Unknown. Final rule

19,916 words·~91 min read·/register/2006/08/03/06-6649·

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

--- schema: federal-register doc_type: fedreg source_file: FR-2006-08-03.xml --- 71 149 Thursday, August 3, 2006 Contents Agriculture Agriculture Department See Commodity Credit Corporation See Farm Service Agency See Food and Nutrition Service See Food Safety and Inspection Service See Foreign Agricultural Service NOTICES Agency information collection activities; proposals, submissions, and approvals, E6-12492 44013-44014 E6-12558 Broadcasting Broadcasting Board of Governors NOTICES Agency information collection activities; proposals, submissions, and approvals, 44014-44015 E6-12493 Centers Centers for Disease Control and Prevention NOTICES Meetings:

Disease, Disability, and Injury Prevention and Control Special Emphasis Panels, 44031 E6-12542 Centers Centers for Medicare & Medicaid Services PROPOSED RULES Medicare: Home health prospective payment system; 2007 CY rates update, 44082-44180 06-6614 Coast Guard Coast Guard RULES Ports and waterways safety; regulated navigation areas, safety zones, security zones, etc.: Marblehead Neck and Rock, MA, 43973-43975 E6-12529 Merrimack River, MA, 43975-43977 E6-12530 NOTICES Organization, functions, and authority delegations:

Sector Anchorage; implementation, 44036-44037 E6-12531 Sector Juneau; implementation, 44037-44038 E6-12562 Commerce Commerce Department See Economic Development Administration See International Trade Administration See National Oceanic and Atmospheric Administration Commodity Commodity Credit Corporation PROPOSED RULES Loan and purchase program: Quality Samples Program, 43992-43996 06-6652 Defense Defense Department See Navy Department Economic Economic Development Administration NOTICES Adjustment assistance; applications, determinations, etc.:

Marlen Research Corp., et al., 44015-44016 E6-12533 Energy Energy Department See Federal Energy Regulatory Commission EPA Environmental Protection Agency RULES Air quality implementation plans; approval and promulgation; various States: Alabama, 43978-43979 E6-12471 Arizona, 43979-43984 E6-12483 Superfund program: National oil and hazardous substances contingency plan priorities list, 43984-43985 E6-12446 NOTICES Agency information collection activities; proposals, submissions, and approvals, 44026-44027 E6-12540 Air pollution control:

California pollution control standards— On-road motorcycles and motorcycle engines; exhaust emission standards and test procedures; Federal preemption waiver request, 44027-44029 E6-12546 Farm Farm Service Agency RULES Loan and purchase programs: Preferred Lender Program leaders; status and interest payment accrue during bankruptcy and redemption rights periods, 43955-43958 E6-12503 FAA Federal Aviation Administration RULES Airworthiness directives: McDonnell Douglas, 43961-43964 E6-12298 E6-12299 Rolls-Royce Corp., 43964-43967 E6-12420 PROPOSED RULES Airworthiness directives:

Pratt & Whitney, 43997-43998 E6-12539 FCC Federal Communications Commission NOTICES Rulemaking proceedings; petitions filed, granted, denied, etc., 44029 E6-12545 Federal Energy Federal Energy Regulatory Commission NOTICES Complaints filed: Fourth Branch Associates (Mechanicville), 44024 E6-12507 Electric rate and corporate regulation combined filings, 44024-44025 E6-12512 Hydroelectric applications, 44026 E6-12508 *Applications, hearings, determinations, etc.:* Alliance Pipeline L.P., 44021-44022 E6-12505 Discovery Producer Services LLC, et al., 44022 E6-12506 National Fuel Gas Supply Corp., 44022-44023 E6-12509 Northwest Pipeline Corp., 44023 E6-12510 Questar Overthrust Pipeline Co., 44023-44024 E6-12511 Federal Highway Federal Highway Administration NOTICES Highway planning and construction; licenses, permits, approvals, etc.:

Eastern corridor, OH; various highway and transit projects, 44073-44074 E6-12563 Portsmith Bypass, OH, 44074 E6-12553 Federal Reserve Federal Reserve System NOTICES Banks and bank holding companies: Change in bank control, 44029 E6-12487 Formations, acquisitions, and mergers, 44029-44030 E6-12486 Food Food and Drug Administration RULES Animal drugs, feeds, and related products: Isoflurane; sponsor change, 43967 E6-12570 Kanamycin, etc.; oral dosage form, 43967-43968 E6-12568 NOTICES Human drugs:

Patent extension; regulatory review period determinations— CLINACOX, 44032-44033 E6-12572 CYMBALTA, 44034-44035 E6-12574 EMEND, 44033-44034 E6-12573 IPLEX, 44031-44032 E6-12571 Meetings: National Mammography Quality Assurance Advisory Committee, 44035 E6-12569 Transmissible Spongiform Encephalopathies Advisory Committee, 44035-44036 E6-12567 Food Food and Nutrition Service PROPOSED RULES Food distribution programs: Donated foods in child nutrition programs, Nutrition Services Incentive Program, and charitable institutions; distribution, management, and use, 43992 E6-12494 Food Food Safety and Inspection Service RULES Meat and poultry inspection:

Foreign establishments exporting meat and poultry to US; supervisory visits by foreign inspection systems, 43958-43961 E6-12565 Foreign Foreign Agricultural Service NOTICES Farmers trade adjustment assistance petitions; filing instructions, 44014 E6-12504 Health Health and Human Services Department See Centers for Disease Control and Prevention See Centers for Medicare & Medicaid Services See Food and Drug Administration NOTICES Agency information collection activities; proposals, submissions, and approvals, 44030 E6-12561 Meetings:

American Health Information Community, 44030-44031 06-6660 06-6661 06-6662 Homeland Homeland Security Department See Coast Guard Housing Housing and Urban Development Department NOTICES Agency information collection activities; proposals, submissions, and approvals, 44038 E6-12495 Grants and cooperative agreements; availability, etc.: Discretionary programs (SuperNOFA); correction, 44038-44040 E6-12498 Interior Interior Department See Land Management Bureau See Reclamation Bureau See Special Trustee for American Indians Office IRS Internal Revenue Service RULES Income taxes:

Widely held fixed investment trusts; reporting requirements, 43968-43973 06-6649 PROPOSED RULES Income taxes: Widely held fixed investment trusts; reporting requirements; cross-reference, 43998-44001 06-6650 NOTICES Agency information collection activities; proposals, submissions, and approvals, 44075-44080 E6-12496 International International Trade Administration NOTICES Antidumping: Circular welded carbon steel pipes and tubes from— Thailand, 44016 E6-12552 Dynamic random access memory semiconductors of one megabit or above from— Korea, 44016-44017 E6-12554 Frozen warmwater shrimp from— Thailand, 44017-44018 E6-12536 Granular polytetrafluoroethylene resin from— Italy, 44018 E6-12566 Hand trucks and parts from— China, 44018-44019 E6-12551 Hot-rolled carbon steel flat products from— Thailand, 44019 E6-12535 Land Land Management Bureau NOTICES Committees; establishment, renewal, termination, etc.:

Utah Resource Advisory Council, 44040 E6-12559 Meetings: Resource advisory councils— Boise District, 44041 E6-12550 Idaho Falls, 44040-44041 E6-12538 Oil and gas leases: Montana, 44041 E6-12557 North Dakota, 44041-44042 06-6663 Survey plat filings: Maine, 44042 E6-12097 National Archives National Archives and Records Administration NOTICES Committees; establishment, renewal, termination, etc.: Presidential Libraries Advisory Committee, 44044 E6-12499 National Highway National Highway Traffic Safety Administration RULES Motor vehicle safety standards:

Registration of importers and importation of motor vehicles not certified as conforming to Federal standards; fee schedule, 43985-43990 E6-12497 NOAA National Oceanic and Atmospheric Administration RULES Fishery conservation and management: Alaska; fisheries of Exclusive Economic Zone— Rockfish, 43990-43991 06-6664 PROPOSED RULES Marine mammals: Taking and importing— Eglin Air Force Base, FL; precision strike weapons testing and training, 44001-44012 E6-12556 NOTICES Marine mammal permit applications, determinations, etc., 44020 E6-12555 Navy Navy Department NOTICES Environmental statements; notice of intent:

Marine Corps Base Quantico, VA, 44020-44021 E6-12532 Nuclear Nuclear Regulatory Commission PROPOSED RULES Byproduct material; expanded definition, 43996-43997 E6-12517 NOTICES Environmental statements; availability, etc.: Esperion Therapeutics, Inc., 44045-44046 E6-12516 James Madison University, Miller Hall Facility, Harrisonburg, VA, 44046-44048 E6-12513 West Virginia University Institute of Technology, 44048-44049 E6-12514 Whittaker Corp., 44049-44052 E6-12515 *Applications, hearings, determinations, etc.:* FMRI, 44044-44045 E6-12518 Postal Postal Rate Commission NOTICES Negotiated service agreements:

Capital One Services, Inc., 44052-44054 06-6653 Railroad Railroad Retirement Board NOTICES Agency information collection activities; proposals, submissions, and approvals, 44054-44055 E6-12560 Reclamation Reclamation Bureau NOTICES Committees; establishment, renewal, termination, etc.: Glen Canyon Dam Adaptive Management Work Group, 44042 06-6659 SEC Securities and Exchange Commission NOTICES Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC, 44055-44056 E6-12524 Boston Stock Exchange, Inc., 44056-44058 E6-12525 Chicago Board Options Exchange, Inc., 44058-44064 E6-12519 E6-12527 Chicago Stock Exchange, Inc., 44064-44066 E6-12521 International Securities Exchange, Inc., 44066-44067 E6-12526 National Securities Clearing Corp., 44067 E6-12501 Philadelphia Stock Exchange, Inc., 44067-44072 E6-12520 E6-12522 E6-12523 SBA Small Business Administration NOTICES Disaster loan areas:

California, 44072-44073 E6-12502 Special Special Trustee for American Indians Office NOTICES Agency information collection activities; proposals, submissions, and approvals, 44042-44044 E6-12490 E6-12491 Transportation Transportation Department See Federal Aviation Administration See Federal Highway Administration See National Highway Traffic Safety Administration Treasury Treasury Department See Internal Revenue Service See United States Mint NOTICES Agency information collection activities; proposals, submissions, and approvals, 44075 E6-12548 E6-12549 U.S.

Mint United States Mint NOTICES Meetings: Citizens Coinage Advisory Committee, 44080 E6-12645 Separate Parts In This Issue Part II Health and Human Services Department, Centers for Medicare & Medicaid Services, 44082-44180 06-6614 Reader Aids Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws. To subscribe to the Federal Register Table of Contents LISTSERV electronic mailing list, go to http://listserv.access.gpo.gov and select Online mailing list archives, FEDREGTOC-L, Join or leave the list (or change settings); then follow the instructions. 71 149 Thursday, August 3, 2006 Rules and Regulations DEPARTMENT OF AGRICULTURE Farm Service Agency 7 CFR Part 762 RIN 0560-AH07 Guaranteed Loans—Retaining PLP Status and Payment of Interest Accrued During Bankruptcy and Redemption Rights Periods AGENCY:

Farm Service Agency, USDA. ACTION: Final rule. SUMMARY: The Farm Service Agency

(FSA)is amending its regulations pertaining to the retention of Preferred Lender Program

(PLP)status by lenders in certain situations, and the payment of interest in cases where the lender is unable to take action due to bankruptcy or state redemption laws. This rule will allow PLP lenders, under certain conditions, to retain their PLP status for a period, not to exceed two years, after their loss ratio exceeds the standard established by the Agency. It will also allow for the payment of additional interest on a final loss claim if a bankruptcy prevents the lender from taking liquidation action or a state's mandatory redemption law prevents the lender from disposing of property acquired through foreclosure. DATES: *Effective Date:* September 5, 2006. FOR FURTHER INFORMATION CONTACT: Joseph Pruss, Senior Loan Officer, Farm Service Agency; telephone:

(202)690-2854; facsimile:

(202)690-1196; e-mail: *Joseph.Pruss@wdc.usda.gov.* SUPPLEMENTARY INFORMATION: Background FSA published a proposed rule on August 15, 2005, (70 FR 47730-47733) to amend its regulations governing the servicing of loans made under the guaranteed farm loan program. The comment period ended October 14, 2005. Summary of Public Comments All of the issues related to the proposed rule were commented on. FSA considered the comments and incorporated some of the recommendations and suggestions in this rule. Following is a review of the comments and the changes made in the final rule in response to the comments. Retaining PLP Status Six comments were received regarding the proposal to amend 7 CFR 762.106(g)(2)(ii). The proposal would recognize additional situations where a PLP lender could be allowed to retain their status as a PLP lender if, due to circumstances beyond their control they no longer met the eligibility requirements concerning loss ratios. All of the commenters were in favor of the proposal, with one specifically mentioning that the current regulation is inadequate without any change. One comment suggested that the Agency should enlarge the maximum period of waiver from one year to three years, subject to earlier revocation by the Agency if the lender was not making progress toward meeting the requirements of its approved loss reduction plan. Another commenter favored the extension of the one year period only in cases of extreme disasters. One commenter also suggested that the decision on whether or not the extension was to be granted should be made administratively final, since it is subjective and could subject the Agency to appeals and litigation. In consideration of the comments received, the Agency is making changes in the final rule. Because recovery from disasters can take several years to accomplish, the Agency is going to extend the time period for which an exception can be granted from one year to two years. Past experience shows that one year is an inadequate amount of time to fully recover. Present regulations allow the Agency to grant a waiver to PLP lenders to allow them to retain their PLP status when they exceed the maximum loss ratio, currently set at three percent, but only under natural disasters that are widespread enough to be declared a disaster. There are many other reasons that are totally beyond the control of the lender that could cause a lender's loss ratio to exceed three percent, even if the lender normally does an outstanding job in making and servicing loans guaranteed by the Agency. Some of the possibilities could include an untimely freeze of only local impact, an economic downturn in a local area, or perhaps very low commodity prices for a specialty crop only grown in one or two localities. Land values could drop drastically in a local area only, possibly due to industry moving in or out of an area, loss of access to markets, or biological or chemical damage that is not widespread, but negatively affects a small area. A limited area may experience localized flooding due to locally severe thunderstorms, or a large amount of hail in a small area. Smaller banks that make and service loans in a local area only are more likely to incur losses above the three percent maximum loss ratio because all of their portfolio is concentrated in a small area and the volume of their portfolio is such that as little as one or two loans incurring large loss claims could cause their loss ratio to go up greatly. Larger lenders with loans spread out over a large area would not suffer as greatly and it would take more losses before they would reach the maximum loss limit. Whether a large or small lender, either one would suffer the loss for reasons totally beyond their control. PLP Lenders who exceed the maximum loss ratio and want to retain their status will contact their FSA State Office and explain why they believe their excessive losses are beyond their control. They will be required to develop a plan to reduce their losses below the three percent loss ratio, the current maximum allowed by regulations to retain PLP status. If the FSA State Office determines there is adequate justification for allowing the lender to retain PLP status, the State Office will make their recommendation and send an exception request to the Deputy Administrator of Farm Loan Programs, who will make the final decision on granting the exception. If the State Office determines that an exception is not justified, they will decline to send a request for an exception. If granted, the exception may be renewed at the end of the two year period for another two year period if the lender is making satisfactory progress toward reducing their loss ratio below the standard, currently set at three percent. No further renewals or extensions would be granted. The Deputy Administrator for Farm Loan Programs would not automatically grant the request for retention of PLP status. A careful analysis would be performed on the information provided by the lender and the State Office of the Agency. A comparison would be made with loss ratios of other lenders in the same area. If there are several local lenders, and only one is experiencing excessive loss claims, the request would be denied, unless there were other extenuating circumstances that would justify the request. The Agency does not adopt the suggestion that the decision on granting an exception be administratively final in order to avoid appeals. The Agency anticipates that such exceptions rarely will be made, and any denials will be upheld in an appeal. Interest Accrual on Loan Liquidations Nine comments were received on this subject; all were supportive of the proposal, and saw it as a good start, but some believe it does not go far enough. One mentioned that they appreciated that FSA is responding to the concerns of the commercial lenders on the issue of interest accrual in Chapter 7 bankruptcies and in redemption rights cases. Several commenters believed the Agency should relax its requirements further than proposed, to pay interest for a longer period. These comments stated that while 45 days is enough time to liquidate chattel security, 45 days in some cases is not enough time to liquidate real estate. In response to these comments, the Agency will pay interest on the unsecured amount for up to 90 days, instead of the 45 days originally proposed, after the earlier of the relief from stay or discharge of the Chapter 7 bankruptcy for real estate secured loans. The Agency still believes that, when the security is chattels, paying interest on the unsecured amount for up to 45 days after the earlier of the relief from stay or discharge of the Chapter 7 bankruptcy is adequate. Forty five days is generally enough time to accomplish liquidation after the relief from stay or discharge since, for chattels there should be few legal impediments; however, this amount of time often is inadequate when real estate serves as collateral. That is because lenders are typically unable to liquidate real estate in the same timeframe as chattels. Thus, the Agency has amended this final rule accordingly. One comment indicated that the Agency was establishing the date of filing a Chapter 7 bankruptcy as the date from which the 90 day time limit on interest was to be paid. That, in fact, is already the current policy of FSA, and the revision is simply stating this more clearly in § 762.148 in order to reduce confusion. Another suggestion was that the time period should be based on the unique circumstances of each case, and suggested that Farm Credit is at a disadvantage because they are required to offer a right of first refusal in all states, regardless of whether or not redemption rights apply. Establishing an indefinite period of time to pay interest based on the particulars of each case would not be appropriate, as lenders would not all be treated equally, so the Agency does not adopt this comment. The suggestion also was made that the additional interest should apply to the entire amount of the debt and not just the unsecured portion. The Agency does not adopt this comment as the process of the estimated loss claim allows the lender to receive immediate compensation upon which they can invest to offset any earnings reductions. Another commenter assumed that the filing of Chapter 7 bankruptcy would serve as the lender's liquidation plan. This is not the case. Lenders shall continue to follow those existing regulations at 7 CFR 762.149(b). This section makes very clear the requirements a lender must follow in developing a liquidation plan, including timeframes and submission requirements to the Agency. A lender is still required to appraise the collateral, determine the method to obtain the greatest return, and submit an estimated loss claim if liquidation cannot be completed within 90 days. Other comments were that the Agency should use some other date for starting the 90 day clock, such as the date the bankruptcy is closed, when the trustee abandons the security, or the date of discharge. The Agency carefully considered these comments, but believes using the date of filing for Chapter 7 bankruptcy as the date of the decision to liquidate is most reasonable as previously explained. When a borrower files for a Chapter 7 bankruptcy, the lender can immediately submit an estimated loss claim, even with incomplete information concerning the collateral. There is limited justification in using the date the bankruptcy is closed, when the trustee abandons the security, or the date of discharge, as the starting date of the 90 day interest accrual the Agency will pay, because there is no reason a lender cannot file an estimated loss claim upon notification of the borrower filing for a Chapter 7 Bankruptcy. The proposal to pay additional interest on the amount that was estimated to be secured but was eventually found to be unsecured removes the penalty that a lender effectively receives for underestimating their loss under existing regulations. This rule will encourage the lender to file an estimated loss claim since the lender will be paid additional interest on any unsecured debt remaining only if the lender filed an estimated loss claim. Thus the lender will not lose interest due to an inaccurate estimated loss claim. Another commenter suggested that the Agency include Chapter 11 bankruptcies along with Chapter 7 bankruptcies in the proposal to pay additional interest. The existing regulations concerning Chapter 11 bankruptcies are adequate to cover those situations, so no changes will be made in response to this comment. Another comment was that the Agency should put some reasonable caps on default interest rates and attorney fees that lenders charge. The Agency has no authority to establish maximum default interest rates. Default interest rates are often spelled out in the promissory note and, by signing promissory notes, borrowers agree to the default interest rate. The Agency is not involved in negotiating loan terms between lenders and their customers beyond the term limits imposed for guaranteed loan origination and rescheduling, and no change will be made in response to the comment. In addition, the Agency does not cover default interest as part of any loss claims. As for the comment suggesting a particular limitation on attorney fees, the Agency has no authority to establish what reasonable legal fees are. The Agency does often negotiate with lenders to reduce loss claims that include attorney fees that seem unreasonable in a particular case. Explicitly stating in the regulation what is reasonable, is not necessary or appropriate and no change will be made in response to the comment. Several comments were received which addressed the proposed payment of interest in cases where state redemption rights apply. Commenters generally combined comments concerning interest where state redemption rights apply with the comments on Chapter 7 Bankruptcy. No commenter was opposed to the proposal, but, just as in the case of Chapter 7 bankruptcies, several thought the 45 day proposal was inadequate in some cases, and should be longer. The Agency agrees with the suggestions and amending the final regulation to allow for the payment of interest for a period of up to 90 days after the end of the redemption period for real estate secured loans. One commenter suggested that there has been an increasing marginalization of borrowers in the program in recent years, and objects to the use of the language that identifies lenders as the Agency's customers. The guaranteed loan program was created to make credit available to farmers and ranchers who may not have credit available to them. This is accomplished by providing a guarantee to a commercial lender to reduce most of their risk of loss on the loan they make to the farmer/rancher. The loans guaranteed are those that the lender would not have made without a guarantee. Thus, farmers and ranchers are ultimate beneficiaries of the program by being able to obtain credit, or credit at competitive rates and better terms. In making and servicing guaranteed loans, no direct contact between the farmer and the Agency is required; the Agency conducts its program by dealing with the lenders. For guaranteed loans, the farm borrowers make application to, and are customers of the lender. The lender makes application to the Agency for the guarantee, and thus is the customer of the Agency. No changes were made to the rule as a result of this comment. Executive Order 12866 This rule has been determined to be not significant under Executive Order 12866 and was not reviewed by the Office of Management and Budget. Regulatory Flexibility Act The Agency certifies that this rule will not have a significant economic effect on a substantial number of small entities, because it does not require any specific actions on the part of the borrower or the lenders. The Agency made this certification in the proposed rule and no comments were received in this area. The Agency, therefore, is not required to perform a Regulatory Flexibility Analysis as required by the Regulatory Flexibility Act, Public Law 96-534, as amended (5 U.S.C. 601). Environmental Evaluation The environmental impacts of this final rule have been considered in accordance with the provisions of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 *et seq.* , the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and the FSA regulations for compliance with NEPA, 7 CFR part 1940, subpart G. FSA concluded that the rule does not require preparation of an environmental assessment or environmental impact statement. Executive Order 12988 This rule has been reviewed in accordance with E.O. 12988, Civil Justice Reform. In accordance with that Executive Order:

(1)All State and local laws and regulations that are in conflict with this rule will be preempted;

(2)no retroactive effect will be given to this rule except that lender servicing under this rule will apply to loans guaranteed prior to the effective date of the rule; and

(3)administrative proceedings in accordance with 7 CFR part 11 must be exhausted before requesting judicial review. Executive Order 12372 For reasons contained in the Notice related to 7 CFR part 3015, subpart V (48 FR 29115, June 24, 1983) the programs and activities within this rule are excluded from the scope of Executive Order 12372, which requires intergovernmental consultation with state and local officials. Unfunded Mandates This rule contains no Federal mandates, as defined by title II of Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, for State, local, and tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA. Executive Order 13132 The policies contained in this rule do not have any substantial direct effect on states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. Nor does this rule impose substantial direct compliance costs on state and local governments. Therefore, consultation with the states is not required. Paperwork Reduction Act The amendments to 7 CFR part 762 contained in this rule require no revisions to the information collection requirements that were previously approved by OMB under control number 0560-0155. Federal Assistance Programs These changes affect the following FSA programs as listed in the Catalog of Federal Domestic Assistance: 10.406 Farm Operating Loans; 10.407 Farm Ownership Loans. List of Subjects in 7 CFR Part 762 Agriculture, Banks, Credit, Loan programs—agriculture. Accordingly, Title 7 of the Code of Federal Regulations is amended as follows: PART 762—GUARANTEED FARM LOANS 1. The authority citation for part 762 continues to read as follows: Authority: 5 U.S.C. 301; 7 U.S.C. 1989. 2. Amend § 762.106 by revising paragraph (g)(2)(ii) to read as follows: § 762.106 Preferred and certified lender programs.

(g)* * *

(2)* * *

(ii)Failure to maintain PLP or CLP eligibility criteria. The Agency may allow a PLP lender with a loss rate which exceeds the maximum PLP loss rate, to retain its PLP status for a two-year period, if:

(A)The lender documents in writing why the excessive loss rate is beyond their control;

(B)The lender provides a written plan that will reduce the loss rate to the PLP maximum rate within two years from the date of the plan, and

(C)The Agency determines that exceeding the maximum PLP loss rate standard was beyond the control of the lender. Examples include, but are not limited to, a freeze with only local impact, economic downturn in a local area, drop in local land values, industries moving into or out of an area, loss of access to a market, and biological or chemical damage.

(D)The Agency will revoke PLP status if the maximum PLP loss rate is not met at the end of the two-year period, unless a second two year extension is granted under this subsection. 3. Amend § 762.148(d)(1) by adding a sentence to the end of the paragraph to read as follows: § 762.148 Bankruptcy.

(d)* * *

(1)* * * For purposes of calculating the time frames required under § 762.149 of this part, for a borrower who is or will be liquidated, the date the borrower files for bankruptcy protection under Chapter 7 shall be the date of the decision to liquidate. 4. Amend § 762.149 by revising paragraph (d)(2) to read as follows: § 762.149 Liquidation.

(d)* * *

(2)The lender generally will discontinue interest accrual on the defaulted loan at the time the estimated loss claim is paid by the Agency. The following exceptions apply:

(i)If the lender estimates that there will be no loss after considering the costs of liquidation, interest accrual will cease 90 days after the decision to liquidate,

(ii)In the case of a Chapter 7 bankruptcy, in cases where the lender filed an estimated loss claim, the Agency will pay the lender interest which accrues during and up to 45 days after the date of discharge on the portion of the chattel only secured debt that was estimated to be secured but upon final liquidation was found to be unsecured, and up to 90 days after the date of discharge on the portion of real estate secured debt that was estimated to be secured but was found to be unsecured upon final disposition,

(iii)The Agency will pay the lender interest which accrues during and up to 90 days after the time period the lender is unable to dispose of acquired property due to state imposed redemption rights on any unsecured portion of the loan during the redemption period, if an estimated loss claim was paid by the Agency during the liquidation action. Signed at Washington, DC, on July 18, 2006. Teresa C. Lasseter, Administrator, Farm Service Agency. [FR Doc. E6-12503 Filed 8-2-06; 8:45 am] BILLING CODE 3410-05-P DEPARTMENT OF AGRICULTURE Food Safety and Inspection Service 9 CFR Parts 327 and 381 [Docket No. 03-033F; FDMS Docket Number FSIS-2005-0026] RIN 0583-AD08 Frequency of Foreign Inspection System Supervisory Visits to Certified Foreign Establishments AGENCY: Food Safety and Inspection Service, USDA. ACTION: Final rule. SUMMARY: The Food Safety and Inspection Service

(FSIS)FSIS is amending 9 CFR parts 327 and 381 to bring the frequency with which foreign inspection systems are required to make supervisory visits to certified establishments into agreement with the frequency with which the Agency makes supervisory visits to domestic establishments. This final rule does not affect in-plant inspection requirements. FSIS is deleting the requirement that supervisory visits take place “not less frequent[ly] than one such visit per month.” Instead, FSIS will require foreign inspection systems to make “periodic supervisory visits” to certified establishments to ensure that establishments meet FSIS requirements for certification to export meat and poultry to the United States. DATES: *Effective Date:* September 5, 2006. FOR FURTHER INFORMATION CONTACT: Ms. Sally White, Director, International Equivalence Staff, FSIS Office of International Affairs;

(202)720-6400; *sally.white@fsis.usda.gov.* SUPPLEMENTARY INFORMATION: Background On August 18, 2004, FSIS published a proposal in the **Federal Register** (69 FR 51194-51196) to amend 9 CFR 327.2(a)(2)(iv)(A) and 9 CFR 381.196(a)(2)(iv)(A) to provide that supervisory visits by a representative of the foreign inspection system are to occur at periodic intervals to ensure that establishments and products meet the requirements for certification to the United States on an ongoing basis. This change would make the Agency's requirements for foreign inspection programs as consistent as possible with the FSIS domestic inspection program. It would also allow foreign countries flexibility in structuring their programs. Upon the effective date of this final rule, FSIS will send an official letter to each eligible country announcing: The change from the monthly requirement and requesting, in writing, formal notice of the eligible country's projected frequency of supervisory visits; an explanation of why the proposed frequency will ensure that the eligible country's system produces safe, wholesome, unadulterated, and properly labeled and packaged product on an ongoing basis; and an explanation of how the system will ensure that any immediate need for supervisory intervention will be recognized and met. The frequency of periodic supervisory visits will be evaluated for adequacy by FSIS through its annual audit process, in which the ongoing eligibility of an exporting country is reviewed. Comments FSIS received four comments on the proposed rule. One comment supported the proposal. Three comments raised concerns, with one calling for the proposal to be withdrawn. The concerns expressed in these three comments are summarized and answered below. Equivalence With U.S. Domestic Inspection System Culture Two comments noted that FSIS has stated that there are continual contacts between its inspectors in domestic plants and supervisors through means other than personal visits and questioned whether such intensive interaction exists within exporting countries that would no longer be held to monthly supervisory visits. FSIS Response The Agency notes that the inspection system of a country requesting eligibility to export meat and poultry products to the United States is thoroughly investigated during the equivalence evaluation process described at length in the proposal to this final rule. A key part of the evaluation is an assessment of in-plant implementation of inspection system procedures, which includes an examination of the appropriate level of supervisory oversight for certified establishments. An applying country must demonstrate that its inspection system, as implemented, includes features equivalent to those of the U.S. system before the country can be found equivalent. As stated above, upon the effective date of this final rule, FSIS will send an official letter to each eligible country announcing the change from the monthly requirement. FSIS will request formal notice in writing of the eligible country's projected frequency of supervisory visits and an explanation of why the proposed frequency will ensure that the eligible country's system produces safe and wholesome product on an ongoing basis. Each eligible country will also be asked to describe, in writing, how its system will ensure that any immediate need for supervisory intervention will be recognized and met. The frequency of periodic supervisory visits will be evaluated for adequacy by FSIS in its annual audits reviewing the ongoing eligibility of an exporting country. Equivalence With Domestic State Inspection Systems Another comment noted that the 28 State inspection systems are required to be “at least equal to” the Federal inspection system, and that many federally-inspected plants have reported supervisory visits more frequently than the monthly requirement that will be eliminated for eligible exporting countries by the final rule. FSIS Response The Agency notes that, as it does not set a mandatory frequency for itself, it does not require a set frequency of supervisory visits from the “equal to” State inspection systems. Thus, there is no compelling reason for the Agency to require exporting countries to meet a specific frequency that is not mandatory for any domestic program. Supervisory visits in domestic establishments under Federal inspection occur at the frequency required by local conditions and by Agency concerns regarding the situation at a given plant. Thus the frequency of visits varies from plant to plant, but overall such visits occur less frequently than once a month. Definition of “Periodic” One comment asked if the Agency will define “periodic” and require uniformity among countries eligible to export meat and poultry products to the United States. FSIS Response As there is no domestic requirement for a specific frequency of supervisory visits to plants, “periodic” will mean a frequency determined by exporting countries as adequate to ensure that certified establishments continually meet FSIS equivalency requirements, as evaluated and verified by the Agency. As stated above, upon the effective date of this final rule, FSIS will send an official letter to each eligible country announcing the change from the monthly requirement and will request formal notice, in writing, of the eligible country's projected frequency of supervisory visits. Timely Information One comment asked whether the Agency has a mechanism for staying current with regulatory or procedural changes in exporting countries. FSIS Response The Agency has long maintained a system of exchanging official letters with trading partners to provide notice of any relevant changes in both regulations and inspection procedures. FSIS, furthermore, conducts an ongoing system of equivalence verification to update the original equivalence evaluation. One key element of this verification system is a recurring document analysis of the laws, regulations, and implementing policies of the foreign food regulatory system to ensure that an equivalent infrastructure is in place, and that timely notification of any relevant changes has been made through the system of official letters. As stated above, upon the effective date of this final rule, FSIS will send official letters to all eligible countries informing them of the change from the monthly requirement and requesting formal notice of their projected frequency of supervisory visits. The second key element of the equivalence verification process is the annual on-site food regulatory system audit conducted by FSIS technical specialists in every country that exports meat or poultry products to the United States. During these annual system audits, FSIS seeks evidence that the exporting country has instituted sanitary measures adequate to provide the same level of protection that is ensured by our domestic system. The system audit focuses on two essential components of safe food production, industry process control and government regulatory control. The frequency of periodic supervisory visits would be evaluated for adequacy by FSIS in the annual audits. The third component of equivalence verification is port-of-entry reinspection, where FSIS randomly samples meat and poultry products as they enter the United States to ensure that exporting country certificates are authentic and accurate, and that products meet all U.S. standards pertaining to safe, wholesome, unadulterated, and properly labeled and packaged product. Although records are maintained on each certified establishment, reinspection is designed to verify effectiveness of the foreign inspection system. Port-of-entry reinspection is directed by the Automated Import Information System (AIIS), a centralized computer database that stores daily reinspection results from all ports of entry for each country and for each establishment. When a shipment is presented for reinspection, the AIIS scans its existing records to determine whether the foreign country, the establishment, and the product are eligible for export to the United States. The shipment is refused entry if any component of eligibility is absent. Given these well-established mechanisms, and the additional FSIS request for notice of an exporting country's projected frequency of periodic supervisory visits, the Agency is confident that it will quickly become aware of any changes in an exporting country's regulatory system and practice. Terrorism One comment stated that eliminating the requirement for monthly supervisory visits could undercut the war on terrorism by loosening control of products destined for export to the United States. FSIS Response As described above, the inspection system of a country requesting eligibility to export meat and poultry products to the United States is analyzed intensively during the equivalence evaluation process, which includes a review of in-plant implementation of inspection system procedures. A country applying for eligibility must demonstrate that its inspection system, as implemented, includes features equivalent to those of the U.S. system before the country can be found equivalent. As stated above, upon the effective date of this final rule, FSIS will send an official letter to each eligible country announcing the change from the monthly requirement and requesting formal notice in writing of the eligible country's projected frequency of supervisory visits. FSIS will also request that each country explain why the proposed frequency will ensure that its system produces safe and wholesome product on an ongoing basis, and describe how the system will ensure that any immediate need for supervisory intervention will be recognized and met. To verify the continuing equivalence of an eligible exporting country, FSIS maintains a comprehensive system of import inspection controls as described above, which includes recurring document analysis of a foreign country's inspection system, annual on-site audits, and port-of-entry reinspection. During the Agency's annual audits of those foreign countries exporting meat, poultry, and egg products to the United States, information is provided to the exporting countries on the FSIS security guidelines for food processors and for the transportation and distribution of meat, poultry, and egg products. FSIS auditors also report to the appropriate inspection officials any potential threats that they observe during the audit. In these annual equivalence/verification audits, FSIS will evaluate the frequency of periodic supervisory visits for adequacy. FSIS has also developed strong internal resources for food defense that provide an extra margin of protection against potential terrorism involving the food supply. These resources include the Office of Food Defense and Emergency Response (OFDER), a dedicated, full-time staff whose sole responsibility is food security, and Import Surveillance Liaison Officers who are stationed around the country to augment the efforts of traditional FSIS inspectors assigned to import houses. The Agency, furthermore, participates in the Federal International Trade Data System (ITDS), a multi-department, multi-agency initiative establishing a single, automated system for sharing data on the inspection and certification of products moving in foreign commerce. With these notification and auditing mechanisms and other initiatives in place, FSIS believes it can verify that countries eligible to export meat and poultry products to the United States maintain, among other things, food defense procedures and practices that are equivalent to those of the United States. Executive Order 12866 and Regulatory Flexibility Act This rule has been reviewed under Executive Order 12866. It has been determined to be not significant for purposes of E.O. 12866 by the Office of Management and Budget (OMB). The main effect of this action is to give eligible countries the flexibility to structure their own supervisory programs as they deem necessary so as to ensure that establishments continue to meet the requirements for certification to export to the United States. This action will enable the United States to meet its obligation as a signatory to the World Trade Organization

(WTO)“Agreement on the Application of Sanitary and Phytosanitary Measures” not to impose import requirements on inspection systems or establishments in an exporting country that are more stringent than those applied domestically. No costs should ensue from this final action. Executive Order 12988 This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. When this final rule is adopted:

(1)All State and local laws and regulations that are inconsistent with this rule will be preempted;

(2)no retroactive effect will be given to this rule; and

(3)administrative proceedings will not be required before parties may file suit in court challenging this rule. Effect on Small Entities This action affects only how foreign countries perform inspection and will not have any effect on domestic establishments. Therefore, the Administrator, FSIS, has made a determination that this final rule will not have a significant impact on a substantial number of small entities, as defined by the Regulatory Flexibility Act (5 U.S.C. 601). Expected Effect on FSIS, Other Federal Agencies, State and Local Governments and Foreign Countries This final action is expected to have no effect upon FSIS or other Federal agencies. It is likely to have only minimal effects on foreign countries. The action will not affect State and local governments. Expected Environmental Effects Amending 9 CFR parts 327 and 381 to bring the frequency with which foreign inspection systems are required to make supervisory visits to certified establishments into agreement with the frequency with which the Agency makes supervisory visits to domestic establishments is an activity that will not have a significant individual or cumulative effect on the human environment. Therefore, this action is appropriately subject to the categorical exclusion from the preparation of an environmental assessment or environmental impact statement provided under 7 CFR 1b.4(6) of the U.S. Department of Agriculture regulations. Paperwork Requirements No new paperwork requirements are associated with this final rule. Foreign countries wanting to export meat and meat products to the United States are required to provide information to FSIS certifying that their inspection systems provide standards equivalent to those of the United States, and that the legal authority for the systems and their implementing regulations are equivalent to those of the United States, before they may start exporting such product to the United States. FSIS collects this information one time only. This information collection was approved under OMB number 0583-0094. The final rule contains no other paperwork requirements. Additional Public Notification Public awareness of all segments of rulemaking and policy development is important. Consequently, in an effort to ensure that the public and in particular minorities, women, and persons with disabilities, are aware of this final rule, FSIS will announce it on-line through the FSIS Web page located at *http://www.fsis.usda.gov/Regulations_&_Policies/2005_Interim_&_Final_Rules_Index/index.asp* . The Regulations.gov Web site is the central online rulemaking portal of the United States Government. It is being offered as a public service to increase participation in the Federal Government's regulatory activities. FSIS participates in Regulations.gov and will accept comments on documents published on the site. The site allows visitors to search by keyword or Department or Agency for rulemakings that allow for public comment. Each entry provides a quick link to a comment form so that visitors can type in their comments and submit them to FSIS. The Web site is located at *http://www.regulations.gov/* . FSIS also will make copies of this **Federal Register** publication available through the FSIS Constituent Update, which is used to provide information regarding FSIS policies, procedures, regulations, **Federal Register** notices, FSIS public meetings, recalls, and other types of information that could affect or would be of interest to our constituents and stakeholders. The update is communicated via Listserv, a free e-mail subscription service consisting of industry, trade, and farm groups, consumer interest groups, allied health professionals, scientific professionals, and other individuals who have requested to be included. The update also is available on the FSIS Web page. Through Listserv and the Web page, FSIS is able to provide information to a much broader, more diverse audience. In addition, FSIS offers an e-mail subscription service which provides automatic and customized access to selected food safety news and information. This service is available at *http://www.fsis.usda.gov/news_and_events/email_subscription/* . Options range from recalls to export information to regulations, directives and notices. Customers can add or delete subscriptions themselves and have the option to password protect their account. List of Subjects 9 CFR Part 327 Imported products. 9 CFR Part 381 Imported poultry products, poultry inspection. For the reasons discussed in the preamble, FSIS is amending 9 CFR parts 327 and 381, as follows: PART 327—IMPORTED PRODUCTS 1. The authority for part 327 continues to read as follows: Authority: 21 U.S.C. 601-695; 7 CFR 2.18, 2.53. 2. Section 327.2(a)(2)(iv)(A) is revised to read as follows: § 327.2 Eligibility of foreign countries for importation of products into the United States.

(a)* * *

(2)* * *

(iv)* * *

(A)Periodic supervisory visits by a representative of the foreign inspection system to each establishment certified in accordance with paragraph (a)(3) of this section to ensure that requirements referred to in paragraphs (a)(2)(ii)(A) through

(H)of this section are being met: Provided, That such visits are not required with respect to any establishment during a period when the establishment is not operating or is not engaged in producing products for exportation to the United States; PART 381—POULTRY PRODUCTS INSPECTION REGULATIONS 3. The authority for part 381 continues to read as follows: Authority: 7 U.S.C. 138f, 450; 21 U.S.C. 451-470; 7 CFR 2.18, 2.53. Subpart T—Imported Poultry Products 4. Section 381.196(a)(2)(iv)(A) is revised to read as follows: § 381.196 Eligibility of foreign countries for importation of products into the United States.

(a)* * *

(2)* * *

(iv)* * *

(H)of this section are being met: Provided, That such visits are not required with respect to any establishment during a period when the establishment is not operating or is not engaged in producing products for exportation to the United States; Done at Washington, DC, on July 31, 2006. Barbara J. Masters, Administrator. [FR Doc. E6-12565 Filed 8-2-06; 8:45 am] BILLING CODE 3410-DM-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2006-24786; Directorate Identifier 2006-NM-087-AD; Amendment 39-14702; AD 2006-16-02] RIN 2120-AA64 Airworthiness Directives; McDonnell Douglas Model DC-9-81 (MD-81), DC-9-82 (MD-82), DC-9-83 (MD-83), DC-9-87 (MD-87), and MD-88 Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. SUMMARY: The FAA is adopting a new airworthiness directive

(AD)for certain McDonnell Douglas Model DC-9-81 (MD-81), DC-9-82 (MD-82), DC-9-83 (MD-83), DC-9-87 (MD-87), and MD-88 airplanes. This AD requires installing a clamp, a bonding jumper assembly, and attaching hardware to the refueling manifold in the right wing refueling station area. This AD results from fuel system reviews conducted by the manufacturer. We are issuing this AD to prevent arcing on the in-tank side of the fueling valve during a lightning strike, which could result in an ignition source that could ignite fuel vapor and cause a fuel tank explosion. DATES: This AD becomes effective September 7, 2006. The Director of the Federal Register approved the incorporation by reference of a certain publication listed in the AD as of September 7, 2006. ADDRESSES: You may examine the AD docket on the Internet at *http://dms.dot.gov* or in person at the Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC. Contact Boeing Commercial Airplanes, Long Beach Division, 3855 Lakewood Boulevard, Long Beach, California 90846, Attention: Data and Service Management, Dept. C1-L5A (D800-0024), for service information identified in this AD. FOR FURTHER INFORMATION CONTACT: William Bond, Aerospace Engineer, Propulsion Branch, ANM-140L, FAA, Los Angeles Aircraft Certification Office, 3960 Paramount Boulevard, Lakewood, California 90712-4137; telephone

(562)627-5253; fax

(562)627-5210. SUPPLEMENTARY INFORMATION: Examining the Docket You may examine the airworthiness directive

(AD)docket on the Internet at *http://dms.dot.gov* or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone

(800)647-5227) is located on the plaza level of the Nassif Building at the street address stated in the ADDRESSES section. Discussion The FAA issued a notice of proposed rulemaking

(NPRM)to amend 14 CFR part 39 to include an AD that would apply to certain McDonnell Douglas Model DC-9-81 (MD-81), DC-9-82 (MD-82), DC-9-83 (MD-83), DC-9-87 (MD-87), and MD-88 airplanes. That NPRM was published in the **Federal Register** on May 17, 2006 (71 FR 28626). That NPRM proposed to require installing a clamp, a bonding jumper assembly, and attaching hardware to the refueling manifold in the right wing refueling station area. Comments We provided the public the opportunity to participate in the development of this AD. We received no comments on the NPRM or on the determination of the cost to the public. Conclusion We have carefully reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed. Costs of Compliance There are about 994 airplanes of the affected design in the worldwide fleet. This AD will affect about 573 airplanes of U.S. registry. The required actions will take about 2 work hours per airplane, at an average labor rate of $80 per work hour. Required parts will cost about $8 per airplane. Based on these figures, the estimated cost of this AD for U.S. operators is $96,264, or $168 per airplane. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that this AD:

(1)Is not a “significant regulatory action” under Executive Order 12866;

(2)Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

(3)Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The Federal Aviation Administration

(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **2006-16-02 McDonnell Douglas:** Amendment 39-14702. Docket No. FAA-2006-24786; Directorate Identifier 2006-NM-087-AD. Effective Date

(a)This AD becomes effective September 7, 2006. Affected ADs

(b)None. Applicability

(c)This AD applies to McDonnell Douglas Model DC-9-81 (MD-81), DC-9-82 (MD-82), DC-9-83 (MD-83), DC-9-87 (MD-87), and MD-88 airplanes, certificated in any category; as identified in Boeing Service Bulletin MD80-28-213, dated May 16, 2005. Unsafe Condition

(d)This AD results from fuel system reviews conducted by the manufacturer. We are issuing this AD to prevent arcing on the in-tank side of the fueling valve during a lightning strike, which could result in an ignition source that could ignite fuel vapor and cause a fuel tank explosion. Compliance

(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Electrical Bond Installation

(f)Within 60 months after the effective date of this AD, install a clamp, a bonding jumper assembly, and attaching hardware to the refueling manifold in the right wing refueling station area; in accordance with the Accomplishment Instructions of Boeing Service Bulletin MD80-28-213, dated May 16, 2005. Alternative Methods of Compliance (AMOCs) (g)(1) The Manager, Los Angeles Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

(2)Before using any AMOC approved in accordance with § 39.19 on any airplane to which the AMOC applies, notify the appropriate principal inspector in the FAA Flight Standards Certificate Holding District Office. Material Incorporated by Reference

(h)You must use Boeing Service Bulletin MD80-28-213, dated May 16, 2005, to perform the actions that are required by this AD, unless the AD specifies otherwise. The Director of the Federal Register approved the incorporation by reference of this document in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Contact Boeing Commercial Airplanes, Long Beach Division, 3855 Lakewood Boulevard, Long Beach, California 90846, Attention: Data and Service Management, Dept. C1-L5A (D800-0024), for a copy of this service information. You may review copies at the Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Room PL-401, Nassif Building, Washington, DC; on the Internet at *http://dms.dot.gov* ; or at the National Archives and Records Administration (NARA). For information on the availability of this material at the NARA, call

(202)741-6030, or go to *http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html* . Issued in Renton, Washington, on July 21, 2006. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E6-12298 Filed 8-2-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2006-24780; Directorate Identifier 2006-NM-069-AD; Amendment 39-14703; AD 2006-16-03] RIN 2120-AA64 Airworthiness Directives; McDonnell Douglas Model DC-10-10, DC-10-10F, DC-10-15, DC-10-30, DC-10-30F (KC-10A and KDC-10), DC-10-40, and DC-10-40F Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. SUMMARY: The FAA is adopting a new airworthiness directive

(AD)for certain McDonnell Douglas airplanes, identified above. This AD requires installing or replacing with improved parts, as applicable, the bonding straps between the metallic frame of the fillet and the wing leading edge ribs, on both the left and right sides of the airplane. This AD results from fuel system reviews conducted by the manufacturer. We are issuing this AD to reduce the potential of ignition sources inside fuel tanks in the event of a severe lightning strike, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane. DATES: This AD becomes effective September 7, 2006. The Director of the Federal Register approved the incorporation by reference of certain publications listed in the AD as of September 7, 2006. ADDRESSES: You may examine the AD docket on the Internet at *http://dms.dot.gov* or in person at the Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC. Contact Boeing Commercial Airplanes, Long Beach Division, 3855 Lakewood Boulevard, Long Beach, California 90846, Attention: Data and Service Management, Dept. C1-L5A (D800-0024), for service information identified in this AD. FOR FURTHER INFORMATION CONTACT: Samuel Lee, Aerospace Engineer, Propulsion Branch, ANM-140L, FAA, Los Angeles Aircraft Certification Office, 3960 Paramount Boulevard, Lakewood, California 90712-4137; telephone

(562)627-5262; fax

(562)627-5210. SUPPLEMENTARY INFORMATION: Examining the Docket You may examine the airworthiness directive

(800)647-5227) is located on the plaza level of the Nassif Building at the street address stated in the ADDRESSES section. Discussion The FAA issued a notice of proposed rulemaking

(NPRM)to amend 14 CFR part 39 to include an AD that would apply to certain McDonnell Douglas Model DC-10-10, DC-10-10F, DC-10-15, DC-10-30, DC-10-30F (KC-10A and KDC-10), DC-10-40, and DC-10-40F airplanes. That NPRM was published in the **Federal Register** on May 17, 2006 (71 FR 28619). That NPRM proposed to require installing or replacing with improved parts, as applicable, the bonding straps between the metallic frame of the fillet and the wing leading edge ribs, on both the left and right sides. Comments We provided the public the opportunity to participate in the development of this AD. We received no comments on the NPRM or on the determination of the cost to the public. Conclusion We have carefully reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed. Costs of Compliance There are about 457 airplanes of the affected design in the worldwide fleet. This AD will affect about 280 airplanes of U.S. registry. The required actions will take between 9 and 17 work hours per airplane, at an average labor rate of $80 per work hour. Required parts will cost between $3,720 and $4,169 per airplane. Based on these figures, the estimated cost of the AD is between $4,440 and $5,529 per airplane, or between $1,243,200 and $1,548,120 for the U.S.-registered fleet. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that this AD:

(1)Is not a “significant regulatory action” under Executive Order 12866;

(2)Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

(3)Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The Federal Aviation Administration

(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **2006-16-03 McDonnell Douglas:** Amendment 39-14703. Docket No. FAA-2006-24780; Directorate Identifier 2006-NM-069-AD. Effective Date

(a)This AD becomes effective September 7, 2006. Affected ADs

(b)None. Applicability

(c)This AD applies to McDonnell Douglas Model DC-10-10, DC-10-10F, DC-10-15, DC-10-30, DC-10-30F (KC-10A and KDC-10), DC-10-40, and DC-10-40F airplanes, certificated in any category; as identified in the applicable service bulletin listed in Table 1 of this AD. Table 1.—Service Bulletins McDonnell Douglas DC-10 Service Bulletin Revision level Date For airplanes with— 53-109 4 October 7, 1992 Extended wing-to-fuselage fillets. 53-111 3 August 24, 1992 Conventional wing-to-fuselage fillets. Unsafe Condition

(d)This AD results from fuel system reviews conducted by the manufacturer. We are issuing this AD to reduce the potential of ignition sources inside fuel tanks in the event of a severe lightning strike, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane. Compliance

(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Installation or Replacement

(f)Within 7,500 flight hours or 60 months after the effective date of this AD, whichever occurs earlier: Install or replace with improved parts, as applicable, the bonding straps between the metallic frame of the fillet and the wing leading edge ribs, on both the left and right sides of the airplane, in accordance with the Accomplishment Instructions of the applicable service bulletin identified in Table 1 of this AD. Alternative Methods of Compliance (AMOCs) (g)(1) The Manager, Los Angeles Aircraft Certification Office, FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

(h)You must use McDonnell Douglas DC-10 Service Bulletin 53-109, Revision 4, dated October 7, 1992; or McDonnell Douglas DC-10 Service Bulletin 53-111, Revision 3, dated August 24, 1992; as applicable, to perform the actions that are required by this AD, unless the AD specifies otherwise. The Director of the Federal Register approved the incorporation by reference of these documents in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Contact Boeing Commercial Airplanes, Long Beach Division, 3855 Lakewood Boulevard, Long Beach, California 90846, Attention: Data and Service Management, Dept. C1-L5A (D800-0024), for a copy of this service information. You may review copies at the Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Room PL-401, Nassif Building, Washington, DC; on the Internet at *http://dms.dot.gov;* or at the National Archives and Records Administration (NARA). For information on the availability of this material at the NARA, call

(202)741-6030, or go to *http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.* Issued in Renton, Washington, on July 21, 2006. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E6-12299 Filed 8-2-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. 2004-NE-10-AD; Amendment 39-14704; AD 2006-16-04] RIN 2120-AA64 Airworthiness Directives; Rolls-Royce Corporation (Formerly Allison Engine Company, Allison Gas Turbine Division, and Detroit Diesel Allison)

(RRC)250-B and 250-C Series Turboshaft and Turboprop Engines AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Final rule. SUMMARY: The FAA is superseding an existing airworthiness directive

(AD)for RRC 250-B and 250-C series turboshaft and turboprop engines. That AD currently requires a onetime inspection of the fuel nozzle screen for contamination, and if contamination is found, inspection and cleaning of the entire aircraft fuel system before further flight. That AD also requires replacing the fuel nozzle with a new design fuel nozzle, at the next fuel nozzle overhaul or by June 30, 2006, whichever occurs first. This AD requires the same actions, but would add additional part numbers (P/Ns) to the list of affected fuel nozzles. This AD would also explain that the existing AD, as worded, allows certain part number (P/N) fuel nozzles back into service. Those fuel nozzles must not be allowed back into service. This AD is prompted by the discovery that several P/Ns of fuel nozzles were inadvertently left out of AD 2004-24-09. We are issuing this AD to minimize the risk of sudden loss of engine power and uncommanded shutdown of the engine due to fuel contamination and collapse of the screen in the fuel nozzle. DATES: This AD becomes effective September 7, 2006. ADDRESSES: You may examine the AD docket at the FAA, New England Region, Office of the Regional Counsel, 12 New England Executive Park, Burlington, MA. FOR FURTHER INFORMATION CONTACT: John Tallarovic, Aerospace Engineer, Chicago Aircraft Certification Office, FAA, 2300 East Devon Avenue, Des Plaines, IL 60018-4696; telephone

(847)294-8180; fax

(847)294-7834. SUPPLEMENTARY INFORMATION: The FAA proposed to amend 14 CFR part 39 with a proposed airworthiness directive (AD). The proposed AD applies to RRC 250-B and 250-C series turboshaft and turboprop engines. We published the proposed AD in the **Federal Register** on October 18, 2005 (70 FR 60453). That action proposed to require a onetime inspection of the fuel nozzle screen for contamination, and if contamination is found, inspection and cleaning of the entire aircraft fuel system before further flight. That AD also proposed to require replacing the fuel nozzle with a new design fuel nozzle, at the next fuel nozzle overhaul. Examining the AD Docket You may examine the AD Docket (including any comments and service information), by appointment, between 8 a.m. and 4:30 p.m., Monday through Friday, except Federal holidays. See ADDRESSES for the location. Comments We provided the public the opportunity to participate in the development of this AD. We have considered the comments received. Listing of Rule in DMS One commenter believes that we should have listed the proposed action in “dms”. We do not agree. Although the commenter did not define “dms,” the only relevant system is the Docket Management System (DMS). When we began this proposed rule early in 2004, we were not using the DMS and we could not list it in the system. Change Goodrich Aerospace to Delavan One commenter notes that Goodrich Aerospace acquired the company with the Parts Manufacturer Approval

(PMA)cited in the proposed AD (Delavan) and suggests changing the name in the final rule. We agree and have changed the name to Goodrich Delavan (Delavan was misspelled in the proposed rule.) Combine Tables 3 and 4 One commenter requests we combine Tables 3 and 4. The commenter believes that the nozzles listed in Table 3 manufactured under the PMA, which require an inspection within 50 operating hours, should be treated in the same manner as the nozzles listed in Table 4, which do not require an inspection until 150 operating hours. We do not agree. Operators have already inspected the nozzles listed in Table 4 under the requirements of AD 2004-24-09. After we published that AD, we found that we omitted some fuel nozzle part numbers from the list of parts requiring inspection. This proposed rule adds those omitted part numbers and includes both Rolls-Royce Corporation and PMA parts. Because we omitted these parts from AD 2004-24-09, operators have not inspected them yet. Based on that, we intentionally shortened the compliance time for inspecting them. We have not changed this AD. Correct Applicability Errors One commenter asks that we correct errors and omissions in the listing of aircraft models on which the affected engines are installed in Table 2. We agree and we have corrected this information in Table 2 and in the Applicability. Change in Required Compliance Time We have changed the compliance time required in paragraph

(h)of the proposed rule from, “At the next fuel nozzle overhaul after the effective date of this AD, or by June 30, 2006, whichever occurs first * * *”, to “At the next fuel nozzle overhaul after the effective date of this AD * * *”, because the June 30, 2006 date has past. Conclusion We have carefully reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting the AD with the changes described previously. We have determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD. Costs of Compliance We estimate that this AD will affect 10,000 engines installed on aircraft of U.S. registry. We also estimate that it will take about one work-hour per engine to perform the required actions, and that the average labor rate is $65 per work-hour. In addition, operators can either replace the fuel nozzle with a new one at a cost of about $2,595 or have the existing nozzle overhauled at a cost of about $850. We estimate that about 80 percent of the fuel nozzles will be overhauled and 20 percent will be replaced with a new nozzle. Therefore, we estimate that the required parts will cost, on average, about $1,200 per engine. Based on these figures, we estimate the total cost of the AD to U.S. operators to be $12,650,000. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in subtitle VII, part A, subpart III, section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that this AD:

(1)Is not a “significant regulatory action” under Executive Order 12866;

(2)Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

(3)Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a summary of the costs to comply with this AD and placed it in the AD Docket. You may get a copy of this summary by sending a request to us at the address listed under ADDRESSES . Include “AD Docket No. 2004-NE-10-AD” in your request. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the Federal Aviation Administration amends 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by removing Amendment 39-13885 (69 FR 69807, December 1, 2004) and by adding a new airworthiness directive, Amendment 39-14704, to read as follows: **2006-16-04 Rolls-Royce Corporation (formerly Allison Engine Company, Allison Gas Turbine Division, and Detroit Diesel Allison):** Amendment 39-14704. Docket No. 2004-NE-10-AD. Effective Date

(a)This airworthiness directive

(AD)becomes effective September 7, 2006. Affected ADs

(b)This AD supersedes AD 2004-24-09, Amendment 39-13885. Applicability

(c)This AD applies to Rolls-Royce Corporation (formerly Allison Engine Company, Allison Gas Turbine Division, and Detroit Diesel Allison)

(RRC)250-B and 250-C series turboshaft and turboprop engines in the following Table 1: Table 1.—250-B and 250-C Series Turboshaft and Turboprop Engines Affected -B15A -B15E -B15G -B17 -B17B -B17C -B17D -B17E -B17F -B17F/1 -B17F/2 -C10 -C10B -C10D -C18 -C18A -C18B -C18C -C20 -C20B -C20C -C20F -C20J -C20R -C20R/1 -C20R/2 -C20R/4 -C20S -C20W -C28 -C28B -C28C -C30 -C30G -C30G/2 -C30M -C30P -C30R -C30R/1 -C30R/3 -C30R/3M -C30S -C30U -C40B -C47B -C47M These engines are installed on, but not limited to, the aircraft listed in the following Table 2: Table 2.—Engines Installed on, But Not Limited To Manufacturer Model AeroSpace Technologies of Australia Pty Ltd N22B, N22S, and N24A. Agusta A109, A109A, A109AII, and A109C. Arrow Falcon Exporters OH-58A, OH-58A+, and OH-58C. Bell Helicopter Textron 206A, 206A-1, 206B, 206L, 206L-1, 206L-3, 206L-4, 230, 407, and 430. B-N Group BN-2T and BN-2T-4R. Enstrom Helicopter TH28, 480; and 480B. Eurocopter Canada Limited BO 105 LS A-3. Eurocopter Deutschland BO-105A, BO-105C, BO-105LS A-1, and BO-105S. Eurocopter France AS355E, AS355F, AS355I, and AS355F2. FH-1100 Manufacturing Corporation 100, 420, and MX-7-420A. Garlick Helicopters OH-58A, OH-58A+, OH-58C; Maule zm-7-420A, MT-7-420, MX-7-420, MX-7-420A. MD Helicopters Inc 369, 369A, 369D, 369E, 369F, 369FF, 369H, 369HE, 369HM, 369HS, 500N, and 600N. San Joaquin Helicopters OH-58A, OH-58A+, and OH-58C. Schweizer TH269D. SIAI Marchetti s.r.l SF600 and SF600A. Sikorsky Aircraft Corporation S-76A. Vulcanair S.p.A AP68TP 300, and AP68TP 600. Unsafe Condition

(d)This AD is prompted by the discovery that several part numbers (P/Ns) of fuel nozzles were inadvertently left out of AD 2004-24-09. That AD, as worded, allows certain P/N fuel nozzles back into service. Those fuel nozzles must not be allowed back into service. We are issuing this AD to minimize the risk of sudden loss of engine power and uncommanded shutdown of the engine due to fuel contamination and collapse of the screen in the fuel nozzle. Compliance

(e)You are responsible for having the actions required by this AD performed within the compliance times specified unless the actions have already been done.

(f)Perform a onetime inspection of the screens in fuel nozzles as follows:

(1)For fuel nozzles with a P/N listed in Table 3 of this AD, inspect the screen for contamination within 50 operating hours after the effective date of this AD. Table 3.—Fuel Nozzles To Be Inspected Within 50 Operating Hours Manufacturer P/N Corresponding RRC vendor P/N RRC 6874959 6894610 6898531 5232815 5233465 5233585 Goodrich Delavan (Parts Manufacturer Approval (PMA)) 47069 47101 49445 N/A N/A N/A

(2)For fuel nozzles with a P/N listed in Table 4 of this AD, inspect the screen for contamination within 150 operating hours after January 5, 2005. Table 4.—Fuel Nozzles To Be Inspected Within 150 Operating Hours Manufacturer P/N Corresponding RRC vendor P/N RRC 6852020 6890917 6899001 5232480 5233333 5233600

(g)If you find contamination on the screen, inspect and clean the entire aircraft fuel system before further flight.

(h)At the next fuel nozzle overhaul after the effective date of this AD, do the following:

(1)Remove from service fuel nozzles listed in Table 3 and Table 4 of this AD.

(2)Replace with a serviceable fuel nozzle. Definition

(i)For the purposes of this AD, a serviceable fuel nozzle is defined as a nozzle that has a P/N not specified in, or addressed by, this AD. Previous Credit

(j)Previous credit is given for onetime inspections of fuel nozzles, RRC P/Ns 6852020, 6890917, and 6899001 using AD 2004-24-09. Alternative Methods of Compliance

(k)The Manager, Chicago Aircraft Certification Office, has the authority to approve alternative methods of compliance for this AD if requested using the procedures found in 14 CFR 39.19. Related Information

(l)Information related to the subject of this AD can be found in Rolls-Royce Corporation Alert Commercial Engine Bulletins (CEBs), all at Revision 1, and all dated August 30, 2004, listed in the following Table 5: Table 5.—Related Alert Commercial Engine Bulletins CEB-A-313 CEB-A-73-5029 CEB-A-73-2075 CEB-A-73-6041 CEB-A-1394 TP CEB-A-183 CEB-A-73-3118 TP CEB-A-1336 CEB-A-73-4056 TP CEB-A-73-2032 Issued in Burlington, Massachusetts, on July 27, 2006. Francis A. Favara, Manager, Engine and Propeller Directorate, Aircraft Certification Service. [FR Doc. E6-12420 Filed 8-2-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Parts 510 and 529 New Animal Drugs; Change of Sponsor; Isoflurane AGENCY: Food and Drug Administration, HHS. ACTION: Final rule. SUMMARY: The Food and Drug Administration

(FDA)is amending the animal drug regulations to reflect a change of sponsor for an abbreviated new animal drug application (ANADA) for isoflurane, U.S.P., from Rhodia UK Ltd. to Nicholas Piramal India Ltd. UK. DATES: This rule is effective August 3, 2006. FOR FURTHER INFORMATION CONTACT: David R. Newkirk, Center for Veterinary Medicine (HFV-100), Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855, 301-827-6967, e-mail: *david.newkirk@fda.hhs.gov* . SUPPLEMENTARY INFORMATION: Rhodia UK Ltd., P.O. Box 46, St. Andrews Rd., Avonmouth, Bristol BS11 9YF, England, UK, has informed FDA that it has transferred ownership of, and all rights and interest in, ANADA 200-237 for isoflurane, U.S.P., to Nicholas Piramal India Ltd. UK, 1st Floor, Alpine House, Unit II, Honeypot Lane, London, NW99RX, England, UK. Accordingly, the regulations are amended in 21 CFR 529.1186 to reflect this change of sponsorship and a current format. Following these changes of sponsorship, Rhodia UK Ltd. is no longer the sponsor of an approved application. In addition, Nicholas Piramal India Ltd. UK is not currently listed in the animal drug regulations as a sponsor of an approved application. Accordingly, 21 CFR 510.600(c) is being amended to remove the entries for Rhodia UK Ltd. to add entries for Nicholas Piramal India Ltd. UK. This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808. List of Subjects 21 CFR Part 510 Administrative practice and procedure, Animal drugs, Labeling, Reporting and recordkeeping requirements. 21 CFR Part 529 Animal drugs. Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR parts 510 and 529 are amended as follows: PART 510—NEW ANIMAL DRUGS 1. The authority citation for 21 CFR part 510 continues to read as follows: Authority: 21 U.S.C. 321, 331, 351, 352, 353, 360b, 371, 379e. 2. In § 510.600, in the table in paragraph (c)(1), alphabetically add an entry for “Nicholas Piramal India Ltd. UK” and remove the entry for “Rhodia UK Limited”; and in the table in paragraph (c)(2) remove the entry for “059258” and numerically add an entry for “066112” to read as follows: § 510.600 Names, addresses, and drug labeler codes of sponsors of approved applications.

(c)* * *

(1)* * * Firm name and address Drug labeler code * * * * * Nicholas Piramal India Ltd. UK, 1st Floor, Alpine House, Unit II, Honeypot Lane, London, NW99RX, England, UK 066112 * * * * *

(2)* * * Drug labeler code Firm name and address * * * * * 066112 Nicholas Piramal India Ltd. UK, 1st Floor, Alpine House, Unit II, Honeypot Lane, London, NW99RX, England, UK * * * * * PART 529—OTHER DOSAGE FORM NEW ANIMAL DRUGS 3. The authority citation for 21 CFR part 529 continues to read as follows: Authority: 21 U.S.C. 360b. 4. In § 529.1186, in paragraph (b), remove “059258” and numerically add “066112”; and revise paragraph (a), the introductory text of paragraph (c), and paragraph (c)(3) to read as follows: § 529.1186 Isoflurane.

(a)*Specifications* . The drug is a clear, colorless, stable liquid.

(c)*Conditions of use* . Administer by inhalation:

(3)*Limitations* . Do not use in horses intended for human consumption. Federal law restricts this drug to use by or on the order of a licensed veterinarian. Dated: July 24, 2006. Bernadette A. Dunham, Deputy Director, Office of New Animal Drug Evaluation, Center for Veterinary Medicine. [FR Doc. E6-12570 Filed 8-2-06; 8:45 am] BILLING CODE 4160-01-S DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 520 Oral Dosage Form New Animal Drugs; Kanamycin, Bismuth Subcarbonate, Activated Attapulgite AGENCY: Food and Drug Administration, HHS. ACTION: Final rule; technical amendment. SUMMARY: The Food and Drug Administration

(FDA)is amending the animal drug regulations to remove inactive ingredients from the specifications for an oral suspension and for tablets containing kanamycin, bismuth subcarbonate, and activated attapulgite; and to consolidate and reformat these sections. These actions are being taken to improve the accuracy and readability of the animal drug regulations. DATES: *This rule is effective August 3, 2006.* FOR FURTHER INFORMATION CONTACT: George K. Haibel, Center for Veterinary Medicine (HFV-6), Food and Drug Administration, 7519 Standish Pl., Rockville, MD 20855, 301-827-4567, e-mail: *george.haibel@fda.hhs.gov* . SUPPLEMENTARY INFORMATION: FDA is amending the animal drug regulations in part 520 (21 CFR part 520) in §§ 520.1204 and 520.1205 to remove aminopentamide hydrogen sulfate and pectin from the specifications for an oral suspension and for tablets containing kanamycin, bismuth subcarbonate, and activated attapulgite. These ingredients have been declared inactive or have been removed from the formulations. In addition, these sections are being reformatted and consolidated. These actions are being taken to improve the accuracy and readability of the animal drug regulations. This rule does not meet the definition of “rule”in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808. List of Subjects in 21 CFR Part 520 Animal drugs. Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR part 520 is amended as follows: PART 520—ORAL DOSAGE FORM NEW ANIMAL DRUGS 1. The authority citation for 21 CFR part 520 continues to read as follows: Authority: 21 U.S.C. 360b. 2. In § 520.1204, revise the section heading and paragraphs

(a)and

(c)to read as follows: § 520.1204 Kanamycin, bismuth subcarbonate, activated attapulgite .

(a)*Specifications* —(1) Each 5 milliliters

(mL)of suspension contains 100 milligrams

(mg)kanamycin (as the sulfate), 250 mg bismuth subcarbonate, and 500 mg activated attapulgite (aluminum magnesium silicate).

(2)Each tablet contains 100 mg kanamycin (as the sulfate), 250 mg bismuth subcarbonate, and 500 mg activated attapulgite.

(c)*Conditions of use in dogs* —(1) *Amount* . 5 mL of suspension or 1 tablet per 20 pounds body weight every 8 hours. Maximum dose: 5 mL of suspension or 3 tablets every 8 hours. Dogs under 10 pounds: 2.5 mL of suspension or 1/2 tablet every 8 hours. A recommended initial loading dose should be twice the amount of a single dose.

(2)*Indications for use* . For the treatment of bacterial enteritis caused by organisms susceptible to kanamycin and the symptomatic relief of the associated diarrhea.

(3)*Limitations* . Federal law restricts this drug to use by or on the order of a licensed veterinarian. § 520.1205 [Removed] 3. Remove § 520.1205. Dated: July 21, 2006. Daniel G. McChesney, Director, Office of Surveillance and Compliance, Center for Veterinary Medicine. [FR Doc. E6-12568 Filed 8-2-06; 8:45 am] BILLING CODE 4160-02-S DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9279] RIN 1545-BF86 Reporting Rules for Widely Held Fixed Investment Trusts AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final and Temporary regulations. SUMMARY: This document contains final and temporary regulations amending § 1.671-5, a provision which provides reporting rules for widely held fixed investment trusts (WHFITs). These regulations clarify and simplify reporting for trustees and middlemen of non-mortgage widely held fixed investment trusts (NMWHFITs). The text of these final and temporary regulations also serves, in part, as the text of the proposed regulations set forth in the notice of proposed rulemaking (REG-125071-06) on this subject in this issue of the **Federal Register** . DATES: *Effective Date:* These regulations are effective July 28, 2006. *Applicability Date:* For dates of applicability see § 1.671-5(m). FOR FURTHER INFORMATION CONTACT: Faith Colson, 202-622-3060 (not a toll-free number). SUPPLEMENTARY INFORMATION: Paperwork Reduction Act These final and temporary regulations amend § 1.671-5. The collection of information contained in these regulations is in § 1.671-5 and has been previously reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) under control number 1545-1540. Response to this collection of information is mandatory. This information is required to be reported to beneficial owners of trust interests to enable them to correctly report their share of the items of income, deduction, and credit of the WHFIT in which they have invested. This information is also required to be reported to the IRS to enable the IRS to verify that trustees and middlemen are accurately reporting information to beneficial owners of trust interests and that beneficial owners are properly reporting their ownership of a trust interest. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget. Books or records relating to a collection of information must be retained as long as their contents might become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Background This document contains amendments to 26 CFR part 1. On January 24, 2006, the Internal Revenue Service

(IRS)and the Treasury Department published final regulations (TD 9241) (final regulations) under § 1.671-5 in the **Federal Register** (71 FR 4002) providing reporting rules for WHFITs. On February 23, 2006, in response to comments received subsequent to the publication of the final regulations, the IRS and the Treasury Department issued Notice 2006-29 (2006-12 I.R.B. 644). Notice 2006-29 informed trustees and middlemen of NMWHFITs that § 1.671-5 would be amended to extend the availability of the qualified NMWHFIT exception (discussed in section I) beyond February 23, 2006, the cut-off date provided in the final regulations for funding a NMWHFIT that satisfied the exception, and to clarify the application of certain provisions in the final regulations to NMWHFITs. On May 25, 2006, the IRS and Treasury Department issued Notice 2006-30 (2006-24 I.R.B. 1044) stating that the IRS and the Treasury Department expected to issue the additional guidance under § 1.671-5 discussed in Notice 2006-29 in the near future but that such guidance would not be issued prior to the expiration of the extended cut-off date for the qualified NMWHFIT exception in Notice 2006-29. Accordingly, Notice 2006-30 extended the cut-off date for the availability of the qualified NMWHFIT exception in Notice 2006-29 for an additional 60 days. These temporary regulations extend the availability of the qualified NMWHFIT exception to the dates provided in Notice 2006-30 and clarify the NMWHFIT reporting rules as described in Notice 2006-29. These temporary regulations also simplify the application of § 1.671-5 as it applies to NMWHFIT sales and dispositions as well as sales or redemptions of trust interests in an equity trust (a trust, substantially all of whose income is comprised of dividends). Summary and Explanation of Revisions I. The Qualified NMWHFIT Exception In general, under the final regulations, trustees and middlemen of NMWHFITs are required to report information regarding market discount, bond premium, sales and dispositions of trust assets, redemptions, and sales of trust interests. Trustees and middlemen of NMWHFITs that satisfy the qualified NMWHFIT exception in § 1.671-5(c)(2)(iv)(E) are, however, excepted from reporting market discount and bond premium and are permitted to use the simplified reporting rules for sales and dispositions of trust assets in § 1.671-5(c)(2)(iv)(B) and the simplified reporting rules for sales or redemptions of trust interests in § 1.671-5(c)(2)(v)(C). As provided in Notice 2006-29 and subsequently modified in Notice 2006-30, § 1.671-5T(c)(2)(iv)(E) of these final and temporary regulations provides that the qualified NMWHFIT exception is satisfied if the calendar year for which the trustee is reporting begins before January 1, 2011, and the NMWHFIT meets any of the following requirements:

(1)The NMWHFIT has a start-up date as defined in § 1.671-5(b)(19) before February 23, 2006;

(2)the registration statement for the NMWHFIT becomes effective under the Securities Act of 1933 (15 U.S.C. 77a) (Securities Act of 1933) and trust interests are offered for sale to the public before February 23, 2006; or

(3)the registration statement of the NMWHFIT becomes effective under the Securities Act of 1933 and trust interests are offered for sale to the public on or after February 23 and before July 31, 2006, and the NMWHFIT is fully funded before October 1, 2006. The IRS and the Treasury Department have also received comments suggesting that the January 1, 2011 cut-off date be extended or eliminated. The IRS and the Treasury Department are not adopting that suggestion. II. Availability of the NMWHFIT Safe Harbor Section 1.671-5(f) provides a reporting safe harbor for NMWHFITs. If trustees and middlemen report consistently with the safe harbor, trustees and middlemen are deemed to have provided information in a manner that enables a trust interest holder to reasonably accurately report the items of income, deduction, and credit of the trust on the trust interest holder's own federal income tax return. Section 1.671-5(f)(1)(i) provides that if substantially all of a NMWHFIT's income is from dividends (as defined in section 6042(b) and the regulations thereunder) or interest (as defined in section 6049(b) and the regulations thereunder) and all trust interests have identical value and rights, a NMWHFIT may report under the safe harbor in § 1.671-5(f). Commentators have expressed concern that, if a trustee of a NMWHFIT must sell or dispose of a significant number of trust assets and trust sales proceeds are included in the determination of whether “substantially all” of a trust's income is from interest or dividends, the NMWHFIT will be ineligible for the safe harbor reporting rules in § 1.671-5(f). To address this concern, § 1.671-5T(f)(1)(i) of the final and temporary regulations provides that trust sales proceeds are to be ignored in determining whether a NMWHFIT is eligible to report under the NMWHFIT safe harbor in § 1.671-5(f). Accordingly, a NMWHFIT may be eligible to report under the NMWHFIT safe harbor even if it has significant trust sales proceeds from the sale or disposition of trust assets. Commentators also noted that § 1.671-5(f)(1)(i)( *1* ) refers to section 6049(b) and the definition of interest in sectional 6049(b) does not include interest that is exempt from tax under section 103 of the Internal Revenue Code. These commentators were concerned that if a NMWHFIT's income is from tax-exempt interest, the NMWHFIT would not be eligible to report under the NMWHFIT safe harbor reporting rules. To address this concern, § 1.671-5T(f)(1)(i)(A)( *1* ) of the final and temporary regulations does not refer to sections 6042(b) and 6049(b) and the regulations thereunder. Accordingly, NMWHFITs whose income is from taxπexempt interest, may be eligible to report under the NMWHFIT safe harbor reporting rules. III. Simplified Reporting of Sales and Redemptions of Trust Interests for Equity Trusts Section 1.671-5(c)(2)(v) requires trustees and middlemen to provide information regarding the income that is attributable to a redeeming, selling or purchasing beneficial owner up to the date of the sale or redemption of a trust interest. Section 1.671-5(c)(2)(v)(C) provides an exception to this rule for NMWHFITs if substantially all their income is comprised of dividends (equity trusts) and the NMWHFIT is required by its governing document to distribute income at least monthly. Commentators reported that some equity trusts do not receive significant dividend income and that it would not be feasible for these trusts to make monthly distributions. These commentators suggested that there be a *de minimis* exception to the requirement that the trust make monthly distributions. Accordingly, § 1.671-5T(c)(2)(v)(C) provides that a NMWHFIT will be considered to have satisfied the requirement that it make monthly distributions notwithstanding the fact that, although the governing document requires monthly distributions, the governing document of the NMWHFIT also permits the trustee to forego making its normally required monthly distribution if the cash held for distribution is less than 0.1% of the net asset value of the trust (aggregate fair market value of the trust's assets less the trust's liabilities) as of the date that the amount of the monthly distribution is required to be determined. Commentators suggested various other modifications to the § 1.675(c)(2)(v)(C) exception; however, the IRS and Treasury Department believe that the modification adopted above addresses the majority of the commentators’ concerns while maintaining the integrity of the reporting information to be provided under § 1.671-5. Similar to the “substantially all” test for eligibility to use the NMWHFIT safe harbor discussed in section II above, commentators have expressed concern that if a NMWHFIT has significant sales and dispositions and trust sales proceeds are included for the purpose of determining if “substantially all” of the NMWHFIT's income is from dividends, then the NMWHFIT will not qualify for this exception even though the NMWHFIT only holds assets that produce dividend income. To address this concern, § 1.671-5T(c)(2)(v)(C) of the final and temporary regulations provides that proceeds received by a NMWHFIT from the sale or disposition of trust assets are to be ignored for the purpose of determining whether an equity trust is eligible to report under that paragraph. IV. Simplified Reporting for Certain NMWHFIT Sales and Dispositions In addition to the qualified NMWHFIT exception, the final regulations provide that the trustees of NMWHFITs that meet the general *de minimis* test in § 1.671-5(c)(2)(iv)(D)( *1* ) are only required, under § 1.671-5(c)(2)(iv)(B), to provide information regarding the amount of trust sales proceeds distributed to a trust interest holder. The reason for the *de minimis* exception, as stated in the preamble to the final regulations, is that the IRS and the Treasury Department believe that if a NMWHFIT only sells or disposes of assets infrequently, although there will be some deferral of gains and losses if sales and dispositions are not fully reported, the deferral is acceptable, in light of the burden of fully, accurately reporting the sales and dispositions. Commentators reported that trustees of NMWHFITs frequently have to sell trust assets to obtain cash to effect redemptions. These commentators indicated that because of certain securities laws, trustees of many NMWHFITs must redeem trust interests every time an interest is tendered for redemption. Trustees have no control over the number of trust interests tendered for redemption and as a result, have no control over the number of corresponding sales of trust assets to obtain cash for these redemptions. Because of these sales to effect redemptions, many NMWHFITs will also not be able to meet the general *de minimis* test in § 1.671-5(c)(2)(iv)(D)( *1* ). If a NMWHFIT does not meet the general *de minimis* test, trustees and middlemen must provide information regarding the amount of trust sales proceeds that are attributable to a trust interest holder, and information that will enable a trust interest holder to allocate with reasonable accuracy a portion of its basis and a portion of its market discount or premium to the assets sold. Commentators indicated that, under the final regulations, a significant number of NMWHFITs do not qualify for the reduced reporting in § 1.671-5(c)(2)(iv)(B) and that as a result, many investors will be provided with more information than they can accurately process and trustees and middlemen will be subject to the significant reporting costs of supplying this information. These commentators requested that the final regulations be amended to provide for reduced reporting for other situations in which it will have little or no compliance impact. In response to these comments, the IRS and the Treasury Department provide the following modifications to the sales and disposition reporting rules for NMWHFITs in the final regulations: 1. NMWHFIT Final Calendar Year Exception Commentators requested that the IRS and Treasury Department extend the simplified reporting in § 1.671-5(c)(2)(iv)(B) to the final calendar year of a NMWHFIT regardless of whether the *de minimis* test or the qualified NMWHFIT exception is satisfied. The commentators reported that for a significant number of NMWHFITs, 95% of a trustee's sales of assets to effect redemptions occur during the last three months of the NMWHFIT. The commentators asserted that there would not be significant deferral of gains or losses on sales or dispositions of assets by NMWHFITs in their final calendar year if information regarding the sales and dispositions of trust assets during these final months were not communicated to non-redeeming trust interest holders because the non-redeeming trust interest holders would be cashing out their investment during that calendar year. Accordingly, § 1.671-5T(c)(2)(iv)(F) of the final and temporary regulations provide that all NMWHFITs qualify for the simplified reporting in § 1.671-5T(c)(2)(iv)(B) in the final calendar year of the NMWHFIT, regardless of whether the NMWHFIT has otherwise satisfied the *de minimis* test, provided that a trust interest holder cannot roll-over its investment in the NMWHFIT to another WHFIT. 2. Pro-Rata Sale Exception Commentators also requested that pro-rata sales of trust assets be excepted from reporting. The commentators contended that trustees generally sell a redeeming trust interest holder's pro-rata share of the trust assets to effect a redemption so that there is no change in the investments of the non-redeeming trust interest holders and therefore little or no compliance benefit of reporting to the non-redeeming trust interest holders. Accordingly, the commentators requested that pro-rata sales of trust assets to effect redemptions be excepted from the reporting requirements of § 1.671-5(c)(2)(iv). In response to this request, § 1.671-5T(c)(2)(iv)(G) of the final and temporary regulations provides that a pro-rata sale of a trust asset to effect a redemption is not required to be reported under § 1.671-5. A pro-rata sale of a trust asset occurs when

(1)a trust interest holder tenders one or more trust interests for redemption;

(2)the trustee sells the pro-rata share of a trust asset that is deemed to be owned by the trust interest holder as a result of the trust interest holder's ownership of the trust interest or interests tendered for redemption;

(3)the trustee engages in the sale solely to obtain cash that is immediately distributed to the redeeming trust interest holder as a result of the redemption; and

(4)the redemption is reported as required under § 1.671-5(c)(2)(v). Commentators strongly urged the IRS and the Treasury Department to except NMWHFITs with a duration of no more than 15 months and that span no more than two calendar years (short-term NMWHFITs) from all reporting of sales and dispositions of trust assets. The IRS and the Treasury Department believe that the NMWHFIT final year exception, discussed in section IV(1), adequately provides reporting relief for most short-term NMWHFITs for the sales and dispositions of trust assets to effect redemptions that a trustee must make during the final three months of the NMWHFIT. Further, § 1.671-5T(b)(21) provides an amended definition of trust sales proceeds excluding the gross proceeds paid to a NMWHFIT for a *pro-rata* sale of a trust asset to effect a redemption from the definition of trust sales proceeds. The effect of this change in the definition of trust sales proceeds is to exclude the proceeds from a pro- *rata* sale of a trust asset to effect a redemption when determining whether a trust has met the *de minimis* test. Since only the proceeds from non *pro-rata* sales of trust assets are considered for purposes of determining whether a NMWHFIT meets the *de minimis* test, more trusts will meet the *de minimis* test and qualify for the reduced reporting in § 1.671-5T(c)(2)(iv)(B). The IRS and the Treasury Department believe that the combined application of the pro-rata sales exception, the revised definition of trust sales proceeds, and the *de minimis* test adequately address the commentators’ concerns regarding sales and dispositions of trust assets by trustees of short-term NMWHFITs during the first year of the trust. Commentators also suggested that there be a reporting exception for when a trustee engages in a non pro-rata sale of a trust asset because the redeeming trust interest holder is only deemed to own a fractional share of a trust asset or because market conditions or restrictions prevent a pro-rata sale of a trust asset. The IRS and the Treasury Department believe that this issue is also adequately addressed by the combined application of the pro-rata sale exception, the revised definition of trust sales proceeds and the *de minimis* test. Effective Date These amendments are effective July 28, 2006. The amendments are applicable to the reporting required under § 1.671-5 as of January 1, 2007 (see § 1.671-5(m)) and will be applied as though these amendments were included in TD 9241. Special Analysis These regulations are necessary to provide trustees and middlemen of NMWHFITs with immediate guidance on the application of the final regulations so they can take measures necessary to be able to comply with the final regulations on their January 1, 2007, effective date. Additionally, the IRS and the Treasury Department have published Notice 2006-29 and Notice 2006-30 indicating that § 1.671-5 would be amended as provided in these temporary regulations and received comments regarding the application of § 1.671-5 from trustees and middlemen of NMWHFITs. Accordingly, good cause is found for dispensing with notice and public comment pursuant to 5 U.S.C. 553(b)(B)(3). The final and temporary regulations are applicable more than 30 days after they are published in the **Federal Register** and accordingly, no exemption is required under 5 U.S.C. 553(d). For the applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6) refer to the Special Analysis section of the preamble to the cross-referenced notice of proposed rulemaking published in this issue of the **Federal Register** . Pursuant section 7805(f) of the Code, these final and temporary regulations will be submitted to the Chief Counsel for Advocacy of Small Business Administration for comment on its impact on small business. Drafting Information The principal author of these regulations is Faith Colson, Office of Associate Chief Counsel (Passthroughs & Special Industries). However, other personnel from the IRS and the Treasury Department participated in their development. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows: PART 1—INCOME TAXES **Paragraph 1.** The authority citation for part 1 continues to read, in part, as follows: Authority: 26 U.S.C. 7805 * * * **Par. 2.** Section 1.671-5 is amended by: 1. Revising paragraphs (b)(5), (b)(8), and (b)(21) 2. Revising paragraphs (c)(2)(iv), (v)(C), (vi), and

(vii)3. Revising paragraphs (f)(1)(i)(A) and (viii)(A) The revisions read as follows: § 1.671-5 Reporting for widely held fixed investment trusts.

(b)* * *

(5)[Reserved.] For further guidance, see § 1.671-5T(b)(5).

(8)[Reserved.] for further guidance, see § 1.671-5T(b)(8).

(21)[Reserved.] For further guidance, see § 1.671-5T(b)(21).

(c)* * *

(2)* * *

(iv)[Reserved.] For further guidance, see § 1.671-5T(c)(2)(iv).

(v)* * *

(C)[Reserved.] For further guidance, see § 1.671-5T(c)(2)(v)(C).

(vi)[Reserved.] For further guidance, see § 1.671-5T(c)(2)(vi).

(vii)[Reserved.] For further guidance, see § 1.671-5T(c)(2)(vii).

(f)* * *

(1)* * *

(i)* * *

(A)[Reserved] For further guidance, see § 1.671-5T(f)(1)(i)(A).

(viii)* * *

(A)[Reserved.] For further guidance, see § 1.671-5T(f)(1)(viii). **Par. 3.** Section 1.671-5T is added to read as follows: § 1.671-5T Reporting for widely held fixed investment trusts (temporary).

(a)Through (b)(4) [Reserved.] For further guidance, see § 1.671-5(a) through (b)(4).

(5)The *cash held for distribution* is the cash held by the WHFIT (other than trust sales proceeds and proceeds from sales described in paragraph (c)(2)(iv)(G) of this section) less reasonably required reserve funds as of the date that the amount of a distribution is required to be determined under the WHFIT's governing document. (b)(6) and (b)(7) [Reserved.] For further guidance, see § 1.671-5(b)(6) and (b)(7).

(8)An *in-kind redemption* is a redemption in which a beneficial owner receives a pro-rata share of each of the assets of the WHFIT that the beneficial owner is deemed to own under section 671. For example, for purposes of this paragraph (b)(8), if beneficial owner *A* owns a one percent interest in a WHFIT that holds 100 shares of *X* corporation stock, so that *A* is considered to own a one percent interest in each of the 100 shares, *A* 's pro-rata share of the *X* corporation stock for this purpose is one share of X corporation stock. (b)(9) through (b)(20) [Reserved.] For further guidance, see § 1.671-5(b)(9) through (b)(20).

(21)*Trust sales proceeds* equal the amount paid to a WHFIT for the sale or disposition of an asset held by the WHFIT, including principal payments received by the WHFIT that completely retire a debt instrument (other than a final scheduled principal payment) and pro-rata partial principal prepayments described under § 1.1275-2(f)(2). Trust sales proceeds do not include amounts paid for any interest income that would be required to be reported under § 1.6045-1(d)(3). Trust sales proceeds also do not include amounts paid to a NMWHFIT as the result of a pro-rata sales of trust assets to effect a redemption described in paragraph (c)(2)(iv)(G) of this section. (b)(22) through (c)(2)(iii) [Reserved.] For further guidance, see § 1.671-5(b)(22) through (c)(2)(iii).

(iv)*Asset sales and dispositions* . The trustee must report information regarding sales and dispositions of WHFIT assets as required in this paragraph (c)(2)(iv). For purposes of this paragraph (c)(2)(iv), a payment (other than a final scheduled payment) that completely retires a debt instrument (including a mortgage held by a WHMT) or a pro-rata prepayment on a debt instrument (see § 1.1275-2(f)(2)) held by a WHFIT must be reported as a full or partial sale or disposition of the debt instrument. A pro-rata sale of a trust asset to effect a redemption, as defined in paragraph (c)(2)(iv)(G) of this section, is not reported as a sale or disposition under this paragraph (c)(2)(iv).

(A)*General rule* . Except as provided in paragraph (c)(2)(iv)(B) of this section (regarding the exception for certain NMWHFITs) or paragraph (c)(2)(iv)(C) (regarding the exception for certain WHMTs) of this section, the trustee must report with respect to each sale or disposition of a WHFIT asset— ( *1* ) The date of each sale or disposition; ( *2* ) Information that enables a requesting person to determine the amount of trust sales proceeds (as defined in paragraph (b)(21) of this section) attributable to a beneficial owner as a result of each sale or disposition; and ( *3* ) Information that enables a beneficial owner to allocate, with reasonable accuracy, a portion of the owner's basis in its trust interest to each sale or disposition.

(B)*Exception for certain NMWHFITs.* If a NMWHFIT meets either the general WHFIT *de minimis* test of paragraph (c)(2)(iv)(D)( *1* ) of this section for a calendar year, the qualified NMWHFIT exception of paragraph (c)(2)(iv)(E) of this section, or the NMWHFIT final calendar year exception of paragraph (c)(2)(iv)(F) of this section, the trustee is not required to report under paragraph (c)(2)(iv)(A) of this section. Instead, the trustee must report sufficient information to enable a requesting person to determine the amount of trust sales proceeds distributed to a beneficial owner during the calendar year with respect to each sale or disposition of a trust asset. The trustee also must provide requesting persons with a statement that the NMWHFIT is permitted to report under this paragraph (c)(2)(iv)(B).

(C)*Exception for certain WHMTs.* If a WHMT meets either of the *de minimis* tests of paragraph (c)(2)(iv)(D) of this section for the calendar year, the trustee is not required to report under paragraph (c)(2)(iv)(A) of this section. Instead, the trustee must report information to enable a requesting person to determine the amount of trust sales proceeds attributable to a beneficial owner as a result of the sale or disposition. The trustee also must provide requesting persons with a statement that the WHMT is permitted to report under this paragraph (c)(2)(iv)(C).

(D)*De minimis tests* —( *1* ) *General WHFIT de minimis* test. The general WHFIT *de minimis* test applies to a NMWHFIT or to a WHMT that does not meet the requirements for the special WHMT test in paragraph (c)(2)(iv)(D)( *2* ) of this section. The general WHFIT *de minimis* test is satisfied if trust sales proceeds for the calendar year are not more than five percent of the net asset value of the trust (aggregate fair market value of the trust's assets less the trust's liabilities) as of the later of January 1 of that year or the trust's start-up date (as defined in § 1.671-5(b)(19)). ( *2* ) *Special WHMT de minimis test* . A WHMT that meets the asset requirement of § 1.671-5(g)(1)(ii)(E) satisfies the special WHMT *de minimis* test in this paragraph (c)(2)(iv)(D)( *2* ) if trust sales proceeds for the calendar year are not more than five percent of the aggregate outstanding principal balance of the WHMT (as defined in § 1.671-5(g)(1)(iii)(D)) as of the later of January 1 of that year or the trust's start-up date. For purposes of applying the special WHMT *de minimis* test in this paragraph (c)(2)(iv)(D)( *2* ), amounts that result from the complete or partial payment of the outstanding principal balance of the mortgages held by the trust are not included in the amount of trust sales proceeds. ( *3* ) *Effect of clean-up call* . If a WHFIT fails to meet either *de minimis* test described in this paragraph (c)(2)(iv)(D) solely as the result of a clean-up call, as defined in § 1.671-5(b)(6), the WHFIT will be treated as having met the *de minimis* test.

(E)*Qualified NMWHFIT exception* . The qualified NMWHFIT exception is satisfied if the calendar year for which the trustee is reporting begins before January 1, 2011 and— ( *1* ) The NMWHFIT has a start-up date (as defined in § 1.671-5(b)(19)) before February 23, 2006; ( *2* ) The registration statement of the NMWHFIT becomes effective under the Securities Act of 1933, as amended (15 U.S.C. 77a, *et seq.* ) and trust interests are offered for sale to the public before February 23, 2006; or ( *3* ) The registration statement of the NMWHFIT become effective under the Securities Act of 1933 and trust interests are offered for sale to the public on or after February 23, 2006, and before July 31, 2006, and the NMWHFIT is fully funded before October 1, 2006.

(F)*NMWHFIT final calendar year exception* . The NMWHFIT final calendar year exception is satisfied if— ( *1* ) The NMWHFIT terminates on or before December 31 of the year for which the trustee is reporting; ( *2* ) A trust interest holder may not roll-over its investment in the NMWHFIT to another WHFIT; and ( *3* ) The trustee makes reasonable efforts to engage in pro-rata sales of trust assets to effect redemptions.

(G)*Pro-rata sales of trust assets to effect a redemption* —( *1* ) *Definition* . A pro-rata sale of a trust asset to effect a redemption is not required to be reported under this paragraph (c)(2)(iv). A pro-rata sale of a trust asset to effect a redemption occurs when a— ( *i* ) A trust interest holder tenders one or more trust interests for redemption; ( *ii* ) The trustee sells the pro-rata share of the trust asset that is deemed to be owned by the trust interest holder under section 671 as a result of the trust interest holder's ownership of the trust interest or interests tendered for redemption (See paragraph (b)(8) of this section for a description of how pro-rata is to be applied for purposes of this paragraph (c)(2)(iv)(G)); ( *iii* ) The trustee engages in the sale solely to obtain cash that is immediately distributed to the redeeming trust interest holder as a result of the redemption; and ( *iv* ) The redemption is reported as required under § 1.671-5(c)(2)(v) by the trustee. ( *2* ) *Example* . The following example illustrates the definition of a pro-rata sale of a trust asset to effect a redemption: Example: Trust has two hundred trust interests and all interests have equal value and rights. Trust owns two hundred shares of stock in corporation *X* , two hundred shares of stock in corporation *Y* , and one hundred shares of stock in corporation *Z. C* owns one trust interest and tenders it for redemption. To obtain cash for the redemption, the trustee of Trust sells one share of each of the *X* and *Y* stock and one share of *Z* stock. Trustee immediately distributes the proceeds from the sale of the *X* and the *Y* stock, as well as 50% of the proceeds from the sale of the *Z* stock to *C* as redemption proceeds. Trustee will report the redemption under § 1.671-5(c)(2)(v). The sale of the share of *X* stock and the sale of the share of *Y* stock are each a pro-rata sale of a trust asset to effect a redemption and are not required to be reported under this paragraph (c)(2)(iv)(G). The proceeds from the sale of the X stock and the Y stock are not trust sales proceeds under paragraph (b)(21) of this section and are not included for the purpose of determining whether Trust meets the *de minimis* test. The sale of the *Z* stock, because it was not a sale of the pro-rata share of the trust asset that is treated as owned by *C* is not a pro-rata sale of a trust asset to effect a redemption and is required to be reported as provided under paragraph (c)(2)(iv)(A) or

(B)of this section, whichever is applicable. The proceeds from the sale of the *Z* stock are trust sales proceeds under paragraph (b)(21) of this section and included for the purpose of determining whether Trust meets the de minimis test in paragraph (c)(2)(iv)(D)( *1* ) of this section. (c)(2)(v)(A) and

(B)[Reserved.] For further guidance, see § 1.671-5(c)(2)(v)(A) and (B).

(C)*Exception for certain NMWHFITs with dividend income* —( *1* ) *In general* . The trustee of a NMWHFIT described in paragraph (c)(2)(v)(C)( *2* ) of this section is not required to report the information described in § 1.671-5(c)(2)(v)(A) (regarding redemptions) or (c)(2)(v)(B) (regarding sales). However, the trustee must report to requesting persons, for each date on which the amount of redemption proceeds to be paid for the redemption of a trust interest is determined, information that will enable requesting persons to determine the redemption proceeds per trust interest on that date. The trustee also must provide requesting persons with a statement that this paragraph applies to the NMWHFIT. ( *2* ) *NMWHFITs that qualify for the exception* . This paragraph (c)(2)(v)(C) applies to a NMWHFIT if substantially all the income of the NMWHFIT consists of dividends (as defined in section 6042(b) and the regulations thereunder) and the NMWHFIT satisfies either paragraph (c)(2)(v)(C)( *2* )( *i* ) or ( *ii* ) of this section. Trust sales proceeds and gross proceeds from a sale described in paragraph (c)(2)(iv)(G) of this section are ignored for the purpose of determining if substantially all of a NMWHFIT's income consists of dividends. ( *i* ) The trustee is required by the governing document of the NMWHFIT to determine and distribute all cash held for distribution (as defined in paragraph (b)(5) of this section) no less frequently than monthly. A NMWHFIT will be considered to have satisfied this paragraph (c)(2)(v)(C)( *2* )( *i* ) notwithstanding that the governing document of the NMWHFIT permits the trustee to forego making a required monthly or more frequent distribution, if the cash held for distribution is less than 0.1% of the aggregate net asset value of the trust as of the date specified in the governing document for calculating the amount of the monthly distribution. ( *ii* ) The qualified NMWHFIT exception of paragraph (c)(2)(iv)(E) of this section is satisfied.

(vi)*Information regarding bond premium* . The trustee generally must report information that enables a beneficial owner to determine, in any manner that is reasonably consistent with section 171, the amount of the beneficial owner's amortizable bond premium, if any, for each calendar year. However, if a NMWHFIT meets the general *de minimis* test of paragraph (c)(2)(iv)(D)( *1* ) of this section, the qualified NMWHFIT exception of paragraph (c)(2)(iv)(E) of this section, or the NMWHFIT final calendar year exception of paragraph (c)(2)(iv)(F) of this section, the trustee of such NMWHFIT is not required to report information regarding bond premium.

(vii)*Information regarding market discount* . The trustee generally must report information that enables a beneficial owner to determine, in any manner reasonably consistent with section 1276 (including section 1276(a)(3)), the amount of market discount that has accrued during the calendar year. However, if a NMWHFIT meets the general *de minimis* test of paragraph (c)(2)(iv)(D)( *1* ) of this section, the qualified NMWHFIT exception of paragraph (c)(2)(iv)(E) of this section, NMWHFIT final calendar year exception of paragraph (c)(2)(iv)(F) of this section, the trustee of such NMWHFIT is not required to provide information regarding market discount. (c)(3) through (f)(1)(i) [Reserved.] For further guidance, see § 1.671-5(c)(3) through (e)(4).

(f)*Safe harbor for providing information for certain NMWHFITs* —( *1* ) *Safe harbor for trustee reporting of NMWHFIT information* . The trustee of a NMWHFIT that meets the requirements of paragraph (f)(1)(i) of this section is deemed to satisfy paragraph (c)(1)(i) of this section, if the trustee calculates and provides WHFIT information in the manner described in this paragraph

(f)and provides a statement to a requesting person giving notice that information has been calculated in accordance with this paragraph (f)(1).

(i)*In general* —(A) *Eligibility to report under this safe harbor* . Only NMWHFITs that meet the requirements set forth in paragraphs (f)(1)(i)(A)( *1* ) and ( *2* ) of this section may report under this safe harbor. For purposes of determining whether paragraph (f)(1)(i)(A)( *1* ) of this section is met, trust sales proceeds and gross proceeds from sales described in paragraph (c)(2)(iv)(G) of this section are ignored: ( *1* ) Substantially all of the NMWHFIT's income is from dividends or interest; and ( *2* ) All trust interests have identical value and rights. (f)(1)(i)(B) through (f)(vii) [Reserved.] For further guidance, see § 1.671-5(f)(1)(i)(B) through (f)(vii).

(viii)*Reporting market discount information under the safe harbor—*

(A)*In general* . If the trustee of a NMWHFIT is required to provide information regarding market discount under paragraph (c)(2)(vii) of this section, the trustee must provide the information required under § 1.671-5(f)(1)(iv)(A)( *1* )( *iii* ) of this section. If the trustee is not required to provide market discount information under paragraph (c)(2)(vii) of this section (because paragraph (c)(2)(iv) of this section applies to the NMWHFIT), the trustee is not required under this paragraph

(f)to provide any information regarding market discount. (f)(1)(viii)(B) through

(m)[Reserved.] For further guidance, see § 1.671-5(f)(1)(viii)(B) through (m). Mark E. Matthews, Deputy Commissioner for Services and Enforcement. Approved: July 28, 2006. Eric Solomon, Acting Deputy Assistant Secretary (Tax Policy). [FR Doc. 06-6649 Filed 7-28-06; 4:15 pm]

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