Rules and Regulations. Correcting amendment
16,719 words·~76 min read·
/register/2006/10/26/06-8933A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
BILLING CODE 4910-13-M DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9244] RIN 1545-BC05; 1545-BE88 Determination of Basis of Stock or Securities Received in Exchange for, or With Respect to, Stock or Securities in Certain Transactions; Treatment of Excess Loss Accounts; Correction AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Correcting amendment. SUMMARY: This document contains a correction to final and temporary regulations (TD 9244), that were published in the **Federal Register** on Thursday, January 26, 2006 (71 FR 4264).
This regulation provides guidance regarding the determination of the basis of stock or securities received in exchange for, or with respect to, stock or securities in certain transactions. DATES: This correction is effective January 23, 2006. FOR FURTHER INFORMATION CONTACT: Theresa M. Kolish,
(202)622-7530 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background The final and temporary regulations (TD 9244) that are the subject of these corrections are under sections 358 and 1502 of the Internal Revenue Code. Need for Correction As published, TD 9244 contains errors that may prove to be misleading and are in need of clarification. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Correction of Publication Accordingly, 26 CFR Part 1 is corrected by making the following correcting amendments: 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 * * * § 1.358-1 [Corrected] **Par. 2.** Section 1.358-1 is amended by revising paragraph (b), *Example* to read as follows: § 1.358-1 Basis to distributees.
(b)* * * Example. A purchased a share of stock in Corporation X in 1935 for $150. Since that date A has received distributions out of other than earnings and profits (as defined in section 316) totaling $60, so that A's adjusted basis for the stock is $90. In a transaction qualifying under section 356, A exchanged this share for one share in Corporation Y, worth $100, cash in the amount of $10, and other property with a fair market value of $30. The exchange had the effect of the distribution of a dividend. A's ratable share of the earnings and profits of Corporation X accumulated after February 28, 1913, was $5. A realized a gain of $50 on the exchange, but the amount recognized is limited to $40, the sum of the cash received and the fair market value of the other property. Of the gain recognized, $5 is taxable as a dividend, and $35 is taxable as a gain from the exchange of property. The basis to A of the one share of stock of Corporation Y is $90, that is, the adjusted basis of the one share of stock of Corporation X ($90), decreased by the sum of the cash received ($10) and the fair market value of the other property received ($30) and increased by the sum of the amount treated as a dividend ($5) and the amount treated as a gain from the exchange of property ($35). The basis of the other property received is $30. § 1.358-2 [Corrected] **Par. 3.** Section 1.358-2(c) is amended by revising paragraphs
(ii)in *Examples 4* , *5* , *6* and *11* to read as follows: § 1.358-2 Allocation of basis among nonrecognition property.
(a)* * *
(2)* * *
(viii)* * *
(c)* * * Example 4.
(i)* * *
(ii)*Analysis.* Under paragraph (a)(2)(ii) of this section and under § 1.356-1(b), because the terms of the exchange do not specify that shares of Corporation Y stock or cash are received in exchange for particular shares of Class A stock or Class B stock of Corporation X, a pro rata portion of the shares of Corporation Y stock and cash received will be treated as received in exchange for each share of Class A stock and Class B stock of Corporation X surrendered based on the fair market value of such stock. Therefore, J is treated as receiving one share of Corporation Y stock and $5 of cash in exchange for each share of Class A stock of Corporation X and one share of Corporation Y stock and $5 of cash in exchange for each share of Class B stock of Corporation X. J realizes a gain of $140 on the exchange of shares of Class A stock of Corporation X, $100 of which is recognized under § 1.356-1(a). J realizes a gain of $80 on the exchange of Class B stock of Corporation X, all of which is recognized under § 1.356-1(a). Under paragraph (a)(2)(i) of this section, J has 10 shares of Corporation Y stock, each of which has a basis of $2 and is treated as having been acquired on Date 1, 10 shares of Corporation Y stock, each of which has a basis of $4 and is treated as having been acquired on Date 2, and 20 shares of Corporation Y stock, each of which has a basis of $5 and is treated as having been acquired on Date 3. Under paragraph (a)(2)(vii) of this section, on or before the date on which the basis of a share of Corporation Y stock received becomes relevant, J may designate which of the shares of Corporation Y stock received have a basis of $2, which have a basis of $4, and which have a basis of $5. Example 5.
(i)* * *
(ii)*Analysis.* Under paragraph (a)(2)(ii) of this section and under § 1.356-1(b), because the terms of the exchange specify that J receives 40 shares of stock of Corporation Y in exchange for J's shares of Class A stock of Corporation X and $200 of cash in exchange for J's shares of Class B stock of Corporation X and such terms are economically reasonable, such terms control. J realizes a gain of $140 on the exchange of shares of Class A stock of Corporation X, none of which is recognized under § 1.356-1(a). J realizes a gain of $80 on the exchange of shares of Class B stock of Corporation X, all of which is recognized under § 1.356-1(a). Under paragraph (a)(2)(i) of this section, J has 20 shares of Corporation Y stock, each of which has a basis of $1 and is treated as having been acquired on Date 1, and 20 shares of Corporation Y stock, each of which has a basis of $2 and is treated as having been acquired on Date 2. Under paragraph (a)(2)(vii) of this section, on or before the date on which the basis of a share of Corporation Y stock received becomes relevant, J may designate which of the shares of Corporation Y stock received have a basis of $1 and which have a basis of $2. Example 6.
(i)* * *
(ii)*Analysis.* Under paragraph (a)(2)(ii) of this section and under § 1.354-1(a), because the terms of the exchange specify that J receives 10 shares of stock of Corporation Y in exchange for J's shares of Class A stock of Corporation X and a Corporation Y security in exchange for its Corporation X security and such terms are economically reasonable, such terms control. Pursuant to section 354, J recognizes no gain on either exchange. Under paragraph (a)(2)(i) of this section, J has 10 shares of Corporation Y stock, each of which has a basis of $2 and is treated as having been acquired on Date 1, and a security that has a basis of $100 and is treated as having been acquired on Date 2. Example 11.
(i)* * *
(ii)*Analysis.* Under paragraph (a)(2)(iii) of this section, J is deemed to have received shares of Corporation Y stock with an aggregate fair market value of $1,000 in exchange for J's Corporation X shares. Consistent with the economics of the transaction and the rights associated with each class of stock of Corporation Y owned by J, J is deemed to receive additional shares of Corporation Y common stock. Because the value of the common stock indicates that the liquidation preference associated with the Corporation Y preferred stock could be satisfied even if the reorganization did not occur, it is not appropriate to deem the issuance of additional Corporation Y preferred stock. Given the number of outstanding shares of common stock of Corporation Y and their value immediately before the effective time of the reorganization, J is deemed to have received 100 shares of common stock of Corporation Y in the reorganization. Under paragraph (a)(2)(i) of this section, each of those shares has a basis of $1 and is treated as having been acquired on Date 1. Then, the common stock of Corporation Y is deemed to be recapitalized in a reorganization under section 368(a)(1)(E) in which J receives 100 shares of Corporation Y common stock in exchange for those shares of Corporation Y common stock that J held immediately prior to the reorganization and those shares of Corporation Y common stock that J is deemed to have received in the reorganization. Under paragraph (a)(2)(i), immediately after the reorganization, J holds 50 shares of Corporation Y common stock, each of which has a basis of $2 and is treated as having been acquired on Date 1, and 50 shares of Corporation Y common stock, each of which has a basis of $4 and is treated as having been acquired on Date 2. Under paragraph (a)(2)(vii) of this section, on or before the date on which the basis of any share of J's Corporation Y common stock becomes relevant, J may designate which of those shares have a basis of $2 and which have a basis of $4. § 1.1502-19T [Corrected] **Par. 4.** Section 1.1502-19T is amended by removing the cross reference for paragraphs (b)(2) through
(c)and adding a cross reference for paragraphs
(a)through
(c)in its place and revising the text to paragraph (h)(2)(iv) to read as follows: § 1.1502-19T Excess loss accounts (temporary).
(a)through
(c)[Reserved]. For further guidance, see § 1.1502-19
(a)through (c). (h)(2)(iv) * * * For guidance regarding determinations of the basis of the stock of a subsidiary acquired in an intercompany reorganization on or after January 23, 2006, see paragraphs
(d)and
(g)*Example 2* of this section. § 1.1502-32 [Corrected] **Par. 5.** Section 1.1502-32 is amended by revising the text of paragraph (h)(8) to reads as follows: § 1.1502-32 Investment adjustments.
(h)* * * (h)(8) * * * Paragraph (b)(5)(ii) *Example 6* of this section applies only with respect to determinations of the basis of the stock of a subsidiary on or after January 23, 2006. For determinations of the basis of the stock of a subsidiary before January 23, 2006, see § 1.1502-32(b)(5)(ii) *Example 6* as contained in the 26 CFR part 1 edition revised as of April 1, 2005. Guy R. Traynor, Federal Register Liaison, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration). [FR Doc. E6-17987 Filed 10-25-06; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 100 [CGD07-06-191] RIN 1625-AA08 Special Local Regulation; ChampBoat Grand Prix of Savannah; Savannah, GA AGENCY: Coast Guard, DHS. ACTION: Temporary final rule. SUMMARY: The Coast Guard is establishing a temporary special local regulation
(SLR)for the ChampBoat Grand Prix of Savannah, a speed boat race occurring on the Savannah River. The regulated area is defined as all waters located between the width of the Savannah River bounded on the northern end by the U. S. Highway 17 (Talmadge) Bridge across the Savannah River and on the southern end by a line drawn at 146 degrees True from Day Board 62 on the left descending bank of the Savannah River. This special local regulation is necessary to ensure the safety of commercial and recreational vessels and personnel within the regulated area. DATES: This rule is effective from 7 a.m. on November 4, 2006, until 9 p.m. on November 5, 2006. ADDRESSES: Documents indicated in this preamble as being available in the docket are part of docket CGD07-06-191, and are available for inspection or copying at Coast Guard Marine Safety Unit Savannah, 100 West Oglethorpe Avenue, Suite 1017, Savannah, Georgia 31401 between 7:30 a.m. and 4 p.m., Monday through Friday, except Federal Holidays. FOR FURTHER INFORMATION CONTACT: LT Robert Webb, Waterways Management Officer, Coast Guard Marine Safety Unit Savannah, 912-652-4353. SUPPLEMENTARY INFORMATION: Regulatory Information We did not publish a notice of proposed rulemaking
(NPRM)for this rule. Under 5 U.S.C. 553(b), the Coast Guard finds that good cause exists for not publishing an NPRM. The sponsor's application for this event was not submitted to the Coast Guard with sufficient time for a public comment period before the event date. Publishing an NPRM, which would incorporate a comment period before a final rule could be issued, would be contrary to public safety interests since it would delay the effective date of the rule until after the date of the event. For the same reasons, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the **Federal Register.** The Coast Guard will issue a broadcast notice to mariners to advise mariners of the regulated area and its requirements. Background and Purpose Speedway Group, Inc. and ChampBoat Series, LLC., submitted an application for a marine event permit for the ChampBoat Grand Prix of Savannah, to be held November 4-5, 2006, in Savannah, GA. After close review of the application and through extensive conversation with port stakeholders, the Coast Guard approved the application. The approval of the application and issuance of the marine permit was contingent on the ability of race coordinators to periodically open the river to commercial traffic. The race course will consist of a four-buoy, rectangle race course within the regulated area. The race buoys although within the regulated area will be placed outside of the navigational channel. Scheduled vessel traffic will be allowed to transit through the regulated area during a planned 20-minute stoppage time during each hour of racing. In addition, vessel traffic will be allowed to transit in the morning and evening prior to and after race events. In the event there is a last minute change in scheduled traffic or exigent circumstances, the race coordinators will clear the river for vessel traffic to transit through the regulated area. Because of the high speeds and inherent dangers associated with powerboat racing, the Coast Guard is establishing this temporary special local regulation (SLR). This temporary SLR is necessary to ensure the safety of commercial and recreational vessels and personnel within the regulated area. Discussion of Rule The ChampBoat Grand Prix of Savannah will be held November 4-5, 2006, in Savannah, GA and will consist of powerboats racing a rectangular course at speeds up to 120 miles per hour. The regulated area is defined as all waters located between the width of the Savannah River bounded on the northern end by the U. S. Highway 17 (Talmadge) Bridge across the Savannah River and on the southern end by a line drawn at 146 degrees True from Day Board 62 on the left descending bank of the Savannah River. Regulatory Evaluation This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation is unnecessary. Commercial vessel traffic will be allowed to transit through the regulated area at scheduled times throughout the day and before and after race activities. Small Entities Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule would not have a significant economic impact on a substantial number of small entities. This rule would affect the following entities, some of which might be small entities: the owners or operators of vessels intending to transit or anchor in a portion of the Savannah River between 8 a.m. and 6 p.m. on November 4-5, 2006. This SLR would not have a significant economic impact on a substantial number of small entities because it would only be in effect between 8 a.m. and 9 p.m. and vessel traffic would be allowed to pass through the zone with permission from the Coast Guard patrol commander. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pubic Law 104-121), we offer to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process. Small entities may contact the person listed under FOR FURTHER INFORMATION CONTACT for assistance in understanding and participating in this rulemaking. We also have a point of contact for commenting on actions by employees of the Coast Guard. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). Collection of Information This rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). Federalism A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism. Unfunded Mandates Reform Act The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble. Taking of Private Property This rule would not affect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. Civil Justice Reform This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. Protection of Children We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children. Indian Tribal Governments This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. Energy Effects We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211. Technical Standards The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( *e.g.,* specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies. This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. Environment We have analyzed this rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969
(NEPA)(42 U.S.C. 4321-4370f), and have made a preliminary determination that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, we believe that this rule should be categorically excluded, under figure 2-1, paragraph (34)(h) of the Instruction from further environmental documentation. Under figure 2-1, paragraph (34)(h), of the Instruction, an “Environmental Analysis Check List” is not required for this rule. List of Subjects in 33 CFR Part 100 Marine Safety, Navigation (water), Reporting and recordkeeping requirements, Waterways. For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows: PART 100—SAFETY OF LIFE ON NAVIGABLE WATERS 1. The authority citation for part 100 continues to read as follows: Authority: 33 U.S.C. 1233; Department of Homeland Security Delegation No. 0170.1. 2. A new temporary section § 100.35T07-06-191 is added to read as follows: § 100.35T07-06-191 ChampBoat Grand Prix of Savannah; Savannah, Georgia.
(a)*Regulated Area.* The regulated area is defined as all waters located between the width of the Savannah River bounded on the northern end by the U.S. Highway 17 (Talmadge) Bridge across the Savannah River and on the southern end by a line drawn at 146 degrees True from Day Board 62 on the left descending bank of the Savannah River.
(b)*Definitions.* The following definitions apply to this section: *Coast Guard Patrol Commander.* The Coast Guard Patrol Commander is a commissioned, warrant, or petty officer of the Coast Guard who has been designated by the Commander, Coast Guard Sector Charleston, Charleston, South Carolina.
(c)*Special Local Regulations.* Entry into the regulated area in paragraph
(a)by other than event participants is prohibited unless otherwise authorized by the Coast Guard Patrol Commander. If entry is authorized, all persons shall be required to follow the instructions of the Coast Guard Patrol Commander. At the completion of scheduled races and departure of participants from the regulated area, and between scheduled racing events, traffic may resume normal operations, at the discretion of the Coast Guard Patrol Commander.
(d)*Enforcement period.* This section will be enforced from 7 a.m. through 9 p.m. on November 4 and 5, 2006.
(e)*Effective period.* This section is effective from 7 a.m. on November 4, 2006, until 9 p.m. on November 5, 2006. Dated: October 16, 2006. D.W. Kunkel, Rear Admiral, U.S. Coast Guard, Commander, Seventh Coast Guard District. [FR Doc. E6-17849 Filed 10-25-06; 8:45 am] BILLING CODE 4910-15-P DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 208, 209, and 225 Defense Federal Acquisition Regulation Supplement; Technical Amendments AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Final rule. SUMMARY: DoD is making technical amendments to the Defense Federal Acquisition Regulation Supplement (DFARS) to update cross-references and to add a reference to the DFARS companion resource, Procedures, Guidance, and Information. EFFECTIVE DATE: October 26, 2006. FOR FURTHER INFORMATION CONTACT: Ms. Michele Peterson, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone
(703)602-0311; facsimile
(703)602-0350. SUPPLEMENTARY INFORMATION: This final rule amends DFARS text as follows: • *Sections 208.7400 and 209.105-2.* Updates cross-references. • *Section 225.004.* Adds a reference to reporting instructions found in the DFARS companion resource, Procedures, Guidance, and Information (PGI). List of Subjects in 48 CFR Parts 208, 209, and 225 Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System. Therefore, 48 CFR parts 208, 209, and 225 are amended as follows: 1. The authority citation for 48 CFR parts 208, 209, and 225 continues to read as follows: Authority: 41 U.S.C. 421 and 48 CFR Chapter 1. PART 208—REQUIRED SOURCES OF SUPPLIES AND SERVICES 208.7400 [Amended] 2. Section 208.7400 is amended in paragraph
(d)by removing “8.404(b)(4)” and adding in its place “8.405 and 208.405-70”. PART 209—CONTRACTOR QUALIFICATIONS 3. Section 209.105-2 is revised to read as follows: 209.105-2 Determinations and documentation.
(a)The contracting officer shall submit a copy of a determination of nonresponsibility to the appropriate debarring and suspending official listed in 209.403. PART 225—FOREIGN ACQUISITION 4. Section 225.004 is added to read as follows: 225.004 Reporting of acquisition of end products manufactured outside the United States. Follow the procedures at PGI 225.004 for entering the data upon which the report required by FAR 25.004 will be based. [FR Doc. E6-17954 Filed 10-25-06; 8:45 am] BILLING CODE 5001-08-P DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 212, 222, and 252 RIN 0750-AF11 Defense Federal Acquisition Regulation Supplement; Combating Trafficking in Persons (DFARS Case 2004-D017) AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Interim rule with request for comments. SUMMARY: DoD has issued an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement DoD policy prohibiting activities on the part of DoD contractors and contractor employees that support or promote trafficking in persons. The rule contains a clause for use in contracts performed outside the United States. DATES: *Effective date:* October 26, 2006. *Comment date:* Comments on the interim rule should be submitted to the address shown below on or before December 26, 2006, to be considered in the formation of the final rule. ADDRESSES: You may submit comments, identified by DFARS Case 2004-D017, using any of the following methods: ○ *Federal eRulemaking Portal: http://www.regulations.gov.* Follow the instructions for submitting comments. ○ *E-mail: dfars@osd.mil.* Include DFARS Case 2004-D017 in the subject line of the message. ○ *Fax:*
(703)602-0350. ○ *Mail:* Defense Acquisition Regulations System, Attn: Ms. Amy Williams, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. ○ *Hand Delivery/Courier:* Defense Acquisition Regulations System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402. Comments received generally will be posted without change to *http://www.regulations.gov,* including any personal information provided. FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams,
(703)602-0328. SUPPLEMENTARY INFORMATION: A. Background This interim rule implements
(1)a memorandum issued by the Secretary of Defense on September 16, 2004, which states that trafficking practices will not be tolerated in DoD contractor organizations or their subcontractors in supporting DoD operations, and
(2)a memorandum issued by the Deputy Secretary of Defense on January 30, 2004, which states as an objective that, consistent with U.S. and host-nation law, provisions should be incorporated in overseas service contracts that prohibit any activities on the part of contractor employees that support or promote trafficking in persons and that impose suitable penalties on contractors who fail to monitor the conduct of their employees. The January 30, 2004, memorandum cites National Security Presidential Directive/NSPD-22, which decrees that all departments of the U.S. Government will take a “zero tolerance” approach to trafficking in persons. DoD published a proposed rule at 70 FR 35603 on June 21, 2005, to implement the DoD policy prohibiting trafficking in persons in all contracts performed outside the United States. Two respondents submitted comments on the proposed rule. Subsequently, on April 19, 2006 (71 FR 20301), an interim rule amending the Federal Acquisition Regulation
(FAR)was published to implement 22 U.S.C. 7104, as amended by the Trafficking Victims Protection Reauthorization Act of 2003 (Pub. L. 108-193) and the Trafficking Victims Protection Reauthorization Act of 2005 (Public Law 109-164). The FAR rule contains a new Subpart 22.17, Combating Trafficking in Persons, with an associated contract clause, and prohibits severe forms of trafficking in persons, procurement of commercial sex acts, and the use of forced labor by Government contractors or subcontractors or their employees. The FAR rule applies to service contracts, other than commercial service contracts awarded under FAR Part 12. This interim DFARS rule supplements the interim FAR rule published on April 19, 2006, and also contains changes made as a result of public comments received on the proposed DFARS rule published on June 21, 2005. The DFARS rule extends the FAR prohibitions on severe forms of trafficking in persons and use of forced labor to all DoD contracts performed outside the United States, and extends the FAR prohibition on the procurement of commercial sex acts to all DoD service and construction contracts performed outside the United States. Many of DoD's contracts performed outside the United States are susceptible to trafficking in persons due to the difficult working conditions (e.g., war zones, extreme climate). Also, DoD has significant numbers and varying types of contracts and subcontracts being performed outside the United States (e.g., supplies, food services, logistics services, guard services, maintenance services, construction) and seeks to prevent instances of trafficking in persons in all such contracts. For example, if a contract or subcontract has been awarded for cleaning services and the contracting officer discovers that the contractor is using forced labor, DoD wants to be able to take action against the contractor. As another example, if a contractor employee working on a DoD logistics support contract “purchases” an individual (i.e., slavery/indentured servitude), DoD wants the contractor to take action against that employee. The DFARS text is included in Part 222, instead of the proposed rule location of Part 225, for consistency with the location of the corresponding FAR text. The new clause at DFARS 252.222-7006, Combating Trafficking in Persons, requires DoD contractors performing outside the United States to take appropriate action against employees who engage in activities prohibited by the clause; to include the substance of the clause in all subcontracts performed outside the United States; and to include the substance of the clause in subcontracts performed in the United States when both the contract and the subcontract are for services (other than commercial services). The following is a discussion of the public comments received in response to the proposed rule published on June 21, 2005, and the resulting changes included in this interim rule. 1. Comments Related to Policy and Clause Prescription a. *Comment:* One respondent recommended that DoD withhold any further action on this DFARS rule pending completion of the FAR rule on this subject. *DoD Response:* DoD has incorporated most of the language of the FAR interim rule into this interim DFARS rule. The DFARS rule implements DoD policy and has broader application than the FAR rule. Therefore, it is not necessary for the FAR rule to be finalized prior to proceeding with this DFARS rule. b. *Comment:* One respondent expressed concerns about imposing the “full brunt” of the contract clause in all commercial item and service procurements, and recommended narrowly tailoring the clause and revising flow-down requirements for commercial items. *DoD Response:* DoD recognizes the difficulty in fully applying the clause to the purchase of commercial items, and acknowledges the intent of Public Law 103-355 to limit provisions and clauses in contracts for commercial items to those implementing statute or Executive order. However, DoD policy for zero tolerance requires application of the clause to all contractors and subcontractors performing contracts outside the United States, including those performing under contracts for commercial items. DoD also believes that contracts for supplies or services that rely upon unskilled labor, including contracts for commercial items, present the greatest risk for severe forms of trafficking in persons or use of forced labor. Therefore, the interim rule prohibits contractors performing outside the United States from engaging in trafficking and requires appropriate action against any employee found to be in violation of the policy, but limits the mandate to train and monitor the conduct of employees to those contractors performing under service and construction contracts, since those employees are generally providing direct support to DoD operations and their behavior can more reasonably be monitored. c. *Comment:* One respondent recommended that DoD clarify that the scope of the rule extends beyond service contracts, specifically referencing the memorandum of the Deputy Secretary of Defense that addressed combating trafficking in overseas service contracts. *DoD Response:* DoD developed the rule with the belief that the intent of the Deputy Secretary's memorandum of January 30, 2004, was to ensure adequate application of the policy to DoD service contract employees, but not necessarily limit the application to service contract employees. This belief was supported by National Security Presidential Directive/NSPD-22 and the Secretary of Defense memorandum of September 16, 2004, both of which indicate a broader application to contracts performed outside the United States. The Secretary's memorandum specifically states: “* * * trafficking practices will not be tolerated in DoD contractor organizations or their subcontractors in supporting DoD operations.” Therefore, the interim rule applies to all contracts performed outside the United States. d. *Comment:* One respondent questioned application of the rule to non-U.S. contractors and subcontractors. *DoD Response:* One of the examples leading to the development of the DoD policy involved a non-U.S. subcontractor. Zero tolerance within DoD extends to all contractors and subcontractors, whether or not based in the United States. The application of the rule to both U.S. and non-U.S. firms is necessary to fully implement the DoD policy. 2. Comments Related to Notification Requirements a. *Comment:* One respondent recommended that the clause provide flexibility in both the timing and the nature of the disclosure to be required. Another respondent recommended that violations be reported to the contracting officer and the Combatant Commander within 24 hours of receiving or learning of any information relating to trafficking. *DoD Response:* DoD recognizes the need to report infractions in a timely manner, but is concerned with stating a specific time period. While requiring that contractors report trafficking activities to the contracting officer within a certain time period may assist in promoting the U.S. policy, it may also raise issues with host nation criminal or international laws ( *e.g.* , permitting 24 hours to elapse before reporting a crime). Therefore, the clause has been amended to require “immediate” notification by the contractor to the contracting officer. The text at DFARS 222.1704-70 (previously DFARS 225.7404-3) also has been amended to require the contracting officer to “immediately” notify the Combatant Commander. b. *Comment:* One respondent requested inclusion of a requirement to notify relevant law enforcement authorities. *DoD Response:* DFARS 222.1704-70 requires the contracting officer to immediately notify the Combatant Commander, who will handle alleged violations in accordance with established theater policy and practices and U.S. and host nation laws. 3. Comments Related to Procedures and Training a. *Comment:* One respondent recommended deleting the requirement for the contractor to obtain copies of referenced legal and regulatory documents, and expressed concerns with requirements for providing legal guidance and interpretations of non-U.S. host nation laws and policies to employees regarding trafficking laws and regulations, especially for small businesses and contractors providing commercial items. *DoD Response:* Contractors operating overseas are expected to be knowledgeable of a host nation's policies, laws, regulations, and directives. DoD acknowledges that the intent of the clause is for contractors operating in a foreign country to know (not necessarily acquire copies of) host nation, as well as U.S., laws applicable to the instant contract. Therefore, the clause has been revised, indicating a requirement for the contractor to be knowledgeable (rather than obtain copies) of policies, laws, regulations, and directives. However, contractors performing under service and construction contracts must provide employees with guidance on trafficking policies, laws, regulations, and directives as part of efforts to increase awareness and must ensure that employees do not engage in trafficking activities. b. *Comment:* One respondent recommended clarifying the actions that contractors must take relative to developing policy and procedures that prohibit employee activities supporting or promoting trafficking in persons. *DoD Response:* DoD has revised the rule at 222.1703(2)(ii) (previously 225.7404-2(b)) and in paragraph
(d)of the clause to incorporate the changes recommended by the respondent. c. *Comment:* One respondent proposed that outside experts provide the training specified in the contract clause. *DoD Response:* The clause neither precludes nor requires the use of outside experts in a training capacity. The clause has been drafted to give contractors maximum flexibility to use those resources that are deemed appropriate, based on location, workforce composition, and other factors, to ensure adequate training. d. *Comment:* One respondent recommended that the contractor be permitted to tailor its training program to the size and nature of the overseas work. *DoD Response:* The clause has been revised to require only those contractors (if other than an individual) performing service and construction contracts to fully train and monitor employees regarding severe forms of trafficking in persons, procurement of commercial sex acts, and use of forced labor, since those employees are generally providing direct support to DoD operations and their behavior can more reasonably be monitored. However, all DoD contractors and subcontractors are required to take action against any of their employees who engage in severe forms of trafficking activities or the use of forced labor, regardless of the size or nature of the overseas work. e. *Comment:* One respondent recommended deletion of the requirement for the contractor to develop policy and training relating to the Military Extraterritorial Jurisdiction Act (MEJA). *DoD Response:* DoD has amended the rule to clarify this requirement. Contractors must train their employees about MEJA, not every possible felony committed in the host nation for which MEJA would confer jurisdiction on the United States. f. *Comment:* One respondent recommended revision of the phrase “including removal” to “up to and including removal,” to demonstrate that there is a range of personnel actions that the contractor could take if there is a violation. *DoD Response:* Paragraph (d)(1) of the clause incorporates this recommendation by stating “Such actions may include, but are not limited to * * *”. g. *Comment:* One respondent expressed concern that the rule makes no mention of whether employees terminated for trafficking may be rehired or transferred to another location for additional service. *DOD Response:* Existing laws and regulatory procedures address this issue with regard to employees who are found to be guilty of trafficking. For example, 10 U.S.C. 2408 provides for a fine of up to $500,000 to be assessed against a contractor that employs (in certain positions) a person convicted of fraud or any other felony arising out of a DoD contract. These individuals are listed in the Excluded Parties List System, available to the public at *http://www.epls.gov/.* h. *Comment:* One respondent was concerned with the use of suspension of payments as a remedy, and recommended that DFARS Procedures, Guidance, and Information
(PGI)address procedures that the contracting officer must follow before concluding that there is a failure to comply. *DOD Response:* The authority to suspend payments is modeled after the penalties in paragraph
(d)of clause at FAR 52.223-6, Drug-Free Workplace. Guidance for contracting officers regarding use of this authority has been added at PGI 222.1704. This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. B. Regulatory Flexibility Act DoD does not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule applies only to contracts performed outside the United States, and reinforces existing laws and policies prohibiting trafficking in persons. Therefore, DoD has not performed an initial regulatory flexibility analysis. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2004-D017. C. Paperwork Reduction Act This interim rule contains DFARS policy to supplement the interim FAR rule published at 71 FR 20301 on April 19, 2006. The interim FAR rule established a new contract clause, 52.222-50, Combating Trafficking in Persons, to implement 22 U.S.C. 7104(g), which requires that Federal contracts provide for termination of a contract if the contractor or a subcontractor engages in severe forms of trafficking in persons, the use of forced labor, or procures a commercial sex act during the period of contract performance. The FAR clause applies to contracts for services (other than commercial service contracts under FAR Part 12), and requires the contractor to notify the contracting officer of any information alleging employee misconduct under the clause and any resulting action taken against employees. Comments concerning the information collection requirements of the FAR clause were solicited in the preamble to the interim FAR rule published on April 19, 2006, for submission to the FAR Secretariat in accordance with the procedures specified at 71 FR 20301. This interim rule contains a new clause at DFARS 252.222-7006, Combating Trafficking in Persons, which expands the requirement for contractors to notify the contracting officer of employee misconduct and the resulting action, to all DoD contracts performed outside the United States, including those for supplies, construction, and commercial services. The Office of Management and Budget
(OMB)has approved the information collection requirements of the interim DFARS rule for use through January 31, 2007, under OMB Control Number 0704-0440, in accordance with the emergency processing procedures of 5 CFR 1320.13. DoD invites comments on the following aspects of the interim DFARS rule:
(a)Whether the collection of information is necessary for the proper performance of the functions of DoD, including whether the information will have practical utility;
(b)the accuracy of the estimate of the burden of the information collection;
(c)ways to enhance the quality, utility, and clarity of the information to be collected; and
(d)ways to minimize the burden of the information collection on respondents, including the use of automated collection techniques or other forms of information technology. The following is a summary of the additional information collection requirements that will result from inclusion of the clause at DFARS 252.222-7006 in DoD contracts performed outside the United States for supplies, construction, and commercial services. *Title:* Defense Federal Acquisition Regulation Supplement (DFARS) Subpart 222.17, Combating Trafficking in Persons. *Type of Request:* New collection. *Number of Respondents:* 30. *Responses Per Respondent:* 2. *Annual Responses:* 60. *Average Burden Per Response:* 1 hour. *Annual Burden Hours:* 60. *Needs and Uses:* DoD contracting officers will use this information to monitor contractor compliance with DoD policy for zero tolerance of trafficking in persons. *Affected Public:* Businesses or other for-profit and not-for-profit institutions. *Frequency:* On occasion. Written comments and recommendations on the proposed information collection should be sent to Ms. Hillary Jaffe at the Office of Management and Budget, Desk Officer for DoD, Room 10236, New Executive Office Building, Washington, DC 20503, with a copy to the Defense Acquisition Regulations System, Attn: Ms. Amy Williams, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Comments can be received from 30 to 60 days after the date of this notice, but comments to OMB will be most useful if received by OMB within 30 days after the date of this notice. To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to Defense Acquisition Regulations System, Attn: Ms. Amy Williams, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. D. Determination To Issue an Interim Rule A determination has been made under the authority of the Secretary of Defense that urgent and compelling reasons exist to publish an interim rule prior to affording the public an opportunity to comment on the rule. This interim DFARS rule supplements the interim FAR rule published in the **Federal Register** on April 19, 2006, regarding combating severe forms of trafficking in persons, the use of forced labor, and procurement of commercial sex acts by contractors performing under Federal contracts for services (other than commercial services). The supplemental DFARS coverage is needed to ensure that all DoD contracts performed outside the United States, including those for supplies, construction, and commercial services, address DoD zero-tolerance policy regarding these prohibited activities and provide for suitable penalties on contractors that fail to monitor the conduct of their employees. Comments received in response to this interim rule will be considered in the formation of the final rule. List of Subjects in 48 CFR Parts 212, 222, and 252 Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System. Therefore, 48 CFR parts 212, 222, and 252 are amended as follows: 1. The authority citation for 48 CFR parts 212, 222, and 252 continues to read as follows: Authority: 41 U.S.C. 421 and 48 CFR Chapter 1. PART 212—ACQUISITION OF COMMERCIAL ITEMS 2. Section 212.301 is amended by adding paragraph (f)(x) to read as follows: 212.301 Solicitation provisions and contract clauses for the acquisition of commercial items.
(f)* * *
(x)Use the clause at 252.222-7006, Combating Trafficking in Persons, as prescribed in 222.1705. PART 222—APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS 3. Subpart 222.17 is added to read as follows: Subpart 222.17—Combating Trafficking in Persons Sec. 222.1700 Scope of subpart. 222.1701 Applicability. 222.1702 Definitions. 222.1703 Policy. 222.1704 Violations and remedies. 222.1704-70 Notification to Combatant Commander. 222.1705 Contract clause. Subpart 222.17—Combating Trafficking in Persons 222.1700 Scope of subpart. This subpart also implements DoD policy for combating trafficking in persons in contracts performed outside the United States. 222.1701 Applicability. This subpart also applies to all DoD contracts performed outside the United States. 222.1702 Definitions. *Combatant Commander* , *construction* , *employee* , *service contract* , *severe forms of trafficking in persons* , and *United States* , as used in this subpart, have the meaning given in the clause at 252.222-7006, Combating Trafficking in Persons. 222.1703 Policy.
(1)Contracts performed outside the United States shall—
(i)Prohibit any activities on the part of the contractor that support or promote severe forms of trafficking in persons or use of forced labor;
(ii)Impose suitable penalties on contractors that—
(A)Engage in activities that support or promote severe forms of trafficking in persons or use forced labor; or
(B)Fail to take appropriate action against their employees and subcontractors that engage in or support severe forms of trafficking in persons or use forced labor.
(2)In addition to the prohibitions and penalties stated in paragraph
(1)of this section, contracts performed outside the United States for services or construction shall—
(i)Prohibit any activities on the part of the contractor that promote or support the procurement of commercial sex acts;
(ii)Require contractors to develop policy and procedures that prohibit any activities on the part of contractor employees that support or promote severe forms of trafficking in persons, procurement of commercial sex acts, or use of forced labor; and
(iii)Impose suitable penalties on contractors that—
(A)Fail to monitor the conduct of their employees and subcontractors with regard to severe forms of trafficking in persons, procurement of commercial sex acts, or use of forced labor; or
(B)Fail to take appropriate action against their employees and subcontractors that engage in or support the procurement of commercial sex acts.
(3)See PGI 222.1703 for additional information regarding DoD policy for combating trafficking in persons outside the United States. 222.1704 Violations and remedies.
(a)*Violations.*
(i)The Government may impose the remedies set forth in paragraph
(b)of this section if, during performance of the contract—
(A)The contractor or any contractor employee engages in severe forms of trafficking in persons;
(B)The contractor or any contractor employee uses forced labor; or
(C)The contractor fails to comply with the requirements of the clause at 252.222-7006, Combating Trafficking in Persons.
(ii)In addition to the violations stated in paragraph (a)(i) of this section, the Government may impose the remedies specified in paragraph
(b)of this section if, during performance of a service or construction contract, the contractor or any contractor employee procures a commercial sex act.
(b)*Remedies.* After determining in writing that adequate evidence exists to suspect any of the violations stated in paragraph
(a)of this section, the contracting officer may pursue any of the remedies specified in paragraph
(f)of the clause at 252.222-7006, Combating Trafficking in Persons. These remedies are in addition to any other remedies available to the Government (see PGI 222.1704 for procedures and guidance regarding imposition of such remedies). 222.1704-70 Notification to Combatant Commander. If the contracting officer receives information indicating that the contractor or its subcontractors have failed to comply with paragraph (c), (d), or
(e)of the clause at 252.222-7006, the contracting officer shall, through the contracting officer's local commander or other designated representative, immediately notify the Combatant Commander responsible for the geographical area in which the incident has occurred (see PGI 222.1704-70 for assistance in contacting the responsible Combatant Commander). 222.1705 Contract clause.
(1)Use the clause at 252.222-7006, Combating Trafficking in Persons, in solicitations and contracts when contract performance will be outside the United States.
(2)Do not use the clause at FAR 52.222-50, Combating Trafficking in Persons, in solicitations and contracts that include the clause at 252.222-7006, Combating Trafficking in Persons. PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 4. Section 252.222-7006 is added to read as follows: 252.222-7006 Combating Trafficking in Persons. As prescribed in 222.1705, use the following clause: Combating Trafficking in Persons (OCT 2006)
(a)*Definitions.* As used in this clause— *Coercion* means—
(1)Threats of serious harm to or physical restraint against any person;
(2)Any scheme, plan, or pattern intended to cause a person to believe that failure to perform an act would result in serious harm to or physical restraint against any person; or
(3)The abuse or threatened abuse of the legal process. *Commercial sex act* means any sex act on account of which anything of value is given to or received by any person. *Construction* means construction, alteration, or repair (including dredging, excavating, and painting) of buildings, structures, or other real property. For purposes of this definition, the terms “buildings, structures, or other real property” include, but are not limited to, improvements of all types, such as bridges, dams, plants, highways, parkways, streets, subways, tunnels, sewers, mains, power lines, cemeteries, pumping stations, railways, airport facilities, terminals, docks, piers, wharves, ways, lighthouses, buoys, jetties, breakwaters, levees, canals, and channels. Construction does not include the manufacture, production, furnishing, construction, alteration, repair, processing, or assembling of vessels, aircraft, or other kinds of personal property. *Debt bondage* means the status or condition of a debtor arising from a pledge by the debtor of his or her personal services or of those of a person under his or her control as a security for debt, if the value of those services as reasonably assessed is not applied toward the liquidation of the debt or the length and nature of those services are not respectively limited and defined. *Employee* means an employee of a contractor directly engaged in the performance of work under a Government contract, including all direct cost employees and any other contractor employee who has other than a minimal impact or involvement in contract performance. *Individual* means a contractor that has no more than one employee including the contractor. *Involuntary servitude* includes a condition of servitude induced by means of—
(1)Any scheme, plan, or pattern intended to cause a person to believe that, if the person did not enter into or continue in such conditions, that person or another person would suffer serious harm or physical restraint; or
(2)The abuse or threatened abuse of the legal process (22 U.S.C. 7102(5)). *Service contract* means a contract that directly engages the time and effort of a contractor whose primary purpose is to perform an identifiable task rather than to furnish an end item of supply. *Service (other than commercial)* means a service that does not meet the definition of commercial item in section 2.101 of the Federal Acquisition Regulation. *Severe forms of trafficking in persons* means—
(1)Sex trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform such act has not attained 18 years of age; or
(2)The recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery. *Sex trafficking* means the recruitment, harboring, transportation, provision, or obtaining of a person for the purpose of a commercial sex act. *United States* means the 50 States, the District of Columbia, and outlying areas.
(b)*Policy.* It is the policy of the Department of Defense
(DoD)that trafficking in persons will not be facilitated in any way by the activities of DoD contractors or contractor personnel. DoD will not tolerate severe forms of trafficking in persons or use of forced labor by DoD contractors, DoD subcontractors, or DoD contractor or subcontractor personnel during the period of contract performance. Furthermore, DoD will not tolerate the procurement of commercial sex acts by DoD contractors, DoD subcontractors, or DoD contractor or subcontractor personnel, during the period of performance of service or construction contracts. As delineated in National Security Presidential Directive 22, the United States has adopted a zero tolerance policy regarding contractor personnel who engage in or support trafficking in persons.
(c)*Contractor compliance.*
(1)During the performance of this contract, the Contractor shall comply with the policy of DoD and shall not engage in or support severe forms of trafficking in persons or use forced labor. The Contractor is responsible for knowing and adhering to United States Government zero-tolerance policy and all host nation laws and regulations relating to trafficking in persons and the use of forced labor.
(2)Additionally, if this contract is a service or construction contract, the Contractor shall not engage in or support the procurement of commercial sex acts during the performance of this contract and is responsible for knowing and adhering to United States Government policy and all host nation laws and regulations relating thereto.
(d)*Contractor responsibilities for employee conduct* — *service or construction contracts.* If this contract is a service or construction contract, the Contractor, if other than an individual, shall establish policies and procedures for ensuring that during the performance of this contract, its employees do not engage in or support severe forms of trafficking in persons, procure commercial sex acts, or use forced labor. At a minimum, the Contractor shall—
(1)Publish a statement notifying its employees of the United States Government policy described in paragraph
(b)of this clause and specifying the actions that will be taken against employees for violations of this policy. Such actions may include, but are not limited to, removal from the contract, reduction in benefits, termination of employment, or removal from the host country;
(2)Establish an awareness program to inform employees regarding—
(i)The Contractor's policy of ensuring that employees do not engage in severe forms of trafficking in persons, procure commercial sex acts, or use forced labor;
(ii)The actions that will be taken against employees for violation of such policy; and
(iii)Laws, regulations, and directives that apply to conduct when performance of the contract is outside the United States, including—
(A)All host country Government laws and regulations relating to severe forms of trafficking in persons, procurement of commercial sex acts, and use of forced labor;
(B)All United States laws and regulations on severe forms of trafficking in persons, procurement of commercial sex acts, and use of forced labor that may apply to its employees' conduct in the host nation, including those laws for which jurisdiction is established by the Military Extraterritorial Jurisdiction Act of 2000 (18 U.S.C. 3261-3267) and 18 U.S.C. 3271, Trafficking in persons offenses committed by persons employed by or accompanying the Federal Government outside the United States; and
(C)Directives on trafficking in persons from the Combatant Commander, or the Combatant Commander's designated representative, that apply to contractor employees, such as general orders and military listings of “off-limits” local establishments; and
(3)Provide all employees directly engaged in performance of the contract with—
(i)Any necessary legal guidance and interpretations regarding combating trafficking in persons policies, laws, regulations, and directives applicable to performance in the host country; and
(ii)A copy of the statement required by paragraph (d)(1) of this clause. If this contract is for services (other than commercial), the Contractor shall obtain written agreement from the employee that the employee shall abide by the terms of the statement.
(e)*Employee violations—notification and action.* The Contractor shall—
(1)Inform the Contracting Officer immediately of any information it receives from any source (including host country law enforcement) that alleges a contractor or subcontractor employee has engaged in conduct that violates the policy in paragraph
(b)of this clause. Notification to the Contracting Officer does not alleviate the Contractor's responsibility to comply with applicable host nation laws;
(2)In accordance with its own operating procedures and applicable policies, laws, regulations, and directives, take appropriate action, up to and including removal from the host nation or dismissal, against any of its employees who violate the policy in paragraph
(b)of this clause; and
(3)Inform the Contracting Officer of any actions taken against employees pursuant to this clause.
(f)*Remedies.* In addition to other remedies available to the Government, the Contractor's failure to comply with the requirements of paragraphs (c), (d), (e), or
(g)of this clause may render the Contractor subject to—
(1)Required removal of a Contractor employee or employees from the performance of the contract;
(2)Required subcontractor termination;
(3)Suspension of contract payments;
(4)Loss of award fee, consistent with the award fee plan, for the performance period in which the Government determined Contractor non-compliance;
(5)Termination of the contract for default, in accordance with the Termination clause of this contract; or
(6)Suspension or debarment.
(g)*Subcontracts.* (1)(i) The Contractor shall include the substance of this clause, including this paragraph (g), in all subcontracts performed outside the United States; and
(ii)If this contract is for services (other than commercial), the Contractor shall include the substance of this clause, including this paragraph (g), in all subcontracts performed in the United States for the acquisition of services (other than commercial).
(2)If this contract is a service or construction contract, the Contractor shall conduct periodic reviews of its service and construction subcontractors to verify compliance with their obligations pursuant to paragraph
(d)of this clause.
(3)The Contractor shall—
(i)Immediately inform the Contracting Officer of any information it receives from any source (including host country law enforcement) that alleges a subcontractor has engaged in conduct that violates the policy in paragraph
(b)of this clause. Notification to the Contracting Officer does not alleviate the Contractor's responsibility to comply with applicable host nation laws;
(ii)Take appropriate action, including termination of the subcontract, when the Contractor obtains sufficient evidence to determine that the subcontractor is in non-compliance with its contractual obligations pursuant to this clause; and
(iii)Inform the Contracting Officer of any actions taken against subcontractors pursuant to this clause. (End of Clause) [FR Doc. E6-17984 Filed 10-25-06; 8:45 am] BILLING CODE 5001-08-P DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Part 225 [DFARS Case 2005-D012] RIN 0750-AF21 Defense Federal Acquisition Regulation Supplement; Foreign Acquisition Procedures AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Final rule. SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to delete text addressing internal DoD procedures pertaining to foreign acquisition. This text has been relocated to the DFARS companion resource, Procedures, Guidance, and Information. DATES: *Effective Date:* October 26, 2006. FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone
(703)602-0328; facsimile
(703)602-0350. Please cite DFARS Case 2005-D012. SUPPLEMENTARY INFORMATION: A. Background This final rule deletes DFARS text addressing internal DoD procedures in the following areas: DFARS 225.871-4—Processing of requests for waiver under North Atlantic Treaty Organization cooperative projects. DFARS 225.7017-3—Preparation of determinations regarding award of a contract for ballistic missile defense research, development, test, and evaluation to a foreign source. DFARS 225.7502—Application of the Balance of Payments Program to an acquisition. DFARS 225.7604—Processing of requests for waiver of foreign source restrictions. This text has been relocated to the DFARS companion resource, Procedures, Guidance, and Information (PGI), available at *http://www.acq.osd.mil/dpap/dars/pgi.* DoD published a proposed rule at 71 FR 3448 on January 23, 2006. DoD received no comments on the proposed rule and has adopted the proposed rule as a final rule. However, as a result of the final rule published at 71 FR 39005 on July 11, 2006, which relocated DFARS Subpart 225.6 to 225.76, the text that was designated in the January 23, 2006, proposed rule as DFARS 225.670-4 is now located at DFARS 225.7604. This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. B. Regulatory Flexibility Act DoD certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, *et seq.* , because the rule addresses internal DoD procedural matters and makes no significant change to DoD contracting policy. C. Paperwork Reduction Act The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, *et seq.* List of Subjects in 48 CFR Part 225 Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System. Therefore, 48 CFR part 225 is amended as follows: PART 225—FOREIGN ACQUISITION 1. The authority citation for 48 CFR part 225 continues to read as follows: Authority: 41 U.S.C. 421 and 48 CFR Chapter 1. 2. Section 225.871-4 is amended by revising paragraph
(c)to read as follows: 225.871-4 Statutory waivers.
(c)To request a waiver under a cooperative project, follow the procedures at PGI 225.871-4. 3. Section 225.7017-3 is amended by revising paragraph
(b)to read as follows: 225.7017-3 Exceptions.
(b)If the head of the contracting activity certifies in writing, before contract award, that a U.S. firm cannot competently perform a contract for RDT&E at a price equal to or less than the price at which a foreign government or firm would perform the RDT&E. The contracting officer or source selection authority, as applicable, shall make a determination, in accordance with PGI 225.7017-3(b), that will be the basis for the certification. 4. Section 225.7502 is revised to read as follows: 225.7502 Procedures. If the Balance of Payments Program applies to the acquisition, follow the procedures at PGI 225.7502. 5. Section 225.7604 is revised to read as follows: 225.7604 Waivers. The Secretary of Defense may waive this restriction on the basis of national security interests. To request a waiver, follow the procedures at PGI 225.7604. [FR Doc. E6-17982 Filed 10-25-06; 8:45 am] BILLING CODE 5001-08-P DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 225 and 252 RIN 0750-AF48 Defense Federal Acquisition Regulation Supplement; PAN Carbon Fiber—Deletion of Obsolete Restriction (DFARS Case 2006-D033) AGENCY: Defense Acquisition Regulations System, Department of Defense, (DoD). ACTION: Final rule. SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to remove obsolete text relating to a restriction on the acquisition of polyacrylonitrile
(PAN)carbon fiber from foreign sources. The restriction expired on May 31, 2006. EFFECTIVE DATE: October 26, 2006. FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone
(703)602-0328; facsimile
(703)602-0350. Please cite DFARS Case 2006-D033. SUPPLEMENTARY INFORMATION: A. Background DFARS 225.7103 and the corresponding contract clause at 252.225-7022 restricted the acquisition of PAN carbon fiber from foreign sources. As specified in DFARS 225.7103-1 and 225.7103-3, the period for applicability of the restriction ended on May 31, 2006. Therefore, this final rule removes the DFARS text that has become obsolete. This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. B. Regulatory Flexibility Act This rule will not have a significant cost or administrative impact on contractors or offerors, or a significant effect beyond the internal operating procedures of DoD. Therefore, publication for public comment is not required. However, DoD will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 2006-D033. C. Paperwork Reduction Act The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, *et seq.* List of Subjects in 48 CFR Parts 225 and 252 Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System. Therefore, 48 CFR parts 225 and 252 are amended as follows: 1. The authority citation for 48 CFR parts 225 and 252 continues to read as follows: Authority: 41 U.S.C. 421 and 48 CFR Chapter 1. PART 225—FOREIGN ACQUISITION 225.7103 through 225.7103-3 [Removed] 2. Sections 225.7103 through 225.7103-3 are removed. PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 252.225-7022 [Removed and Reserved] 3. Section 252.225-7022 is removed and reserved. [FR Doc. E6-17955 Filed 10-25-06; 8:45 am] BILLING CODE 5001-08-P DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Part 252 RIN 0750-AF47 Defense Federal Acquisition Regulation Supplement; Definition of Terrorist Country (DFARS Case 2006-D034) AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Final rule. SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to remove Libya from the list of terrorist countries subject to a prohibition on DoD contract awards. This change is a result of the Department of State's removal of Libya from the list of countries designated as state sponsors of terrorism. DATES: *Effective Date:* October 26, 2006. FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone
(703)602-0328; facsimile
(703)602-0350. Please cite DFARS Case 2006-D034. SUPPLEMENTARY INFORMATION: A. Background The provision at DFARS 252.209-7001, Disclosure of Ownership or Control by the Government of a Terrorist Country, implements 10 U.S.C. 2327, which prohibits DoD from entering into a contract with a firm that is owned or controlled by the government of a country that has been determined by the Secretary of State to repeatedly provide support for acts of international terrorism. This final rule removes Libya from the terrorist countries listed in the provision at DFARS 252.209-7001, since the Secretary of State has removed Libya from the list of designated state sponsors of terrorism. This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. B. Regulatory Flexibility Act This rule will not have a significant cost or administrative impact on contractors or offerors, or a significant effect beyond the internal operating procedures of DoD. Therefore, publication for public comment is not required. However, DoD will consider comments from small entities concerning the affected DFARS subpart in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 2006-D034. C. Paperwork Reduction Act The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, *et seq.* List of Subjects in 48 CFR Part 252 Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System. Therefore, 48 CFR part 252 is amended as follows: PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 1. The authority citation for 48 CFR Part 252 continues to read as follows: Authority: 41 U.S.C. 421 and 48 CFR Chapter 1. 252.209-7001 [Amended] 2. Section 252.209-7001 is amended as follows: a. By revising the clause date to read “(OCT 2006)”; and b. In paragraph (a)(2), in the second sentence, by removing “Libya,”. [FR Doc. E6-17981 Filed 10-25-06; 8:45 am] BILLING CODE 5001-08-P 71 207 Thursday, October 26, 2006 Proposed Rules DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2006-26110; Directorate Identifier 2006-NM-112-AD] RIN 2120-AA64 Airworthiness Directives; Boeing Model 747-400, 747-400D, and 747-400F Series Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: The FAA proposes to adopt a new airworthiness directive
(AD)for certain Boeing Model 747-400, 747-400D, and 747-400F series airplanes. This proposed AD would require replacement of an electronic flight information system/engine indicating and crew alerting system (EFIS/EICAS) interface unit
(EIU)located on the E2-6 shelf of the main equipment center with a new or modified EIU. This proposed AD results from two instances where all six integrated display units
(IDUs)on the flight deck panels went blank in flight. We are proposing this AD to prevent loss of the IDUs due to failure of all three EIUs, which could result in the inability of the flightcrew to maintain safe flight and landing of the airplane. DATES: We must receive comments on this proposed AD by December 11, 2006. ADDRESSES: Use one of the following addresses to submit comments on this proposed AD. • *DOT Docket Web site:* Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • *Government-wide rulemaking Web site:* Go to *http://www.regulations.gov* and follow the instructions for sending your comments electronically. • *Mail:* Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 20590. • *Fax:*
(202)493-2251. • *Hand Delivery:* Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207, for the service information identified in this proposed AD. FOR FURTHER INFORMATION CONTACT: Jay Yi, Aerospace Engineer, Systems and Equipment Branch, ANM-130S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone
(425)917-6494; fax
(425)917-6590. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed in the ADDRESSES section. Include the docket number “FAA-2006-26110; Directorate Identifier 2006-NM-112-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments. We will post all comments we receive, without change, to *http://dms.dot.gov* , including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of that Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78), or you may visit *http://dms.dot.gov.* Examining the Docket You may examine the 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 DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the Docket Management System receives them. Discussion We have received a report indicating that all six integrated display units
(IDUs)on the flight deck panels went blank in flight, on two Boeing Model 747-400 series airplanes. With these failures the primary displays of attitude, airspeed, and altitude are lost. Also, engine, navigation, and other status and necessary displays are lost. In both instances, the flightcrew was able to land the airplane safely. The six IDUs were returned to normal operation after cycling (pulling out and then pushing back) the circuit breakers for the electronic flight information system/engine indicating and crew alerting system (EFIS/EICAS) interface units (EIUs). Investigation revealed that all six IDUs blanked because all three of the EIUs stopped transmitting data to the IDUs over a period of time. This condition, if not corrected, could result in the inability of the flightcrew to maintain safe flight and landing of the airplane. Other Related Rulemaking On May 5, 2004, we issued AD 2004-10-05, amendment 39-13635 (69 FR 28051, May 18, 2004), applicable to certain Boeing Model 747-400, 747-400D, and 747-400F series airplanes; Model 757-200, 757-200PF, and 757-200CB series airplanes; and Model 767-200, 767-300, and 767-300F series airplanes. That AD requires modification of the air data computer
(ADC)system, which involves installing certain new circuit breakers, relays, and related components and making various wiring changes in and between the flight deck and main equipment center. For certain airplanes, that AD also requires accomplishment of various other actions prior to or concurrently with the modification of the ADC system. For certain airplanes, that AD also contains an option that extends the compliance time to accomplish the modification of the ADC system. Specifically, paragraph (d)(1) of AD 2004-10-05 requires the following concurrent actions for Model 747-400, 747-400D, and 747-400F series airplanes: Replacement of EIUs with improved EIUs; installation of new software in the IDUs and EIUs; replacement of certain central maintenance computers
(CMCs)with improved CMCs and modification of related wiring and the data loader control panel; and installation of new software in the CMC; as applicable. Replacing all three EIUs with new or modified EIUs in accordance with paragraph
(f)of this proposed AD is acceptable for compliance with the replacement of EIUs with improved EIUs required by paragraph (d)(1) of AD 2004-10-05. All other actions required by paragraph (d)(1) of AD 2004-10-05 must be complied with. Relevant Service Information We have reviewed Boeing Service Bulletin 747-31-2368, Revision 1, dated July 24, 2006. The service bulletin describes procedures for replacing the three EIUs, part number (P/N) 622-8589-104, located on the E2-6 shelf of the main equipment center with EIUs that have auto restart circuitry, P/N 622-8589-105. Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. Boeing Service Bulletin 747-31-2368 refers to Rockwell Collins Service Bulletin EIU-7000-31-502, dated March 21, 2006, as an additional source of service information for modifying an EIU by adding auto restart circuitry, which converts EIU P/N 622-8589-104 to P/N 622-8589-105. FAA's Determination and Requirements of the Proposed AD We have evaluated all pertinent information and identified an unsafe condition that is likely to exist or develop on other airplanes of this same type design. For this reason, we are proposing this AD, which would require accomplishing the actions specified in the service information described previously, except as discussed under “Difference Between the Proposed AD and Service Bulletin.” Difference Between the Proposed AD and Service Bulletin Boeing Service Bulletin 747-31-2368 recommends replacing all three EIUs located on the E2-6 shelf of the main equipment center with improved EIUs. However, this proposed AD would require replacing only one of the three EIUs. Since the three EIUs are identical to provide triple redundancy, we have determined that replacement of at least one EIU will adequately address the unsafe condition of this proposed AD. We have coordinated this difference with Boeing. Costs of Compliance There are about 639 airplanes of the affected design in the worldwide fleet. This proposed AD would affect about 79 airplanes of U.S. registry. The proposed actions would take about 1 work hour per airplane, at an average labor rate of $80 per work hour. Required parts would cost about $2,840 per airplane (to replace one EIU). Based on these figures, the estimated cost of the proposed AD for U.S. operators is $230,680, or $2,920 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 proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would 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 the proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the 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 proposed 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, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 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): **Boeing** : Docket No. FAA-2006-26110; Directorate Identifier 2006-NM-112-AD. Comments Due Date
(a)The FAA must receive comments on this AD action by December 11, 2006. Affected ADs
(b)Accomplishing paragraph
(f)of this AD for all three electronic flight information system/engine indicating and crew alerting system (EFIS/EICAS) interface units
(EIUs)terminates certain requirements of AD 2004-10-05, amendment 39-13635. Applicability
(c)This AD applies to Boeing Model 747-400, 747-400D, and 747-400F series airplanes, certificated in any category; as identified in Boeing Service Bulletin 747-31-2368, Revision 1, dated July 24, 2006. Unsafe Condition
(d)This AD results from two instances where all six integrated display units
(IDUs)on the flight deck panels went blank in flight. We are issuing this AD to prevent loss of the IDUs due to failure of all three EIUs, which could result in the inability of the flightcrew to maintain safe flight and landing 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. Replacement
(f)Within 60 months after the effective date of this AD, replace at least one of the three EIUs, part number (P/N) 622-8589-104, located on the E2-6 shelf of the main equipment center with a new or modified EIU, P/N 622-8589-105, in accordance with the Accomplishment Instructions of Boeing Service Bulletin 747-31-2368, Revision 1, dated July 24, 2006. Note 1: Boeing Service Bulletin 747-31-2368, Revision 1, dated July 24, 2006, refers to Rockwell Collins Service Bulletin EIU-7000-31-502, dated March 21, 2006, as an additional source of service information for modifying an EIU by adding auto restart circuitry, which converts EIU P/N 622-8589-104 to P/N 622-8589-105. Credit for Previous Service Bulletin
(g)Actions done before the effective date of this AD in accordance with Boeing Service Bulletin 747-31-2368, dated November 22, 2005 (Revision 1 of the service bulletin specifies that the original issue is dated December 1, 2005), are acceptable for compliance with the corresponding requirements of paragraph
(f)of this AD. Credit for AD 2004-10-05
(h)Replacing all three EIUs with new or modified EIUs in accordance with paragraph
(f)of this AD is acceptable for compliance with only the EIU replacement of paragraph (d)(1) of AD 2004-10-05. All other actions required by paragraph (d)(1) of AD 2004-10-05 must be complied with. Alternative Methods of Compliance (AMOCs) (i)(1) The Manager, Seattle 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.
(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. Issued in Renton, Washington, on October 13, 2006. Kalene C. Yanamura, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E6-17655 Filed 10-25-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2005-20850; Directorate Identifier 2005-NE-05-AD] RIN 2120-AA64 Airworthiness Directives; Teledyne Continental Motors GTSIO-520 Series Reciprocating Engines AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: The FAA proposes to supersede an existing airworthiness directive
(AD)for Teledyne Continental Motors
(TCM)GTSIO-520 series reciprocating engines. That AD currently requires initial and repetitive visual inspections of the starter adapter assembly and crankshaft gear and unscheduled visual inspections of the starter adapter assembly and crankshaft gear due to a rough-running engine. That AD also requires replacement of the starter adapter shaft gear needle bearing with a certain bushing and installation of a certain TCM service kit at the next engine overhaul, or at the next starter adapter replacement, whichever occurs first. This proposed AD would require the inspection ordered in paragraph
(h)of AD 2005-20-04 to be done every 100 hours time-in-service (TIS), or annually. This proposed AD results from an error discovered in AD 2005-20-04. We are proposing this AD to prevent failure of the starter adapter assembly and or crankshaft gear, resulting in failure of the engine and possible forced landing. DATES: We must receive any comments on this proposed AD by December 26, 2006. ADDRESSES: Use one of the following addresses to comment on this proposed AD. • DOT Docket Web site: Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • Government-wide rulemaking Web site: Go to *http://www.regulations.gov* and follow the instructions for sending your comments electronically. • Mail: Docket Management Facility; U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 20590-0001. • Fax:
(202)493-2251. • Hand Delivery: Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. You can get the service information identified in this proposed AD from Teledyne Continental Motors, Inc., PO Box 90, Mobile, AL 36601; telephone
(251)438-3411. FOR FURTHER INFORMATION CONTACT: Jerry Robinette, Senior Engineer, Propulsion, Atlanta Aircraft Certification Office, FAA, Small Airplane Directorate, One Crown Center, 1895 Phoenix Blvd., Suite 450, Atlanta, GA 30349; telephone:
(770)703-6096, fax:
(770)703-6097. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to send any written relevant data, views, or arguments regarding this proposal. Send your comments to an address listed under ADDRESSES . Include “Docket No. FAA-2005-20850; Directorate Identifier 2005-NE-05-AD” in the subject line of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments. We will post all comments we receive, without change, to *http://dms.dot.gov* , including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of the DMS Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78) or you may visit *http://dms.dot.gov.* Examining the AD Docket You may examine the docket that contains the proposal, any comments received and any final disposition in person at the DMS Docket Offices between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Office (telephone
(800)647-5227) is located on the plaza level of the Department of Transportation Nassif Building at the street address stated in ADDRESSES . Comments will be available in the AD docket shortly after the DMS receives them. Discussion On September 20, 2005, the FAA issued AD 2005-20-04, Amendment 39-14297 (70 FR 56355, September 27, 2005). That AD requires initial and repetitive visual inspections of the starter adapter assembly and crankshaft gear and unscheduled visual inspections of the starter adapter assembly and crankshaft gear due to a rough-running engine. That AD also requires replacement of the starter adapter shaft gear needle bearing with a certain bushing and installation of a certain TCM service kit at the next engine overhaul, or at the next starter adapter replacement, whichever occurs first. That AD resulted from six service difficulty reports and one fatal accident report that related to failed starter adapter assemblies. Actions Since AD 2005-20-04 Was Issued Since we issued that AD, we discovered an error in paragraph (h). In that paragraph, we specify an inspection at the next 100-hour or annual inspection, whichever occurs first. However, because most of the airplanes are privately owned and operate under 14 CFR part 91, they are not required to perform 100-hour inspections. This proposed AD would correct that error and require the inspections every 100 hours TIS, instead of at the next 100-hour inspection. Also, since we issued AD 2005-20-04, TCM revised the mandatory service bulletin required by this AD. It is now identified as Mandatory Service Bulletin
(MSB)No. MSB94-4G, dated October 31, 2005, and includes a service kit with new, rather than rebuilt parts. Relevant Service Information We have reviewed and approved the technical contents of Teledyne Continental Aircraft Engine, MSB94-4G, dated October 31, 2005 that provides inspection and replacement procedures for the starter adapter assembly and crankshaft gear. That MSB also describes procedures for replacement of the needle bearing, part number (P/N) 537721, with P/N 654472. That MSB also describes procedures for installation of TCM service kits EQ6642
(new)or EQ6642R (rebuilt). Differences Between the Proposed AD and the Service Information Although TCM MSB No. MSB94-4G, dated October 31, 2005, applies to GIO-550 and GTSIO-520 series reciprocating engines, this proposed AD would only apply to GTSIO-520 series reciprocating engines. Also, although that MSB mandates in Part 1, that magnetos must be overhauled and periodically inspected at specified times, this proposed AD would not mandate those actions. FAA's Determination and Requirements of the Proposed AD We have evaluated all pertinent information and identified an unsafe condition that is likely to exist or develop on other products of this same type design. For that reason, we are proposing this AD, which would require: • Initial and repetitive visual inspections of the starter adapter assembly and crankshaft gear, and replacement of components as necessary. • Unscheduled visual inspections of the starter adapter assembly and crankshaft gear due to a rough-running engine, and replacement of components as necessary. • Replacement of the starter adapter shaft gear needle bearing, P/N 537721 with bushing, P/N 654472. • Inspection and replacement of components specified in Part 2 of the MSB as necessary every 100 hours TIS or annually, whichever occurs first. • Inspection of starter adapters with more or less than 400 hours TIS or unknown TIS. • Installation of TCM service kit, P/N EQ6642 or P/N EQ6642R, at next engine overhaul, or at next starter adapter replacement, whichever occurs first. The proposed AD would require you to use the service information described previously to perform the inspections and replacements. Costs of Compliance We estimate that this AD will affect 4,240 engines installed on airplanes of U.S. registry. We also estimate that it would take about one work-hour per engine to perform the inspection, about one work-hour per engine to perform the proposed bushing installation and about six work-hours per engine to install the TCM service kit. The average labor rate is $80 per work-hour. We estimate that about 25 percent of the engines will require an unscheduled (rough-running engine) inspection and about half of the engines will require the bushing and TCM service kit. Required bushings would cost about $16 per engine and service kits about $800 per engine. Based on these figures, we estimate the total cost of the proposed AD to U.S. operators to be $6,393,432. 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 proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would 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 the proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Would 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 proposed AD. 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, Safety. The Proposed Amendment Under the authority delegated to me by the Administrator, the Federal Aviation Administration proposes to amend 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 39-14297 (70 FR 56355, September 27, 2005) and by adding a new airworthiness directive, Amendment 39-XXXXX, to read as follows: **Teledyne Continental Motors:** Docket No. FAA-2005-20850; Directorate Identifier 2005-NE-05-AD. Comments Due Date
(a)The Federal Aviation Administration
(FAA)must receive comments on this airworthiness directive
(AD)action by December 26, 2006. Affected ADs
(b)This AD supersedes AD 2005-20-04, Amendment 39-14297. Applicability
(c)This AD applies to Teledyne Continental Motors
(TCM)GTSIO-520 series reciprocating engines. These engines are installed on, but not limited to, Twin Commander (formerly Aero Commander) model 685, Cessna model 404, 411 series, and 421 series, British Aerospace, Aircraft Group, Scottish Division model B.206 series 2 and Aeronautica Macchi model AM-3 airplanes. Unsafe Condition
(d)This AD results from an error discovered in AD 2005-20-04. We are issuing this AD to prevent failure of the starter adapter assembly and or crankshaft gear, resulting in failure of the engine and possible forced landing. 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. Starter Adapter Shaft Gear Needle Bearing Replacement
(f)If, during an inspection required by paragraph (g), (h), (i), or
(j)of this AD, you find needle bearing, part number (P/N) 537721, installed in the crankcase, replace it with a serviceable bushing, before reassembling components. Use the bushing installation procedure specified in Part 4 of TCM Mandatory Service Bulletin
(MSB)No. MSB94-4G, dated October 31, 2005. Unscheduled Inspections for Rough-Running Engines
(g)For any engine that experiences rough running conditions regardless of time-in-service (TIS), do the following:
(1)Before further flight, perform the inspection procedures specified in Part 1 and Part 3 of TCM MSB No. MSB94-4G, dated October 31, 2005, and replace components as necessary.
(2)An engine is considered rough-running if there is a sudden increase in the perceived vibration levels that cannot be cleared by adjustment of the engine controls; particularly the fuel mixture setting. Information on rough running engines can be found in the aircraft manufacturer's Airplane Flight Manual, Pilot's Operating Handbook, or Aircraft Owners Manual. 100-Hour and Annual Inspections
(h)For any engine that has been inspected using paragraph
(h)of AD 2005-20-04 and the 100-hour inspection procedures or 100 hour TIS intervals or annual inspection procedures, continue the inspections as follows:
(1)Perform the inspection procedures specified in Part 2 of TCM MSB No. MSB94-4G, dated October 31, 2005 and replace components as necessary at each 100 hour TIS interval (plus or minus 10 hours TIS) or annual inspection, whichever occurs first.
(2)Thereafter, at each 100 hour TIS interval (plus or minus 10 hours TIS) perform repetitive inspections and component replacements as specified in paragraph (h)(1) of this AD.
(i)For any engine that has not been inspected using paragraph
(h)of AD 2005-20-04, within 25 hours TIS or at the annual inspection, whichever occurs first, do the following:
(1)Perform the inspection procedures specified in Part 2 of TCM MSB No. MSB94-4G, dated October 31, 2005 and replace components as necessary.
(2)Thereafter, at each 100-hour TIS interval (plus or minus 10 hours TIS) perform repetitive inspections and component replacements as specified in paragraph (i)(1) of this AD.
(3)If the inspection is performed at more than 100 hour intervals, subtract the additional hours from the next scheduled 100 hour inspection. Starter Adapters With 400 Hours or More Time-In-Service
(TIS)or Unknown TIS
(j)For any starter adapter with 400 hours or more TIS or unknown TIS on the effective date of this AD, do the following:
(1)Within 25 hours TIS, perform the inspection procedures specified in Part 3 of TCM MSB No. MSB94-4G, dated October 31, 2005, and replace components as necessary.
(2)Thereafter, at 400-hour TIS intervals, (plus or minus 10 hours TIS), perform repetitive inspections and component replacements specified in Part 3 of TCM MSB No. MSB94-4G, dated October 31, 2005, and replace components as necessary. Starter Adapters With Fewer Than 400 Hours TIS
(k)For any starter adapter with fewer than 400 hours TIS on the effective date of this AD, do the following:
(1)Upon accumulation of 400 hours TIS, (plus or minus 10 hours TIS), perform the inspection procedures specified in Part 3 of TCM MSB No. MSB94-4G, dated October 31, 2005, and replace components as necessary.
(2)Thereafter, at 400-hour TIS intervals, (plus or minus 10 hours TIS), perform repetitive inspections and component replacements, as specified in Part 3 of TCM MSB No. MSB94-4G, dated October 31, 2005, and replace components as necessary. Installation of TCM Service Kit, EQ6642 or EQ6642R
(l)At the next engine overhaul or starter adapter replacement after the effective date of this AD, whichever occurs first, do the following:
(1)Install TCM service kit, P/N EQ6642
(new)or EQ6642R (rebuilt). Use the service kit installation procedures specified in Part 5 of TCM MSB No. MSB94-4G, dated October 31, 2005.
(2)Continue performing the inspections and component replacements specified in paragraphs (g), (h), (i),
(j)and
(k)of this AD. Prohibition of Special Flight Permits for Rough-Running Engines
(m)Special flight permits are prohibited for rough-running engines described in paragraph (g)(2) of this AD. Alternative Methods of Compliance (AMOCs)
(n)The Manager, Atlanta Aircraft Certification Office, FAA, 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
(o)None. Issued in Burlington, Massachusetts, on October 18, 2006. Thomas A. Boudreau, Acting Manager, Engine and Propeller Directorate, Aircraft Certification Service. [FR Doc. E6-17935 Filed 10-25-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF LABOR Mine Safety and Health Administration 30 CFR Part 100 RIN 1219-AB51 Criteria and Procedures for Proposed Assessment of Civil Penalties AGENCY: Mine Safety and Health Administration, Labor. ACTION: Reopening of comment period. SUMMARY: The Mine Safety and Health Administration
(MSHA)is reopening the comment period to the proposed rule amending the criteria and procedures for proposed assessment of civil penalties. The proposed rule was published on September 8, 2006. DATES: The comment period will close on November 9, 2006. ADDRESSES: Identify all comments by “RIN: 1219-AB51” and send them to MSHA as follows:
(1)Electronically through the Federal e-Rulemaking portal at *http://www.regulations.gov* (Follow the online instructions for submitting comments) or by e-mail to *zzMSHA-comments@dol.gov.*
(2)By facsimile to 202-693-9441.
(3)By regular mail to MSHA, Office of Standards, Regulations, and Variances, 1100 Wilson Boulevard, Room 2350, Arlington, Virginia 22209-3939.
(4)By hand delivery to MSHA, 1100 Wilson Boulevard, 21st Floor, Arlington, Virginia. Leave the package at the receptionist's desk. FOR FURTHER INFORMATION CONTACT: Patricia W. Silvey at 202-693-9440 (Voice), 202-693-9441 (Facsimile), or *silvey.patricia@dol.gov* (E-mail). SUPPLEMENTARY INFORMATION: On September 8, 2006 (71 FR 53054), MSHA published a proposed rule amending its civil penalty regulations. The proposed rule would increase penalty amounts, implement new requirements of the Mine Improvement and New Emergency Response Act of 2006 (MINER Act) amendments to the Mine Safety and Health Act of 1977 (Mine Act), and revise Agency procedures for proposing civil penalties. MSHA requested comments on or before October 23, 2006. In addition, MSHA held six public hearings on September 26, September 28, October 4, October 6, 2006, October 17, and October 19, 2006. At the public hearings held in Charleston, West Virginia, on October 17, and Pittsburgh, Pennsylvania, on October 19, 2006, MSHA stated that the proposed rule includes a requirement that requests for safety and health conferences be in writing. MSHA further stated that the Agency is considering adding a provision that such requests for a conference include a brief statement of the reason why each citation or order should be conferenced. MSHA stated that such a change would assure that parties requesting a conference focus on the issue to be discussed at the conference. In addition, this change would help expedite the conference process by providing the District Manager with necessary information prior to conducting the conference. MSHA requested comments on such a provision. In addition, in response to comments at each of the public hearings, MSHA clarified that the proposed deletion of the single penalty assessment would be replaced with the regular penalty assessment. Thus, under the proposed rule, all violations that are now processed under the existing single penalty provision would be processed under the proposed regular assessment formula. MSHA is reopening the public comment period for 2 weeks so that interested parties can address the issues. MSHA welcomes comment from all interested parties. Dated: October 23, 2006. Richard E. Stickler, Assistant Secretary for Mine Safety and Health. [FR Doc. 06-8933 Filed 10-24-06; 10:53 am]
Connectionstraces to 19
Traces to 19 documents
U.S. Code
- Rules and regulations§ 7805
- Rule making§ 553
- Avoidance of duplicative or unnecessary analyses§ 605
- Establishment, functions, and activities§ 272
- Prevention of trafficking§ 7104
- Renumbered § 4656]§ 2408
- Definitions§ 601
- Periodic review of rules§ 610
- Definitions§ 7102
- Trafficking in persons offenses committed by persons employed by or accompanying the Federal Government outside the United States§ 3271
- Purposes§ 3501
- Renumbered § 4871]§ 2327
- Federal Aviation Administration§ 106
register
19 references not yet in our index
- 26 CFR 1
- T.D. 9244
- 33 CFR 100
- 5 USC 601-612
- 44 USC 3501-3520
- 2 USC 1531-1538
- 42 USC 4321-4370f
- 33 USC 1233
- 41 USC 421
- Pub. L. 108-193
- Pub. L. 109-164
- Pub. L. 103-355
- 5 CFR 1320.13
- 18 USC 3261-3267
- 48 CFR 225
- 48 CFR 252
- 14 CFR 39
- 14 CFR 91
- 30 CFR 100
Citation graph
cites case law
Rules and Regulations
Correcting amendment
Cite26 CFR 1
Treas. Dec.T.D. 9244
Cite33 CFR 100
Cites 38 · showing 12Cited by 0 across 0 sources