substances are                        Vinyl acetate .............................       108–05–4
                                                                                                                      submittal should be mailed to the IRIS
priorities for IRIS due to one or more of                                                                             Submission Desk, NCEA (MS–105), U.S.
                                                           Check the IRIS web site at
the following reasons: (1) Agency                                                                                     Environmental Protection Agency, 26
                                                         www.epa.gov/iris for any additions to
statutory, regulatory, or program                                                                                     Martin Luther King Drive, Cincinnati,
                                                         the above list during the course of FY
implementation need; (2) new scientific                                                                               OH 45268.
                                                         1998. Follow-up Federal Register
information or methodology is available                  notices will address new starts for                             The submission inventory and cover
that might significantly change current                  subsequent fiscal years. In the future,                      letter may instead be submitted
IRIS information, (3) interest to other                  these notices will include chemical                          electronically to
levels of government or the public, (4)                  substances selected for assessment or                        IRIS.comments@epamail.epa.gov.
most of the scientific assessment work                   reassessment under EPA’s new                                 Electronic information must be
has been completed while meeting other                   guidelines for carcinogen risk                               submitted in Wordperfect or as an ASCII
Agency requirements, and only a                          assessment that are also planned for                         file. Information will also be accepted
modest additional effort will be needed                  inclusion in IRIS (See FR Vol. 61 no. 64                     on 3.5′′ floppy disks. All information in
to complete the review and                               p. 32799, June 25, 1996).                                    electronic form must be identified as an
documentation for IRIS. Unless                                                                                        IRIS Submission.
otherwise noted, noncancer and cancer                      Submission of Information                                     2. In the second step, EPA will
endpoints will be assessed for each                           The IRIS program is providing an                        compare the submission inventory to
substance.                                                 opportunity for public involvement on                      existing files and identify the
Assessments in Progress—Completion                         new assessments starting in FY 1998.                       information that should be submitted.
Planned for FY 1998                                        While the Agency conducts a thorough                       This step will help prevent an influx of
                                                           literature search for each chemical                        duplicative information. The submitter
  In addition to completing the                            substance, there may be other articles or                  will receive notification requesting full
remaining Pilot assessments, the                           unpublished studies we are not aware                       submission of the selected material.
following assessments are underway or                      of. The Agency would greatly appreciate                       3. In the third step, the submitter
generally complete, and are planned for receiving scientific information from the                                     must send in the information requested
update on IRIS in FY 1998:                                 public during the information gathering                    by EPA within 30 days to ensure its
                                                           stage for the list of ‘‘new assessments’’                  consideration in the assessment.
               Name                            CAS No.     listed above. Interested persons should                    Submittals should include a cover letter
                                                           provide scientific comments, analyses,                     addressing all of the points in item 1
Acetonitrile ................................    75–05–8 studies, and other pertinent scientific
Barium ....................................... 7440–39–3
                                                                                                                      above. In addition, persons submitting
Benzene ....................................     71–43–2
                                                           information. The most useful                               results of new health effects studies
1,3-Butadiene ............................      106–99–0 documents for EPA are unpublished                            concerning existing substances on IRIS
Cadmium ...................................    7440–43–9 studies or other primary technical                           should include a specific explanation of
Chloroethane ............................        75–00–3 sources that we may not otherwise                            how and why the study results could
Diesel emissions .......................            [N.A.] obtain through open literature searches.                   change the information in IRIS.
                         Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                   77

   Submitters are requested to send three     1998. The Iron and Steel Sector                The Subcommittee meeting agenda
copies, at least one of which should be       Subcommittee will hold an open              includes an update on the status of the
unbound. The submittal should be              meeting on Wednesday, January 21 and        Refinery Air Information Reporting
mailed to the IRIS Submission Desk,           Thursday, January 22, 1998. On              System Project and the Equipment
NCEA (MS–105), U.S. Environmental             Wednesday, the meeting will begin at        Leaks Project. The Subcommittee also
Protection Agency, 26 Martin Luther           10:00 a.m. CST and will run until 5:00      plans to discuss potential new project
King Drive, Cincinnati, OH 45268.             p.m. CST. Shortly after convening, the      ideas. A public comment period has
Receipt of information will be                Subcommittee will break into work           been scheduled from approximately
acknowledged by the IRIS Submission           group sessions and reconvene in the         2:00 pm CST until 3:00 pm CST on
Desk.                                         afternoon. On Thursday, the meeting         Tuesday, January 27, 1998.
   Confidential Business Information          will begin at 8:00 a.m. CST and end at         For further information concerning
(CBI) should not be submitted to the          4:00 p.m. CST. The Subcommittee will        this meeting of the Petroleum Refining
IRIS Submission Desk. CBI must be             review the status of the two work groups    Sector Subcommittee, please contact
submitted to the appropriate EPA Office       it has created to deal with                 either Craig Weeks, Designated Federal
via approved Agency procedures for            environmental performance and               Officer (DFO), at US EPA Region 6
submission of CBI as codified in the          monitoring and decide its next steps.       (6EN), 1445 Ross Avenue, Dallas, TX
Code of Federal Regulations (40 CFR,          The meeting will be held both days at       75202–2733, by telephone at 214–665–
Part 2, Subpart B). If a submitter            the Metcalf Federal Building, Great         7505 or E-mail at
believes that a CBI submission contains       Lakes Conference Center, 12th floor, 77     weeks.craig@epamail.epa.gov or Steve
information with implications for IRIS,       West Jackson Blvd., Chicago, IL 60604.      Souders, Alternate DFO, at US EPA
it should be noted in the cover letter           At its October meeting, the              (5306W), 401 M Street, SW,
accompanying the submission to the            Subcommittee decided to create two          Washington, DC 20460, by telephone at
appropriate office.                           work groups: environmental                  703–308–8431 or E-mail at
   Submitters may also request to             performance and monitoring. The             souders.steve@epamail.epa.gov.
augment their submission with a               environmental performance work group           Inspection of Subcommittee
scientific briefing to EPA staff. Such        is working on developing a code of          Documents: Documents relating to the
requests should be made directly to           conduct and a definition of substantial     above topics will be publicly available
Amy Mills, acting IRIS Assessment             compliance for the industry, and the        at the meeting. Thereafter, these
Manager (see ADDRESSEES).                     monitoring work group is exploring the      documents, together with the official
                                              different federal, state, and local         minutes for the meetings, will be
  Dated: December 24, 1997.                   monitoring requirements with a goal of      available for public inspection in room
William H. Farland,                           considering if current monitoring of the    2821M of EPA Headquarters, Common
Director, National Center for Environmental   industry is relevant to today’s needs. At   Sense Initiative Staff, 401 M Street, SW,
Assessment.                                   the January meeting, the Subcommittee       Washington, D.C. 20460, telephone
[FR Doc. 97–34198 Filed 12–31–97; 8:45 am]    will allow time on January 21st for the     number 202–260–7417. Common Sense
BILLING CODE 6560–50–P                        two work groups to meet in the morning      Initiative information can be accessed
                                              and early afternoon, then review the        electronically on our web site at http./
                                              progress of these two work groups and       /www.epa.gov/commonsense.
ENVIRONMENTAL PROTECTION                      decide its next steps. Additionally, it
AGENCY                                        will review the status of ongoing             Dated: December 24, 1997.
                                              projects and discuss the development of     Kathleen Bailey,
[FRL–5943–1]
                                              papers dealing with industry-specific       Designated Federal Officer.
Common Sense Initiative Council               Resource Conservation and Recovery          [FR Doc. 97–34197 Filed 12–31–97; 8:45 am]
(CSIC)                                        Act issues.                                 BILLING CODE 6560–50–P
                                                 For more information about this
AGENCY:   Environmental Protection            meeting, please contact: Ms. Judith
Agency (EPA).                                 Hecht, Designated Federal Officer           FEDERAL COMMUNICATIONS
ACTION: Notification of Public Advisory       (DFO), at US EPA by telephone at 202–       COMMISSION
for CSI Iron and Steel Sector and             260–5682 in Washington, D.C. or by E-
Petroleum Refining Sector                     mail at hecht.judy@epamail.epa.gov, or      Notice of Public Information
Subcommittee Meetings; Open                   Mr. Robert Tolpa at EPA Region 5 in         Collection(s) Being Reviewed by the
Meetings.                                     Chicago, Illinois, on 312–886–6706, or      Federal Communications Commission
                                              Dr. Mahesh Podar at EPA, Washington,
SUMMARY: Pursuant to the Federal              DC on 202–260–5387.                         December 22, 1997.
Advisory Committee Act, Public Law               (2) Petroleum Refining Sector            SUMMARY:    The Federal Communications
92–463, notice is hereby given that the       Subcommittee Meeting—January 26–27,         Commission, as part of its continuing
Iron and Steel Sector and Petroleum           1998. The Petroleum Refining Sector         effort to reduce paperwork burden,
Refining Sector Subcommittees of the          Subcommittee will hold an open              invites the general public and other
CSIC will meet on the dates and times         meeting on January 26 and 27, 1998.         Federal agencies to take this
described below. Both meetings are            Work Group meetings will be held from       opportunity to comment on the
open to the public. Seating at both           1:00 pm CST to 5:00 pm CST on               following information collection(s), as
meetings will be on a first-come basis        Monday, January 26. The full                required by the Paperwork Reduction
and limited time will be provided for         Subcommittee will meet from                 Act of 1995, Public Law 104–13. An
public comment. For further                   approximately 8:00 am CST until 5:00        agency may not conduct or sponsor a
information concerning specific               pm CST on Tuesday, January 27, 1998.        collection of information unless it
meetings, please contact the individuals      The meeting will be held at the Harvey      displays a currently valid control
listed with the announcements below.          Hotel Dallas, 7800 Alpha Road, Dallas,      number. No person shall be subject to
   (1) Iron and Steel Sector                  Texas 75240. The hotel telephone            any penalty for failing to comply with
Subcommittee Meeting—January 21–22,           number is 972–960–7000.                     a collection of information subject to the
78                     Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

Paperwork Reduction Act (PRA) that          granting a transfer of control or an         Synopsis Of Order
does not display a valid control number.    assignment of a license awarded                 1. On September 30, 1997, BellSouth
Comments are requested concerning (a)       through lottery procedures. The              Corporation, BellSouth
whether the proposed collection of          foregoing estimates include the time for     Telecommunications, Inc., and
information is necessary for the proper     reviewing instructions, searching            BellSouth Long Distance, Inc.
performance of the functions of the         existing data sources, gathering and         (collectively, BellSouth) filed an
Commission, including whether the           maintaining the data needed, and             application for authorization under
information shall have practical utility;   completing and reviewing the burden          section 271 of the Act, to provide in-
(b) the accuracy of the Commission’s        estimates or any other aspect of the         region interLATA services in the State
burden estimate; (c) ways to enhance        collection of information.                   of South Carolina. In this Order, the
the quality, utility, and clarity of the    Federal Communications Commission.           Commission concludes that BellSouth
information collected; and (d) ways to      William F. Caton,                            may not obtain authorization to provide
minimize the burden of the collection of                                                 in-region, interLATA services in South
                                            Acting Secretary.
information on the respondents,                                                          Carolina pursuant to section 271(c)(1)(B)
including the use of automated              [FR Doc. 97–34149 Filed 12–31–97; 8:45 am]
                                            BILLING CODE 6712–01–P
                                                                                         at this time because it has failed to meet
collection techniques or other forms of                                                  its burden of demonstrating that it has
information technology.                                                                  received no qualifying requests for
DATES: Written comments should be           FEDERAL COMMUNICATIONS                       access and interconnection that, if
submitted on or before March 3, 1998.       COMMISSION                                   implemented, would satisfy the
If you anticipate that you will be                                                       requirements of section 271(c)(1)(A).
submitting comments, but find it            [CC Docket No. 97–208; FCC 97–418]           The Commission further concludes that
difficult to do so within the period of                                                  BellSouth has not yet demonstrated that
time allowed by this notice, you should     Application of BellSouth Corporation,        it has fully implemented the
advise the contact listed below as soon     et al. Pursuant to Section 271 of the        competitive checklist in section
as possible.                                Communications Act of 1934, as               271(c)(2)(B). In particular, the
ADDRESSES: Direct all comments to Judy      Amended, to Provide In-Region                Commission finds that BellSouth has
Boley, Federal Communications               InterLATA Services in South Carolina         not met its burden of showing that it
Commission, Room 234, 1919 M St.,           AGENCY: Federal Communications               meets the competitive checklist with
NW, Washington, DC 20554 or via             Commission.                                  respect to: (1) access to its operations
internet to jboley@fcc.gov.                                                              support systems; (2) access to network
                                            ACTION: Notice.
FOR FURTHER INFORMATION CONTACT: For                                                     elements; and (3) resale. The
additional information or copies of the     SUMMARY:    The Memorandum Opinion           Commission concludes that BellSouth
information collection(s), contact Judy     and Order (Order) in CC Docket No. 97–       complies with the requirement to
Boley at 202–418–0214 or via internet at    208 concludes that BellSouth                 provide access to 911 and E911 services,
jboley@fcc.gov.                             Corporation, et al. (BellSouth) has not      and that BellSouth’s inbound
SUPPLEMENTARY INFORMATION:                  satisfied the requirements of section        telemarketing script is consistent with
   OMB Control No.: 3060–0639.              271(c)(1) of the Communications Act of       the Act. The Commission therefore
   Title: Implementation of Section         1934, as amended (Act). The                  denies, pursuant to section 271(d)(3),
309(j) of the Communications Act,           Commission therefore denies, pursuant        BellSouth’s application to provide in-
Competitive Bidding, PP Docket              to section 271(d)(3), BellSouth’s            region interLATA services in South
Number 93–253, First Report and Order.      application to provide in-region             Carolina.
   Form No.: N/A.                           interLATA services in South Carolina.           2. Compliance with Section
   Type of Review: Revision of a            The Order declines to grant BellSouth        271(c)(1)(B). The Commission concludes
currently approved collection.              authority to provide in-region               that BellSouth may not obtain
   Respondents: Businesses or other for     interLATA services in South Carolina.        authorization to provide in-region,
profit.                                                                                  interLATA services in South Carolina
                                            EFFECTIVE DATE: December 24, 1997.
   Number of Respondents: 400.                                                           pursuant to section 271(c)(1)(B) at this
   Estimated Time Per Response: 1 hour.     FOR FURTHER INFORMATION CONTACT:             time because it has failed to meet its
   Frequency of Response: On occasion       Michael Pryor, Attorney, Policy and          burden of demonstrating that it has
reporting requirement.                      Program Planning Division, Common            received no qualifying requests for
   Cost to Respondents: N/A.                Carrier Bureau, (202) 418–1580.              access and interconnection that, if
   Total Annual Burden: 400 hours.          SUPPLEMENTARY INFORMATION: This is a         implemented, would satisfy the
   Needs and Uses: Section 3002 of the      summary of the Commission’s Order            requirements of section 271(c)(1)(A).
Balanced Budget Act of 1997 amended         adopted December 24, 1997, and               The Commission, as an initial matter,
Section 309(j), to, in effect, reduce the   released December 24, 1997. The full         clarifies its standard for evaluating
situations in which the use of random       text of this Order is available for          qualifying requests and the role of
selection is appropriate. While the         inspection and copying during normal         reasonable steps in its evaluation.
Commission proposes to reduce the           business hours in the FCC Reference             3. The Commission further concludes
number of respondents, it does not          Center, 1919 M St., N.W., Room 239,          that MCI’s provision of telephone
reduce the burden hours required to         Washington, D.C. The complete text also      exchange service on a test basis, at no
complete an individual information          may be obtained through the World            charge, to the homes of nineteen MCI
collection. The Commission seeks            Wide Web, at http://www.fcc.gov/             employees, does not qualify MCI as a
comment on this proposal and other          Bureaus/Common Carrier/Orders/fcc97–         competing provider under section
methods by which the burden on              228.wp, or may be purchased from the         271(c)(1)(A), and therefore BellSouth
respondents may be reduced.                 Commission’s copy contractor,                has not satisfied the requirements of
   The Commission will use the              International Transcription Service,         section 271(c)(1)(A).
information to determine whether the        Inc., (202) 857–3800, 1231 20th St.,            4. Compliance with the Competitive
public interest would be served by          N.W., Washington, D.C. 20036.                Checklist in Section 271(c)(2)(B). For the
                       Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                     79

reasons set forth below, the Commission      access—collocation. The Commission              9. Compliance with Section 272. The
concludes that BellSouth has not yet         finds that BellSouth fails to demonstrate    Commission concludes that BellSouth’s
demonstrated by a preponderance of the       that it offers or can timely provide         inbound telemarketing script is
evidence that it has fully implemented       collocation for the purposes of              consistent with the Act. The
the competitive checklist. As a              recombining unbundled network                Commission concludes that a BOC,
preliminary matter, the Commission           elements. The Commission finds it            during an inbound telephone call, may
concludes that a BOC ‘‘generally offers’’    significant that BellSouth’s SGAT does       recommend its own long distance
a checklist item if it makes the checklist   not commit to any provisioning               affiliate, as long as it
item available as both a legal and a         intervals for implementing collocation       contemporaneously states that other
practical matter.                            requests. The Commission further finds       carriers also provide long distance
   5. With respect to the first checklist    that the record indicates that, in           service and offers to read a list of all
item addressed, the Commission               practice, it is taking BellSouth a long      available interexchange carriers in
concludes, consistent with the               time to implement collocation requests.      random order.
Department of Justice’s finding, that        The Commission further finds that               10. Public Interest. Based on the
BellSouth has failed to demonstrate by       BellSouth has made no showing that           Commission’s conclusions that
a preponderance of the evidence that it      there has been actual commercial usage       BellSouth has not fully implemented
provides nondiscriminatory access to all     or testing of collocation anywhere in its    the competitive checklist, the
of the operations support systems (OSS)      region for the purpose of recombining        Commission need not and does not
functions provided to competing              UNEs. Thus, the Commission                   address the issue of whether BellSouth
carriers, as required by the competitive     concludes, BellSouth has not                 has demonstrated that the authorization
checklist. First, the Commission             demonstrated that it can timely deliver      it seeks is consistent with the public
describes BellSouth’s OSS. Second, the       unbundled network elements to                interest, convenience, and necessity, as
Commission outlines its general              collocation spaces for combining, or that    required by section 271(d)(3)(C).
approach to analyzing the adequacy of        the resulting provision of these
                                                                                          Federal Communications Commission.
a BOC’s OSS. Third, the Commission           combined elements will be at an
analyzes the evidence concerning                                                          William F. Caton,
                                             acceptable level of quality.
competing carriers’ access to OSS               7. The Commission also addresses the      Acting Secretary.
functions for resale services and            checklist item that requires incumbent       [FR Doc. 97–34144 Filed 12–31–97; 8:45 am]
unbundled network elements. Based on         LECs to offer for resale at wholesale        BILLING CODE 6712–01–P
the evidence in the record, the              rates any telecommunications service
Commission concludes that BellSouth          that the carrier provides at retail, and
has not demonstrated that the access to      not to prohibit, or to impose                FEDERAL ELECTION COMMISSION
certain OSS functions that it provides to    unreasonable or discriminatory
competing carriers for pre-ordering,         conditions or limitations on, the resale     Sunshine Act Meeting
ordering, and provisioning of resale         of such telecommunications service.
                                                                                          AGENCY:  Federal Election Commission.
services and pre-ordering of unbundled       The Commission concludes that
network elements is equivalent to the        BellSouth does not meet this checklist       DATE & TIME: Tuesday, January 6, 1998
access it provides to itself. Finally, in    item because it refuses to offer contract    at 10:00 a.m.
order to provide additional guidance,        service arrangements, which are              PLACE: 999 E Street, N.W., Washington,
the Commission highlights a number of        contractual agreements made between a        D.C.
other OSS-related issues that are of         carrier and a specific, typically high-      STATUS: This meeting will be closed to
concern to the Commission.                   volume, customer, at a wholesale             the public.
   6. The next checklist item the            discount. The Commission concludes           ITEMS TO BE DISCUSSED:
Commission addresses is access to            that BellSouth’s argument that CSAs
unbundled network elements. The              should not be further discounted                Compliance matters pursuant to 2
Commission concludes that BellSouth          because they have already been               U.S.C. § 437g.
does not meet this checklist item            discounted from the tariff rate has been        Audits conducted pursuant to 2
because it has not demonstrated by a         previously considered and rejected by        U.S.C. § 437g, § 438(b), and Title 26,
preponderance of the evidence that it        the Commission. The Commission               U.S.C.
can make available, as a legal and           further finds that failure to offer CSAs        Matters concerning participation in
practical matter, access to unbundled        to resellers at a discount impedes           civil actions or proceedings or
network elements in a manner that            competition for large-volume customers       arbitration.
allows competing carriers to recombine       and thus impairs use of resale as a             Internal personnel rules and
them. The Commission concludes that          vehicle for competitors to enter             procedures or matters affecting a
the statement of generally available         BellSouth’s market.                          particular employee.
terms (SGAT) is deficient because it            8. The Commission also addresses the      DATE & TIME: Thursday, January 8, 1998
fails to include sufficiently detailed       part of the checklist item that requires     at 10:00 a.m.
terms and conditions for access to           BellSouth to provide nondiscriminatory       PLACE: 999 E Street, N.W., Washington,
network elements for the purposes of         access to 911 and E911 services. The         D.C. (ninth Floor).
recombining them. The Commission             Commission concludes that BellSouth          STATUS: This meeting will be open to the
finds that the SGAT lacks crucial details    has made a prima facie case that it offers   public.
such as which elements will be               nondiscriminatory access to 911 and
separated and which will be provided in      E911 services. Because no commenter          ITEMS TO BE DISCUSSED:
combination, and how and at what cost.       has produced evidence to demonstrate           Correction and Approval of Minutes.
The Commission concludes that, in            that BellSouth is not currently offering       Audit: San Diego Host Committee/Sail
particular, BellSouth has failed to          nondiscriminatory access to 911 and          to Victory ’96 (continued from meeting
demonstrate that it can provide access       E911 services, the Commission                of December 4, 1997).
to such elements through the one             concludes that BellSouth satisfies this        Audit: Committee on Arrangements
method that it has identified for such       part of the checklist item.                  for the 1996 Republican National
80                                    Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

Convention (continued from meeting of                                    Health and Human Services announces                                440–D, Humphrey Building, 200
December 4, 1997).                                                       the following advisory committee                                   Independence Avenue S.W., Washington,
  Administrative Matters.                                                meeting.                                                           D.C. 20201, telephone (202) 690–7100, or
PERSON TO CONTACT FOR INFORMATION:                                                                                                          Marjorie S. Greenberg, Executive Secretary,
                                                                            Name: National Committee on Vital and
Mr. Ron Harris, Press Officer;                                           Health Statistics (NCVHS), Subcommittee on                         NCVHS, NCHS, CDC, Room 1100,
Telephone: (202) 219–4155.                                               Privacy and Confidentiality.                                       Presidential Building, 6525 Belcrest Road,
[FR Doc. 97–34232 Filed 12–30–97; 2:41pm]                                   Times and Dates: 9 a.m.–5 p.m., January                         Hyattsville, Maryland 20782, telephone 301/
                                                                         28, 1998; 9 a.m.–5 p.m., January 29, 1998.                         436–7050. Additional information about the
BILLING CODE 6715–01–M
                                                                            Place: Room 303A, Hubert H. Humphrey                            full Committee is available on the NCVHS
                                                                         Building, 200 Independence Avenue, S.W.,                           website, where the tentative agenda for the
                                                                         Washington, D.C. 20201.                                            Subcommittee meeting will also be posted
FEDERAL MARITIME COMMISSION                                                 Status: Open.                                                   when available: http://aspe.os.dhhs.gov/
                                                                            Purpose: The Subcommittee will conduct
Ocean Freight Forwarder License                                                                                                             ncvhs.
                                                                         two workshops designed to gather
Applicants                                                               information, stimulate dialogue, and identify                        Dated: December 24, 1997.
                                                                         issues on the topics of identifiability of data                    James Scanlon,
  Notice is hereby given that the                                        (January 28) and the use of registries (January
following applicants have filed with the                                 29). The context for the discussions will be                       Director, Division of Data Policy.
Federal Maritime Commission                                              the data needs of the health care system, the                      [FR Doc. 97–34191 Filed 12–31–97; 8:45 am]
applications for licenses as ocean freight                               privacy of individuals, the Secretary’s                            BILLING CODE 4151–04–M
forwarders pursuant to section 19 of the                                 legislative recommendations on the
Shipping Act of 1984 (46 U.S.C. app.                                     confidentiality of individually-identifiable
                                                                         health information, and the current                                DEPARTMENT OF HEALTH AND
1781 and 46 CFR 510).                                                    legislative efforts on health privacy.
  Persons knowing of any reason why                                         On the first day the Subcommittee is                            HUMAN SERVICES
any of the following applicants should                                   interested in looking at how personal health
not receive a license are requested to                                   information might be collected, stored,                            Administration for Children and
contact the Office of Freight Forwarders,                                maintained, and disclosed for research,                            Families
Federal Maritime Commission,                                             health care, quality assurance, cost
Washington, D.C. 20573.                                                  containment, law enforcement, and other                            Agency Recordkeeping/Reporting
                                                                         purposes so that individual identities might                       Requirements Under Emergency
Marianas Steamship Agencies, Inc.,                                       be protected. The goal is to look for ways to
     1026 Cabras Highway,                                                                                                                   Review by the Office of Management
                                                                         support important functions that rely on
     Administration Building Annex,                                      personal health information without unduly                         and Budget (OMB)
     Piti, Guam 96925.                                                   impinging on the privacy interests of
  Junichi Kinoshita, President                                           individuals.                                                          Title: Native Employment Works
  Clarence Tenorio, Vice President                                          On the second day the Subcommittee is                           (NEW) Program Plan Guidance and
Impex Cargo, Inc., 7661 NW 68 Street,                                    interested in exploring the purposes and                           Report Requirements.
     Miami, FL 33166.                                                    function of health and medical registries in
Officers:                                                                the U.S. and the extent to which they may                             OMB No.: New.
  Zamir Nader, President                                                 pose or lessen threats to the privacy and                             Description: The purpose of this
  Martha Claudia Garcia, Vice President                                  confidentiality of individuals whose data is                       document is to determine whether a
                                                                         included in the registry. The goal is to                           Tribal plan is complete and will fulfill
  Dated: December 29, 1997.                                              identify the range or current activities that
Ronald D. Murphy,                                                        might qualify as registries and to put more                        its intended purpose, goals and
Assistant Secretary.                                                     information on the public record about the                         objectives to provide work activities.
[FR Doc. 97–34188 Filed 12–31–97; 8:45 am]                               manner in which registries collect, maintain,                      The plan will provide an outline of how
                                                                         and disclose personal health information.                          the Tribe’s program will be
BILLING CODE 6730–01–M
                                                                         Workshop participants are expected to                              administered and operated and
                                                                         include a variety of invited public and                            instructions for reporting program
                                                                         private sector representatives whose
DEPARTMENT OF HEALTH AND                                                 expertise can contribute to addressing the                         characteristics. It is also used to provide
HUMAN SERVICES                                                           workshop topics.                                                   the public with information about the
                                                                            Contact Person for More Information:                            NEW program.
National Committee on Vital and Health                                   Substantive program information as well as                            Respondents: States, Puerto Rico,
Statistics: Meeting                                                      a roster of committee members may be
                                                                         obtained from Judith Galloway, Division of                         Guam and the District of Columbia.
  Pursuant to the Federal Advisory                                       Data Policy, Office of the Assistant Secretary                        Annual Burden Estimates:
Committee Act, the Department of                                         for Planning and Evaluation, DHHS, Room

                                                                                                                                                  Number of       Average
                                                                                                                                     Number of    responses       burden      Total bur-
                                                        Instrument                                                                  respondents     per re-      hours per    den hours
                                                                                                                                                   spondent      response

Program Plan ....................................................................................................................           78              1            40        3,120
Operations Report ............................................................................................................              78              1            16        1,248



  Estimated Total Annual Burden                                          processing by February 17, 1998. A copy                            Families, Acting Reports Clearance
Hours: 4,368.                                                            of this information collection, with                               Officer, Bob Sargis at (202) 690–7275.
  Additional Information: ACF is                                         applicable supporting documentation,                                 Comments and questions about the
requesting that OMB grant a 180 day                                      may be obtained by calling the                                     information collection described above
approval for this information collection                                 Administration for Children and                                    should be directed, prior to the request
under procedures for emergency                                                                                                              date, to the Office of Information and
                         Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                 81

Regulatory Affairs, Attn: OMB Desk           Secretary for Policy and External           direction to plan and coordinate ACF
Officer for ACF, Office of Management        Affairs.                                    program activities to assure their
and Budget, Paperwork Reduction                These Chapters are amended as             effectiveness, approving instructions,
Project, 725 17th Street, N.W.,              follows:                                    policies, publications, and grant awards
Washington, D.C. 20503, (202) 395–             I. Chapter K.10 Organization. Delete      issued by ACF, and representing ACF in
7316.                                        K.10 Organization in its entirety and       relationships with governmental and
                                             replace with the following:                 non-governmental organizations. The
  Dated: December 22, 1997.
                                               K.10 Organization. The                    Assistant Secretary for Children and
Bob Sargis,                                  Administration for Children and             Families also serves as the Director of
Acting Reports Clearance Officer.            Families (ACF) is a principal operating     the Office of Child Support
[FR Doc. 97–34190 Filed 12–31–97; 8:45 am]   division of the Department of Health        Enforcement, and signs official Child
BILLING CODE 4184–01–M                       and Human Services (DHHS). The              Support Enforcement documents as the
                                             Administration is headed by the             Assistant Secretary for Children and
                                             Assistant Secretary for Children and        Families. The Principal Deputy
DEPARTMENT OF HEALTH AND                     Families, who reports directly to the       Assistant Secretary serves as alter ego to
HUMAN SERVICES                               Secretary. The Assistant Secretary also     the Assistant Secretary on program
                                             serves as the Director of Child Support     matters and acts in the absence of the
Administration for Children and              Enforcement. In addition to the             Assistant Secretary.
Families                                     Assistant Secretary, the Administration        III. Delete Chapter KL, ‘‘The Office of
                                             consists of the Principal Deputy            Staff Development and Organizational
Statement of Organization, Functions
                                             Assistant Secretary, the Deputy             Resources,’’ retitle it as the ‘‘Office of
and Delegations of Authority
                                             Assistant Secretary for Administration,     the Assistant Secretary for Policy and
  This Notice amends Part K of the           the Deputy Assistant Secretary for          External Affairs’’ and replace with the
Statement of Organization, Functions,        Policy and External Affairs, and Staff      following:
and Delegations of Authority of the          and Program Offices. ACF is organized       Office of the Assistant Secretary for
Department of Health and Human               as follows:                                       Policy and External Affairs
Services (DHHS), Administration for          • Office of the Assistant Secretary for        KL.00 Mission
Children and Families (ACF) as follows:        Children and Families (KA)                   KL.10 Organization
K, Administration for Children and           • Office of the Deputy Assistant               KL.20 Functions
Families (62 FR 4295), as last amended,        Secretary for Policy and External            KL.00 Mission. The Deputy
January 29, 1997; KA, the Office of the        Affairs (KL)                              Assistant Secretary for Policy and
Assistant Secretary for Children and         • Office of the Deputy Assistant            External Affairs serves as the principal
Families (62 FR 4295), as last amended,        Secretary for Administration (KP)         advisor and counsel to the Assistant
January 29, 1997; Chapter KL, the Office     • Administration on Children, Youth         Secretary for Children and Families on
of Staff Development and                       and Families (KB)                         all aspects of legislation, policy and
                                             • Administration on Developmental           intergovernmental affairs.
Organizational Resources (OSDOR), (62
                                               Disabilities (KC)                            KL.10 Organization. The Deputy
FR 4295), as last amended, January 29,
                                             • Regional Offices for Children and         Assistant Secretary for Policy and
1997; Chapter KM, the Office of
                                               Families (KD 1–X)                         External Affairs reports to the Assistant
Planning, Research and Evaluation            • Administration for Native Americans
(OPRE), (62 FR 7787), as last amended,                                                   Secretary for Children and Families.
                                               (KE)                                      The Office is organized as follows:
February 20, 1997; Chapter KN, the           • Office of Child Support Enforcement
Office of Public Affairs (OPA), (60 FR                                                   • Office of the Deputy Assistant
                                               (KF)—(which will remain as a
40586) as last amended, August 9, 1995;                                                     Secretary for Policy and External
                                               separate organizational unit)
Chapter KP, the Office of Program            • Office of Community Services (KG)            Affairs (KLA)
Support (OPS), (62 FR 4295), as last         • Office of Family Assistance (KH)          • Office of Intergovernmental Affairs
amended, January 29, 1997; Chapter KS,       • Office of Regional Operations (KJ)           (KLB)
Equal Employment Opportunities/Civil         • Office of Planning, Research and             KL.20 Functions A. The Office of the
Rights and Special Initiatives Staff           Evaluation (KM)                           Deputy Assistant Secretary for Policy
(EEO/CR&SI), (60 FR 58628), as last          • Office of Public Affairs (KN)             and External Affairs. The Deputy
amended, November 28, 1995; Chapter          • Office of Refugee Resettlement (KR)       Assistant Secretary for Policy and
KT, Office of Legislative Affairs and        • Office of Legislative Affairs and         External Affairs serves as the principal
Budget (OLAB), (62 FR 4295), as last           Budget (KT)                               advisor and counsel to the Assistant
amended, January 29, 1997; Chapter KU,         II. Chapter KA, Office of the Assistant   Secretary for Children and Families on
Office of Human Resource Management          Secretary for Children and Families.        all aspects of legislation, policy, and
(OHRM), (62 FR 4295), as last amended,         A. Amend KA.10 Organization.              intergovernmental affairs. The Deputy
January 29, 1997; and Chapter KV,            Delete Executive Secretariat Office         Assistant Secretary for Policy and
Office of Administrative Services and        (KAB).                                      External Affairs develops broad policy
Facilities Management (OASFM), (62 FR          B. Delete KA.20 Functions,                strategies and concepts pertaining to on-
4295), as last amended, January 29,          Paragraph A, in its entirety and replace    going and anticipated program issues
1997. This realignment of staff offices      with the following:                         and recommends legislation relevant to
will combine the fiscal and support            KA.20 Functions. A. The Office of         ACF programs. The Deputy Assistant
functions under the purview of a newly       the Assistant Secretary is responsible to   Secretary for Policy and External Affairs
created position of Deputy Assistant         the Secretary for carrying out ACF’s        represents the Assistant Secretary for
Secretary for Administration (formerly       mission and provides executive              Children and Families on
the Deputy Assistant Secretary for           supervision to the major components of      intergovernmental matters, and in
Program Operations) and establish the        ACF.                                        contacts and negotiations with
Office of Intergovernmental Affairs            These responsibilities include            Congressional members and staff and
under the Office of the Deputy Assistant     providing executive leadership and          executives of agencies and
82                      Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

organizations. The Deputy Assistant           economic and social well-being of            Families at various planning, research,
Secretary for Policy and External Affairs     children and families.                       evaluation and data collection and
provides executive leadership and                The Office provides guidance,             analysis forums and carries out special
direction to the Office of Legislative        analysis, technical assistance, and          Departmental and Administration
Affairs and Budget and Office of              oversight to ACF programs and across         initiatives.
Intergovernmental Affairs.                    programs in the agency on: strategic           B. The Division of Economic
   B. The Office of Intergovernmental         planning aimed at measurable results;        Independence, in cooperation with ACF
Affairs (OIA) serves as the focal point       performance measurement; research and        income support programs and others,
for intergovernmental coordination            evaluation methodologies;                    works with Federal counterparts, states,
activities with other federal agencies,       demonstration testing and model              community agencies, and the private
state and local officials, special interest   development; statistical, policy and         sector to understand and overcome
groups, professional and business             program analysis; synthesis and              barriers to economic independence;
organizations, and private and voluntary      dissemination of research and                promote parental responsibility; and
groups. It tracks plans, proposals,           demonstration findings; and application      assist in improving the effectiveness of
legislative positions, conferences and        of emerging technologies to improve the      programs that further economic
other activities of outside groups that       effectiveness of programs and service        independence.
influence or affect ACF’s programs and        delivery. The Office is also responsible       The Division provides guidance,
policies. It responds to requests for         for the collection, compilation, analysis,   analysis, technical assistance and
information from outside groups on            and dissemination of data.                   oversight in ACF on: strategic planning
ACF’s programs and positions. It plans,          The Office oversees and manages the       and performance measurement for
organizes and coordinates conferences,        section 1110 and section 1115 social         economic independence; statistical,
workshops and other events to promote         service research programs, including:        policy and program analysis; surveys,
ACF’s programs and priorities, and it         priority setting and analysis; processing    research, and evaluation methodologies;
coordinates ACF’s participation at            waivers for welfare reform                   demonstration testing and model
meetings and conferences sponsored by         demonstrations; managing and                 development; synthesis and
outside groups. It manages the speaker        coordinating major cross-cutting,            dissemination of research and
request system. It provides advance           leading-edge studies and special             demonstration findings; and application
planning and preparation for trips by         initiatives; collaborating with states,      of emerging technologies to programs
the Assistant Secretary, Principal            communities, foundations, professional       which promote employment, parental
Deputy Assistant Secretary, and Deputy        organizations and others to promote the      responsibility, and economic
Assistant Secretaries for ACF including       development of children, family focused      independence.
                                                                                             The Division analyzes, processes and
speaking engagements. The Office              services, parental responsibility,
                                                                                           coordinates Federal review and
serves as a focal point for ACF’s             employment, and economic
                                                                                           decision-making for all section 1115
international activities and provides         independence; and providing
                                                                                           state welfare reform waiver
policy advice and staff support to the        coordination and leadership in
                                                                                           demonstration requests; develops
Assistant Secretary for Children and          implementing the Government
                                                                                           policy-relevant priorities; conducts,
Families on international issues              Performance and Results Act (GPRA).
                                                                                           manages and coordinates major cross-
concerned with human services;                   KM.10 Organization. The Office of
                                                                                           program, leading-edge research,
coordinates ACF’s participation in            Planning, Research and Evaluation is
                                                                                           demonstrations, and evaluation studies;
special international initiatives;            headed by a Director who reports to the
                                                                                           manages and conducts statistical, policy
prepares or coordinates preparation of        Assistant Secretary for Children and
                                                                                           and program analyses on trends in
position papers for U.S. delegations to       Families. The Office is organized as
                                                                                           employment, child support payments,
international organizations (e.g. United      follows:                                     and other income supports; and works
Nations (UN), UNICEF, Organization of         • Office of the Director (KMA)               in partnership with states, communities,
American States (OAS), and the                • Division of Economic Independence          and the private sector to promote
European Centre for Social Welfare               (KMB)                                     employment, parental responsibility,
Policy and Research); arranges                • Division of Child and Family               and family economic independence.
professional development programs for            Development (KMC)                           C. The Division of Child and Family
foreign visitors; develops and manages        • Division of Data Collection and            Development, in cooperation with ACF
international research and comparative           Analysis (KMD)                            programs and others, works with
studies; and manages international               KM.20 Functions. A. The Office of         Federal counterparts, states, community
travel by ACF staff.                          the Director provides direction and          agencies, and the private sector to:
   IV. Delete Chapter KM, ‘‘The Office of     executive leadership to OPRE in              improve the effectiveness and efficiency
Planning, Research and Evaluation,’’ in       administering its responsibilities. It       of programs; assure the protection of
its entirety and replace with the             serves as principal advisor to the           children and other vulnerable
following:                                    Assistant Secretary for Children and         populations; strengthen and promote
Office of Planning, Research and              Families on all matters pertaining to:       family stability; and foster sound growth
     Evaluation                               improving the effectiveness and              and development of children and their
   KM.00 Mission                              efficiency of ACF programs; strategic        families.
   KM.10 Organization                         planning; performance measurement;             The Division provides guidance,
   KM.20 Functions                            program and policy evaluation; research      analysis, technical assistance and
   KM.00 Mission. The Office of               and demonstrations; state and local          oversight in ACF on: Strategic planning
Planning, Research and Evaluation             innovations and progress; collection,        and performance measurement for child
(OPRE) is the principal advisor to the        analysis, and dissemination of data; and     and family development; statistical,
Assistant Secretary for Children and          public/private partnership initiatives of    policy and program analysis; surveys,
Families on improving the effectiveness       concern to the Assistant Secretary for       research and evaluation methodologies;
and efficiency of programs designed to        Children and Families. It represents the     demonstration testing and model
make measurable improvements in the           Assistant Secretary for Children and         development; synthesis and
                      Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                   83

dissemination of research and               • Division of Public Information (KNB)      Office of Legislative Affairs and Budget
demonstration findings; and application     • Division of Publications Services            KT.00 Mission
of emerging technologies to improve the        (KNC)                                       KT.10 Organization
effectiveness of programs and service          KN.20 Functions. A. Office of               KT.20 Functions
delivery.                                   Director provides leadership and               KT.00 Mission. The Office of
   The Division: Manages the section        direction to OPA in administering its       Legislative Affairs and Budget (OLAB)
1110 social service research budget;        responsibilities. The Office provides       provides leadership in the development
develops policy-relevant priorities;        direction and leadership in the areas of    of legislation, budget, and policy,
conducts, manages and coordinates           public relations policy and                 ensuring consistency in these areas
major cross-program, leading-edge           communications services. It serves as       among ACF program and staff offices,
research, demonstration, and evaluation     advisor to the Assistant Secretary for      and with ACF and the Department’s
studies; manages and conducts               Children and Families in the areas of       vision and goals. It advises the Assistant
statistical, policy and program analyses    public affairs; provides advice on          Secretary for Children and Families on
on social trends and behaviors which        strategies and approaches to be used to     all policy and programmatic matters
impact child and family well-being; and     improve public understanding of and         which substantially impact the agency’s
works in partnership with states, local     access to ACF programs and policies;        legislative program, budget
communities, and the private sector to      and coordinates and serves as ACF           development, budget execution and
promote the well-being of children and      liaison with the Assistant Secretary for    regulatory agenda. The Office serves as
families.                                   Public Affairs. The Office serves as        the primary ACF contact for the
   D. The Division of Data Collection       Regional Liaison on public affairs          Department, the Executive Branch, and
and Analysis is responsible for all         issues. The Deputy Director assists the     the Congress on all legislative, budget
aspects of the collection, compilation,     Director in carrying out the                development, and regulatory activities.
analysis, and dissemination of data on      responsibilities of the Office.                KT.10 Organization. The Office of
selected ACF programs.                         B. Division of Public Information        Legislative Affairs and Budget is headed
   The Division develops regulations to     develops and implements public affairs      by a Director, who reports to the
implement data collection requirements;     strategies to achieve ACF program           Assistant Secretary for Children and
designs, develops, implements, and          objectives in coordination with other       Families.
maintains systems for the collection and    ACF components. It coordinates news            KT.20 Functions. The Office of
analysis of data including: Participation   media relations strategy; responds to all   Legislative Affairs and Budget serves as
rate information, recipient                 media inquiries concerning ACF              the principal advisor to the Assistant
characteristics, administrative data,       programs and related issues; develops       Secretary for Children and Families on
State expenditures on families, work        fact sheets, news releases, feature         all policy and programmatic matters
activities of non-custodial parents,        articles for magazines and other            which substantially impact on
transitional services, and data used in     publications on ACF programs and            legislative affairs, budget development,
the assessment of State performance.        initiatives; and manages preparation        budget execution and the regulatory
   The Division provides leadership in      and clearance of speeches and official      agenda; and represents the Assistant
and coordinates with other ACF and          statements on ACF programs. It              Secretary on budget, policy and
HHS offices and external organizations      coordinates regional public affairs         legislative materials and activities.
in the dissemination and use of these       policies and public affairs activities         Serves as the primary ACF contact for
data for policy and research purposes.      pertaining to ACF programs and              the Department, the Executive Branch,
The Division also develops and              initiatives.                                and Congress on all budget development
maintains statistical protocols and            C. Division of Publications Services     and budget execution activities;
manuals for data collection purposes        directs the audio-visual, publication and   manages the development and
and provides technical assistance in the    printing management systems for ACF.        presentation of ACF’s budget; provides
use of these materials.                     It manages preparation and clearance of     guidance to ACF program and staff
   V. Delete Chapter KN, ‘‘The Office of    all ACF audio-visual product,               components in preparing material in
Public Affairs,’’ in its entirety and       publications, and graphic designs,          support of budget development;
replace with the following:                 including planning, budget oversight        manages the ACF regulatory
Office of Public Affairs                    and technical support. It provides          development process; negotiates
   KN.00 Mission                            centralized graphics design services to     regulatory policy positions with the
   KN.10 Organization                       ACF. It reviews requests for proposals      Department and the Executive Branch;
   KN.20 Functions                          for contracts and grants which involve      provides guidance to ACF programs and
   KN.00 Mission. The Office of Public      publications, audio-visual materials        staff components on policy and
Affairs (OPA) develops, directs and         and/or public information and               programmatic matters which
coordinates public affairs and              education activity.                         substantially impact the budget and
communication services for ACF. It             The Division also provides technical     regulatory development process; and
provides leadership, direction and          leadership and services in public           reviews and analyzes other policy
oversight in promoting ACF’s public         information, printing, and mail             significant documents to ensure
affairs policies, programs and              distribution. Recommends approaches         consistency with ACF’s budget, vision
initiatives. The Office of Public Affairs   for meeting internal and external           and goals.
also provides printing and distribution     communications needs of the ACF. Acts          Serves as the focal point for
services for ACF.                           as focal point for clearance of all         congressional liaison in ACF and for the
   KN.10 Organization. The Office of        publications and audio-visual projects      Office of Assistant Secretary for
Public Affairs is headed by a Director      whether produced in-house or by             Legislation; counsels and advises the
who reports to the Assistant Secretary      contract or grant.                          Assistant Secretary for Children and
for Children and Families. The Office is       VI. Delete Chapter KT, ‘‘The Office of   Families and senior ACF staff on
organized as follows:                       Legislative Affairs and Budget,’’ in its    congressional activities and relations;
• Office of the Director (KNA)              entirety and replace with the following:    manages the preparation of testimony
84                     Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

and briefings; negotiates clearance of       • Equal Employment Opportunity/Civil          responsibilities under the Information
testimony; monitors hearings and other          Rights and Special Initiatives Staff       Technology Management Reform Act;
congressional activities which affect           (KPH)                                      reviews and analyzes all ADP
ACF; and manages congressional               • Office of Human Resource                    acquisition documentation for
inquiries.                                      Management (KPJ)                           compliance with applicable laws and
   Manages the ACF legislative planning      • Office of Staff Development and             regulations as well as for procurement
cycle and the development of Reports to         Organizational Resources (KPK)             strategy; coordinates technical
Congress; reviews and analyzes a wide        • Office of Administrative Services and       assistance provided to program offices
range of Congressional policy                   Facilities Management (KPL)                on ADP support services procurement;
documents including, legislative                KP.20 Functions. A. Office of the          represents ACF on the Department’s
proposals, pending legislation, and bill     Deputy Assistant Secretary for                IRM Advisory Council; provides liaison
reports; solicits and synthesizes internal   Administration directs and coordinates        and manages major interdepartmental
ACF comments on such documents;              all administrative activities for the         IRM initiatives; conducts major
negotiates legislative policy positions      Administration for Children and               information system reviews of ADP
with the Department and the Executive        Families. The Deputy Assistant                systems as required by the Department;
Branch; and reviews other policy             Secretary for Administration serves as        directs and coordinates ACF’s systems
significant documents to ensure              ACF’s Chief Financial Officer (CFO);          security and privacy responsibilities;
consistency with statutory and               ACF’s Chief Grants Management Officer;        maintains an ACF-wide program data
congressional intent and the agency          Federal Manager’s Financial Integrity         inventory; coordinates mandated OMB
legislative agenda.                          Act (FMFIA) Management Control                approvals required under the Paperwork
   Facilitates the preparation of            Officer; Principal Information Resource       Reduction Act; and plans, directs and
comprehensive administrative (salaries       Management Official serving as ACF’s          maintains ACF electronic records
and expenses) budget for ACF; and            Chief Information Officer responsible         management system.
designs and develops budget estimating                                                        OIS plans, manages, maintains and
                                             for implementing the Information
modes and procedures.                                                                      operates ACF’s local area networks
                                             Technology Management Reform Act;
   VII. Delete Chapter KP, ‘‘The Office of                                                 (LANs), national wide-area network
                                             and Reports Clearance Officer. The
Program Support,’’ retitle it as the                                                       (WAN) and personal computers;
                                             Deputy Assistant Secretary for
‘‘Office of the Deputy Assistant                                                           provides for equipment and software
                                             Administration serves as the ACF              acquisition, maintenance and user
Secretary for Administration’’ and           liaison to the General Counsel and, as
replace with the following:                                                                support for end-user computing;
                                             appropriate, initiates action in securing     manages and maintains a Help Desk for
Office of the Deputy Assistant Secretary     resolution of legal matters relating to       ACF users and provides information
     for Administration                      management of the agency, and
   KP.00 Mission                                                                           technology and software training in
                                             represents the Assistant Secretary on all     coordination with ACF components;
   KP.10 Organization                        administrative litigation matters. The
   KP.20 Functions                                                                         develops plans and places orders for
                                             Deputy Assistant Secretary for                data communications services; provides
   KP.00 Mission. The Deputy                 Administration provides day-to-day            liaison with HHS, GSA and private
Assistant Secretary for Administration       executive leadership and direction to         firms on data telecommunications
serves as principal advisor and counsel      the Equal Employment Opportunity/             matters; and provides assistance to ACF
to the Assistant Secretary for Children      Civil Rights and Special Initiatives Staff,   components to identify needs for and
and Families on all aspects of personnel     Office of Staff Development and               use of data telecommunications
administration and management,               Organizational Resources, Office of           equipment and systems.
information resource, financial, grants      Human Resource Management, Office of             OIS designs, develops, implements
and procurement issues, staff                Administrative Services and Facilities        and maintains application systems to
development and training activities,         Management, the Executive Secretariat         support ACF administrative, budget and
organizational development and               Office, Office of Information Services,       program systems; provides technical
organizational analysis, administrative      Office of Financial Services, Office of       assistance to ACF program offices
services and facilities management and       Management Services, Office of                procuring system support services;
state systems. Oversees the Executive        Customer Services and Administration          provides technical assistance on
Secretariat Office, the ACF Equal            and Office of State Systems. The Deputy       automated systems to state and local
Employment Opportunity and Civil             Assistant Secretary for Administration        agencies who are users of ACF’s
Rights program and all special               represents the Assistant Secretary in         Computer Center; and develops software
initiatives activities for ACF.              HHS and with other Federal agencies           policy, procedures, standards and
   KP.10 Organization. The Office of         and task forces in defining objectives        guidelines.
the Deputy Assistant Secretary for           and priorities, and in coordinating              C. The Office of Financial Services
Administration is headed by the Deputy       activities associated with reinvention        (OFS) supports the Deputy Assistant
Assistant Secretary who reports to the       and continuous improvement                    Secretary for Administration in
Assistant Secretary for Children and         initiatives.                                  fulfilling ACF’s Chief Financial Officer,
Families. The Office is organized as            B. The Office of Information Services      Management Control Officer, and Chief
follows:                                     (OIS) provides centralized information        Grants Officer responsibilities including
• Office of the Deputy Assistant             technology policy, procedures,                preparation of the CFO 5 Year Plan;
   Secretary for Administration (KPA)        standards and guidelines; develops            performs audit oversight and liaison
• Office of Information Services (KPB)       long-range information resource               activities, including preparing reports to
• Office of Financial Services (KPC)         management (IRM) plans; develops IRM          Congress, Office of the General Counsel
• Office of Management Services (KPD)        policy, procurement plans and budget          and the Office of the Inspector General.
• Office of Customer Service and             for OIS; develops and implements              OFS writes/interprets financial policy
   Administration (KPE)                      procurement strategies for ADP support        and researches appropriation law issues;
• Office of State Systems (KPF)              services; serves as the Deputy Chief          oversees and coordinates ACF’s Federal
• Executive Secretariat Office (KPG)         Information Officer supporting ACF’s          Manager’s Financial Integrity Act
                      Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                   85

(FMFIA) activities; performs debt           incorporation of necessary grant terms      responsibilities for Federal financial
management functions; and develops          and conditions, and monitors grantee        participation in the funding of State
and administers quality assurance,          expenditures; analyzes financial needs      automated systems. It coordinates ACF’s
training and certification programs for     under grant programs; provides data in      development and implementation of
grants management; and responsible for      support of apportionment requests;          strategies and policies related to
the annual preparation and audit of         prepares reports and analyses on the        payment integrity, electronic benefits
ACF’s financial statement requirements.     grantee’s use of funds; maintains liaison   transfer, welfare systems integration,
It develops/interprets internal policies    and coordination with appropriate ACF       and related initiatives and programs. It
and procedures for OFS components           and HHS organizations to ensure             directs state systems activities on
and coordinates the management of           consistency between ACF grant systems       partnership, collaborative efforts, and
ACF’s interagency agreement activities.     and the Department’s grant payment          technical assistance activities.
   OFS provides agency-wide guidance        systems; and provides technical                The Office provides leadership for
to program and regional office staff on     assistance to ACF program and regional      provision of technical assistance to
grant related issues; including             components on grant operations and          States on information systems projects;
developing and interpreting financial       technical grants management issues;         and advances the use of computer
and grants policy, coordinating strategic   and performs audit resolution activities    technology in the administration of
grants planning, facilitating policy        for ACF grant programs. OMS serves as       welfare and social services programs by
advisory groups, and assuring consistent    the lead for ACF in coordination and        States. The Office is responsible for
grant program announcements. OFS            liaison with the Department and other       developing departmental policies and
prepares, coordinates and disseminates      federal agencies on grants management       procedures under which States obtain
action transmittals, information            and administration operational issues       Federal financial participation in the
memoranda, and other policy guidance        and activities.                             cost of automated systems development
on financial and grants management             E. The Office of Customer Service and    to support programs funded under the
issues; provides financial and grants       Administration (OCSA) develops and          Social Security Act. It serves as the
administration training and technical       maintains a customer service plan for       departmental focal point for the
assistance to ACF staff and grantees; and   the Deputy Assistant Secretary for          development and implementation of
in coordination with the Office of          Administration (DASA) and conducts          strategies and policies related to
Management Services, directs and/or         customer surveys for DASA; facilitates      payment integrity, welfare systems
coordinates management initiatives to       and assists in developing and writing       integration and related initiatives and
improve financial administration of         standard operating procedures for all       programs; and provides leadership and
ACF mandatory and discretionary grant       components within DASA; assists in          guidance to interagency work groups in
programs. OFS also develops and             office-specific training of DASA staff;     these areas for the Department.
delivers grants management training to      assists DASA components with the               The Office reviews, analyzes, and
ACF program and financial staff.            provision of office-specific and            approves/disapproves State requests for
   D. The Office of Management Services     functional training to program and          Federal financial participation for
(OMS) provides centralized                  regional offices; coordinates permanent     automated systems development
management and administration of            and temporary teams formed within           activities which support the Child Care,
acquisitions for ACF headquarters and       DASA; develops and maintains DASA           Head Start, Child Welfare, Foster Care,
regional components; assures that all       staff directory and users’ guide for        Social Services, and Refugee
contracts awarded conform to                DASA services.                              Resettlement programs. It provides
applicable statutes, regulations and           OCSA is responsible for overseeing       assistance to States in developing or
policies; develops ACF policies,            DASA’s salaries and expenses budget.        modifying automation plans to conform
procedures and instructions for the         Provides direction to meet the human        to Federal requirements. It monitors
award and administration of all ACF         resource management needs within            approved State systems development
acquisitions; reviews and interprets        DASA; coordinates with the office           activities; conducts periodic reviews to
proposed HHS and OMB regulations,           which handles ACF’s human resources         assure State compliance with regulatory
circulares and directives pertaining to     activities and the Department to provide    requirements applicable to automated
acquisition management; solicits,           DASA staff with personnel services          systems supported by Federal financial
negotiates, awards, modifies, terminates    including position management,              participation. It provides guidance to
and closes all acquisitions issued by       staffing, recruitment, employee and         States on functional requirements for
ACF; conducts the Small and                 labor relations, employee assistance,       these automated information systems. It
Disadvantaged Business Utilization          payroll, staff development and training,    promotes interstate transfer of existing
Program; and provides training and          and special hiring and placement            automated systems and provides
technical assistance to program and staff   programs; and maintains systems to          assistance and guidance to improve
components on significant acquisition       track personnel actions to keep the         ACF’s programs through the use of
policies and procedures. OMS serves as      Deputy Assistant Secretary for              automated systems.
the lead for ACF in coordination and        Administration and, as appropriate, the        G. The Executive Secretariat Office
liaison within ACF and with the             Directors of offices within DASA            (ExecSec) ensures that issues requiring
Department, OMB, GSA and other              informed about the status of personnel      the attention of the Assistant Secretary,
federal agencies on procurement             actions, current full-time equivalency      Deputy Assistant Secretaries and/or
management issues and activities.           usage and salaries and expenses             executive staff are addressed on a timely
   OMS provides management and              resources, and employee programs and        and coordinated basis; facilitates
technical administration of ACF             benefits. All DASA personnel related        decisions on matters requiring
discretionary, formula, entitlement and     issues, performance management              immediate action including White
block grants; assures that all grants       activities and other administrative         House, congressional and secretarial
awarded by ACF conform with                 functions within DASA are handled           assignments. It serves as the ACF liaison
applicable statutes, regulations, and       within this office.                         with the HHS Executive Secretariat. It
policies; computes grantee allocations,        F. The Office of State Systems (OSS)     receives, assesses and controls incoming
prepares grant awards, ensures              oversees the Department’s                   correspondence and assignments to the
86                      Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

appropriate ACF component(s) for                 J. The Office of Human Resource            regulations, and appeals. Pursues
response and action; provides assistance      Management (OHRM) directs and                 human relations innovations such as
and advice to ACF staff on the                manages the personnel operations and          alternative dispute resolutions and
development of responses to                   services for the Administration for           serves as the focal point on all issues
correspondence and on the controlled          Children and Families (ACF). Provides         pertaining to the Labor-Management
correspondence system; coordinates            advice and assistance to ACF managers         Partnership Council. Provides
and/or prepares congressional                 in their personnel management                 leadership in assuring the integrity,
correspondence; and tracks                    activities including workforce planning,      effectiveness and impartiality of ACF’s
development of periodic reports and           recruitment, selection, position              alternative dispute resolution programs,
facilitates departmental clearance. The       management, performance management,           grievances, and merit systems program.
Director of the Executive Secretariat         and incentive awards. Provides a variety      Participates in the formulation and
Office serves as the Freedom of               of services to ACF employees, including       implementation of policies, practices
Information Act Officer for ACF and           provision of employee assistance              and matters affecting bargaining unit
coordinates hot line calls received by        services and career, retirement and           employees’ working conditions by
the Office of Inspector General and the       benefits counseling. Serves as ACF            assuring management’s compliance with
General Accounting Office on ACF              liaison to the Department on all payroll      the Federal Labor Relations Program (5
operations and personnel.                     matters. Provides the following               U.S.C. Chapter 71).
   H. The Equal Employment                    personnel administrative services: the           Administers ACF’s personnel security
Opportunity/Civil Rights and Special          exercise of appointing authority,             responsibilities and ethics program.
Initiatives Staff (EEOCR&SI) serves as        position classification, awards               Coordinates the ethics program with the
the principal advisor to the Deputy           authorization, personnel management           Department’s Office of Special Counsel
Assistant Secretary for Administration        evaluation, personnel action processing       for Ethics.
on all aspects of the Equal Employment        and recordkeeping. Manages the merit             K. The Office of Staff Development
Opportunity and Civil Rights program.         promotion, special hiring and                 and Organizational Resources (OSDOR)
Serves as the liaison between ACF and         placement programs.                           provides leadership in directing and
the HHS Office for Civil Rights.                 Provides leadership, oversight, and        managing agency-wide staff
Provides leadership for all special           coordination for the planning, analysis,      development and training activities for
initiative activities for ACF; participates   and development of human resource             ACF. The Office is responsible for the
in pilot projects; and represents ACF on      policies and programs. Serves as liaison      functional management of all program,
committees which relate to the                between ACF, the Department, and the          common needs and management
functions of the Staff. Manages and           Office of Personnel Management.               training in the agency, including policy
coordinates honor awards programs for         Provides technical advice and assistance      development, guidance, and technical
ACF.                                          on policy, legal and regulatory matters.      assistance and evaluation of all aspects
   The Staff directs and manages the          Formulates and interprets policies            of program, career, employee,
ACF Equal Employment Opportunity              pertaining to all areas related to            supervisory, management, executive
and Civil Rights program in accordance        personnel administration and                  and organizational development.
with Equal Employment Opportunity             management. Formulates and interprets         Provides leadership in implementing
Commission (EEOC) regulations and             new human resource programs and               the recommendations of the Staff
HHS guidelines. Immediate oversight is        strategies.                                   Development and Training Team by
provided by a staff under the direction          Formulates and oversees the                managing/overseeing and monitoring
of the ACF EEO Officer. Plans, develops,      implementation of ACF-wide policies,          the ACF Training Resource Center and
and evaluates programs and procedures         regulations and procedures concerning         institutionalizing long-term
designed to identify and eliminate            all aspects of the Senior Executive           developmental training for ACF
discrimination in employment, training,       Service (SES), and SES equivalent             employees. Support the daily work and
incentive awards, promotion and career        recruitment, staffing, position               special projects of ACF employees by
opportunities. Responsible for                establishment, compensation, award,           managing the Information Resource
implementing and evaluating a cost-           performance management and other              Center (library).
effective, timely, and impartial system       related personnel areas. Manages the             The Office serves as the principal
for processing individual complaints of       performance recognition systems and           source of advice through the Deputy
discrimination under Title VII of the         the responsibilities of the Executive         Assistant Secretary for Administration
Civil Rights Act of 1964, as amended.         Resources Board (ERB) and the                 to the Assistant Secretary on
Provides information, guidance, advice,       Performance Review Board (PRB).               organizational design by collaborating
and technical assistance to ACF               Coordinates the Schedule C and                with staff to develop high-leverage,
supervisors and managers on                   Executive personnel activity with the         tailored solutions to achieve measurable
Affirmative Employment planning and           Office of the Secretary. Is the focal point   outcomes and to transform the agency to
other means of achieving parity and           for data, reports, and analyses relating to   a quality organization that supports
promoting work force diversity.               SES, Schedule C and other executive           ACF’s vision, values and goals. The
Responsible for ensuring that ACF-            personnel, such as those in Executive         Office advises the Assistant Secretary
conducted programs do not discriminate        Level positions.                              through the Deputy Assistant Secretary
against recipients on the basis of race,         Provides management advisory               for Administration on all aspects of ACF
color, national origin, age or disability.    service on all labor management and           organizational analysis including:
Monitors and implements civil rights          employee relations issues. Plans and          planning for new organizational
compliance actions under Title VI,            coordinates ACF-wide employee                 elements; and planning, organizing and
Section 504 of the Rehabilitation Act of      relations and labor relations activities,     performing studies, analysis and
1973, as amended and the Age                  including the application and                 evaluations related to structural,
Discrimination Act of 1975, as                interpretation of the Federal Labor-          functional and organizational issues,
amended. Implements the applicable            Management Relations Program,                 problems and policies to ensure
provisions of the Americans with              collective bargaining agreements,             organizational effectiveness. Conducts
Disabilities Act of 1990.                     disciplinary and adverse action               the review process for ACF
                      Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                       87

reorganization proposals. Acts as liaison   handicapped barriers, space shortages,      personal property inventories; develops
with the HHS Office of the Assistant        and security. Develops and maintains        and coordinates records (paper) and
Secretary for Management and Budget to      space floor plans and inventories,          forms management, and real property
coordinate organizational proposals         directory boards, and locator signs.        activities.
requiring Secretarial approval; prepares    OASFM serves as the lead for ACF in           VIII. Within Chapter K, replace the
functional statements and official          coordination and liaison with               term ‘‘Deputy Assistant Secretary for
organizational charts. Administers          Departmental, GSA, Federal Protective       Program Operations’’ with ‘‘Deputy
ACF’s system for review, approval, and      Service, and other Federal agencies on      Assistant Secretary for Administration.’’
documentation of delegations of             implementation of Federal security            Dated: December 24, 1997.
authority and maintains the guidelines      directives. Responsible for planning and    Olivia A. Golden,
related to the delegations of authority.    executing the Agency’s environmental        Assistant Secretary for Children and Families.
   L. The Office of Administrative          health, safety, and physical security
                                                                                        [FR Doc. 97–34217 Filed 12–31–97; 8:45 am]
Services and Facilities Management          programs, ensuring that appropriate
                                                                                        BILLING CODE 4184–01–P
(OASFM) directs and manages ACF’s           occupational health and safety and
administrative support services,            occupant emergency evacuation plans
facilities management programs and          are in place. Serves as principal liaison   DEPARTMENT OF HEALTH AND
activities.                                 with private and/or Federal building
   Provides agency-wide guidance on                                                     HUMAN SERVICES
                                            managers for all administrative services
administrative issues; prepares,            and facilities management activities.       Food and Drug Administration
coordinates and disseminates                Responsible for issuing, and managing
information, policy, and/or procedural      and controlling badge and cardkey           [Docket No. 97M–0521]
guidance on administrative and              systems to control access to agency
facilities management issues. Directs                                                   Richard-James, Inc.; Premarket
                                            space for security purposes.
and/or coordinates management                  Develops and/or implements agency        Approval of SILIKON 1000-Silicone Oil
initiatives to improve ACF                  telecommunications management policy        AGENCY:   Food and Drug Administration,
administrative and facilities               in accordance with Federal regulations      HHS.
management services with the goal of        and procedures. Reviews and directs         ACTION:   Notice.
continually improving services while        payment of all agency telephone
reducing costs.                             invoices. Recommends and advises on         SUMMARY:    The Food and Drug
   Maintains budgetary controls on          the design and function of                  Administration (FDA) is announcing its
administrative services accounts,           telecommunications systems, based on        approval of the application submitted
reconciling accounting reports and          user needs, costs and technological         by Richard-James, Inc., Peabody, MA,
invoices, and monitoring all spending.      availability. Communicates directly         for premarket approval, under the
Controls OASFM Visa credit card for         with private industry service providers     Federal Food, Drug, and Cosmetic Act
small purchases. Establishes and            to coordinate the acquisition,              (the act), of the SILIKON 1000-Silicone
manages contracts and/or blanket            installation and maintenance of voice/      Oil. After reviewing the
purchase agreements (BPAs) for              data telecommunications equipment           recommendation of the Ophthalmic
administrative support and facilities       and systems. Responsible for other          Devices Panel, FDA’s Center for Devices
management services, including space        sources of communications capability        and Radiological Health (CDRH)
design, building alteration and repair,     such as pagers, cellular phone service,     notified the applicant, by letter of
telecommunications, reprographics,          cable TV service, and audio                 September 25, 1997, of the approval of
physical security, moving, labor, records   conferencing equipment and service.         the application.
and property management and                 Coordinates the implementation of           DATES: Petitions for administrative
inventory, systems furniture                personal video and video conferencing.      review by February 2, 1998.
acquisitions and assembly, fleet            Updates and maintains the ACF LAN-
                                                                                        ADDRESSES: Written requests for copies
management, and the Information             based telephone directory, handles the
Resource Center (library).                                                              of the summary of safety and
                                            distribution of all commercial
   Provides management and oversight                                                    effectiveness data and petitions for
                                            directories, and updates and maintains
of ACF mail delivery services and                                                       administrative review to the Dockets
                                            the databases for telephone lines, and
activities, including Federal and                                                       Management Branch (HFA–305), Food
                                            equipment inventories.
contractor postal services nationwide,         Plans, manages/operates employee         and Drug Administration, 12420
covering all classes of U.S. Postal         transportation programs, including          Parklawn Dr., rm. 1–23, Rockville, MD
Service mail, priority and express mail     shuttle service and fleet management,       20857.
services, and courier services, etc.        employee and visitor parking, and           FOR FURTHER INFORMATION CONTACT:
   Directs all activities associated with   commuter services and programs              James F. Saviola, Center for Devices and
the ACF Master Housing Plan, including      including transit subsidies and             Radiological Health (HFZ–460), Food
coordination and development of the         ridesharing. Develops and implements        and Drug Administration, 9200
agency long-range space budget;             ACF travel policies and procedures          Corporate Blvd., Rockville, MD 20850,
planning, budgeting, identification,        consistent with Federal requirements.       301–594–2018.
solicitation, acceptance and utilization    Provides technical assistance and           SUPPLEMENTARY INFORMATION: On
of office and special purpose space,        oversight; coordinates ACF use of the       February 22, 1995, Richard-James, Inc.,
repairs, and alterations; principal         Travel Management System; manages           Peabody, MA 01960, submitted to CDRH
liaison with General Services               employee participation in the American      an application for premarket approval of
Administration (GSA) and other Federal      Express Credit Card program for travel.     the SILIKON 1000-Silicone Oil. The
agencies, building managers and                Purchases and tracks common use          device is an intraocular fluid and is
facilities engineers, architects and        supplies, stationery and publications;      indicated for use as a prolonged retinal
commercial representatives, for space       manages equipment repair services and       tamponade in selected cases of
acquisition, negotiation of lease terms,    reprographics management activities;        complicated retinal detachments where
dealing with sensitive issues such as       controls and maintains equipment and        other interventions are not appropriate
88                     Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

for patient management. Complicated          identified with the name of the device           perfluorocarbon liquid and is indicated
retinal detachments or recurrent retinal     and the docket number found in                   for use as an intraoperative surgical aid
detachments occur most commonly in           brackets in the heading of this                  during vitreoretinal surgery in patients
eyes with proliferative vitreoretinopathy    document. Received petitions may be              with primary and recurrent complicated
(PVR), proliferative diabetic retinopathy    seen in the office above between 9 a.m.          retinal detachments. Complicated cases
(PDR), cytomegalovirus (CMV) retinitis,      and 4 p.m., Monday through Friday.               include giant retinal tear or retinal
giant tears, and following perforating         This notice is issued under the                dialysis, proliferative vitreoretinopathy,
injuries. SILIKON 1000 is also indicated     Federal Food, Drug, and Cosmetic Act             proliferative diabetic retinopathy,
for primary use in detachments due to        (secs. 515(d), 520(h) (21 U.S.C. 360e(d),        tractional retinal detachments, and
acquired immune deficiency syndrome          360j(h))) and under authority delegated          blunt or penetrating ocular trauma.
(AIDS) related CMV retinitis and other       to the Commissioner of Food and Drugs               On October 19, 1995, the Ophthalmic
viral infections affecting the retina.       (21 CFR 5.10) and redelegated to the             Devices Panel of the Medical Devices
   On January 13, 1997, the Ophthalmic       Director, Center for Devices and                 Advisory Committee, an FDA advisory
Devices Panel of the Medical Devices         Radiological Health (21 CFR 5.53).               committee, reviewed and recommended
Advisory Committee, an FDA advisory            Dated: December 1, 1997.                       approval of the application. On
committee, reviewed and recommended
approval of the application. On              Joseph A. Levitt,                                September 30, 1997, CDRH approved
September 25, 1997, CDRH approved            Deputy Director for Regulations Policy, Center   the application by a letter to the
the application by a letter to the           for Devices and Radiological Health.             applicant from the Director of the Office
applicant from the Director of the Office    [FR Doc. 97–34156 Filed 12–31–97; 8:45 am]       of Device Evaluation, CDRH.
of Device Evaluation, CDRH.                  BILLING CODE 4160–01–F                              A summary of the safety and
   A summary of the safety and                                                                effectiveness data on which CDRH
effectiveness data on which CDRH                                                              based its approval is on file in the
based its approval is on file in the         DEPARTMENT OF HEALTH AND                         Dockets Management Branch (address
Dockets Management Branch (address           HUMAN SERVICES                                   above) and is available from that office
above) and is available from that office                                                      upon written request. Requests should
upon written request. Requests should        Food and Drug Administration                     be identified with the name of the
be identified with the name of the           [Docket No. 97M–0519]                            device and the docket number found in
device and the docket number found in                                                         brackets in the heading of this
brackets in the heading of this              Vitrophage, Inc.; Premarket Approval             document.
document.                                    of VITREON®
                                                                                              Opportunity for Administrative Review
Opportunity for Administrative Review        AGENCY:   Food and Drug Administration,
                                             HHS.                                                Section 515(d)(3) of the act (21 U.S.C.
   Section 515(d)(3) of the act (21 U.S.C.
                                             ACTION:   Notice.                                360e(d)(3)) authorizes any interested
360e(d)(3)) authorizes any interested
                                                                                              person to petition, under section 515(g)
person to petition, under section 515(g)     SUMMARY:   The Food and Drug                     of the act, for administrative review of
of the act, for administrative review of     Administration (FDA) is announcing its           CDRH’s decision to approve this
CDRH’s decision to approve this              approval of the application submitted            application. A petitioner may request
application. A petitioner may request
                                             by Vitrophage, Inc., Lyons, IL, for              either a formal hearing under 21 CFR
either a formal hearing under 21 CFR
                                             premarket approval, under the Federal            part 12 of FDA’s administrative
part 12 of FDA’s administrative
                                             Food, Drug, and Cosmetic Act (the act),          practices and procedures regulations or
practices and procedures regulations or
                                             of VITREON® . After reviewing the                a review of the application and CDRH’s
a review of the application and CDRH’s
                                             recommendation of the Ophthalmic                 action by an independent advisory
action by an independent advisory
                                             Devices Panel, FDA’s Center for Devices          committee of experts. A petition is to be
committee of experts. A petition is to be
                                             and Radiological Health (CDRH)                   in the form of a petition for
in the form of a petition for
                                             notified the applicant, by letter of             reconsideration under 21 CFR 10.33(b).
reconsideration under 21 CFR 10.33(b)).
                                             September 30, 1997, of the approval of           A petitioner shall identify the form of
A petitioner shall identify the form of
                                             the application.                                 review requested (hearing or
review requested (hearing or
                                             DATES: Petitions for administrative              independent advisory committee) and
independent advisory committee) and
shall submit with the petition               review by February 2, 1998.                      shall submit with the petition
supporting data and information              ADDRESSES: Written requests for copies           supporting data and information
showing that there is a genuine and          of the summary of safety and                     showing that there is a genuine and
substantial issue of material fact for       effectiveness data and petitions for             substantial issue of material fact for
resolution through administrative            administrative review to the Dockets             resolution through administrative
review. After reviewing the petition,        Management Branch (HFA–305), Food                review. After reviewing the petition,
FDA will decide whether to grant or          and Drug Administration, 12420                   FDA will decide whether to grant or
deny the petition and will publish a         Parklawn Dr., rm. 1–23, Rockville, MD            deny the petition and will publish a
notice of its decision in the Federal        20857.                                           notice of its decision in the Federal
Register. If FDA grants the petition, the    FOR FURTHER INFORMATION CONTACT:                 Register. If FDA grants the petition, the
notice will state the issue to be            James F. Saviola, Center for Devices and         notice will state the issue to be
reviewed, the form of the review to be       Radiological Health (HFZ–460), Food              reviewed, the form of the review to be
used, the persons who may participate        and Drug Administration, 9200                    used, the persons who may participate
in the review, the time and place where      Corporate Blvd., Rockville, MD 20850,            in the review, the time and place where
the review will occur, and other details.    301–594–1744.                                    the review will occur, and other details.
   Petitioners may, at any time on or        SUPPLEMENTARY INFORMATION: On                       Petitioners may, at any time on or
before February 2, 1998, file with the       December 6, 1991, Vitrophage, Inc.,              before February 2, 1998, file with the
Dockets Management Branch (address           Lyons, IL 60534, submitted to CDRH an            Dockets Management Branch (address
above) two copies of each petition and       application for premarket approval of            above) two copies of each petition and
supporting data and information,             VITREON®. The device is a purified               supporting data and information,
                         Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                         89

identified with the name of the device           office in processing your request, or fax      A text-only version of the CDRH Web
and the docket number found in                   your request to 301–443–8818.               site is also available from a computer or
brackets in the heading of this                  FOR FURTHER INFORMATION CONTACT:            VT–100 compatible terminal by dialing
document. Received petitions may be              Donald St. Pierre, Center for Devices       800–222–0185 (terminal settings are 8/
seen in the office above between 9 a.m.          and Radiological Health (HFZ–450),          1/N). Once the modem answers, press
and 4 p.m., Monday through Friday.               Food and Drug Administration, 9200          Enter several times and then select
  This notice is issued under the                Corporate Blvd., Rockville, MD 20850,       menu choice 1: FDA BULLETIN BOARD
Federal Food, Drug, and Cosmetic Act             301–594–2194.                               SERVICE. From there follow
(secs. 515(d), 520(h) (21 U.S.C. 360e(d),        SUPPLEMENTARY INFORMATION:                  instructions for logging in, and at the
360j(h))) and under authority delegated                                                      BBS TOPICS PAGE, arrow down to the
to the Commissioner of Food and Drugs            I. Background                               FDA home page (do not select the first
(21 CFR 5.10) and redelegated to the                External penile rigidity devices are     CDRH entry). Then select Medical
Director, Center for Devices and                 unclassified medical devices designed       Devices and Radiological Health. From
Radiological Health (21 CFR 5.53).               to promote or maintain sufficient penile    there select CENTER FOR DEVICES
  Dated: December 1, 1997.                       rigidity for sexual intercourse. This       AND RADIOLOGICAL HEALTH for
Joseph A. Levitt,
                                                 document clarifies when premarket           general information, or arrow down for
                                                 review is required for new external         specific topics.
Deputy Director for Regulations Policy, Center
for Devices and Radiological Health.
                                                 penile rigidity devices using a uniform
                                                 approach. The new policy also allows        III. Comments
[FR Doc. 97–34157 Filed 12–31–97; 8:45 am]                                                     Interested persons may at any time
                                                 manufacturers the option of marketing
BILLING CODE 4160–01–F                                                                       submit written comments on the
                                                 external penile rigidity devices as
                                                 prescription and/or over the counter        guidance document to the contact
                                                 (OTC) devices.                              person. Comments will be considered in
DEPARTMENT OF HEALTH AND                            This guidance document represents        determining whether to revise or revoke
HUMAN SERVICES                                   the agency’s current thinking on            the guidance document.
Food and Drug Administration                     regulation of external penile rigidity        Dated: December 1, 1997.
                                                 devices. It does not create or confer any
[Docket No. 97D–0514]                                                                        Joseph A. Levitt,
                                                 rights for or on any person and does not
                                                 operate to bind FDA or the public. An       Deputy Director for Regulations Policy, Center
CDRH Interim Regulatory Policy for                                                           for Devices and Radiological Health.
                                                 alternative approach may be used if
External Penile Rigidity Devices;                such approach satisfies the applicable      [FR Doc. 97–34158 Filed 12-31-97; 8:45 am]
Availability                                     statute, regulations, or both. The agency   BILLING CODE 4160–01–F

AGENCY:   Food and Drug Administration,          has adopted Good Guidance Practices
HHS.                                             (GGP’s), which set forth the agency’s
                                                 policies and procedures for the             DEPARTMENT OF HEALTH AND
ACTION:   Notice.                                                                            HUMAN SERVICES
                                                 development, issuance, and use of
SUMMARY: The Food and Drug                       guidance documents (61 FR 8961,             Health Care Financing Administration
Administration (FDA) is making                   February 27, 1997). This guidance is
available a policy from its Center for           issued as Level 2 guidance consistent       [HCFA–1904–NC]
Devices and Radiological Health (CDRH)           with GGP’s.                                 RIN 0938–AI24
entitled ‘‘CDRH Interim Regulatory               II. Electronic Access
Policy for External Penile Rigidity                                                          Medicare Program; Schedule of Limits
Devices.’’ The document outlines                    Persons interested in obtaining a copy   on Home Health Agency Costs Per
several changes in how FDA regulates             of the guidance may do so using the         Visit for Cost Reporting Periods
external penile rigidity devices                 World Wide Web (WWW). The Center            Beginning on or After October 1, 1997
                                                 for Devices and Radiological Health
including constriction rings, vacuum
                                                 (CDRH) maintains an entry on the            AGENCY: Health Care Financing
pumps, and penile splints.
                                                 World Wide Web for easy access to           Administration (HCFA), HHS.
DATES: Written comments concerning               information including text, graphics,       ACTION: Notice with comment period.
this guidance may be submitted at any            and files that may be downloaded to a
time.                                            personal computer with access to the        SUMMARY:   This notice sets forth a
ADDRESSES: Written comments                      Web. Updated on a regular basis, the        revised schedule of limits on home
concerning this guidance must be                 CDRH Home Page includes the CDRH            health agency costs that may be paid
submitted to the contact person.                 Interim Regulatory Policy for External      under the Medicare program for cost
Comments should be identified with the           Penile Rigidity Devices, device safety      reporting periods beginning on or after
docket number found in brackets in the           alerts, Federal Register reprints,          October 1, 1997. These limits replace
heading of this document. See the                information on premarket submissions        the per visit limits that were set forth in
SUPPLEMENTARY INFORMATION                        (including lists of approved applications   our July 1, 1996 notice with comment
section for electronic access to the             and manufacturers’ addresses), small        period (61 FR 34344) and supersede
policy. Submit written requests for              manufacturers’ assistance, information      those set forth in our July 1, 1997 notice
single copies of the ‘‘CDRH Interim              on video conferencing and electronic        with comment period (62 FR 35608).
Regulatory Policy for External Penile            submissions, mammography matters,           This notice also provides, in accordance
Rigidity Implants’’ to the Division of           and other device-oriented information.      with the Balanced Budget Act of 1997,
Small Manufacturers Assistance, Center           The CDRH home page may be accessed          that there be no changes in the home
for Devices and Radiological Health              at http://www.fda.gov/cdrh. The CDRH        health per visit limits for cost reporting
(HFZ–220), Food and Drug                         Interim Regulatory Policy for External      periods beginning on or after July 1,
Administration, 1350 Piccard Dr.,                Penile Rigidity Devices will be available   1997 and before October 1, 1997 (that is,
Rockville, MD 20850. Send two self-              at http://www.fda.gov/cdrh/ode/             the cost limits set forth in our July 1,
addressed adhesive labels to assist that         expenrig.html.                              1996 notice will apply to cost reporting
90                     Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

periods beginning during this time             Because of staffing and resource          delivery of needed health services.
period); that the establishment of the      limitations, we cannot accept comments       Under this authority, we have
cost per visit limitations for cost         by facsimile (FAX) transmission. In          maintained limits on home health
reporting periods beginning on or after     commenting, please refer to file code        agency (HHA) per-visit costs since 1979.
October 1, 1997 be based on 105 percent     HCFA–1904–NC. Comments received              The limits may be applied to direct or
of the median of the labor-related and      timely will be available for public          indirect overall costs or to the costs
nonlabor per visit costs for freestanding   inspection as they are received,             incurred for specific items or services
home health agencies; that there be no      generally beginning approximately 3          furnished by the provider.
updates in the home health costs limits     weeks after publication of a document,       Implementing regulations are located at
(including no adjustments for changes       in Room 309–G of the Department’s            42 CFR 413.30. Additional statutory
in the wage index or other updates) for     offices at 200 Independence Avenue,          provisions specifically governing the
cost reporting periods beginning on or      SW, Washington, DC, on Monday                limits applicable to HHAs are contained
after July 1, 1994 and before July 1,       through Friday of each week from 8:30        at section 1861(v)(1)(L) of the Act.
1996; and the wage index value that is      a.m. to 5 p.m. (Phone: (202) 690–7890).      Section 1861(v)(1)(L)(i) of the Act, as
applied to the labor portion of the per        Copies: To order copies of the Federal    amended by section 4602(a) of the
visit limitations be based on the           Register containing this document, send      Balanced Budget Act of 1997 (BBA ’97),
geographic area in which the home           your request to: New Orders,                 Pub. L. 105–33, specifies that the cost
health service is furnished.                Superintendent of Documents, P.O. Box        limits must not exceed 105 percent of
DATES: Effective Date: This is a major      371954, Pittsburgh, PA 15250–7954.           the median of the labor-related and
rule under title 5, United States Code,     Specify the date of the issue requested      nonlabor per-visit costs for freestanding
section 804(2). As indicated in section     and enclose a check or money order           HHAs. Section 1861(v)(1)(L)(vii) of the
                                            payable to the Superintendent of             Act, as added by section 4602(c) of BBA
XI.A. of the preamble of this notice with
                                            Documents, or enclose your Visa or           ’97, requires that the Secretary establish
comment period, pursuant to 5 U.S.C.
                                            Master Card number and expiration            HHA cost limits on an annual basis for
553(b)(B), for good cause we find that
                                            date. Credit card orders can also be         cost reporting periods beginning on or
prior notice and comment procedures
                                            placed by calling the order desk at (202)    after October 1 of each year beginning
are impracticable and unnecessary.
                                            512–1800 or by faxing to (202) 512–          in 1998, (except the cost limits
Pursuant to 5 U.S.C. section 808(2), as
                                            2250. The cost for each copy is $8.00.       established for cost reporting periods
well as section 1861(v)(1)(L)(i) of the
                                            As an alternative, you may view and          beginning on or after October 1, 1997
Social Security Act (as amended by
                                            photocopy the Federal Register               must be established by January 1, 1998).
section 4602(a)(5) of Pub. L. 105–33),
                                            document at most libraries designated        In establishing these limits, the statute
this schedule of limits is effective for                                                 directs the Secretary to use the
cost reporting periods beginning on or      as Federal Deposit Libraries and at
                                            many other public and academic               applicable hospital wage index, as
after October 1, 1997.                                                                   discussed below.
   Comment Period: Written comments         libraries throughout the country that
                                            receive the Federal Register.                   This notice with comment period sets
will be considered if we receive them at                                                 forth revised cost limits for cost
the appropriate addresses, as provided         This Federal Register document is
                                            also available from the Federal Register     reporting periods beginning on or after
below, no later than 5 p.m. on March 3,                                                  October 1, 1997. As required by section
1998.                                       online database through GPO Access, a
                                            service of the U.S. Government Printing      1861(v)(1)(L)(iii) of the Act, we are
ADDRESSES: Mail written comments (one                                                    using the area wage index applicable
                                            Office. Free public access is available on
original and three copies) to the                                                        under section 1886(d)(3)(E) of the Act
                                            a Wide Area Information Server (WAIS)
following address: Health Care                                                           which were determined using the
                                            through the Internet and via
Financing Administration, Department                                                     survey of the most recent available
                                            asynchronous dial-in. Internet users can
of Health and Human Services,                                                            wages and wage-related costs of
                                            access the database by using the World
Attention: HCFA–1904–NC, P.O. Box                                                        hospitals located in the geographic area
                                            Wide Web; the Superintendent of
7517, Baltimore, Maryland 21207–0517                                                     in which the home health service is
                                            Documents home page address is http:/
   If you prefer, you may deliver your                                                   furnished. For purposes of this notice,
                                            /www.access.gpo.gov/su docs/, by
written comments (one original and                                                       the HHA wage index is based on the
                                            using local WAIS client software, or by
three copies) to one of the following                                                    most recent hospital wage index, that is,
                                            telnet to swais.access.gpo.gov, then         the prereclassified hospital wage index
addresses:                                  login as guest (no password required).
Room 309–G, Hubert H. Humphrey                                                           effective for hospital discharges on or
                                            Dial-in users should use                     after October 1, 1997, which uses
   Building, 200 Independence Avenue,       communications software and modem
   SW, Washington, DC 20201,                                                             Federal fiscal year (FY) 1994 wage data.
                                            to call (202) 512–1661; type swais, then     As the statute also specifies, in applying
      or                                    login as guest (no password required).       the hospital wage index to HHAs, no
Room C5–09–26, Central Building, 7500       FOR FURTHER INFORMATION CONTACT:             adjustments are to be made to account
   Security Boulevard, Baltimore,           Michael Bussacca, (410) 786–4602.            for hospital reclassifications under
   Maryland 21244–1850.                                                                  section 1886(d)(8)(B) of the Act,
   Comments may also be submitted           SUPPLEMENTARY INFORMATION:
                                                                                         decisions of the Medicare Geographic
electronically to the following e-mail      I. Background                                Classification Review Board (MGCRB)
address: HCFA1904NC@hcfa.gov. E-                                                         under section 1886(d)(10) of the Act, or
mail comments must include the full         A. Summary
                                                                                         decisions by the Secretary.
name, postal address, and affiliation (if      Section 1861(v)(1)(A) of the Social
applicable) of the sender and must be       Security Act (the Act) authorizes the        B. Relevant Provisions of the Balanced
submitted to the referenced address in      Secretary to establish limits on             Budget Act of 1997
order to be considered. All comments        allowable costs incurred by a provider          The BBA ’97 made major changes that
must be incorporated in the e-mail          of services that may be paid under the       affect the cost per visit limitations
message because we may not be able to       Medicare program, based on estimates         applicable to services provided by
access attachments.                         of the costs necessary in the efficient      HHAs. The provisions of Pub. L. 105–
                       Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                       91

33 that we are implementing in this          BBA ’97 and requires the establishment        1998. In accordance with section
notice with comment period are as            of the cost per visit limitations based on    1861(v)(1)(L)(vii)(I), we are establishing
follows:                                     105 percent of the median of labor-           by January 1, 1998, the per-visit limits
                                             related and nonlabor-related per visit        for cost reporting periods beginning on
1. Delay in Updates
                                             costs for freestanding HHAs. This is a        or after October 1, 1997.
   Section 4602(b) of BBA ’97 amended        change to the previous requirement that
section 1861(v)(1)(L)(iii) of the Act to                                                   II. Updating the Wage Index on a
                                             the cost limitations be established based
provide that there be no changes in the                                                    Budget-Neutral Basis
                                             on 112 percent of the mean of the labor-
home health per visit cost limits for cost   related and nonlabor per visit cost for          Section 4207(d)(2) of the Omnibus
reporting periods beginning on or after      freestanding HHAs.                            Budget Reconciliation Act of 1990, Pub.
July 1, 1997 and before October 1, 1997.        The impact of this change will be          L. 101–508, requires that in updating
The effect of this provision is that a       discussed in general in the impact            the wage index, aggregate payments to
HHA’s latest per-visit cost limit for a      statement in section XI of this notice        HHAs should be equal to the amount
cost reporting period beginning on or        with comment period.                          that would result from use of the 1982
after July 1, 1996 and before October 1,                                                   wage index. On July 1, 1997, we
1996, as calculated under the notice         3. Reduction in Market Basket Updates         published the appropriate adjustment
published July 1, 1996 (61 FR 34344),           Section 1861(v)(1)(L)(iv) was added to     factor to comply with this requirement
will remain in effect until its cost         the Act by section 4601(a) of BBA 97          to ensure that payments were not
reporting period beginning on or after       and requires the Secretary not to take        affected by the hospital wage index
October 1, 1997. For providers entering      into account any changes in the home          published on August 30, 1996.
the Medicare program on or after July 1,     health market basket with respect to             As stated before, BBA ’97 was passed
1997 and before October 1, 1997, the         cost reporting periods which began on         and included legislation that affected
applicable cost limit will be the cost       or after July 1, 1994 and before July 1,      the cost per-visit limitations. The effect
limit that would have applied for the        1996 in establishing the limitations for      of the changes in the cost limit
identical cost reporting period              cost reporting periods beginning after        calculations (reducing per visit limits
beginning on or after July 1, 1996 and       September 30, 1997. This, in effect,          from 112% of the mean to 105% of the
before October 1, 1996. (For example, if     reduces the factors for increasing the        median and freezing market basket
a provider enters the Medicare program       database dollars used in calculating the      updates) impacts the level of payments
on July 1, 1997, with a 12-month cost        limits. How these factors are determined      and, therefore, affects the budget
reporting period, its cost limit will be     is explained further in section VII of this   neutrality factor. To determine the new
determined in the same manner as a           notice with comment period.                   adjustment factor, we used the same
cost limit for a period beginning July 1,                                                  methodology as explained in the July 1,
1996 and ending June 30, 1997. If the        4. Application of per Visit Limitation        1997 Federal Register, page 35611,
provider entering the Medicare program          Section 1861(v)(1)(L)(iii) was             using the cost limits specified in this
has a short cost reporting period, for       amended by section 4604(b) of BBA ’97         notice. As has been the case with each
example, a period beginning July 1,          to require that the utilization of the area   of the new wage indices used in
1997 and ending December 31, 1997, the       wage index applicable under section           calculating home health limits since the
cost limit will be determined in the         1886(d)(3)(E) of the Act be determined        requirement of budget neutrality was
same manner as a cost limit for a period     using the survey of the most recent           established, agencies would have
beginning July 1, 1996, and ending           available wages and wage-related costs        received a higher adjusted cost
December 31, 1996.) Therefore, the           of hospitals located in the geographic        limitation in the aggregate. Aggregate
notice of schedule of limits on HHA          area in which the home health services        payments to HHAs can only be affected
costs per visit for cost reporting periods   are furnished. Previously, the survey         to the extent that agencies have costs
beginning on or after July 1, 1997,          was from hospitals located in the             exceeding the limits. When only a small
which was published in the Federal           geographic area in which the home             portion of total costs exceed the limits,
Register (62 FR 35608) on July 1, 1997       health agency is located, and applied to      the adjustment is effectively spread over
has been superseded by the change in         cost limitations for cost reporting           agencies, and the labor portion of the
the statute.                                 periods beginning prior to October 1,         limits needs to be increased by a large
   The notice of schedule of limits on       1997. In effect, the cost per visit           factor to reach the amount by which
HHA costs per visit, which was               limitation that will apply for the service    agencies, in the aggregate, would have
published in the Federal Register on         furnished by the HHA will be the urban        benefited using the 1982 wage index. It
July 1, 1997 (62 FR 35608) also              or rural limit and the appropriate wage       follows that as the portion of costs
contained comments and responses to          index for the geographic area where the       exceeding the limits becomes larger, the
the notice of schedule of limits             home health service is furnished. A           adjustment factor becomes smaller.
published in the Federal Register on         Program Memorandum (Rev. AB–97–               Because the new cost limits are lower,
July 1, 1996 (61 FR 34344). The              18), which was published in September         more providers are affected by the
comments and responses in the July 1,        1997, outlined the billing changes that       limits. Under the old cost limit, 31% of
1997 Federal Register (62 FR 35609           are needed to properly implement this         home health agencies were over the
through 35611) are not repeated in this      provision.                                    limit, as compared to 65% of home
notice. Even though the cost limitations                                                   health agencies over the new cost limit.
                                             5. Effective Date                             In order to achieve the level of savings
in the July 1, 1997 Federal Register
have been superseded by Pub. L. 105–            Section 1861(v)(1)(L)(vii) of the Act      that would have occurred if the 1982
33, the responses to the comments to the     was added by section 4602(c) of BBA           wage index was used, less of an increase
July 1, 1996 notice are still relevant and   ’97. Beginning in 1998, the Secretary is      is necessary to raise the limits to
effective.                                   required to establish the per-visit limits    achieve budget neutrality. We used the
                                             by August 1 of each year. However, for        same methodology as contained in the
2. Reduction to limits                       cost reporting periods beginning on or        Federal Register published July 1, 1997
   Section 1861(v)(1)(L)(i)(IV) was added    after October 1, 1997, the Secretary need     and determined the new budget
to the Act by section 4602(a)(5) of the      only establish those limits by January 1,     neutrality factor to be 1.009.
92                      Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

III. Update of Limits                        1, 1992 notice (57 FR 29410). These         the HHAs, we will apply the wage index
   The cost report data used to develop      exceptions have been recognized in          based upon the location of where the
the schedule of limits set forth in this     setting hospital cost limits for cost       service is furnished. See discussion in
notice is for the same period as that        reporting periods beginning on and after    section VII.
used in setting the limits that were         July 1, 1979 (45 FR 41218), and were
                                                                                         IV. Provisions of the HHA Schedule of
                                             authorized under section 601(g) of the
effective July 1, 1996. We have updated                                                  Limits
                                             Social Security Amendments of 1983
the cost limits to reflect the expected                                                     The schedule of limits set forth below
                                             (Pub. L. 98–21). Section 601(g) of Public
cost increases occurring between the                                                     was calculated using 105 percent of the
                                             Law 98–21 requires that any hospital in
cost reporting periods for the data                                                      median per-visit costs of freestanding
                                             New England that was classified as
contained in the database and                                                            HHAs and is adjusted by the latest
                                             being in an urban area under the
September 30, 1998 (excluding, as                                                        estimates in the market basket index,
                                             classification system in effect in 1979
required by statute, any changes in the                                                  excluding any changes in the home
                                             will be considered urban for the
home health market basket for cost                                                       health market basket for cost reporting
                                             purposes of the hospital prospective
reporting periods beginning on or after                                                  periods beginning on or after July 1,
                                             payment system. This provision is
July 1, 1994 and before July 1, 1996).       intended to ensure equitable treatment      1994 and before July 1, 1996.
A. Data Used                                 under the hospital prospective payment         The schedule of limits effective for
                                             system. Under this authority, the           cost reporting periods beginning on or
   To develop the schedule of limits that                                                after October 1, 1997, is based on the
                                             following counties have been deemed to
is effective for cost reporting periods                                                  actual cost per-visit data from settled
                                             be urban areas for purposes of payment
beginning on or after October 1, 1997,                                                   Medicare cost reports from freestanding
                                             under the inpatient hospital prospective
we extracted actual cost per-visit data                                                  HHAs for periods ending on or after
                                             payment system:
from settled Medicare cost reports of           • Litchfield County, CT in the           June 30, 1991, and settled by October 1,
freestanding HHAs for periods ending         Hartford, CT MSA.                           1995, updated by the market basket rate
on or after June 30, 1991, and settled by       • York County, ME and Sagadahoc          of increase, excluding any changes in
October 1, 1995. The majority of the cost    County, ME in the Portland, ME MSA.         the home health market basket with
reports were from FY 1993. We then              • Merrimack County, NH in the            respect to cost reporting periods that
adjusted the data using the latest           Boston-Brockton-Nashua, MA-NH MSA.          began on or after July 1, 1994 and before
available market basket indexes to              • Newport County, RI in the              July 1, 1996, and provides for the
reflect expected cost increases occurring    Providence-Warwick-Pawtucket, RI            following:
between the cost reporting periods           MSA.                                           • A classification system based on
contained in our database and                   We are continuing to grant these         whether an HHAs services are furnished
September 30, 1998. However, section         urban exceptions for the purpose of         within an MSA, a NECMA, and/or a
1861(v)(1)(L)(iv) prohibits the Secretary    applying the Medicare hospital wage         non-MSA area. (See Tables 4a and 4b in
from taking into account any changes in      index to the HHA cost limits. These         section IX. of this notice for the listing
the home health market basket with           exceptions result in the same New           of MSAs, NECMAs, and rural areas.)
respect to cost reporting periods which      England County Metropolitan Area               • The use of a single schedule of
began on or after July 1, 1994 and before    (NECMA) definitions for hospitals,          limits for hospital-based and
July 1, 1996. Therefore, we excluded         skilled nursing facilities (SNFs), and      freestanding agencies. This single limit
this time period when we adjusted the        HHAs. In New England, MSAs are              is based on the cost experience of
database for the market basket increases.    defined on town boundaries rather than      freestanding agencies in accordance
                                             on county lines but exclude parts of the    with section 1861(v)(1)(L)(i) of the Act.
B. Wage Index
                                             four counties cited above that would be        • The use of a market basket index,
   The wage index is used to adjust the      considered urban under the MSA              which was developed from the price of
labor-related portion of the limits to       definition. Under this notice, those four   goods and services purchased by HHAs
reflect differing wage levels among          counties are urban under either             to account for the impact of changing
areas. In setting this schedule of limits,   definition, NECMA or MSA.                   wage and price levels on HHA costs.
we used the FY 1998 hospital wage               Section 1861(v)(1)(L)(iii), as amended      • The current hospital wage index
index, which is based on 1994 hospital       by section 4604(b) of BBA ’97, requires     that is used to adjust the labor-related
wage data.                                   us to establish these limits using the      portion of the limits. The employee
   Each HHA’s labor market area is           area wage index applicable under            wage portion of the market basket index,
determined based on the definitions of       section 1886(d)(3)(E) of the Act and        including a proportionate share of
Metropolitan Statistical Areas (MSAs)        determined using the survey of the most     contract services (64.226 percent), and
issued by the Office of Management and       recent available wages and wage-related     the employee benefits portion (13.442
Budget (OMB). Section 1861(v)(1)(L)(iii)     costs of hospitals located in the           percent) are used to determine the labor
of the Act requires us to use the current    geographic area in which the home           component (77.668 percent) of all HHA
hospital wage index (that is, the FY         health service is furnished. Prior to the   per-visit costs used to set the limits.
1998 hospital wage index, which was          amendment, the wage index as applied           • Separate treatment of the labor and
published in the Federal Register on         to the labor portion of the per visit       nonlabor components of per-visit costs.
August 29, 1997 (62 FR 46070)) to            limitation was based on the location of     The separate components of costs are
establish the HHA cost limits.               the HHA. Effective with cost reporting      calculated by obtaining actual HHA cost
Therefore, this schedule of limits           periods beginning on or after October 1,    data for each agency for cost periods
reflects the MSA definitions that are        1997, the wage-index as applied to the      ending on or after June 30, 1991 and
currently in effect under the hospital       labor portion of the per visit limitation   settled before October 1, 1995, and
prospective payment system.                  must be based on the geographic             increasing those data by the actual and
   We are continuing to incorporate          location in which the home health           projected increases in the HHA market
exceptions to the MSA classification         service is actually furnished rather than   basket index excluding any changes in
system for certain New England               the physical location of the HHA itself.    the home health market basket with
counties that were identified in the July    Therefore, in establishing the limits for   respect to cost reporting periods that
                                        Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices                                                                                                 93

began on or after, July 1, 1994 and                                          Hawaii, Puerto Rico, and the U.S. Virgin                                     limits are applied in the aggregate to the
before July 1, 1996. We then separated                                       Islands.                                                                     cost remaining after these adjustments
each HHA’s per-visit costs into labor                                           • Limits are determined for the per-                                      are made. Payment is limited to the
and nonlabor portions, and divided the                                       visit cost of each type of home health                                       lesser of the actual costs, the cost
labor portion by the wage index value                                        service: skilled nursing care, physical                                      aggregated limits, or the per beneficiary
for the agency’s location to control for                                     therapy, speech pathology, occupational                                      limitation. The per-beneficiary
the effect of geographic variations in                                       therapy, medical social services, and                                        limitation must be established by April
prevailing wage levels. Separate means                                       home health aide.                                                            1, 1998, under section 1861(v)(1)(L)(vii),
are computed for the labor and nonlabor                                         • Application of the limits in the
                                                                                                                                                          as added by section 4602(c) of BBA ’97
components of per-visit costs. For each                                      aggregate after an HHA’s actual costs are
                                                                             adjusted. An HHA’s actual costs are                                          and will be effective for cost reporting
comparison group, the resulting
                                                                             adjusted for individual items of cost that                                   periods beginning October 1, 1997.
amounts are shown in Table 3 of section
VIII of this notice.                                                         are found to be excessive under                                              V. Market Basket
  • The application of a cost-of-living                                      Medicare principles of provider
adjustment to the nonlabor portion of                                        payment and for costs that are not                                            The 1993-based cost categories and
the limit for HHAs located in Alaska,                                        included in the limitation amount. The                                       weights are listed in Table 1 below.

                                           TABLE 1.—1993-BASED COST CATEGORIES, WEIGHTS, AND PRICE PROXIES
                                                                                                        1993-based
                                       Cost category                                                    market bas-                                                     Price proxy
                                                                                                         ket weight

Compensation, including allocated Contract Services’ Labor ......                                               77.668
    Wages and Salaries, including allocated Contract Services’                                                  64.226         HHA Occupational Wage Index.
      Labor.
    Employee benefits, including allocated Contract Services’                                                   13.442         HHA Occupational Benefits Index.
      Labor.
Operations & Maintenance ...........................................................                              0.832        CPI–U Fuel & Other Utilities.
Administrative & General, including allocated Contract Services’                                                  9.569
  Non-Labor.
    Telephone ..............................................................................                      0.725        CPI–U Telephone.
    Paper & Printing ....................................................................                         0.529        CPI–U Household Paper, Paper Products & Stationery Sup-
                                                                                                                                plies.
    Postage ..................................................................................                    0.724        CPI–U Postage.
    Other Administrative & General, including allocated Con-                                                      7.591        CPI–Services.
      tract Services Non-Labor.
Transportation ...............................................................................                    3.405        CPI–U Private Transportation.
Capital-Related .............................................................................                     3.204
    Insurance ...............................................................................                     0.560        CPI–U Household Insurance.
    Fixed Capital ..........................................................................                      1.764        CPI–U Owner’s Equivalent Rent.
    Movable Capital .....................................................................                         0.880        PPI Machinery & Equipment.
Other Expenses, including allocated Contract Services’ Non-                                                       5.322        CPI–U All Items Less Food & Energy.
  Labor.

          Total ...................................................................................           100.000



VI. Methodology for Determining Cost-                                        periods ending on or after June 30, 1991,                                    September 30, 1998 excluding any
Per-Visit Limits                                                             and settled before October 1, 1995. We                                       changes in the home health market
A. Data                                                                      then adjusted the data using the latest                                      basket with respect to cost reporting
                                                                             available market basket factors to reflect                                   periods which began on or after, July 1,
  For this notice, the cost-per-visit limit                                  expected cost increases occurring                                            1994 and before July 1, 1996. The
values were determined by extracting                                         between the cost reporting periods                                           following adjustment factors were used
settled actual cost-per-visit data from
                                                                             contained in our database and                                                to compute the per-visit costs:
Medicare cost reports for cost reporting

                                    TABLE 2.—FACTORS FOR INFLATING DATABASE DOLLARS TO SEPTEMBER 30, 1998
                                                                                          [Inflation Adjustment Factors1]

                                                                        Fiscal year end                                                                                         1992            1993      1994

January 31 ............................................................................................................................................................      ................   1.11250   1.07813
February 28 ..........................................................................................................................................................       ................   1.10947   1.07550
March 31 ..............................................................................................................................................................      ................   1.10642   1.07295
April 30 .................................................................................................................................................................   ................   1.10336   1.07046
May 31 ..................................................................................................................................................................    ................   1.10033   1.06800
June 30 .................................................................................................................................................................       1.13438         1.09737   1.06565
July 31 ..................................................................................................................................................................      1.13111         1.09450   1.06354
August 31 .............................................................................................................................................................         1.12791         1.09168   1.06165
September 30 .......................................................................................................................................................            1.12476         1.08891   1.05993
October 31 ............................................................................................................................................................         1.12166         1.08619   1.05838
November 30 ........................................................................................................................................................            1.11859         1.08349   1.05706
94                                     Federal Register / Vol. 63, No. 1 / Friday, January 2, 1998 / Notices

                       TABLE 2.—FACTORS FOR INFLATING DATABASE DOLLARS TO SEPTEMBER 30, 1998—Continued
                                                                                       [Inflation Adjustment Factors1]

                                                                      Fiscal year end                                                                                  1992      1993      1994

December 31 ........................................................................................................................................................   1.11554   1.08080   1.05599
   1 Source:
         The Home Health Agency Input Price Index, produced by HCFA. The forecasts are from Standard and Poor’s DRI 3rd QTR 1997;
@USSIM/TREND25YR0897@CISSIM/Control973 forecast exercise which has historical data through 1997:2.


   Multiplying nominal dollars for a                                      cost reporting period begins before the                                   Step 3—From Table 6, sum the index levels
given fiscal year end by their respective                                 sixteenth of the mont