Rules and Regulations. Final rule

57,825 words·~263 min read·/register/2007/06/14/07-2935

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BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-27849; Directorate Identifier 2006-NM-249-AD; Amendment 39-15094; AD 2007-12-16] RIN 2120-AA64 Airworthiness Directives; Dassault Model Falcon 2000EX and Falcon 900EX Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. SUMMARY: We are adopting a new airworthiness directive

(AD)for the products listed above. This AD results from mandatory continuing airworthiness information

(MCAI)issued by an airworthiness authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as some stringer reinforcements (F900DX) and some rivets (F900DX/F2000EX) missing from the skin panels on each side of the fuselage between frames 9 and 10 on certain Falcon 900DX and Falcon 2000EX EASy aircraft; this situation affects the structural integrity of the fuselage. We are issuing this AD to require actions to correct the unsafe condition on these products. DATES: This AD becomes effective July 19, 2007. The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of July 19, 2007. ADDRESSES: You may examine the AD docket on the Internet at *http://dms.dot.gov* or in person at the Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC. FOR FURTHER INFORMATION CONTACT: Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-1137; fax

(425)227-1149. SUPPLEMENTARY INFORMATION: Discussion The FAA is implementing a new process for streamlining the issuance of ADs related to MCAI. This streamlined process will allow us to adopt MCAI safety requirements in a more efficient manner and will reduce safety risks to the public. This process continues to allow all FAA AD issuance processes to meet legal, economic, Administrative Procedure Act, and **Federal Register** requirements. We also continue to meet our technical decision-making responsibilities to identify and correct unsafe conditions on U.S.-certificated products. This AD references the MCAI and related service information that we considered in forming the engineering basis to correct the unsafe condition. The AD contains text copied from the MCAI and for this reason might not follow our plain language principles. We issued a notice of proposed rulemaking

(NPRM)to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the **Federal Register** on April 12, 2007 (72 FR 18415). That NPRM proposed to require inspecting skin panels on each side of the fuselage between frames 9 and 10, including holes and structure, where missing rivets are found, adding missing rivets and stringer caps, as applicable, and contacting the manufacturer if the holes are out-of-round beyond tolerance, or if cracks are found, as applicable. The MCAI states that following the incorporation of a design change to the Karman fairing, it has been determined that some stringer reinforcements (F900DX) and some rivets (F900DX/F2000EX) are missing from the skin panels on each side of the fuselage between frames 9 and 10 on certain Falcon 900DX and Falcon 2000EX EASy aircraft. The MCAI was issued to recover the certificated structural strength by adding the missing rivets and checking the condition of the adjacent structure, and to add the missing stringer caps on F900DX (as appropriate). This situation affects the structural integrity of the fuselage and may lead to an unsafe condition if left uncorrected. Comments We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public. Conclusion We reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed. Differences Between This AD and the MCAI or Service Information We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable in a U.S. court of law. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information. We might also have required different actions in this AD from those in the MCAI in order to follow our FAA policies. Any such differences are described in a separate paragraph of the AD. These requirements, if any, take precedence over the actions copied from the MCAI. Costs of Compliance We estimate that this AD will affect about 2 products of U.S. registry. We also estimate that it will take about 170 work-hours per product to comply with this AD. The average labor rate is $80 per work-hour. Required parts will cost $0 per product. Where the service information lists required parts costs that are covered under warranty, we have assumed that there will be no charge for these parts. As we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $27,200, or $13,600 per product. 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 determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that this AD:

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

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

(3)Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD Docket. Examining the AD Docket You may examine the AD docket on the Internet at *http://dms.dot.gov* ; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone

(800)647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by adding the following new AD: **2007-12-16 Dassault Aviation:** Amendment 39-15094. Docket No. FAA-2007-27849; Directorate Identifier 2006-NM-249-AD. Effective Date

(a)This airworthiness directive

(AD)becomes effective July 19, 2007. Affected ADs

(b)None. Applicability

(c)This AD applies to Dassault Model Falcon 2000EX airplanes, S/N (serial number) 82; and Model Falcon 900EX (version F900DX) airplanes, S/Ns 601 through 605; certificated in any category. Reason

(d)The mandatory continuing airworthiness information

(MCAI)states that following the incorporation of a design change to the Karman fairing, it has been determined that some stringer reinforcements (F900DX) and some rivets (F900DX/F2000EX) are missing from the skin panels on each side of the fuselage between frames 9 and 10 on certain Falcon 900DX and Falcon 2000EX EASy aircraft. This situation affects the structural integrity of the fuselage and may lead to an unsafe condition if left uncorrected. The MCAI was issued to recover the certificated structural strength by adding the missing rivets and checking the condition of the adjacent structure, and to add the missing stringer caps on F900DX (as appropriate). These actions include inspecting the area, including holes and structure, where missing rivets are found, and contacting the manufacturer if the holes are out-of-round beyond tolerance, or if cracks are found, as applicable. Actions and Compliance

(e)Within 3 months after the effective date of this AD, unless already done, do the following actions: Inspect and repair the aircraft in accordance with the instructions of Dassault Service Bulletin F900EX-308, dated October 18, 2006, for version F900DX, S/N 601 through 605; and Dassault Service Bulletin F2000EX-133, dated September 28, 2006, for Model F2000EX S/N 82. FAA AD Differences Note: This AD differs from the MCAI and/or service information as follows: No differences. Other FAA AD Provisions

(f)The following provisions also apply to this AD:

(1)*Alternative Methods of Compliance (AMOCs):* The Manager, International Branch, ANM-116, FAA, Transport Airplane Directorate, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to ATTN: Tom Rodriguez, Aerospace Engineer, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-1137, fax

(425)227-1149. Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector

(PI)in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO.

(2)*Airworthy Product:* For any requirement in this AD to obtain corrective actions from a manufacturer or other source, use these actions if they are FAA-approved. Corrective actions are considered FAA-approved if they are approved by the State of Design Authority (or their delegated agent). You are required to assure the product is airworthy before it is returned to service.

(3)*Reporting Requirements:* For any reporting requirement in this AD, under the provisions of the Paperwork Reduction Act, the Office of Management and Budget

(OMB)has approved the information collection requirements and has assigned OMB Control Number 2120-0056. Related Information

(g)Refer to MCAI European Aviation Safety Agency

(EASA)Emergency Airworthiness Directive 2006-0320-E, dated October 18, 2006; Dassault Service Bulletin F900EX-308, dated October 18, 2006; and Dassault Service Bulletin F2000EX-133, dated September 28, 2006; for related information. Material Incorporated by Reference

(h)You must use Dassault Service Bulletin F900EX-308, dated October 18, 2006; or Dassault Service Bulletin F2000EX-133, dated September 28, 2006; as applicable, unless the AD specifies otherwise.

(1)The Director of the Federal Register approved the incorporation by reference of this service information under 5 U.S.C. 552(a) and 1 CFR part 51.

(2)For service information identified in this AD, contact Dassault Falcon Jet, P.O. Box 2000, South Hackensack, New Jersey 07606.

(3)You may review copies at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: *http://www.archives.gov/federal-register/cfr/ibr-locations.html* . Issued in Renton, Washington, on June 1, 2007. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-11203 Filed 6-13-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-27358; Directorate Identifier 2006-NM-270-AD; Amendment 39-15098; AD 2007-12-20] RIN 2120-AA64 Airworthiness Directives; Aerospatiale Model ATR42 and ATR72 Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. SUMMARY: We are adopting a new airworthiness directive

(AD)for the products listed above. This AD results from mandatory continuing airworthiness information

(MCAI)issued by an airworthiness authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as electrical arcing due to chafing between a bonding cable and electrical wires in the 120 VU (volt unit) electrical harness, causing the loss of some instruments and loss of one hydraulic circuit pressure (i.e., loss of pressure of one hydraulic circuit). We are issuing this AD to require actions to correct the unsafe condition on these products. DATES: This AD becomes effective July 19, 2007. The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of July 19, 2007. ADDRESSES: You may examine the AD docket on the Internet at *http://dms.dot.gov* or in person at the Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC. FOR FURTHER INFORMATION CONTACT: Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-1137; fax

(NPRM)to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the **Federal Register** on March 2, 2007 (72 FR 9475). That NPRM proposed to require inspecting the harness installation in the 120 VU (volt unit) electrical harness and, as applicable, restoring correct installation of the bonding cable. The MCAI states that recently an ATR 42 suffered electrical arcing, causing the loss of some instruments and loss of one hydraulic circuit pressure (i.e., loss of pressure of one hydraulic circuit) due to chafing between a bonding cable and electrical wires in the 120 VU electrical harness. The investigation showed that a tubular support had been deformed and therefore impaired the spacing among electrical harness, supports, and cables; the harness was not correctly attached; the size of the harness was increased by addition of cables (for Service Bulletins

(SB)or customer modifications embodiments); and the bonding cable was not correctly installed. The MCAI mandates an inspection of the ATR 42 and ATR 72 fleet for correct installation of the bonding cable and restoring correct installation of the bonding cable if necessary. Comments We gave the public the opportunity to participate in developing this AD. We considered the comment received. Request To Include Revised Service Bulletins Avions de Transport Regional

(ATR)states that in the NPRM reference is made to Avions de Transport Regional Service Bulletins ATR42-92-0012 and ATR72-92-1013, both dated July 4, 2006. ATR notes that this corresponds to the original issue of both service bulletins, and adds that those bulletins have been revised to add a reference to European Aviation Safety Agency Airworthiness Directive 2006-0283. ATR states that nothing else has been changed, and suggests that the AD reference Avions de Transport Regional Service Bulletins ATR42-92-0012 and ATR72-92-1013, both Revision 01, both dated December 7, 2006. We agree to reference Revision 01 of the service bulletins in the AD. We have reviewed Revision 01 of the service bulletins, and the procedures are essentially the same as those in the original issues, as noted by ATR. We have changed paragraphs

(e)and

(g)of this AD to specify Revision 01 of the service bulletins. Conclusion We reviewed the available data, including the comment received, and determined that air safety and the public interest require adopting the AD with the change described previously. We determined that this change will not increase the economic burden on any operator or increase the scope of the AD. Differences Between This AD and the MCAI or Service Information We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable in a U.S. court of law. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information. We might also have required different actions in this AD from those in the MCAI in order to follow our FAA policies. Any such differences are described in a separate paragraph of the AD. These requirements, if any, take precedence over the actions copied from the MCAI. Costs of Compliance Based on the service information, we estimate that this AD affects about 53 products of U.S. registry. We also estimate that it takes about 1 work-hour per product to comply with this AD. The average labor rate is $80 per work-hour. Based on these figures, we estimate the cost of the inspection on U.S. operators to be $4,240, or $80 per product. 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 determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that this AD:

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

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

(800)647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by adding the following new AD: **2007-12-20 Aerospatiale:** Amendment 39-15098. Docket No. FAA-2007-27358; Directorate Identifier 2006-NM-270-AD. Effective Date

(a)This airworthiness directive

(AD)becomes effective July 19, 2007. Affected ADs

(b)None. Applicability

(c)This AD applies to Model ATR42-200, -300, -320, and -500 airplanes; all serial numbers up to manufacturer serial number

(MSN)643 inclusive; and Model ATR72-101, -102, -201, -202, -211, -212, and -212A airplanes, all serial numbers up to MSN 728 inclusive, except MSN 723 and 725; certificated in any category. Reason

(d)The mandatory continuing airworthiness information

(MCAI)states that recently an ATR 42 suffered electrical arcing, causing the loss of some instruments and loss of one hydraulic circuit pressure ( *i.e.* , loss of pressure of one hydraulic circuit) due to chafing between a bonding cable and electrical wires in the 120 VU (volt unit) electrical harness. The investigation showed that a tubular support had been deformed and therefore impaired the spacing among electrical harness, supports, and cables; the harness was not correctly attached; the size of the harness was increased by addition of cables (for Service Bulletins

(e)Unless already done, do the following actions. Within 3 months after the effective date of this AD: Inspect the harness installation in the 120 VU electrical harness and, as applicable, restore correct installation of the bonding cable, in accordance with the instructions given by Avions de Transport Regional Service Bulletins ATR42-92-0012 (for Model ATR42 airplanes) and ATR72-92-1013 (for Model ATR72 airplanes), both dated July 4, 2006; or Revision 01, both dated December 7, 2006; as applicable. FAA AD Differences Note: This AD differs from the MCAI and/or service information as follows: No differences. Other FAA AD Provisions

(f)The following provisions also apply to this AD:

(1)*Alternative Methods of Compliance (AMOCs):* The Manager, International Branch, ANM-116, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to ATTN: Tom Rodriguez, Aerospace Engineer, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-1137; fax

(425)227-1149. Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector

(PI)in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO.

(3)*Reporting Requirements:* For any reporting requirement in this AD, under the provisions of the Paperwork Reduction Act, the Office of Management and Budget

(OMB)has approved the information collection requirements and has assigned OMB Control Number 2120-0056. Related Information

(g)Refer to MCAI European Aviation Safety Agency Airworthiness Directive 2006-0283, dated September 14, 2006; and the Avions de Transport Regional Service Bulletins specified in Table 1 of this AD for related information. Table 1.—Related Service Information Avions de transport regional service bulletin Revision level Date ATR42-92-0012 Original July 4, 2006. ATR42-92-0012 01 December 7, 2006. ATR72-92-1013 Original July 4, 2006. ATR72-92-1013 01 December 7, 2006 Material Incorporated by Reference

(h)You must use the applicable Avions de Transport Regional Service Bulletins specified in Table 2 of this AD to do the actions required by this AD; unless the AD specifies otherwise.

(1)The Director of the Federal Register approved the incorporation by reference of this service information under 5 U.S.C. 552(a) and 1 CFR part 51.

(2)For service information identified in this AD, contact Aerospatiale, 316 Route de Bayonne, 31060 Toulouse, Cedex 03, France.

(3)You may review copies at the FAA, Transport Airplane Directorate, 1601 Lind Ave., SW., Renton, Washington; or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: *http://www.archives.gov/federal-register/cfr/ibr-locations.html* . Table 2.—Material Incorporated by Reference Avions de transport regional service bulletin Revision level Date ATR42-92-0012 Original July 4, 2006. ATR42-92-0012 01 December 7, 2006. ATR72-92-1013 Original July 4, 2006. ATR72-92-1013 01 December 7, 2006 Issued in Renton, Washington, on June 1, 2007. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-11202 Filed 6-13-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2006-26354; Directorate Identifier 2006-NM-196-AD; Amendment 39-15095; AD 2007-12-17] RIN 2120-AA64 Airworthiness Directives; Empresa Brasileira de Aeronautica S.A. (EMBRAER) Model EMB-135 Airplanes and Model EMB-145, -145ER, -145MR, -145LR, -145XR, -145MP, and -145EP Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. SUMMARY: The FAA is adopting a new airworthiness directive

(AD)for certain EMBRAER Model EMB-135 airplanes and Model EMB-145, -145ER, -145MR, -145LR, -145XR, -145MP, and -145EP airplanes. This AD requires replacing the metallic tubes enclosing the vent and pilot valve wires in the left- and right-hand wing fuel tanks with non-conductive hoses. This AD results from fuel system reviews conducted by the manufacturer. We are issuing this AD to prevent an ignition source inside the fuel tank that could ignite fuel vapor and cause a fuel tank explosion and loss of the airplane. DATES: This AD becomes effective July 19, 2007. The Director of the Federal Register approved the incorporation by reference of certain publications listed in the AD as of July 19, 2007. ADDRESSES: You may examine the AD docket on the Internet at *http://dms.dot.gov* or in person at the Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street SW., Nassif Building, Room PL-401, Washington, DC. Contact Empresa Brasileira de Aeronautica S.A. (EMBRAER), P.O. Box 343—CEP 12.225, Sao Jose dos Campos—SP, Brazil, for service information identified in this AD. FOR FURTHER INFORMATION CONTACT: Tom Groves, Aerospace Engineer, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-1503; fax

(425)227-1149. SUPPLEMENTARY INFORMATION: 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)647-5527) is located on the plaza level of the Nassif Building at the street address stated in the ADDRESSES section. Discussion The FAA issued a supplemental notice of proposed rulemaking

(NPRM)to amend 14 CFR part 39 to include an AD that would apply to certain EMBRAER Model EMB-135 airplanes and Model EMB-145, -145ER, -145MR, -145LR, -145XR, -145MP, and -145EP airplanes. That supplemental NPRM was published in the **Federal Register** on March 30, 2007 (72 FR 15075). That supplemental NPRM proposed to require replacing the metallic tubes enclosing the vent and pilot valve wires in the left- and right-hand wing fuel tanks with non-conductive hoses. That supplemental NPRM also proposed to add airplanes to the applicability. Comments We provided the public the opportunity to participate in the development of this AD. No comments have been received on the supplemental NPRM or on the determination of the cost to the public. Clarification of Alternative Method of Compliance

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

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

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

(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **2007-12-17 Empresa Brasileira de Aeronautica S.A. (EMBRAER):** Amendment 39-15095. Docket No. FAA-2006-26354; Directorate Identifier 2006-NM-196-AD. Effective Date

(a)This AD becomes effective July 19, 2007. Affected ADs

(b)None. Applicability

(c)This AD applies to the following airplanes, certificated in any category; as described in paragraphs (c)(1) and (c)(2) of this AD.

(1)EMBRAER Model EMB-135ER, -135KE, -135KL, and -135LR airplanes and Model EMB-145, -145ER, -145MR, -145LR, -145XR, -145MP, and -145EP airplanes; as identified in EMBRAER Service Bulletin 145-28-0023, Revision 07, dated February 7, 2007.

(2)EMBRAER Model EMB-135BJ airplanes, as identified in EMBRAER Service Bulletin 145LEG-28-0018, Revision 01, dated April 20, 2005. Unsafe Condition

(d)This AD results from fuel system reviews conducted by the manufacturer. We are issuing this AD to prevent an ignition source inside the fuel tank that could ignite fuel vapor and cause a fuel tank explosion and loss of the airplane. Compliance

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

(f)Within 5,000 flight hours or 48 months after the effective date of this AD, whichever occurs first: Replace the metallic tubes enclosing the vent and pilot valve wires in the left- and right-hand wing fuel tanks with new, improved, non-conductive hoses, in accordance with the Accomplishment Instructions of the service bulletin specified in paragraph (f)(1) or (f)(2) of this AD, as applicable.

(1)For Model EMB-135ER, -135KE, -135KL, -135LR, -145, -145ER, -145MR, -145LR, -145XR, -145MP, and -145EP airplanes: EMBRAER Service Bulletin 145-28-0023, Revision 07, dated February 7, 2007.

(2)For Model EMB-135BJ airplanes: EMBRAER Service Bulletin 145LEG-28-0018, Revision 01, dated April 20, 2005. Credit for Actions Done Using Previous Service Information

(g)Actions accomplished before the effective date of this AD in accordance with the service information specified in Table 1 of this AD are considered acceptable for compliance with the corresponding actions specified in this AD. Table 1.—Acceptable EMBRAER Service Information Service bulletin Revision level Date 145-28-0023 Original April 19, 2004. 145-28-0023 01 June 9, 2004. 145-28-0023 02 November 8, 2004. 145-28-0023 03 April 27, 2005. 145-28-0023 04 November 7, 2005. 145-28-0023 05 May 15, 2006. 145-28-0023 06 October 31, 2006. 145LEG-28-0018 Original April 23, 2004. Alternative Methods of Compliance (AMOCs) (h)(1) The Manager, ANM-116, International Branch, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

(2)To request a different method of compliance or a different compliance time for this AD, follow the procedures in 14 CFR 39.19. Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector

(PI)in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO. Related Information

(i)Brazilian airworthiness directive 2006-06-02, effective June 28, 2006, also addresses the subject of this AD. Material Incorporated by Reference (j)(1) You must use EMBRAER Service Bulletin 145-28-0023, Revision 07, dated February 7, 2007; or EMBRAER Service Bulletin 145LEG-28-0018, Revision 01, dated April 20, 2005; as applicable, to perform the actions that are required by this AD, unless the AD specifies otherwise.

(2)EMBRAER Service Bulletin 145LEG-28-0018, Revision 01, dated April 20, 2005, contains the following effective pages: Page number Revision level shown on page Date shown on page 1, 2 01 April 20, 2005. 3-20 Original April 23, 2004. (Page 2 of EMBRAER Service Bulletin 145LEG-28-0018, Revision 01, dated April 20, 2005, incorrectly shows a revision date of April 20, 2004; that date should be April 20, 2005.)

(3)The Director of the Federal Register approved the incorporation by reference of these documents in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Contact Empresa Brasileira de Aeronautica S.A. (EMBRAER), P.O. Box 343-CEP 12.225, Sao Jose dos Campos—SP, Brazil, for a copy of this service information. You may review copies at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: *http://www.archives.gov/federal-register/cfr/ibr-locations.html.* Issued in Renton, Washington, on June 1, 2007. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-11204 Filed 6-13-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-27361; Directorate Identifier 2006-NM-237-AD; Amendment 39-15097; AD 2007-12-19] RIN 2120-AA64 Airworthiness Directives; Airbus Model A310 Series Airplanes; and Airbus Model A300-600 Series Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. SUMMARY: We are adopting a new airworthiness directive

(AD)for the products listed above. This AD results from mandatory continuing airworthiness information

(MCAI)issued by an airworthiness authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as explosion risks. Chafing of the fuel pump cables could result in short circuits leading to fuel pump failure, intermittent operation, arcing, and possible fuel tank explosion. We are issuing this AD to require actions to correct the unsafe condition on these products. DATES: This AD becomes effective July 19, 2007. The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of July 19, 2007. ADDRESSES: You may examine the AD docket on the Internet at *http://dms.dot.gov* or in person at the Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC. FOR FURTHER INFORMATION CONTACT: Tom Stafford, Aerospace Engineer, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-1622; fax

(NPRM)to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the **Federal Register** on March 13, 2007 (72 FR 11302). That NPRM proposed to require modification of the fuel pump wiring against short circuits. The MCAI states that the FAA has published SFAR 88 (Special Federal Aviation Regulation 88). In their letters referenced 04/00/02/07/01-L296, dated March 4th, 2002, and 04/00/02/07/03-L024, dated February 3, 2003, the JAA (Joint Aviation Authorities) recommended the application of a similar regulation to the National Aviation Authorities (NAA). Under this regulation, all holders of type certificates for passenger transport aircraft with either a passenger capacity of 30 or more, or a payload capacity of 7,500 pounds (3,402 kilograms) or more, which have received their certification since January 1, 1958, are required to conduct a design review against explosion risks. The MCAI design review found that fuel pump cables can possibly become chafed in their metallic conduits. The chafing of the fuel pump cables can result in short circuits leading to fuel pump failure, intermittent operation, arcing, and possible fuel tank explosion. The MCAI, which requires modification of the fuel pump wiring against short circuits, is a consequence of this design review. Comments We gave the public the opportunity to participate in developing this AD. We considered the comment received. Request To Refer to Latest Service Bulletin Airbus requests that we refer to the latest revision of Service Bulletin A310-24-2097. Airbus states that Service Bulletin A310-24-2097, Revision 02, dated May 24, 2007, has been released to operators. Airbus notes that the service bulletin does not introduce any additional work. We have reviewed Airbus Service Bulletin A310-24-2097, Revision 02, dated May 24, 2007 (we referred to Airbus Service Bulletins A310-24-2097, dated February 15, 2006; and Revision 01, dated October 11, 2006; as appropriate sources of service information for accomplishing the actions proposed in the NPRM). Revision 02 of the service bulletin does not add additional work. Revision 02 of the service bulletin updates the effectivity and introduces minor changes. Therefore, we have revised this AD to refer to Revision 02 of the service bulletin as an appropriate source of service information for doing the required actions. Clarification of Alternative Method of Compliance

(AMOC)Paragraph We have revised this action to clarify the appropriate procedure for notifying the principal inspector before using any approved AMOC on any airplane to which the AMOC applies. Conclusion We reviewed the available data, including the comment received, and determined that air safety and the public interest require adopting the AD with the changes described previously. We determined that these changes will not increase the economic burden on any operator or increase the scope of the AD. Differences Between This AD and the MCAI or Service Information We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable in a U.S. court of law. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information. We might also have required different actions in this AD from those in the MCAI in order to follow our FAA policies. Any such differences are described in a separate paragraph of the AD. These requirements, if any, take precedence over the actions copied from the MCAI. Costs of Compliance We estimate that this AD will affect 205 products of U.S. registry. We also estimate that it will take about 72 work-hours per product to comply with this AD. The average labor rate is $80 per work-hour. Required parts will cost about $7,190 per product. Where the service information lists required parts costs that are covered under warranty, we have assumed that there will be no charge for these parts. As we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $2,654,750, or $12,950 per product. 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 determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that this AD:

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

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

(3)Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD Docket. Examining the AD Docket You may examine the AD docket on the Internet at *http://dms.dot.gov;* or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone

(800)647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by adding the following new AD: **2007-12-19 Airbus:** Amendment 39-15097. Docket No. FAA-2007-27361; Directorate Identifier 2006-NM-237-AD. Effective Date

(a)This airworthiness directive

(AD)becomes effective July 19, 2007. Affected ADs

(b)None. Applicability

(c)This AD applies to Airbus Model A310 series airplanes; and Model A300-600 series airplanes; certificated in any category; all certified models, all serial numbers, except for aircraft which have received in production Airbus modification 13118 or Airbus Service Bulletin

(SB)A310-24-2097 or A300-24-6094. Reason

(d)The mandatory continuing airworthiness information

(MCAI)states that the FAA has published SFAR 88 (Special Federal Aviation Regulation 88). In their letters referenced 04/00/02/07/01-L296, dated March 4th, 2002, and 04/00/02/07/03-L024, dated February 3, 2003, the JAA (Joint Aviation Authorities) recommended the application of a similar regulation to the National Aviation Authorities (NAA). Under this regulation, all holders of type certificates for passenger transport aircraft with either a passenger capacity of 30 or more, or a payload capacity of 7,500 pounds (3,402 kilograms) or more, which have received their certification since January 1, 1958, are required to conduct a design review against explosion risks. The MCAI design review found that fuel pump cables can possibly become chafed in their metallic conduits. The chafing of the fuel pump cables can result in short circuits leading to fuel pump failure, intermittent operation, arcing, and possible fuel tank explosion. The MCAI, which requires modification of the fuel pump wiring against short circuits, is a consequence of this design review. Actions and Compliance

(e)Unless already done, do the following actions.

(1)Within 37 months after the effective date of this AD: Modify the inner and outer fuel pumps, route 1P and 2P harnesses in the LH (left-hand) wing and in the RH (right-hand) wing in accordance with the instructions of Airbus Service Bulletins A300-24-6094, dated February 15, 2006; A300-24-6094, Revision 01, dated July 18, 2006; A310-24-2097, dated February 15, 2006; A310-24-2097, Revision 01, dated October 11, 2006; or A310-24-2097, Revision 02, dated May 24, 2007; as applicable. FAA AD Differences Note: This AD differs from the MCAI and/or service information as follows: No differences. Other FAA AD Provisions

(f)The following provisions also apply to this AD:

(1)*Alternative Methods of Compliance (AMOCs):* The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to Attn: Tom Stafford, Aerospace Engineer, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-1622; fax

(425)227-1149. Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector

(PI)in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO.

(3)*Reporting Requirements:* For any reporting requirement in this AD, under the provisions of the Paperwork Reduction Act, the Office of Management and Budget

(OMB)has approved the information collection requirements and has assigned OMB Control Number 2120-0056. Related Information

(g)Refer to MCAI European Aviation Safety Agency Airworthiness Directive 2006-0284 R1, dated February 13, 2007; and Airbus Service Bulletins A300-24-6094, dated February 15, 2006; A300-24-6094, Revision 01, dated July 18, 2006; A310-24-2097, dated February 15, 2006; A310-24-2097, Revision 01, dated October 11, 2006; and A310-24-2097, Revision 02, dated May 24, 2007; for related information. Material Incorporated by Reference

(h)You must use the applicable service information specified in Table 1 of this AD to do the actions required by this AD, unless the AD specifies otherwise.

(1)The Director of the Federal Register approved the incorporation by reference of this service information under 5 U.S.C. 552(a) and 1 CFR part 51.

(2)For service information identified in this AD, contact Airbus, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France.

(3)You may review copies at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: *http://www.archives.gov/federal-register/cfr/ibr-locations.html.* Table 1.—Material Incorporated by Reference Airbus service bulletin Revision Date A300-24-6094 Original February 15, 2006. A300-24-6094 01 July 18, 2006. A310-24-2097 Original February 15, 2006. A310-24-2097 01 October 11, 2006. A310-24-2097 02 May 24, 2007. Issued in Renton, Washington, on June 1, 2007. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-11200 Filed 6-13-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-27533 Directorate Identifier 2007-CE-022-AD; Amendment 39-15102; AD 2007-12-24] RIN 2120-AA64 Airworthiness Directives; Diamond Aircraft Industries Model DA 42 Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. SUMMARY: We are adopting a new airworthiness directive

(AD)for the products listed above. This AD results from mandatory continuing airworthiness information

(MCAI)issued by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as: Shortly after an engine change, the aluminium fitting attached to the engine gearbox holding lines and fittings of the propeller control system was found to be cracked. This led to a pressure loss in the propeller control system following a control system malfunction and led to an in-flight engine shutdown. The broken fitting is part of the engine installation and was initially a steel part. It was later modified by the engine manufacturer to an aluminium design. Investigation determined that the area is critical for cracks due to combination of mass, material and installation torque values. Diamond Aircraft Industries incorporated with Design Change MÄM 42-184 an additional bracket into production airplanes to improve the installations and prevent vibration cracks. We are issuing this AD to require actions to correct the unsafe condition on these products. DATES: This AD becomes effective July 19, 2007. On July 19, 2007, the Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD. ADDRESSES: You may examine the AD docket on the Internet at *http://dms.dot.gov* or in person at the Document Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. FOR FURTHER INFORMATION CONTACT: Sarjapur Nagarajan, Aerospace Engineer, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone:

(816)329-4145; fax:

(816)329-4090. SUPPLEMENTARY INFORMATION: Streamlined Issuance of AD The FAA is implementing a new process for streamlining the issuance of ADs related to MCAI. The streamlined process will allow us to adopt MCAI safety requirements in a more efficient manner and will reduce safety risks to the public. This process continues to follow all FAA AD issuance processes to meet legal, economic, Administrative Procedure Act, and **Federal Register** requirements. We also continue to meet our technical decision-making responsibilities to identify and correct unsafe conditions on U.S.-certificated products. This AD references the MCAI and related service information that we considered in forming the engineering basis to correct the unsafe condition. The AD contains text copied from the MCAI and for this reason might not follow our plain language principles. Discussion We issued a notice of proposed rulemaking

(NPRM)to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the **Federal Register** on April 13, 2007 (72 FR 18598). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states that: Shortly after an engine change, the aluminium fitting attached to the engine gearbox holding lines and fittings of the propeller control system was found to be cracked. This led to a pressure loss in the propeller control system following a control system malfunction and led to a in-flight engine shutdown. The broken fitting is part of the engine installation and was initially a steel part. It was later modified by the engine manufacturer to an aluminium design. Investigation determined that the area is critical for cracks due to combination of mass, material and installation torque values. Diamond Aircraft Industries incorporated with Design Change MÄM 42-184 an additional bracket into production airplanes to improve the installations and prevent vibration cracks. This airworthiness directive requires the retroactive installation of this bracket for all airplanes, including the airplanes with steel fittings. Comments We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public. Conclusion We reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed. Differences Between This AD and the MCAI or Service Information We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information. We might also have required different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are highlighted in a NOTE within the AD. Costs of Compliance We estimate that this AD will affect 70 products of U.S. registry. We also estimate that it will take about 1.0 work-hour per product to comply with basic requirements of this AD. The average labor rate is $80 per work-hour. Required parts will cost about $208 per product. Where the service information lists required parts costs that are covered under warranty, we have assumed that there will be no charge for these parts. As we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $20,160 or $ 288 per product. 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 determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify this AD:

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

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

(3)Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD Docket. Examining the AD Docket You may examine the AD docket on the Internet at *http://dms.dot.gov;* or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone

(800)647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by adding the following new AD: **2007-12-24 Diamond Aircraft Industries:** Amendment 39-15102; Docket No. FAA-2007-27533; Directorate Identifier 2007-CE-022-AD. Effective Date

(a)This airworthiness directive

(AD)becomes effective July 19, 2007. Affected ADs

(b)None. Applicability

(c)This AD applies to DA 42 airplanes, serial numbers 42.004 through 42.129, 42.177, and 42.AC001, certificated in any category. Subject

(d)Air Transport Association of America

(ATA)Code 72: Engine. Reason

(e)The mandatory continuing airworthiness information

(MCAI)states: Shortly after an engine change, the aluminium fitting attached to the engine gearbox holding lines and fittings of the propeller control system was found to be cracked. This led to a pressure loss in the propeller control system following a control system malfunction and led to an in-flight engine shutdown. The broken fitting is part of the engine installation and was initially a steel part. It was later modified by the engine manufacturer to an aluminium design. Investigation determined that the area is critical for cracks due to combination of mass, material and installation torque values. Diamond Aircraft Industries incorporated with Design Change MÄM 42-184 an additional bracket into production airplanes to improve the installations and prevent vibration cracks. This airworthiness directive requires the retroactive installation of this bracket for all airplanes, including the airplanes with steel fittings. Actions and Compliance

(f)Unless already done, within the next 50 hours time-in-service after July 19, 2007 (the effective date of this AD) or within the next 30 days after July 19, 2007 (the effective date of this AD), whichever occurs first, install the additional steel bracket following Diamond Aircraft Industries GmbH Mandatory Service Bulletin NO. MSB-42-024/3, dated September 19, 2006, which references Diamond Aircraft Industries GmbH Work Instruction WI-MSB-42-024, Revision 2, dated September 19, 2006. Note 1: If the above action was accomplished following the procedures described in Diamond Aircraft Industries GmbH Mandatory Service Bulletin No. MSB-42-024/2, dated August 31, 2006, you may take “unless already done” credit, and no further action per this AD is necessary. *FAA AD Differences* Note 2: This AD differs from the MCAI and/or service information as follows: No differences. Other FAA AD Provisions

(g)The following provisions also apply to this AD:

(1)*Alternative Methods of Compliance (AMOCs):* The Manager, Standards Staff, FAA, ATTN: Sarjapur Nagarajan, Aerospace Engineer, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone:

(816)329-4145; fax:

(816)329-4090, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector

(PI)in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO.

(3)*Reporting Requirements:* For any reporting requirement in this AD, under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 *et seq.* ), the Office of Management and Budget

(OMB)has approved the information collection requirements and has assigned OMB Control Number 2120-0056. Related Information

(h)Refer to MCAI European Aviation Safety Agency

(EASA)AD No: 2006-0277, dated September 06, 2006; and Diamond Aircraft Industries GmbH, Mandatory Service Bulletin No. MSB-42-024/3, dated September 19, 2006, which references Diamond Aircraft Industries GmbH Work Instruction WI-MSB-42-024, Revision 2, dated September 19, 2006, for related information. Material Incorporated by Reference

(i)You must use Diamond Aircraft Industries GmbH, Mandatory Service Bulletin No. MSB-42-024/3, dated September 19, 2006, which references Diamond Aircraft Industries GmbH Work Instruction WI-MSB-42-024, Revision 2, dated September 19, 2006, to do the actions required by this AD, unless the AD specifies otherwise.

(1)The Director of the Federal Register approved the incorporation by reference of this service information under 5 U.S.C. 552(a) and 1 CFR part 51.

(2)For service information identified in this AD, contact Diamond Aircraft Industries GmbH, N.A. Otto-Strabe 5, A-2700 Wiener Neustadt; Fax: **43-2622-26620; or e-mail: *support@diamond-air.at.*

(3)You may review copies at the FAA, Central Region, Office of the Regional Counsel, 901 Locust, Room 506, Kansas City, Missouri 64106; or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: *http://www.archives.gov/federal-register/cfr/ibr-locations.html.* Issued in Kansas City, Missouri, on June 6, 2007. James E. Jackson, Acting Manager, Small Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-11287 Filed 6-13-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2005-20863; Directorate Identifier 2004-SW-36-AD; Amendment 39-15100; AD 2007-12-22] RIN 2120-AA64 Airworthiness Directives; Eurocopter France Model AS350B, BA, B1, B2, B3, D, and AS355E Helicopters AGENCY: Federal Aviation Administration, DOT. ACTION: Final rule. SUMMARY: This amendment adopts a new airworthiness directive

(AD)for the specified Eurocopter France

(ECF)model helicopters that requires replacing the hydraulic fluid at a specified time interval when operating in cold weather. This amendment is prompted by reports of ice forming due to condensation in some parts of the hydraulic system during cold weather operation. The actions specified by this AD are intended to prevent ice from forming in the hydraulic system resulting in an unintended movement of the flight controls and subsequent loss of control of the helicopter. DATES: Effective July 19, 2007. The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of July 19, 2007. ADDRESSES: You may get the service information identified in this AD from American Eurocopter Corporation, 2701 Forum Drive, Grand Prairie, Texas 75053-4005, telephone

(972)641-3460, fax

(972)641-3527. *Examining the Docket:* You may examine the docket that contains this AD, any comments, and other information on the Internet at *http://dms.dot.gov* , or at the Docket Management System (DMS), U.S. Department of Transportation, 400 Seventh Street SW., Room PL-401, on the plaza level of the Nassif Building, Washington, DC. FOR FURTHER INFORMATION CONTACT: Ed Cuevas, Aviation Safety Engineer, FAA, Rotorcraft Directorate, Safety Management Group, Fort Worth, Texas 76193-0111, telephone

(817)222-5355, fax

(817)222-5961. SUPPLEMENTARY INFORMATION: A proposal to amend 14 CFR part 39 to include an AD for the specified model helicopters was published in the **Federal Register** on April 7, 2005 (70 FR 17621). That action proposed replacing the hydraulic fluid at a specified time interval when operating in cold weather. The Direction Generale de l'Aviation Civile (DGAC), the airworthiness authority for France, notified the FAA that an unsafe condition may exist on the specified ECF Model AS350 and AS355 helicopters. The DGAC advises of the formation of ice in some parts of the hydraulic system during flights in cold weather and when the hydraulic fluid is highly contaminated by water. ECF has issued Alert Service Bulletin Nos. 05.00.43 and 05.00.45, both dated April 8, 2004, which specify provisions for replacing hydraulic fluid in cold weather. The DGAC classified these service bulletins as mandatory and issued AD Nos. F-2004-055 and F-2004-056, both dated April 28, 2004, to ensure the continued airworthiness of these helicopters in France. These helicopter models are manufactured in France and are type certificated for operation in the United States under the provisions of 14 CFR 21.29 and the applicable bilateral agreement. Pursuant to the applicable bilateral agreement, the DGAC has kept us informed of the situation described above. We have examined the findings of the DGAC, reviewed all available information, and determined that AD action is necessary for products of these type designs that are certificated for operation in the United States. Interested persons have been afforded an opportunity to participate in the making of this amendment. Due consideration has been given to the one comment received. The one commenter states that the ASB is adequate until Eurocopter sorts out the moisture problem, and changing the fluid every 100 hours or 30 days is wasteful and not necessary, and such action will not get all the moisture out of the system. Therefore, an AD should not be issued. The FAA does not agree. The ASB is not adequate until Eurocopter sorts out the moisture problem. Generally, part 91 operators are not required to follow an ASB; however, they are required to follow an AD. An AD is issued to address an unsafe condition. This AD requires replacing the hydraulic fluid at the specified intervals to prevent ice from forming in the hydraulic system resulting in an unintended movement of the flight controls and subsequent loss of control of the helicopter. The ASB was written in association with the airworthiness authority in France

(DGAC)to address the problem of moisture in the hydraulic fluid resulting in feedback in the system during operations in cold temperatures in Canada. Moisture that is absorbed into the hydraulic fluid is not a function of the type of fluid. Moisture is absorbed into the hydraulic fluid due to heating and cooling of the fluid in the reservoir because the reservoir is vented to atmospheric pressure (humidity). It is not a closed system. Moisture may occur with either MIL-H-83282 or MIL-H-5606 fluid. Normally, there is not enough moisture in the system to cause any problems but occasionally there is enough to cause some feedback in the cyclic control (due to ice crystals forming in cold weather). MIL-H-83282 hydraulic fluid is the preferred fluid and MIL-H-5606 is an alternate. In many climates, the operator cannot use the MIL-H-5606 fluid because it has a lower flash point than the MIL-H-83282 fluid. Therefore, MIL-H-5606 fluid can only be used in colder environments. As a result, the option for the alternate fluid is limited to colder environments. An ECF ASB is written in association with an AD issued by a foreign authority (European Aviation Safety Agency

(EASA)or DGAC). The foreign ASB is in place when the AD is published to require that operators comply with the manufacturer's ASB. The FAA AD follows the requirements placed on other parts of the world by the foreign authority (state of design) if the FAA agrees with those requirements. After careful review of the available data, including the comments noted above, the FAA has determined that air safety and the public interest require the adoption of the rule as proposed except for a change in paragraph

(b)of the AD to add additional contact information and to revise the total cost impact; we have used a labor rate of $80 instead of $65. The FAA has determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD. We estimate that this AD will affect 556 helicopters of U.S. registry, and the required actions will take about: • 2 work hours to replace the hydraulic fluid per helicopter at an average labor rate of $80 per work hour; and • $6 for hydraulic fluid each time it is changed. Based on these figures, we estimate the total cost impact of the AD on U.S. operators to be $92,296, assuming two fluid replacements per year for 50 percent of the helicopter fleet. Regulatory Findings We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that the 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 an economic evaluation of the estimated costs to comply with this AD. See the DMS to examine the economic evaluation. 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. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, pursuant to the authority delegated to me by the Administrator, the Federal Aviation Administration amends part 39 of the Federal Aviation Regulations (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. Section 39.13 is amended by adding a new airworthiness directive to read as follows: **2007-12-22 Eurocopter France:** Amendment 39-15100. Docket No. FAA-2005-20863; Directorate Identifier 2004-SW-36-AD. Applicability Model AS350B, BA, B1, B2, B3, D and AS355E helicopters, certificated in any category. Compliance Required as indicated. To prevent ice from forming in the hydraulic system resulting in an unintended movement of the flight controls and subsequent loss of control of the helicopter, do the following:

(a)If the outside air temperature in an FAA weather briefing is forecast to be below negative 15 degrees Celsius (5 degrees Fahrenheit) at or below your planned flight altitude and the hydraulic fluid has not been replaced within the past 100 hours time-in-service or within the past 30 days, whichever occurred first, before further flight, replace the hydraulic fluid. Replace the hydraulic fluid by following the Accomplishment Instructions, paragraphs 2.A. and 2.B., of Eurocopter Alert Service Bulletin Nos. 05.00.43 or 05.00.45, both dated April 8, 2004, as applicable.

(b)To request a different method of compliance or a different compliance time for this AD, follow the procedures in 14 CFR 39.19. Contact the Safety Management Group, Rotorcraft Directorate, FAA, ATTN: Ed Cuevas, Aviation Safety Engineer, Fort Worth, Texas 76193-0111, telephone

(817)222-5355, fax

(817)222-5961, for information about previously approved alternative methods of compliance.

(c)Special flight permits will not be issued.

(d)Replacing the hydraulic fluid must be done by following Eurocopter Alert Service Bulletin Nos. 05.00.43 or 05.00.45, both dated April 8, 2004, as applicable. The Director of the Federal Register approved this incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from American Eurocopter Corporation, 2701 Forum Drive, Grand Prairie, Texas 75053-4005, telephone

(972)641-3460, fax

(972)641-3527. You may review copies at the FAA, Office of the Regional Counsel, Southwest Region, 2601 Meacham Blvd., Room 63, Fort Worth, Texas, or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: *http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html* .

(e)This amendment becomes effective on July 19, 2007. Note: The subject of this AD is addressed in Direction Generale de l'Aviation Civile (France) AD Nos. F-2004-055 and F-2004-056, both dated April 28, 2004. Issued in Fort Worth, Texas, on May 25, 2007. David A. Downey, Manager, Rotorcraft Directorate, Aircraft Certification Service. [FR Doc. E7-11410 Filed 6-13-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. 2003-SW-37-AD; Amendment 39-15101; AD 2007-12-23] RIN 2120-AA64 Airworthiness Directives; MD Helicopters, Inc. Model 369A, 369D, 369E, 369F, 369FF, 369H, 369HE, 369HS, 369HM, 500N, and OH-6A Helicopters AGENCY: Federal Aviation Administration, DOT. ACTION: Final rule. SUMMARY: This amendment adopts a new airworthiness directive

(AD)for MD Helicopters, Inc.

(MDHI)Model 369A, 369D, 369E, 369F, 369FF, 369H, 369HE, 369HS, 369HM, 500N, and OH-6A helicopters that requires inspecting each landing gear fairing support assembly (support assembly), replacing or reworking certain forward and aft landing gear assemblies, and creating an access hole to facilitate inspections and a recurring inspection. A terminating action for the requirements of this AD is also provided. This amendment is prompted by five reports of landing gear strut (strut) failures. The actions specified by this AD are intended to detect a crack that could result in the failure of a strut and subsequent loss of control of the helicopter during landing. DATES: Effective July 19, 2007. The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of July 19, 2007. ADDRESSES: The service information referenced in this AD may be obtained from MD Helicopters Inc., Attn: Customer Support Division, 4555 E. McDowell Rd., Mail Stop M615, Mesa, Arizona 85215-9734, telephone 1-800-388-3378, fax 480-346-6813, or on the Web at *http://www.mdhelicopters.com.* This information may be examined at the FAA, Office of the Regional Counsel, Southwest Region, 2601 Meacham Blvd., Room 663, Fort Worth, Texas. FOR FURTHER INFORMATION CONTACT: John Cecil, Aviation Safety Engineer, FAA, Los Angeles Aircraft Certification Office, Airframe Branch, 3960 Paramount Blvd., Lakewood, California 90712-4137, telephone

(562)627-5228, fax

(562)627-5210. SUPPLEMENTARY INFORMATION: A proposal to amend 14 CFR part 39 to add an AD for the specified MDHI model helicopters was published as a Notice of Proposed Rulemaking

(NPRM)in the **Federal Register** on August 4, 2004 (69 FR 47040). That NPRM would have required removing all landing gear fairings; determining the number and location of rivets that attach the landing gear fairing support assembly to the landing gear strut; and if three rivets (forward, aft and inboard) are present, replacing or reworking the landing gear assembly. If only the forward and aft rivets are present, no rework would be required by the proposed AD. That NPRM was prompted by five reports of strut failures. Operators of the helicopters with failed struts do not fall into any clear category of service. For example, one was a tour operator in Niagara Falls, New York, and another was a police department operator in Calgary, Canada. In its original design, the fairing support was attached to the strut with three rivets (forward, aft, and outboard). In 1994, the manufacturer released a design change to attach the fairing support assembly with only forward and aft rivets because of the possibility of reduced service life of the strut if the third rivet was located on the inboard side of the strut. Some landing gear struts entered service with an additional rivet hole drilled on the inboard side of the strut. This additional rivet hole results in decreased fatigue strength of the strut and subsequent cracking. That condition, if not corrected, could result in cracking of the forward and aft struts, failure of a strut, and subsequent loss of control of the helicopter during landing. After issuing that NPRM, we received several comments from 2 commenters and we agreed that we should make some changes to the NPRM. Because some of those changes expanded the scope of the NPRM, we determined that it was necessary to reopen the comment period to provide additional opportunity for public comment. Therefore, a Supplemental NPRM (SNPRM) was published in the **Federal Register** on January 8, 2007 (72 FR 666). The SNPRM revised the NPRM by proposing to mandate both the creation of an access hole to facilitate inspections and a recurring inspection. The SNPRM also proposed excluding from the applicability certain helicopters modified with a certain Supplemental Type Certificate

(STC)and provided a terminating action for the proposed requirements. The SNPRM also included clarifying changes. Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were received on the SNPRM or the FAA's determination of the cost to the public. The FAA has determined that air safety and the public interest require the adoption of the rule as proposed except we have expanded the contact address in paragraph

(d)in the body of the AD to provide more information to the public and have made minor editorial changes. These changes will neither increase the economic burden on any operator nor increase the scope of this AD. The FAA has reviewed MD Helicopters Service Bulletin SB369H-244, SB369E-094, SB500N-022, SB369D-200, and SB369F-078, dated April 7, 2000, which describes procedures for determining the number and location of rivets attaching the landing gear fairing support assembly to the landing gear strut. Where three rivets are present, instructions are provided to rework the landing gear assembly and replace any cracked strut assembly. The FAA estimates that this AD will affect 651 helicopters of U.S. registry. Determining the number of rivets and initially inspecting each affected “3-hole” strut and fairing will take approximately 2 work hours, installing a new strut will take approximately 1.5 work hours, and reworking a strut will take 1 work hour. Each repetitive inspection will take 1/4 work hour per strut (1 hour per helicopter for each of 4 struts). The average labor rate is $80 per work hour. Required parts (new struts) will cost approximately $2,838 for each forward strut, $2,574 for each aft strut, and $97 for a modification kit to install an inspection hole. Assuming that each helicopter has an initial inspection, that all 651 helicopters are modified, that 325 helicopters have two struts reworked, that 5 helicopters require 2 new forward struts, and that 2 repetitive inspections are required per year, the total estimated cost of the AD on U.S. operators is about $353,047 ($248,887 for the initial inspections, modification, and parts, and $104,160 for the repetitive inspections). Regulatory Findings The regulations adopted herein will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this final rule does not have federalism implications under Executive Order 13132. For the reasons discussed above, I certify that this action

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

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

(3)will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption ADDRESSES . 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. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, pursuant to the authority delegated to me by the Administrator, the Federal Aviation Administration amends part 39 of the Federal Aviation Regulations (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. Section 39.13 is amended by adding a new airworthiness directive to read as follows: **2007-12-23 MD Helicopters, Inc.:** Amendment 39-15101. Docket No. 2003-SW-37-AD. Applicability Model 369A, 369D, 369E, 369F, 369FF, 369H, 369HE, 369HS, 369HM, 500N, and OH-6A helicopters, with any of the components listed in the Applicability Table installed, excluding any helicopter with Aerometals strut (part number (P/N) 369XH6001-41, -42, -51, or -52) installed in accordance with Supplemental Type Certificate

(STC)No. SR00981LA, certificated in any category: Applicability Table Component name Component part No. (P/N) Mid Aft Fairing Assembly 369H6200-61, -62, standard gear. Aft Support Assembly 369H6200-23, -24 (-23 to be reinstalled on the right-hand side and -24 to be reinstalled on the left-hand side, all configurations). Aft Fairing Assembly 369H92113-91, -92, extended gear. Aft Filler Assembly 369H92113-131, -132, extended gear. Aft Fillet Assembly 369A6200-45, -46, standard gear. Aft Fillet Assembly 369H92113-111, -112, extended gear. Mid Fwd Fairing Assembly 369H6200-41, -42, standard gear. Fwd Fairing Assembly 369H92113-81, -82, extended gear. Fwd Support Assembly 369H6200-23, -24 (-23 becomes right-hand side and -24 becomes left-hand side). Fwd Filler Assembly 369H92113-121, -122, extended gear. Fwd Fillet Assembly 369A6200-57, -58, standard gear. Fwd Fillet Assembly 369H92113-101, -102, extended gear. Compliance Required as indicated. To detect a crack that could result in the failure of a strut and subsequent loss of control of the helicopter during landing, accomplish the following:

(a)Within 4 months, unless accomplished previously, remove all landing gear fairings (fairings) and inspect each landing gear fairing support assembly (support assembly) to determine the number and location of the rivets attaching the support assembly to the landing gear strut assembly (strut assembly).

(1)If three rivets (forward, aft and inboard) are used to attach the support assembly to the strut assembly,

(i)For each FORWARD landing gear assembly, remove the landing gear fillet assembly (fillet assembly), the three rivets, and the support assembly, and clean and dye-penetrant inspect the area in and around the 0.125 (3.18mm) diameter hole in the inboard surface of the strut assembly.

(A)If the strut assembly is cracked, replace the cracked strut assembly with an airworthy strut assembly and install the other landing gear components in accordance with steps

(6)through

(11)of paragraph C of the Accomplishment Instructions of MD Helicopters Service Bulletin SB369H-244, SB369E-094, SB500N-022, SB369D-200, and SB369F-078, dated April 7, 2000 (SB).

(B)If the strut assembly is not cracked, rework the landing gear assembly and install the other landing gear components in accordance with steps

(5)through

(11)of paragraph C of the Accomplishment Instructions of the SB.

(ii)For each AFT landing gear assembly, remove the fillet assembly, the three rivets, and the support assembly, and clean and dye-penetrant inspect the area in and around the 0.125 (3.18mm) diameter hole in the inboard surface of the strut assembly.

(A)If the strut assembly is cracked, replace the cracked strut assembly with an airworthy strut assembly and install the other landing gear components in accordance with steps

(6)through

(13)of paragraph B of the Accomplishment Instructions of the SB.

(B)If the strut assembly is not cracked, rework the landing gear assembly and install the other landing gear components in accordance with steps

(5)through

(13)of Paragraph B of the Accomplishment Instructions of the SB.

(2)If only two rivets (forward and aft) are used to attach the support assembly to the strut assembly and a third rivet hole has not been drilled in the strut, neither the inspection of the strut assembly nor the rework of those landing gear assemblies is required by this AD.

(b)At intervals not to exceed 100 hours TIS or during each annual inspection, whichever occurs first, for any strut assembly that has a third rivet hole, remove the fairing inspection button plug and clean and inspect the area in and around the rivet hole for cracks using a bright light and a 10x or higher magnifying glass.

(1)If any FORWARD strut assembly is cracked, replace the cracked strut with an airworthy strut assembly.

(2)If any AFT strut assembly is cracked, replace the cracked strut with an airworthy strut assembly.

(c)Installing a strut assembly that has only 2 rivet holes is terminating action for the requirements of this AD. Note 1: For the Model 369D, 369E, 369F, 369FF, and 500N helicopters, the Handbook of Maintenance Instruction, Servicing and Maintenance, HMI, CSP-HMI-2, Chapter 32, Section 32-10-00, “Landing Gear Strut Inspection” pertains to the subject of this AD. Note 2: For the Model 369A (OH-6A), 369H, 369HE, 369HS, and 369HM helicopters, the Basic Handbook of Maintenance Instructions CSP-H-2, Section 6, “Landing Gear” pertains to the subject of this AD.

(d)To request a different method of compliance or a different compliance time for this AD, follow the procedures in 14 CFR 39.19. Contact the Manager, Los Angeles Aircraft Certification Office, FAA, ATTN: John Cecil, Aviation Safety Engineer, FAA, Los Angeles Aircraft Certification Office, Airframe Branch, 3960 Paramount Blvd., Lakewood, California 90712-4137, telephone

(562)627-5228, fax

(562)627-5210 for information about previously approved alternative methods of compliance.

(e)The replacements and installations shall be done in accordance with the specified portions of MD Helicopters Service Bulletin SB369H-244, SB369E-094, SB500N-022, SB369D-200, and SB369F-078, dated April 7, 2000. The Director of the Federal Register approved this incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from MD Helicopters Inc., Attn: Customer Support Division, 4555 E. McDowell Rd., Mail Stop M615, Mesa, Arizona 85215-9734, telephone 1-800-388-3378, fax 480-346-6813, or on the Web at *http://www.mdhelicopters.com.* Copies may be inspected at the FAA, Office of the Regional Counsel, Southwest Region, 2601 Meacham Blvd., Room 663, Fort Worth, Texas; or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: * http://www.archives.gov/federal_register/ code_of_federal_regulations/ibr_locations.html * .

(f)This amendment becomes effective on July 19, 2007. Issued in Fort Worth, Texas, on June 5, 2007. Mark R. Schilling, Acting Manager, Rotorcraft Directorate, Aircraft Certification Service. [FR Doc. E7-11393 Filed 6-13-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 97 [Docket No. 30554; Amdt. No. 3222] Standard Instrument Approach Procedures; Miscellaneous Amendments AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Final rule. SUMMARY: This amendment amends Standard Instrument Approach Procedures (SIAPs) for operations at certain airports. These regulatory actions are needed because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, addition of new obstacles, or changes in air traffic requirements. These changes are designed to provide safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports. DATES: This rule is effective June 14, 2007. The compliance date for each SIAP is specified in the amendatory provisions. The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of June 14, 2007. ADDRESSES: Availability of matter incorporated by reference in the amendment is as follows: *For Examination* — 1. FAA Rules Docket, FAA Headquarters Building, 800 Independence Ave., SW., Washington, DC 20591; 2. The FAA Regional Office of the region in which affected airport is located; or 3. The National Flight Procedures Office, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or, 4. The National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: *http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html* . *For Purchase* —Individual SIAP copies may be obtained from: 1. FAA Public Inquiry Center (APA-200), FAA Headquarters Building, 800 Independence Avenue, SW., Washington, DC 20591; or 2. The FAA Regional Office of the region in which the affected airport is located. *By Subscription* —Copies of all SIAPs, mailed once every 2 weeks, are for sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. FOR FURTHER INFORMATION CONTACT: Donald P. Pate, Flight Procedure Standards Branch (AFS-420), Flight Technologies and Programs Division, Flight Standards Service, Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 South MacArthur Blvd. Oklahoma City, OK 73169 (Mail Address: P.O. Box 25082 Oklahoma City, OK 73125) telephone:

(405)954-4164. SUPPLEMENTARY INFORMATION: This amendment to Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) amends Standard Instrument Approach Procedures (SIAPs). The complete regulatory description of each SIAP is contained in the appropriate FAA Form 8260, as modified by the National Flight Data Center (FDC)/Permanent Notice to Airmen (P-NOTAM), which is incorporated by reference in the amendment under 5 U.S.C. 552(a), 1 CFR part 51, and § 97.20 of the Code of Federal Regulations. Materials incorporated by reference are available for examination or purchase as stated above. The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the **Federal Register** expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained in FAA form documents is unnecessary. The provisions of this amendment state the affected CFR sections, with the types and effective dates of the SIAPs. This amendment also identifies the airport, its location, the procedure identification and the amendment number. The Rule This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP as modified by FDC/P-NOTAMs. The SIAPs, as modified by FDC P-NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these chart changes to SIAPs, the TERPS criteria were applied to only these specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for all these SIAP amendments requires making them effective in less than 30 days. Further, the SIAPs contained in this amendment are based on the criteria contained in TERPS. Because of the close and immediate relationship between these SIAPs and safety in air commerce, I find that notice and public procedure before adopting these SIAPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making these SIAPs effective in less than 30 days. Conclusion The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866;

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

(3)does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. List of Subjects in 14 CFR Part 97 Air Traffic Control, Airports, Incorporation by reference, and Navigation (Air). Issued in Washington, DC on June 1, 2007. James J. Ballough, Director, Flight Standards Service. Adoption of the Amendment Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal regulations, Part 97, 14 CFR part 97, is amended by amending Standard Instrument Approach Procedures, effective at 0901 UTC on the dates specified, as follows: PART 97—STANDARD INSTRUMENT APPROACH PROCEDURES 1. The authority citation for part 97 continues to read as follows: Authority: 49 U.S.C. 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721-44722. 2. Part 97 is amended to read as follows: By amending: § 97.23 VOR, VOR/DME, VOR or TACAN, and VOR/DME or TACAN; § 97.25 LOC, LOC/DME, LDA, LDA/DME, LDA w/GS, SDF, SDF/DME; § 97.27 NDB, NDB/DME; § 97.29 ILS, MLS, TLS, GLS, WAAS PA, MLS/RNAV; § 97.31 RADAR SIAPs; § 97.33 RNAV SIAPs; § 97.35 COPTER SIAPs, § 97.37 Takeoff Minima and Obstacle Departure Procedures. Identified as follows: * * * Effective Upon Publication FDC date State City Airport FDC No. Subject 5/22/07 NY MONTAUK MONTAUK 7/1798 TAKEOFF MINIMS AND OBSTACLE DP, AMDT 2. 5/23/07 MD BALTIMORE BALTIMORE-WASHINGTON INTL THURGOOD MARSHALL 7/2223 RNAV

(GPS)RWY 33L, ORIG-A. 5/23/07 VT SPRINGFIELD HARTNESS STATE (SPRINGFIELD) 7/2224 NDB A, AMDT 6. 5/23/07 PA KUTZTOWN KUTZTOWN 7/2225 VOR A, AMDT 1A. 5/23/07 TN KNOXVILLE MCGHEE-TYSON 7/2226 NDB RWY 5R, AMDT 5. 5/23/07 TN KNOXVILLE MCGHEE-TYSON 7/2227 ILS OR LOC RWY 5L, AMDT 8. 5/23/07 PA POTTSTOWN POTTSTOWN LIMERICK 7/2228 VOR/DME A, AMDT 3. [FR Doc. E7-11144 Filed 6-13-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9330] RIN 1545-BG66 Built-in Gains and Losses Under Section 382(h) AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Temporary regulations. SUMMARY: This document contains temporary regulations that apply to corporations that have undergone ownership changes within the meaning of section 382. These regulations provide guidance regarding the treatment of prepaid income under the built-in gain provisions of section 382(h). The text of these temporary regulations also serves as the text of the proposed regulations set forth in the notice of proposed rulemaking on this subject in the Proposed Rules section in this issue of the **Federal Register** . DATES: *Effective Date:* These regulations are effective on June 14, 2007. *Applicability Date:* For dates of applicability, see § 1.382-7T(b). FOR FURTHER INFORMATION CONTACT: Keith Stanley at

(202)622-7750 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background Section 382 Section 382 limits, after a more than 50 percent change in stock ownership (ownership change), the amount of a loss corporation's taxable income for any post-change year that may be offset by pre-change losses. The amount of the limitation each year is equal to the product of the fair market value of all the stock of the loss corporation immediately before the ownership change multiplied by the applicable long-term tax-exempt rate (section 382 limitation). Section 382(h)(1)(A) provides that if the loss corporation has a net unrealized built-in gain (NUBIG), the section 382 limitation for any taxable year ending within a 5-year recognition period is increased by the recognized built-in gain

(RBIG)for the taxable year, subject to the NUBIG limitation. Section 382(h)(2)(A) defines RBIG as any gain recognized during the 5-year recognition period on the disposition of any asset to the extent the loss corporation establishes that

(i)It held the asset on the change date and

(ii)such gain does not exceed the asset's built-in gain on the change date. Section 382(h)(6)(A) also treats as RBIG any item of income “properly taken into account during the recognition period” if the item is “attributable to periods before the change date.” In Notice 2003-65 (2003-2 CB 747), the IRS provided interim guidance regarding the identification of built-in gains and losses under section 382(h). The Notice provides, among other things, that a loss corporation may use the 338 approach in determining the amount of its RBIG or recognized built-in loss

(RBIL)for purposes of section 382(h). The 338 approach identifies items of RBIG and RBIL generally by comparing the loss corporation's actual items of income, gain, deduction, and loss with those that would have resulted if a section 338 election had been made with respect to a hypothetical purchase of all of the outstanding stock of the loss corporation on the change date. Prepaid Income Generally, a taxpayer, including an accrual method taxpayer that receives payments in advance of performance, must include the payments in gross income in the taxable year of receipt without regard to whether the required performance has occurred. In *Schlude* v. *Commissioner* , 372 U.S. 128 (1963), the Supreme Court held that advance payments for dance lessons were includable in gross income when received because the payments were nonrefundable and the services were provided on demand of the student. In *American Automobile Association* v. *United States* , 367 U.S. 687 (1961), the Supreme Court held that membership dues entitling members to emergency road assistance and trip-planning services were includable in gross income when received, even though the taxpayer's method reflected income in accordance with generally accepted accounting principles (which generally operate to defer income recognition until the item is economically earned). However, courts have allowed the deferral of prepaid income in limited circumstances. In *Artnell Co.* v. *Commissioner* , 400 F. 2d 981 (7th Cir. 1968), the court held that amounts received on advance ticket sales relating to major league baseball games to be played on fixed dates in the next year could be deferred to that year. In *Tampa Bay Devil Rays, Ltd.* v. *Commissioner* , T.C. Memo 2002-248, the Tax Court held that deposits received by a new baseball franchise (Devil Rays) in 1995 and 1996 on advance season tickets for major league baseball games to be played by the Devil Rays in its first season in 1998 could be deferred until 1998, even though the deferral period was greater than a year. The Tax Court emphasized that the games were to be played on a fixed and definite schedule in 1998 and that deferral more clearly matched the deposits with the related expenses that were incurred and deducted in 1998. Congress, the IRS, and Treasury Department have allowed deferral of prepaid income in certain circumstances. For example, section 455 allows taxpayers that have prepaid subscription income for newspapers, magazines, and other periodicals to elect to defer such income to the taxable years during which the liability to furnish or deliver the newspaper, magazine, or periodical exists. Section 1.451-5(b)(1)(ii) allows advance payments for the sale of goods to be deferred to the year the payments are included in gross receipts under the taxpayer's method of accounting for tax purposes (such as when the goods are shipped or delivered), unless the income is recorded earlier for purposes of the taxpayer's financial statements. For goods that must be inventoried the permitted deferral is further limited by § 1.451-5(c)(1) to the second year following the year substantial advance payments, as defined in § 1.451-5(c)(3), are received. Revenue Procedure 71-21 (1971-2 CB 549), which was modified and superseded by Rev. Proc. 2004-34 (2004-1 CB 991), allowed accrual method taxpayers that received a payment in one taxable year for services to be performed before the end of the next succeeding taxable year to defer income inclusion until the services were performed (but no later than the end of the succeeding taxable year). The stated purpose of the Revenue Procedure was to reconcile the tax accounting treatment of such payments with the financial accounting conventions consistently used by accrual method taxpayers in the treatment of such payments. Rev. Proc. 2004-34 allows a qualifying taxpayer to defer advance payments for services (and for certain non-services and combinations of services and non-services) to the taxable year succeeding the taxable year of receipt to the extent the taxpayer establishes that the advance payments are not recognized in revenues in the taxpayer's applicable financial statement in the taxable year of receipt; or, if the taxpayer does not have an applicable financial statement, the payment is not earned in the taxable year of receipt. The common purpose of the prepaid income deferral provisions described above is to better match the taxpayer's income with the expenses incurred to earn that income and, as a result, to more clearly reflect the taxpayer's income both in the year of receipt and in the year of performance. Certain taxpayers are taking the position that prepaid income received in the period before the change date (pre-change period) but included in gross income in the recognition period is RBIG. As further explained below, the IRS and Treasury Department believe that prepaid income is attributable to the period on or after the change date (post-change period) rather than the pre-change period. Thus, treating prepaid income as RBIG is inconsistent with the purposes of section 382(h). Explanation of Provisions This temporary regulation provides that prepaid income is not recognized built-in gain. The term prepaid income means any amount received prior to the change date that is attributable to performance occurring on or after the change date. Examples to which the temporary regulation applies include, but are not limited to, income received prior to the change date that is deferred under section 455, § 1.451-5, or Rev. Proc. 2004-34 (or any successor revenue procedure). The IRS and Treasury Department believe that the section 382 legislative history, through the examples set forth therein, supports the position that prepaid income should not be treated as RBIG for section 382 purposes. The House and Senate Committee Reports that accompanied the enactment of section 382(h)(6)(A) both state that items of income attributable to the pre-change period include accounts receivable of a cash basis taxpayer that arose before the change date and are collected after that date, the gain on completion of a long-term contract performed by a taxpayer using the completed contract method of accounting that is attributable to the pre-change period, and the recognition of income attributable to the pre-change period pursuant to section 481 adjustments, as when the loss corporation is required to change to the accrual method. See H. Rep. No. 100-795, 46 (1988); S. Rep. No. 100-445, 48 (1988). The IRS and Treasury Department believe that prepaid income is distinguishable from the income items described in the committee report examples. In each of the committee report examples, the item of income is attributable to the pre-change period because that is the period in which performance occurred and expenses were incurred to earn the income. By contrast, prepaid income is attributable to the post-change period because that is the period in which performance occurred and expenses were incurred to earn the income. Therefore, because prepaid income is attributable to the post-change period rather than the pre-change period, the IRS and Treasury Department have determined that such prepaid income should not be treated as RBIG under section 382(h). The 338 approach described in Notice 2003-65 hereinafter will be applied consistently with this temporary regulation. Comments The text of these temporary regulations also serves as the text of the proposed regulations set forth in the notice of proposed rulemaking on this subject in the Proposed Rules section in this issue of the **Federal Register** . Please see the “Comments and Requests for a Public Hearing” section of the notice of proposed rulemaking for the procedures to follow in submitting comments on the proposed regulations on this subject. In preparing comments on the proposed regulations, please consider the following. In Notice 2003-65, comments were requested regarding the different approaches, including the 338 approach, set forth for determining RBIG and RBIL under section 382(h). The IRS and Treasury Department believe the 338 approach, in most cases, will properly identify whether or not an item of income or deduction is treated as RBIG or RBIL. However, the IRS and Treasury Department are concerned that taking items of income and deduction into account separately may cause the 338 approach, in some cases, to not properly identify whether or not an item of income or deduction is treated as RBIG or RBIL. The purpose of section 382(h)(6) is to treat items of income or deduction in similar fashion to gain and loss under section 382(h)(2). However, under general tax principles, there is a fundamental difference between the treatment of items of income or deduction and items of gain or loss. On the one hand, under section 382(h)(2), which incorporates the principles of section 1001, gain or loss on the disposition of an asset is taken into account net of the taxpayer's basis, or investment, in the assets. In contrast, under section 382(h)(6), an item of income is generally a gross amount that is not netted and therefore not necessarily matched with the item of deduction incurred to earn the item of income. Therefore, the IRS and Treasury Department request comments on the proposed regulations about identifying cases where taking into account items of income and deduction separately may cause the 338 approach to not properly identify whether or not an item of income or deduction is treated as RBIG or RBIL, and how the 338 approach might be adapted so that in such cases it properly identifies whether or not an item of income or deduction is treated as RBIG or RBIL. Special Analyses It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12666. Therefore, a regulatory assessment is not required. These temporary regulations address situations in which taxpayers inappropriately attempt to treat deferred prepaid income as net unrealized built-in gain for purposes of increasing the amount of post-ownership change income that may be offset by pre-ownership change losses. For this reason, it has been determined pursuant to 5 U.S.C. 553(b)(B) that prior notice and public procedure are impracticable and contrary to the public interest. For the same reason, it has been determined pursuant to 5 U.S.C. 553(d)(3) that good cause exists to make these temporary regulations effective upon the date of publication. For applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6) refer to the Special Analyses section of the preamble to the cross-reference notice of the proposed rulemaking published in the Proposed Rules section in this issue of the **Federal Register** . Pursuant to section 7805(f) of the Code, these temporary regulations will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business. Drafting Information The principal author of these regulations is Sean McKeever, Office of Associate Chief Counsel (Corporate). However, other personnel from the IRS and Treasury Department participated in their development. Availability of IRS Documents IRS revenue rulings, procedures, and notices cited in this preamble are made available by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows: PART 1—INCOME TAXES **Paragraph 1.** The authority citation for part 1 is amended by adding an entry in numerical order to read as follows: Authority: 26 U.S.C. 7805. * * * Section 1.382-7T also issued under 26 U.S.C. 382(m).* * * **Par. 2.** Section 1.382-7T is added to read as follows: § 1.382-7T Built-in gains and losses (temporary).

(a)*Treatment of prepaid income.* For purposes of section 382(h), prepaid income is not recognized built-in gain. The term *prepaid income* means any amount received prior to the change date that is attributable to performance occurring on or after the change date. Examples to which this paragraph

(a)will apply include, but are not limited to, income received prior to the change date that is deferred under section 455, § 1.451-5, or Rev. Proc. 2004-34 (2004-1 CB 991) (or any successor revenue procedure) (see § 601.601(d)(2) of this chapter).

(b)*Effective/applicability date.*

(1)This section applies to loss corporations that have undergone an ownership change on or after June 14, 2007.

(2)The applicability of this section expires on or before June 14, 2010. Kevin M. Brown, Deputy Commissioner for Services and Enforcement. Eric Solomon, Assistant Secretary of the Treasury. [FR Doc. E7-11438 Filed 6-13-07; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1, 301, and 602 [TD 9329] RIN 1545-BF26 Guidance Necessary To Facilitate Business Electronic Filing and Burden Reduction AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final regulations and removal of temporary regulations. SUMMARY: This document contains final regulations that affect taxpayers filing Federal income tax returns. They simplify, clarify, or eliminate reporting burdens and also eliminate regulatory impediments to the electronic filing of certain statements that taxpayers are required to include on or with their Federal income tax returns. This document also makes conforming changes to certain current regulations. DATES: *Effective Date:* These regulations are effective on June 14, 2007. *Applicability Date:* For dates of applicability, see §§ 1.302-2(d), 1.302-4(h), 1.331-1(f), 1.332-6(e), 1.338-10(c), 1.351-3(f), 1.355-5(e), 1.368-3(e), 1.381(b)-1(e), 1.382-8(j)(4), 1.382-11(b), 1.1081-11(f), 1.1221-2(j), 1.1502-13(m), 1.1502-31(j), 1.1502-32(j), 1.1502-33(k), 1.1502-95(g), 1.1563-3(e) and 1.6012-2(k). FOR FURTHER INFORMATION CONTACT: For all sections except § 1.6012-2, Grid Glyer,

(202)622-7930; for § 1.6012-2, William T. Sullivan

(202)622-7052 (not toll-free numbers). SUPPLEMENTARY INFORMATON: Paperwork Reduction Act The collection of information contained in these final regulations has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1545-2019. The collection of information in these final regulations is in §§ 1.302-2, 1.302-4, 1.331-1, 1.332-6, 1.338-10, 1.351-3, 1.355-5, 1.368-3, 1.381(b)-1, 1.382-8, 1.382-11, 1.1081-11, 1.1221-2, 1.1502-13, 1.1502-31, 1.1502-32, 1.1502-33, 1.1502-95, 1.1563-3 and 1.6012-2. This information is required to enable the IRS to verify that a taxpayer is reporting the correct amount of the fair market value of any property (including stock) received and the basis of any property (including stock) surrendered in the transaction described in such section. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number by the Office of Management and Budget. Books or records relating to a collection of information must be retained as long as their contents might become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Background On May 30, 2006, the IRS and Treasury Department published temporary regulations (TD 9264) under 26 CFR part 1 and 26 CFR part 602. See 71 FR 30591, 2006-26 IRB 1150. The IRS and Treasury Department issued a notice of proposed rulemaking (REG-134317-05) cross-referencing those temporary regulations on the same day. See 71 FR 30640, 2006-26 IRB 1184. In general, the regulations simplify, clarify, or eliminate reporting burdens for corporations and shareholders for certain transactions, including distributions, exchanges and reorganizations. They also eliminate impediments to the electronic filing of statements that taxpayers, primarily large corporations that are members of consolidated or controlled groups, are required to include on their Federal income tax returns. These regulations were part of a series of regulations published by the IRS and Treasury Department that are designed to eliminate impediments to the electronic filing of forms and statements that taxpayers are required to include on their Federal income tax returns. See, for example, TD 9300, 71 FR 71040, 2007-2 IRB 246, and TD 9243, 71 FR 4276, 2006-8 IRB 475. Explanation of Provisions Except as provided in the following paragraph, this Treasury decision adopts the proposed regulations with no substantive changes. In addition, this Treasury decision removes the corresponding temporary regulations. This Treasury decision does not adopt the following proposed regulations: § 1.1502-35(c)(4)(i), § 1.1502-76(b)(2)(ii)(D) and § 1.1563-1(c)(2)(i) through (iii). These proposed regulations will be addressed as part of other guidance projects. The IRS and Treasury Department received no written or electronic comments from the public in response to the notice of proposed rulemaking and no public hearing was requested or held. However, three questions were raised informally and are addressed in this preamble. Section 1.302-2 The first question involves a reporting requirement under § 1.302-2 (redemptions not taxable as dividends). Specifically, the question involved proposed § 1.302-2(b)(2), which requires all “significant holders” receiving property from a corporation in exchange for the corporation's stock (“redemption exchanges”) to include a brief information statement on their return. The statement sets forth certain information necessary to determine the proper treatment of the redemption exchange. Under proposed § 1.302-2(b)(3)(i), a significant holder is any stockholder owning 5 percent or more of the stock of a publicly traded company and any stockholder owning 1 percent or more of the stock of a company that is not publicly traded. The specific question raised was whether the statement is necessary in all redemption exchanges, whether the exchange is treated as a distribution that is essentially equivalent to a dividend or not. Under the proposed regulations, all redemption exchanges are subject to this reporting requirement. The IRS and Treasury Department determined that the simplified information to be provided in the statement is necessary for the identification and evaluation of redemptions that are essentially equivalent to dividends. Furthermore, the required information is information that taxpayers should already have or be prepared to produce. Finally, as noted in this preamble, the regulations limit any remaining burden by imposing the reporting requirement only on significant holders. For all these reasons, the IRS and Treasury Department have concluded that the requirement does not impose an unnecessary or inappropriate burden on taxpayers. Accordingly, the final regulations adopt the rule proposed in § 1.302-2(b)(2) and do not limit the application of the reporting requirement. Section 1.302-4 The second question involves a reporting requirement under § 1.302-4 (termination of shareholder's interest). Specifically, the question involved the statement in proposed § 1.302-4(a) regarding the waiver of family attribution. Under this section and section 302(c)(2), a redeeming shareholder can avoid being treated as receiving a dividend equivalent distribution by waiving the application of the family attribution rules of section 318(a)(1). Prior to the promulgation of § 1.302-4T(a), § 1.302-4(a)(1) provided that taxpayers were required to file family attribution waiver agreements and § 1.302-4(a)(2) prescribed conditions under which a taxpayer that had failed to timely file the agreement could obtain an extension of time to file from the appropriate district director. Section 1.302-4T(a) removed the requirement that an agreement be filed as well as the instructions regarding late filing. Instead, that regulation provided that a statement must be filed and set forth the information that must be included. Section 1.302-4T(a) did not include instructions for late filers. The specific question raised was whether the change affected taxpayers' ability to remedy late filing. The IRS and Treasury Department did not intend any change to taxpayers' ability to remedy late filing. However, the final regulations do not incorporate instructions for late filing because the statement required is a regulatory election and the late filing of all regulatory elections is addressed by § 301.9100-1. Accordingly, such instructions are not necessary and could inadvertently imply that the general rules would not otherwise apply. Section 1.6012-2 Finally, a question was also raised concerning the reporting requirements applicable to foreign insurance corporations electing under section 953(d) to be treated as domestic insurance corporations. Specifically, the question raised was whether such corporations have a reporting requirement. Section 1.6012-2(c)(1)(i) requires that a domestic life insurance company file with its return a copy of its annual statement which shows the reserves used by the company in computing the taxable income reported on its return, and a copy of Schedule A (real estate) and of Schedule D (bonds and stocks), or any successor thereto, of such annual statement. Section 1.6012-2(c)(2) similarly requires that a domestic nonlife insurance company file with its return a copy of its annual statement, including the underwriting and investment exhibit (or any successor thereto), for the year covered by such return. Section 953(d) provides that a foreign insurance company that satisfies the requirements of section 953(d), including the making of an election under section 953(d)(1)(D), shall be treated as a domestic corporation for purposes of the Internal Revenue Code. Thus, a foreign insurance company that elects under section 953(d) to be treated as a domestic corporation generally is required under § 1.6012-2(c)(1) or (2), as appropriate, to file with its return a copy of its annual statement. Under § 1.6012-2(c)(5), the term “annual statement” includes a pro forma annual statement if the insurance company is not required to file the NAIC annual statement. Because the reporting requirements of electing corporations are addressed in the current regulations, the IRS and Treasury Department are not modifying the regulations to address this point further. Special Analysis It has been determined that this Treasury Decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to §§ 1.302-2, 1.302-4, 1.331-1, 1.332-6, 1.351-3, 1.355-5, 1.368-3, 1.381(b)-1, 1.1081-11, 1.1563-3, and 1.6012-2. With respect to the collections of information in such sections, and with respect to §§ 1.338-10, 1.382-8, 1.382-11, 1.1221-2, 1.1502-13, 1.1502-31, 1.1502-32, 1.1502-33 and 1.1502-95, it is hereby certified that these regulations will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that these regulations primarily affect large corporations (which are members of either controlled or consolidated groups) and in the case of all corporations will substantially reduce or eliminate the existing reporting burden. Therefore, a regulatory flexibility analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Internal Revenue Code, these regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business. Drafting Information The principal author of these regulations is Grid Glyer, Office of Associate Chief Counsel (Corporate). However, other personnel from the IRS and Treasury Department participated in their development. List of Subjects 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. 26 CFR Part 301 Administrative practice and procedure, Bankruptcy, Income taxes. 26 CFR Part 602 Reporting and recordkeeping requirements. Adoption of Amendments to the Regulations Accordingly, 26 CFR parts 1 and 602 are amended as follows: PART 1—INCOME TAXES **Paragraph 1** . The authority citation for part 1 is amended by removing the entries for §§ 1.302-2T, 1.302-4T, 1.331-1T, 1.332-6T, 1.338-10T, 1.351-3T, 1.355-5T, 1.368-3T, 1.381(b)-1T, 1.382-8T, 1.382-11T, 1.1081-11T, 1.1221-2T, 1.1502-13T, 1.1502-31T, 1.1502-33T, 1.1502-95T, 1.1563-3T and 1.6012-2T to read, in part, as follows: Authority: 26 U.S.C. 7805. * * * **Par. 2** . Section 1.302-2 is amended by: 1. Adding headings to paragraphs (a), (b), (b)(1) and (c). 2. Revising paragraphs (b)(2) and (d). 3. Adding paragraphs (b)(3) and (b)(4). The additions and revisions read as follows: § 1.302-2 Redemptions not taxable as dividends.

(a)*In general.* * * *

(b)*Redemption not essentially equivalent to a dividend* —(1) *In general.* * * *

(2)*Statement.* Unless § 1.331-1(d) applies, every significant holder that transfers stock to the issuing corporation in exchange for property from such corporation must include on or with such holder's return for the taxable year of such exchange a statement entitled, “STATEMENT PURSUANT TO § 1.302-2(b)(2) BY [INSERT NAME AND TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SIGNIFICANT HOLDER OF THE STOCK OF [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF ISSUING CORPORATION].” If a significant holder is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. The statement must include—

(i)The fair market value and basis of the stock transferred by the significant holder to the issuing corporation; and

(ii)A description of the property received by the significant holder from the issuing corporation.

(3)*Definitions.* For purposes of this section:

(i)*Significant holder* means any person that, immediately before the exchange—

(A)Owned at least five percent (by vote or value) of the total outstanding stock of the issuing corporation if the stock owned by such person is publicly traded; or

(B)Owned at least one percent (by vote or value) of the total outstanding stock of the issuing corporation if the stock owned by such person is not publicly traded.

(ii)*Publicly traded stock* means stock that is listed on—

(A)A national securities exchange registered under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); or

(B)An interdealer quotation system sponsored by a national securities association registered under section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o-3).

(iii)*Issuing corporation* means the corporation that issued the shares of stock, some or all of which were transferred by a significant holder to such corporation in the exchange described in paragraph (b)(2) of this section.

(4)*Cross reference.* See section 6043 of the Internal Revenue Code for requirements relating to a return by a liquidating corporation.

(c)*Basis adjustments.* * * *

(d)*Effective/applicability date.* Paragraphs (b)(2), (b)(3) and (b)(4) of this section apply to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply paragraphs (b)(2), (b)(3) and (b)(4) of this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see § 1.302-2 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.302-2T [Removed] **Par. 3** . Section 1.302-2T is removed. **Par. 4** . Section 1.302-4 is amended by: 1. Revising paragraphs

(a)and (h). 2. Adding headings to paragraphs (b), (c), (d), (e), (f), and

(g)introductory text. The additions and revisions read as follows: § 1.302-4 Termination of shareholder's interest.

(a)*Statement.* The agreement specified in section 302(c)(2)(A)(iii) shall be in the form of a statement entitled, “STATEMENT PURSUANT TO SECTION 302(c)(2)(A)(iii) BY [INSERT NAME AND TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER OR RELATED PERSON, AS THE CASE MAY BE], A DISTRIBUTEE (OR RELATED PERSON) OF [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF DISTRIBUTING CORPORATION].” The distributee must include such statement on or with the distributee's first return for the taxable year in which the distribution described in section 302(b)(3) occurs. If the distributee is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. The distributee must represent in the statement—

(1)THE DISTRIBUTEE (OR RELATED PERSON) HAS NOT ACQUIRED, OTHER THAN BY BEQUEST OR INHERITANCE, ANY INTEREST IN THE CORPORATION (AS DESCRIBED IN SECTION 302(c)(2)(A)(i)) SINCE THE DISTRIBUTION; and

(2)THE DISTRIBUTEE (OR RELATED PERSON) WILL NOTIFY THE INTERNAL REVENUE SERVICE OF ANY ACQUISITION, OTHER THAN BY BEQUEST OR INHERITANCE, OF SUCH AN INTEREST IN THE CORPORATION WITHIN 30 DAYS AFTER THE ACQUISITION, IF THE ACQUISITION OCCURS WITHIN 10 YEARS FROM THE DATE OF THE DISTRIBUTION.

(b)*Substantiation information.* * * *

(c)*Stock of parent, subsidiary or successor corporation redeemed.* * * *

(d)*Redeemed shareholder as creditor.* * * *

(e)*Acquisition of assets pursuant to creditor's rights.* * * *

(f)*Constructive ownership rules applicable.* * * *

(g)*Avoidance of Federal income tax.* * * *

(h)*Effective/applicability date.* Paragraph

(a)of this section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply paragraph

(a)of this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see § 1.302-4 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.302-4T [Removed] **Par. 5** . Section 1.302-4T is removed. **Par. 6** . Section 1.331-1 is amended by: 1. Adding headings to paragraphs (a), (b),

(c)and (e). 2. Revising paragraphs

(d)and (f). The additions and revisions read as follows: § 1.331-1 Corporate liquidations.

(a)*In general.* * * *

(b)*Gain or loss.* * * *

(c)*Recharacterization.* * * *

(d)*Reporting requirement* —(1) *General rule.* Every significant holder that transfers stock to the issuing corporation in exchange for property from such corporation must include on or with such holder's return for the year of such exchange the statement described in paragraph (d)(2) of this section unless—

(i)The property is part of a distribution made pursuant to a corporate resolution reciting that the distribution is made in complete liquidation of the corporation; and

(ii)The issuing corporation is completely liquidated and dissolved within one year after the distribution.

(2)*Statement.* If required by paragraph (d)(1) of this section, a significant holder must include on or with such holder's return a statement entitled, “STATEMENT PURSUANT TO § 1.331-1(d) BY [INSERT NAME AND TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SIGNIFICANT HOLDER OF THE STOCK OF [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF ISSUING CORPORATION].” If a significant holder is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. The statement must include—

(i)The fair market value and basis of the stock transferred by the significant holder to the issuing corporation; and

(ii)A description of the property received by the significant holder from the issuing corporation.

(3)*Definitions.* For purposes of this section:

(i)*Significant holder* means any person that, immediately before the exchange—

(A)Owned at least five percent (by vote or value) of the total outstanding stock of the issuing corporation if the stock owned by such person is publicly traded; or

(B)Owned at least one percent (by vote or value) of the total outstanding stock of the issuing corporation if the stock owned by such person is not publicly traded.

(ii)*Publicly traded stock* means stock that is listed on—

(A)A national securities exchange registered under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); or

(B)An interdealer quotation system sponsored by a national securities association registered under section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o-3).

(4)*Cross reference.* See section 6043 of the Code for requirements relating to a return by a liquidating corporation.

(e)*Example.* * * *

(f)*Effective/applicability date.* Paragraph

(d)of this section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply paragraph

(d)of this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see § 1.331-1 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.331-1T [Removed] **Par. 7** . Section 1.331-1T is removed. **Par. 8** . Section 1.332-6 is added to read as follows: § 1.332-6 Records to be kept and information to be filed with return.

(a)*Statement filed by recipient corporation.* If any recipient corporation received a liquidating distribution from the liquidating corporation pursuant to a plan (whether or not that recipient corporation has received or will receive other such distributions from the liquidating corporation in other tax years as part of the same plan) during the current tax year, such recipient corporation must include a statement entitled, “STATEMENT PURSUANT TO SECTION 332 BY [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A CORPORATION RECEIVING A LIQUIDATING DISTRIBUTION,” on or with its return for such year. If any recipient corporation is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. The statement must include—

(1)The name and employer identification number (if any) of the liquidating corporation;

(2)The date(s) of all distribution(s) (whether or not pursuant to the plan) by the liquidating corporation during the current tax year;

(3)The aggregate fair market value and basis, determined immediately before the liquidation, of all of the assets of the liquidating corporation that have been or will be transferred to any recipient corporation;

(4)The date and control number of any private letter ruling(s) issued by the Internal Revenue Service in connection with the liquidation;

(5)The following representation: THE PLAN OF COMPLETE LIQUIDATION WAS ADOPTED ON [INSERT DATE (mm/dd/yyyy)]; and

(6)A representation by such recipient corporation either that—

(i)THE LIQUIDATION WAS COMPLETED ON [INSERT DATE (mm/dd/yyyy)]; or

(ii)THE LIQUIDATION IS NOT COMPLETE AND THE TAXPAYER HAS TIMELY FILED [INSERT EITHER FORM 952, “Consent To Extend the Time to Assess Tax Under Section 332(b),” OR NUMBER AND NAME OF THE SUCCESSOR FORM].

(b)*Filings by the liquidating corporation.* The liquidating corporation must timely file Form 966, “Corporate Dissolution or Liquidation,” (or its successor form) and its final Federal corporate income tax return. See also section 6043 of the Code.

(c)*Definitions.* For purposes of this section:

(1)*Plan* means the plan of complete liquidation within the meaning of section 332.

(2)*Recipient corporation* means the corporation described in section 332(b)(1).

(3)*Liquidating corporation* means the corporation that makes a distribution of property to a recipient corporation pursuant to the plan.

(4)*Liquidating distribution* means a distribution of property made by the liquidating corporation to a recipient corporation pursuant to the plan.

(d)*Substantiation information.* Under § 1.6001-1(e), taxpayers are required to retain their permanent records and make such records available to any authorized Internal Revenue Service officers and employees. In connection with a liquidation described in this section, these records should specifically include information regarding the amount, basis, and fair market value of all distributed property, and relevant facts regarding any liabilities assumed or extinguished as part of such liquidation.

(e)*Effective/applicability date.* This section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see § 1.332-6 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.332-6T [Removed] **Par. 9** . Section 1.332-6T is removed. **Par. 10** . Section 1.338-0 is amended by revising the entries for §§ 1.338-10(a)(4)(iii) and 1.338-10(c) and removing the entry for § 1.338-10T to read as follows: § 1.338-0 Outline of topics. § 1.338-10 Filing of returns.

(a)* * *

(4)* * *

(iii)Procedure for filing a combined return.

(c)Effective/applicability date. **Par. 11** . Section 1.338-10 is amended by revising paragraphs (a)(4)(iii) and

(c)to read as follows: § 1.338-10 Filing of returns.

(a)* * *

(4)* * *

(iii)*Procedure for filing a combined return.* A combined return is made by filing a single corporation income tax return in lieu of separate deemed sale returns for all targets required to be included in the combined return. The combined return reflects the deemed asset sales of all targets required to be included in the combined return. If the targets included in the combined return constitute a single affiliated group within the meaning of section 1504(a), the income tax return is signed by an officer of the common parent of that group. Otherwise, the return must be signed by an officer of each target included in the combined return. Rules similar to the rules in § 1.1502-75(j) apply for purposes of preparing the combined return. The combined return must include a statement entitled, “ELECTION TO FILE A COMBINED RETURN UNDER SECTION 338(h)(15).” The statement must include—

(A)The name, address, and employer identification number of each target required to be included in the combined return; and

(B)The following declaration: EACH TARGET IDENTIFIED IN THIS ELECTION TO FILE A COMBINED RETURN CONSENTS TO THE FILING OF A COMBINED RETURN.

(c)*Effective/applicability date.* Paragraph (a)(4)(iii) of this section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply paragraph (a)(4)(iii) of this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see § 1.338-10 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.338-10T [Removed] **Par. 12** . Section 1.338-10T is removed. **Par. 13** . Section 1.351-3 is added to read as follows: § 1.351-3 Records to be kept and information to be filed.

(a)*Significant transferor.* Every significant transferor must include a statement entitled, “STATEMENT PURSUANT TO § 1.351-3(a) BY [INSERT NAME AND TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SIGNIFICANT TRANSFEROR,” on or with such transferor's income tax return for the taxable year of the section 351 exchange. If a significant transferor is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. The statement must include—

(1)The name and employer identification number (if any) of the transferee corporation;

(2)The date(s) of the transfer(s) of assets;

(3)The aggregate fair market value and basis, determined immediately before the exchange, of the property transferred by such transferor in the exchange; and

(4)The date and control number of any private letter ruling(s) issued by the Internal Revenue Service in connection with the section 351 exchange.

(b)*Transferee corporation.* Except as provided in paragraph

(c)of this section, every transferee corporation must include a statement entitled, “STATEMENT PURSUANT TO § 1.351-3(b) BY [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A TRANSFEREE CORPORATION,” on or with its income tax return for the taxable year of the exchange. If the transferee corporation is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. The statement must include—

(1)The name and taxpayer identification number (if any) of every significant transferor;

(2)The date(s) of the transfer(s) of assets;

(3)The aggregate fair market value and basis, determined immediately before the exchange, of all of the property received in the exchange; and

(4)The date and control number of any private letter ruling(s) issued by the Internal Revenue Service in connection with the section 351 exchange.

(c)*Exception for certain transferee corporations.* The transferee corporation is not required to file a statement under paragraph

(b)of this section if all of the information that would be included in the statement described in paragraph

(b)of this section is included in any statement(s) described in paragraph

(a)of this section that is attached to the same return for the same section 351 exchange.

(d)*Definitions.* For purposes of this section:

(1)*Significant transferor* means a person that transferred property to a corporation and received stock of the transferee corporation in an exchange described in section 351 if, immediately after the exchange, such person—

(i)Owned at least five percent (by vote or value) of the total outstanding stock of the transferee corporation if the stock owned by such person is publicly traded, or

(ii)Owned at least one percent (by vote or value) of the total outstanding stock of the transferee corporation if the stock owned by such person is not publicly traded.

(2)*Publicly traded stock* means stock that is listed on—

(i)A national securities exchange registered under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); or

(ii)An interdealer quotation system sponsored by a national securities association registered under section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o-3).

(e)*Substantiation information.* Under § 1.6001-1(e), taxpayers are required to retain their permanent records and make such records available to any authorized Internal Revenue Service officers and employees. In connection with the exchange described in this section, these records should specifically include information regarding the amount, basis, and fair market value of all transferred property, and relevant facts regarding any liabilities assumed or extinguished as part of such exchange.

(f)*Effective/applicability date.* This section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see § 1.351-3 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.351-3T [Removed] **Par. 14** . Section 1.351-3T is removed. **Par. 15** . Section 1.355-0 is amended by removing the entry for § 1.355-5T and adding an entry for § 1.355-5. The revision and addition read as follows: § 1.355-0 Outline of sections. § 1.355-5 Records to be kept and information to be filed.

(a)Distributing corporation.

(1)In general.

(2)Special rule when an asset transfer precedes a stock distribution.

(b)Significant distributee.

(c)Definitions.

(1)Significant distributee.

(2)Publicly traded stock.

(d)Substantiation information.

(e)Effective/applicability date. **Par. 16** . Section 1.355-5 is added to read as follows: § 1.355-5 Records to be kept and information to be filed.

(a)*Distributing corporation* —(1) *In general.* Every corporation that makes a distribution (the distributing corporation) of stock or securities of a controlled corporation, as described in section 355 (or so much of section 356 as relates to section 355), must include a statement entitled, “STATEMENT PURSUANT TO § 1.355-5(a) BY [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A DISTRIBUTING CORPORATION,” on or with its return for the year of the distribution. If the distributing corporation is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. The statement must include—

(i)The name and employer identification number (if any) of the controlled corporation;

(ii)The name and taxpayer identification number (if any) of every significant distributee;

(iii)The date of the distribution of the stock or securities of the controlled corporation;

(iv)The aggregate fair market value and basis, determined immediately before the distribution or exchange, of the stock, securities, or other property (including money) distributed by the distributing corporation in the transaction; and

(v)The date and control number of any private letter ruling(s) issued by the Internal Revenue Service in connection with the transaction.

(2)*Special rule when an asset transfer precedes a stock distribution.* If the distributing corporation transferred property to the controlled corporation in a transaction described in section 351 or 368, as part of a plan to then distribute the stock or securities of the controlled corporation in a transaction described in section 355 (or so much of section 356 as relates to section 355), then, unless paragraph (a)(1)(v) of this section applies, the distributing corporation must also include on or with its return for the year of the distribution the statement required by § 1.351-3(a) or 1.368-3(a). If the distributing corporation is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include the statement required by § 1.351-3(a) or 1.368-3(a) on or with its return.

(b)*Significant distributee.* Every significant distributee must include a statement entitled, “STATEMENT PURSUANT TO § 1.355-5(b) BY [INSERT NAME AND TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SIGNIFICANT DISTRIBUTEE,” on or with such distributee's return for the year in which such distribution is received. If a significant distributee is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. The statement must include—

(1)The names and employer identification numbers (if any) of the distributing and controlled corporations;

(2)The date of the distribution of the stock or securities of the controlled corporation; and

(3)The aggregate basis, determined immediately before the exchange, of any stock or securities transferred by the significant distributee in the exchange, and the aggregate fair market value, determined immediately before the distribution or exchange, of the stock, securities or other property (including money) received by the significant distributee in the distribution or exchange.

(c)*Definitions.* For purposes of this section:

(1)*Significant distributee* means—

(i)A holder of stock of a distributing corporation that receives, in a transaction described in section 355 (or so much of section 356 as relates to section 355), stock of a corporation controlled by the distributing corporation if, immediately before the distribution or exchange, such holder—

(A)Owned at least five percent (by vote or value) of the total outstanding stock of the distributing corporation if the stock owned by such holder is publicly traded; or

(B)Owned at least one percent (by vote or value) of the stock of the distributing corporation if the stock owned by such holder is not publicly traded; or

(ii)A holder of securities of a distributing corporation that receives, in a transaction described in section 355 (or so much of section 356 as relates to section 355), stock or securities of a corporation controlled by the distributing corporation if, immediately before the distribution or exchange, such holder owned securities in such distributing corporation with a basis of $1,000,000 or more.

(2)*Publicly traded stock* means stock that is listed on—

(i)A national securities exchange registered under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); or

(ii)An interdealer quotation system sponsored by a national securities association registered under section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o-3).

(d)*Substantiation information.* Under § 1.6001-1(e), taxpayers are required to retain their permanent records and make such records available to any authorized Internal Revenue Service officers and employees. In connection with the distribution or exchange described in this section, these records should specifically include information regarding the amount, basis, and fair market value of all property distributed or exchanged, and relevant facts regarding any liabilities assumed or extinguished as part of such distribution or exchange.

(e)*Effective/applicability date.* This section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see § 1.355-5 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.355-5T [Removed] **Par. 17** . Section 1.355-5T is removed. **Par. 18** . Section 1.368-3 is added to read as follows: § 1.368-3 Records to be kept and information to be filed with returns.

(a)*Parties to the reorganization.* The plan of reorganization must be adopted by each of the corporations that are parties thereto. Each such corporation must include a statement entitled, “STATEMENT PURSUANT TO § 1.368-3(a) BY [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A CORPORATION A PARTY TO A REORGANIZATION,” on or with its return for the taxable year of the exchange. If any such corporation is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. However, it is not necessary for any taxpayer to include more than one such statement on or with the same return for the same reorganization. The statement must include—

(1)The names and employer identification numbers (if any) of all such parties;

(2)The date of the reorganization;

(3)The aggregate fair market value and basis, determined immediately before the exchange, of the assets, stock or securities of the target corporation transferred in the transaction; and

(4)The date and control number of any private letter ruling(s) issued by the Internal Revenue Service in connection with this reorganization.

(b)*Significant holders.* Every significant holder, other than a corporation a party to the reorganization, must include a statement entitled, “STATEMENT PURSUANT TO § 1.368-3(b) BY [INSERT NAME AND TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SIGNIFICANT HOLDER,” on or with such holder's return for the taxable year of the exchange. If a significant holder is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. The statement must include—

(1)The names and employer identification numbers (if any) of all of the parties to the reorganization;

(2)The date of the reorganization; and

(3)The fair market value, determined immediately before the exchange, of all the stock or securities of the target corporation held by the significant holder that is transferred in the transaction and such holder's basis, determined immediately before the exchange, in the stock or securities of such target corporation.

(c)*Definitions.* For purposes of this section:

(1)*Significant holder* means—

(i)A holder of stock of the target corporation that receives stock or securities in an exchange described in section 354 (or so much of section 356 as relates to section 354) if, immediately before the exchange, such holder—

(A)Owned at least five percent (by vote or value) of the total outstanding stock of the target corporation if the stock owned by such holder is publicly traded; or

(B)Owned at least one percent (by vote or value) of the total outstanding stock of the target corporation if the stock owned by such holder is not publicly traded; or

(ii)A holder of securities of the target corporation that receives stock or securities in an exchange described in section 354 (or so much of section 356 as relates to section 354) if, immediately before the exchange, such holder owned securities in such target corporation with a basis of $1,000,000 or more.

(2)*Publicly traded stock* means stock that is listed on—

(i)A national securities exchange registered under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); or

(ii)An interdealer quotation system sponsored by a national securities association registered under section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o-3).

(d)*Substantiation information.* Under § 1.6001-1(e), taxpayers are required to retain their permanent records and make such records available to any authorized Internal Revenue Service officers and employees. In connection with the reorganization described in this section, these records should specifically include information regarding the amount, basis, and fair market value of all transferred property, and relevant facts regarding any liabilities assumed or extinguished as part of such reorganization.

(e)*Effective/applicability date.* This section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see § 1.368-3 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.368-3T [Removed] **Par. 19** . Section 1.368-3T is removed. **Par. 20** . Section 1.381(b)-1 is amended by revising paragraphs (b)(3) and

(e)to read as follows: § 1.381(b)-1 Operating rules applicable to carryovers in certain corporate acquisitions.

(b)* * *

(3)*Election* —(i) *Content of statements.* The statements referred to in paragraph (b)(2) of this section must be entitled, “ELECTION OF DATE OF DISTRIBUTION OR TRANSFER PURSUANT TO § 1.381(b)-1(b)(2),” and must include: [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF DISTRIBUTOR OR TRANSFEROR CORPORATION] AND [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF ACQUIRING CORPORATION] ELECT TO DETERMINE THE DATE OF DISTRIBUTION OR TRANSFER UNDER § 1.381(b)-1(b)(2). SUCH DATE IS [INSERT DATE (mm/dd/yyyy)].

(ii)*Filing of statements.* One statement must be included on or with the timely filed Federal income tax return of the distributor or transferor corporation for its taxable year ending with the date of distribution or transfer. An identical statement must be included on or with the timely filed Federal income tax return of the acquiring corporation for its first taxable year ending after that date. If the distributor or transferor corporation, or the acquiring corporation, is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return.

(e)*Effective/applicability date.* Paragraph (b)(3) of this section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply paragraph (b)(3) of this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see § 1.381(b)-1 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.381(b)-1T [Removed] **Par. 21** . Section 1.381(b)-1T is removed. **Par. 22** . Section 1.382-1 is amended by: 1. Revising the entry for § 1.382-8(c)(2). 2. Revising the entry for § 1.382-8(e)(4). 3. Revising the entry for § 1.382-8(h). 4. Revising the entry for § 1.382-8(j)(4). 5. Removing the entry for § 1.382-8T. 6. Adding the entry for § 1.382-11. 7. Removing the entry for § 1.382-11T. The additions and revisions read as follows: § 1.382-1 Table of contents. § 1.382-8 Controlled groups.

(c)* * *

(2)Restoration of value.

(e)* * *

(4)Foreign component member.

(i)In general.

(ii)Exception.

(h)Time and manner of filing election to restore.

(1)Statements required.

(i)Filing by loss corporation.

(ii)Filing by electing member.

(iii)Agreement.

(2)Special rule for foreign component members.

(i)Deemed election to restore full value.

(ii)Election not to restore full value.

(iii)Agreement.

(3)Revocation of election.

(j)* * *

(4)Effective/applicability date. § 1.382-11 Reporting requirements.

(a)Information statement required.

(b)Effective/applicability date. **Par. 23** . Section 1.382-8 is amended by revising paragraphs (c)(2), (e)(4),

(h)and (j)(4) to read as follows: § 1.382-8 Controlled groups.

(c)* * *

(2)*Restoration of value.* After the value of the stock of each component member is reduced pursuant to paragraph (c)(1) of this section, the value of the stock of each component member is increased by the amount of value, if any, restored to the component member by another component member (the electing member) pursuant to this paragraph (c)(2). The electing member may elect (or may be deemed to elect under paragraph (h)(2)(i) of this section in the case of a foreign component member) to restore value to another component member in an amount that does not exceed the lesser of—

(i)The sum of—

(A)The value, determined immediately before the ownership change, of the electing member's stock (after adjustment under paragraph (c)(1) of this section and before any restoration of value under this paragraph (c)(2)); plus

(B)Any amount of value restored to the electing member by another component member under this paragraph (c)(2); or

(ii)The value, determined immediately before any ownership change, of the electing member's stock (without regard to any adjustment under this section) that is directly owned by the other component member immediately after the ownership change.

(e)* * *

(4)*Foreign component member* —(i) *In general.* Except as provided in paragraph (e)(4)(ii) of this section, foreign component member means a component member that is a foreign corporation.

(ii)*Exception.* A foreign component member shall not include a foreign corporation that has items treated as connected with the conduct of a trade or business in the United States that it takes into account in determining its value pursuant to section 382(e)(3).

(h)*Time and manner of filing election to restore* —(1) *Statements required* —(i) *Filing by loss corporation.* The election to restore value described in paragraph (c)(2) of this section must be in the form set forth in this paragraph (h)(1)(i). It must be filed by the loss corporation by including a statement on or with its income tax return for the taxable year in which the ownership change occurs (or with an amended return for that year filed on or before the due date (including extensions) of the income tax return of any component member with respect to the taxable year in which the ownership change occurs). The common parent of a consolidated group must make the election on behalf of the group. The election is made in the form of a statement entitled, “STATEMENT PURSUANT TO § 1.382-8(h)(1) TO ELECT TO RESTORE ALL OR PART OF THE VALUE OF [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF THE ELECTING MEMBER] TO [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF THE CORPORATION TO WHICH VALUE IS RESTORED].” The statement must include the amount of the value being restored and must also indicate that an agreement signed and dated by both parties, as described in paragraph (h)(1)(iii) of this section, has been entered into. Each such party must retain either the original or a copy of this agreement as part of its records. See § 1.6001-1(e).

(ii)*Filing by electing member.* An electing member must include a statement identical to the one described in paragraph (h)(1)(i) of this section on or with its income tax return (or with an amended return for that year filed on or before the due date (including extensions) of the income tax return of any component member with respect to the taxable year in which the ownership change occurs) (if any) for the taxable year which includes the change date in connection with which the election described in paragraph (c)(2) of this section is made. If the electing member is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. It is not necessary for the electing member (or the United States shareholder, as the case may be) to include this statement on or with its return if the loss corporation includes an identical statement on or with the same return for the same election.

(iii)*Agreement.* Both the electing member and the corporation to which value is restored must sign and date an agreement. The agreement must—

(A)Identify the change date for the loss corporation in connection with which the election is made;

(B)State the value of the electing member's stock (without regard to any adjustment under paragraph

(c)of this section) immediately before the ownership change;

(C)State the amount of any reduction required under paragraph (c)(1) of this section with respect to stock of the electing member that is owned directly or indirectly by the corporation to which value is restored;

(D)State the amount of value that the electing member elects to restore to the corporation; and

(E)State whether the value of either component member's stock was adjusted pursuant to paragraph (c)(4) of this section.

(2)*Special rule for foreign component members* —(i) *Deemed election to restore full value.* Unless the election described in paragraph (h)(2)(ii) of this section is made for a foreign component member, each foreign component member of the controlled group is deemed to have elected to restore to each other component member the maximum value allowable under paragraph (c)(2) of this section, taking into account the limitations of this section.

(ii)*Election not to restore full value.*

(A)A loss corporation may elect to reduce the amount of value restored from a foreign component member (the electing foreign component member) to another component member under paragraph (h)(2)(i) of this section in the form set forth in this paragraph (h)(2)(ii). It must be filed by the loss corporation by including a statement on or with its income tax return for the taxable year in which the ownership change occurs (or with an amended return for that year filed on or before the due date (including extensions) of the income tax return of any component member with respect to the taxable year in which the ownership change occurs). The common parent of a consolidated group must make the election on behalf of the group. The election is made in the form of a statement entitled, “STATEMENT PURSUANT TO § 1.382-8(h)(2)(ii) TO ELECT NOT TO RESTORE FULL VALUE OF [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF ELECTING FOREIGN COMPONENT MEMBER] TO [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF THE CORPORATION TO WHICH SUCH VALUE IS NOT TO BE RESTORED].” The statement must include the amount of the value not being restored and must also indicate that an agreement signed and dated by both parties, as described in paragraph (h)(2)(iii) of this section, has been entered into. Each such party must retain either the original or a copy of the agreement as part of its records. See § 1.6001-1(e).

(B)An electing foreign component member must include a statement identical to the one described in paragraph (h)(2)(ii)(A) of this section on or with its income tax return (or with an amended return for that year filed on or before the due date (including extensions) of the income tax return of any component member with respect to the taxable year in which the ownership change occurs) (if any) for the taxable year which includes the change date in connection with which the election described in paragraph (h)(2)(ii)(A) of this section is made. If the electing foreign component member is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. It is not necessary for the electing foreign component member (or United States shareholder, as the case may be) to include this statement on or with its return if the loss corporation includes an identical statement on or with the same return for the same election.

(iii)*Agreement.* Both the electing foreign component member and the corporation to which full value is not restored must sign and date an agreement. The agreement must—

(A)Identify the change date for the loss corporation in connection with which the election is made;

(B)State the value of the electing foreign component member's stock (without regard to any adjustment under paragraph

(c)of this section) immediately before the ownership change;

(C)State the amount of any reduction required under paragraph (c)(1) of this section with respect to stock of the electing foreign component member that is owned directly or indirectly by the corporation to which value is not restored;

(D)State the amount of value that the electing foreign component member elects not to restore to the corporation; and

(E)State whether the value of either component member's stock was adjusted pursuant to paragraph (c)(4) of this section.

(3)*Revocation of election.* An election (other than the deemed election described in paragraph (h)(2)(i) of this section) made under this section is revocable only with the consent of the Commissioner.

(j)* * *

(4)*Effective/applicability date.* Paragraphs (c)(2), (e)(4) and

(h)of this section apply to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply paragraphs (c)(2), (e)(4) and

(h)of this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see § 1.382-8 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.382-8T [Removed] **Par. 24** . Section 1.382-8T is removed. **Par. 25** . Section 1.382-11 is added to read as follows: § 1.382-11 Reporting requirements.

(a)*Information statement required.* A loss corporation must include a statement entitled, “STATEMENT PURSUANT TO § 1.382-11(a) BY [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER OF TAXPAYER], A LOSS CORPORATION,” on or with its income tax return for each taxable year that it is a loss corporation in which an owner shift, equity structure shift or other transaction described in § 1.382-2T(a)(2)(i) occurs. The statement must include the date(s) of any owner shifts, equity structure shifts, or other transactions described in § 1.382-2T(a)(2)(i), the date(s) on which any ownership change(s) occurred, and the amount of any attributes described in § 1.382-2(a)(1)(i) that caused the corporation to be a loss corporation. A loss corporation may also be required to include certain elections on this statement, including—

(1)An election made under § 1.382-2T(h)(4)(vi)(B) to disregard the deemed exercise of an option if the actual exercise of that option occurred within 120 days of the ownership change; and

(2)An election made under § 1.382-6(b)(2) to close the books of the loss corporation for purposes of allocating income and loss to periods before and after the change date for purposes of section 382.

(b)*Effective/applicability date.* This section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see § 1.382-2T as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.382-11T [Removed] **Par. 26** . Section 1.382-11T is removed. **Par. 27** . Section 1.1081-11 is added to read as follows: § 1.1081-11 Records to be kept and information to be filed with returns.

(a)*Distributions and exchanges; significant holders of stock or securities.* Every significant holder must include a statement entitled, “STATEMENT PURSUANT TO § 1.1081-11(a) BY [INSERT NAME AND TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SIGNIFICANT HOLDER,” on or with such holder's income tax return for the taxable year in which the distribution or exchange occurs. If a significant holder is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. The statement must include—

(1)The name and employer identification number (if any) of the corporation from which the stock, securities, or other property (including money) was received by such significant holder;

(2)The aggregate basis, determined immediately before the exchange, of any stock or securities transferred by the significant holder in the exchange, and the aggregate fair market value, determined immediately before the distribution or exchange, of the stock, securities or other property (including money) received by the significant holder in the distribution or exchange; and

(3)The date of the distribution or exchange.

(b)*Distributions and exchanges; corporations subject to Commission orders.* Each corporation which is a party to a distribution or exchange made pursuant to an order of the Commission must include on or with its income tax return for its taxable year in which the distribution or exchange takes place a statement entitled, “STATEMENT PURSUANT TO § 1.1081-11(b) BY [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A DISTRIBUTING OR EXCHANGING CORPORATION.” If the distributing or exchanging corporation is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. The statement must include—

(1)The date and control number of the Commission order, pursuant to which the distribution or exchange was made;

(2)The names and taxpayer identification numbers (if any) of the significant holders;

(3)The aggregate fair market value and basis, determined immediately before the distribution or exchange, of the stock, securities, or other property (including money) transferred in the distribution or exchange; and

(4)The date of the distribution or exchange.

(c)*Sales by members of system groups.* Each system group member must include a statement entitled, “STATEMENT PURSUANT TO § 1.1081-11(c) BY [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SYSTEM GROUP MEMBER,” on or with its income tax return for the taxable year in which the sale is made. If any system group member is a controlled foreign corporation (within the meaning of section 957), each United States shareholder (within the meaning of section 951(b)) with respect thereto must include this statement on or with its return. The statement must include—

(1)The dates and control numbers of all relevant Commission orders;

(2)The aggregate fair market value and basis, determined immediately before the sale, of all stock or securities sold; and

(3)The date of the sale.

(d)*Definitions.*

(1)For purposes of this section, *Commission* means the Securities and Exchange Commission.

(2)For purposes of this section, *significant holder* means a person that receives stock or securities from a corporation (the distributing corporation) pursuant to an order of the Commission, if, immediately before the transaction, such person—

(i)In the case of stock—

(A)Owned at least five percent (by vote or value) of the total outstanding stock of the distributing corporation if the stock owned by such person is publicly traded, or

(B)Owned at least one percent (by vote or value) of the total outstanding stock of the distributing corporation if the stock owned by such person is not publicly traded; or

(ii)In the case of securities, owned securities of the distributing corporation with a basis of $1,000,000 or more.

(3)*Publicly traded stock* means stock that is listed on—

(i)A national securities exchange registered under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); or

(ii)An interdealer quotation system sponsored by a national securities association registered under section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o-3).

(4)For purposes of paragraph

(b)of this section, exchange means exchange, expenditure, or investment.

(5)For purposes of paragraph

(c)of this section, *system group member* means each corporation which is a member of a system group and which, pursuant to an order of the Commission, sells stock or securities received upon an exchange (pursuant to an order of the Commission) and applies the proceeds derived therefrom in retirement or cancellation of its own stock or securities.

(e)*Substantiation information.* Under § 1.6001-1(e), taxpayers are required to retain their permanent records and make such records available to any authorized Internal Revenue Service officers and employees. In connection with the distribution or exchange described in this section, these records should specifically include information regarding the amount, basis, and fair market value of all property distributed or exchanged, and relevant facts regarding any liabilities assumed or extinguished as part of such distribution or exchange.

(f)*Effective/applicability date.* This section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see § 1.1081-11 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.1081-11T [Removed] **Par. 28** . Section 1.1081-11T is removed. **Par. 29** . Section 1.1221-2 is amended by revising paragraphs (e)(2)(iv) and

(j)to read as follows: § 1.1221-2 Hedging transactions.

(e)* * *

(2)* * *

(iv)*Making and revoking the election.* Unless the Commissioner otherwise prescribes, the election described in paragraph (e)(2) of this section must be made in a separate statement that provides, “[INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER OF COMMON PARENT] HEREBY ELECTS THE APPLICATION OF § 1.1221-2(e)(2) (THE SEPARATE-ENTITY APPROACH).” The statement must also indicate the date as of which the election is to be effective. The election must be filed by including the statement on or with the consolidated group's income tax return for the taxable year that includes the first date for which the election is to apply. The election applies to all transactions entered into on or after the date so indicated. The election may only be revoked with the consent of the Commissioner.

(j)*Effective/applicability date.* Paragraph (e)(2)(iv) of this section applies to any original consolidated Federal income tax return due (without extensions) after June 14, 2007. For original consolidated Federal income tax returns due (without extensions) after May 30, 2006, and on or before June 14, 2007, see § 1.1221-2T as contained in 26 CFR part 1 in effect on April 1, 2007. For original consolidated Federal income tax returns due (without extensions) on or before May 30, 2006, see § 1.1221-2 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.1221-2T [Removed] **Par. 30** . Section 1.1221-2T is removed. **Par. 31** . Section 1.1502-13 is amended by revising paragraphs (f)(5)(ii)(E), (f)(6)(i)(C)( *2* ) and

(m)to read as follows: § 1.1502-13 Intercompany transactions.

(f)* * *

(5)* * *

(ii)* * *

(E)*Election.* An election to apply paragraph (f)(5)(ii) of this section is made in a separate statement entitled, “[INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER OF COMMON PARENT] HEREBY ELECTS THE APPLICATION OF § 1.1502-13(f)(5)(ii) FOR AN INTERCOMPANY TRANSACTION INVOLVING [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER OF S] AND [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER OF T].” A separate election must be made for each such application. The election must be filed by including the statement on or with the consolidated group's income tax return for the year of T's liquidation (or other transaction). The Commissioner may impose reasonable terms and conditions to the application of paragraph (f)(5)(ii) of this section that are consistent with the purposes of such section. The statement must— ( *1* ) Identify S's intercompany transaction and T's liquidation (or other transaction); and ( *2* ) Specify which provision of paragraph (f)(5)(ii) of this section applies and how it alters the otherwise applicable results under this section (including, for example, the amount of S's intercompany items and the amount deferred or offset as a result of paragraph (f)(5)(ii) of this section).

(6)* * *

(i)* * *

(C)* * *

(2)*Election.* The election described in paragraph (f)(6)(i)(C)( *1* ) of this section must be made in a separate statement entitled, “ELECTION TO REDUCE BASIS OF P STOCK UNDER § 1.1502-13(f)(6) HELD BY [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER OF MEMBER WHOSE BASIS IN P STOCK IS REDUCED].” The election must be filed by including the statement on or with the consolidated group's income tax return for the year in which the nonmember becomes a member. The statement must identify the member's basis in the P stock (taking into account the effect of this election) and the number of shares of P stock held by the member.

(m)*Effective/applicability date.* Paragraphs (f)(5)(ii)(E) and (f)(6)(i)(C)( *2* ) of this section apply to any original consolidated Federal income tax return due (without extensions) after June 14, 2007. For original consolidated Federal income tax returns due (without extensions) after May 30, 2006, and on or before June 14, 2007, see § 1.1502-13T as contained in 26 CFR part 1 in effect on April 1, 2007. For original consolidated Federal income tax returns due (without extensions) on or before May 30, 2006, see § 1.1502-13 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.1502-13T [Removed] **Par. 32** . Section 1.1502-13T is removed. **Par. 33** . Section 1.1502-31 is amended by revising paragraphs (e)(2) and

(j)to read as follows: § 1.1502-31 Stock basis after a group structure change.

(e)* * *

(2)*Election.* The election described in paragraph (e)(1) of this section must be made in a separate statement entitled, “ELECTION TO TREAT LOSS CARRYOVER AS EXPIRING UNDER § 1.1502-31(e).” The election must be filed by including the statement on or with the consolidated group's income tax return for the year that includes the group structure change. The statement must identify the amount of each loss carryover deemed to expire (or the amount of each loss carryover deemed not to expire, with any balance of any loss carryovers being deemed to expire).

(j)*Effective/applicability date.* Paragraph (e)(2) of this section applies to any original consolidated Federal income tax return due (without extensions) after June 14, 2007. For original consolidated Federal income tax returns due (without extensions) after May 30, 2006, and on or before June 14, 2007, see § 1.1502-31T as contained in 26 CFR part 1 in effect on April 1, 2007. For original consolidated Federal income tax returns due (without extensions) on or before May 30, 2006, see § 1.1502-31 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.1502-31T [Removed] **Par. 34** . Section 1.1502-31T is removed. **Par. 35** . Section 1.1502-32 is amended by revising paragraphs (b)(4)(iv) and

(j)to read as follows: § 1.1502-32 Investment adjustments.

(b)* * *

(4)* * *

(iv)*Election.* The election described in paragraph (b)(4) of this section must be made in a separate statement entitled, “ELECTION TO TREAT LOSS CARRYOVER OF [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER OF S] AS EXPIRING UNDER § 1.1502-32(b)(4).” The election must be filed by including a statement on or with the consolidated group's income tax return for the year S becomes a member. A separate statement must be made for each member whose loss carryover is deemed to expire. The statement must identify the amount of each loss carryover deemed to expire (or the amount of each loss carryover deemed not to expire, with any balance of any loss carryovers being deemed to expire) and the basis of any stock reduced as a result of the deemed expiration.

(j)*Effective/applicability date.* Paragraph (b)(4)(iv) of this section applies to any original consolidated Federal income tax return due (without extensions) after June 14, 2007. For original consolidated Federal income tax returns due (without extensions) after May 30, 2006, and on or before June 14, 2007, see § 1.1502-32T as contained in 26 CFR part 1 in effect on April 1, 2007. For original consolidated Federal income tax returns due (without extensions) on or before May 30, 2006, see § 1.1502-32 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.1502-32T [Amended] **Par. 36** . Section 1.1502-32T is amended by removing and reserving paragraphs (b)(4)(iv) and (j). **Par. 37** . Section 1.1502-33 is amended by revising paragraphs (d)(5)(i)(D) and

(k)to read as follows: § 1.1502-33 Earnings and profits.

(d)* * *

(5)* * *

(i)* * *

(D)If a method is permitted under paragraph (d)(4) of this section, provide the date and control number of the private letter ruling issued by the Internal Revenue Service approving such method.

(k)*Effective/applicability date.* Paragraph (d)(5)(i)(D) of this section applies to any original consolidated Federal income tax return due (without extensions) after June 14, 2007. For original consolidated Federal income tax returns due (without extensions) after May 30, 2006, and on or before June 14, 2007, see § 1.1502-33T as contained in 26 CFR part 1 in effect on April 1, 2007. For original consolidated Federal income tax returns due (without extensions) on or before May 30, 2006, see § 1.1502-33 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.1502-33T [Removed] **Par. 38** . Section 1.1502-33T is removed. **Par. 39** . Section 1.1502-90 is amended by: 1. Revising the entry for § 1.1502-95(e)(8). 2. Revising the entry for § 1.1502-95(f). 3. Revising the entry for § 1.1502-95(g). 4. Removing the entry for § 1.1502-95T. The revisions read as follows: § 1.1502-90 Table of contents. § 1.1502-95 Rules on ceasing to be a member of a consolidated group (or loss subgroup).

(e)* * *

(8)Reporting requirements.

(i)Common parent.

(ii)Former member.

(iii)Exception.

(f)Filing the election to apportion the section 382 limitation and net unrealized built-in gain.

(1)Form of the election to apportion.

(i)Statement.

(ii)Agreement.

(2)Signing the agreement.

(3)Filing the election.

(i)Filing by the common parent.

(ii)Filing by the former member.

(4)Revocation of election.

(g)Effective/applicability date. **Par. 40** . Section 1.1502-95 is amended by revising paragraphs (e)(8),

(f)and

(g)to read as follows: § 1.1502-95 Rules on ceasing to be a member of a consolidated group (or loss subgroup).

(e)* * *

(8)*Reporting requirements* —(i) *Common Parent.* Except as provided in paragraph (e)(8)(iii) of this section, if a net unrealized built-in loss is allocated under paragraph

(e)of this section, the common parent must include a statement entitled, “STATEMENT OF NET UNREALIZED BUILT-IN LOSS ALLOCATION PURSUANT TO § 1.1502-95(e),” on or with its income tax return for the taxable year in which the former member(s) (or a new loss subgroup that includes that member) ceases to be a member. The statement must include—

(A)The name and employer identification number of the departing member;

(B)The amount of the remaining NUBIL balance for the taxable year in which the member departs;

(C)The amount of the net unrealized built-in loss allocated to the departing member; and

(D)A representation that the common parent has delivered a copy of the statement to the former member (or the common parent of the group of which the former member is a member) on or before the day the group files its income tax return for the consolidated return year that the former member ceases to be a member.

(ii)*Former member.* Except as provided in paragraph (e)(8)(iii) of this section, the former member must include a statement on or with its first income tax return (or the first return in which the former member joins) that is filed after the close of the consolidated return year of the group of which the former member (or a new loss subgroup that includes that member) ceases to be a member. The statement will be identical to the statement filed by the common parent under paragraph (e)(8)(i) of this section except that instead of including the information described in paragraph (e)(8)(i)(A) of this section the former member must provide the name, employer identification number and tax year of the former common parent, and instead of the representation described in paragraph (e)(8)(i)(D) of this section the former member must represent that it has received and retained the copy of the statement delivered by the common parent as part of its records. See § 1.6001-1(e).

(iii)*Exception.* This paragraph (e)(8) does not apply if the required information (other than the amount of the remaining NUBIL balance) is included in a statement of election under paragraph

(f)of this section (relating to apportioning a section 382 limitation).

(f)*Filing the election to apportion the section 382 limitation and net unrealized built-in gain* —(1) *Form of the election to apportion* —(i) *Statement.* An election under paragraph

(c)of this section must be made in the form set forth in this paragraph (f)(1)(i). The election must be made by the common parent and the party described in paragraph (f)(2) of this section. It must be filed in accordance with paragraph (f)(3) of this section and be entitled, “THIS IS AN ELECTION UNDER § 1.1502-95 TO APPORTION ALL OR PART OF THE [INSERT THE CONSOLIDATED SECTION 382 LIMITATION, THE SUBGROUP SECTION 382 LIMITATION, THE LOSS GROUP'S NET UNREALIZED BUILT-IN GAIN, OR THE LOSS SUBGROUP'S NET UNREALIZED BUILT-IN GAIN, AS APPROPRIATE] IN THE AMOUNT OF [INSERT THE AMOUNT OF THE LOSS LIMITATION OR NET UNREALIZED BUILT-IN GAIN] TO [INSERT NAME(S) AND EMPLOYER IDENTIFICATION NUMBER(S) OF THE CORPORATION (OR THE CORPORATIONS THAT COMPOSE A NEW LOSS SUBGROUP) TO WHICH ALLOCATION IS MADE].” The statement must also indicate that an agreement, as described in paragraph (f)(1)(ii) of this section, has been entered into.

(ii)*Agreement.* Both the common parent and the party described in paragraph (f)(2) of this section must sign and date the agreement. The agreement must include, as appropriate—

(A)The date of the ownership change that resulted in the consolidated section 382 limitation (or subgroup section 382 limitation) or the loss group's (or loss subgroup's) net unrealized built-in gain;

(B)The amount of the departing member's (or loss subgroup's) pre-change net operating loss carryovers and the taxable years in which they arose that will be subject to the limitation that is being apportioned to that member (or loss subgroup);

(C)The amount of any net unrealized built-in loss allocated to the departing member (or loss subgroup) under paragraph

(e)of this section, which, if recognized, can be a pre-change attribute subject to the limitation that is being apportioned;

(D)If a consolidated section 382 limitation (or subgroup section 382 limitation) is being apportioned, the amount of the consolidated section 382 limitation (or subgroup section 382 limitation) for the taxable year during which the former member (or new loss subgroup) ceases to be a member of the consolidated group (determined without regard to any apportionment under this section);

(E)If any net unrealized built-in gain is being apportioned, the amount of the loss group's (or loss subgroup's) net unrealized built-in gain (as determined under paragraph (c)(2)(ii) of this section) that may be apportioned to members that ceased to be members during the consolidated return year;

(F)The amount of the value element and adjustment element of the consolidated section 382 limitation (or subgroup section 382 limitation) that is apportioned to the former member (or new loss subgroup) pursuant to paragraph

(c)of this section;

(G)The amount of the loss group's (or loss subgroup's) net unrealized built-in gain that is apportioned to the former member (or new loss subgroup) pursuant to paragraph

(c)of this section;

(H)If the former member is allocated any net unrealized built-in loss under paragraph

(e)of this section, the amount of any adjustment element apportioned to the former member that is attributable to recognized built-in gains (determined in a manner that will enable both the group and the former member to apply the principles of § 1.1502-93(c)); and

(1)The name and employer identification number of the common parent making the apportionment.

(2)*Signing the agreement.* The agreement must be signed by both the common parent and the former member (or, in the case of a loss subgroup, the common parent and the loss subgroup parent) by persons authorized to sign their respective income tax returns. If the allocation is made to a loss subgroup for which an election under § 1.1502-91(d)(4) is made, and not separately to its members, the agreement under this paragraph

(f)must be signed by the common parent and any member of the new loss subgroup by persons authorized to sign their respective income tax returns. Each party signing the agreement must retain either the original or a copy of the agreement as part of its records. See § 1.6001-1(e).

(3)*Filing of the election* —(i) *Filing by the common parent.* The election must be filed by the common parent of the group that is apportioning the consolidated section 382 limitation (or the subgroup section 382 limitation) or the loss group's net unrealized built-in gain (or loss subgroup's net unrealized built-in gain) by including the statement on or with its income tax return for the taxable year in which the former member (or new loss subgroup) ceases to be a member.

(ii)*Filing by the former member.* An identical statement must be included on or with the first return of the former member (or the first return in which the former member, or the members of a new loss subgroup, join) that is filed after the close of the consolidated return year of the group of which the former member (or the members of a new loss subgroup) ceases to be a member.

(4)*Revocation of election.* An election statement made under paragraph

(c)of this section is revocable only with the consent of the Commissioner.

(g)*Effective/applicability date.* Paragraphs (e)(8) and

(f)of this section apply to any original consolidated Federal income tax return due (without extensions) after June 14, 2007. For original consolidated Federal income tax returns due (without extensions) after May 30, 2006, and on or before June 14, 2007, see § 1.1502-95T as contained in 26 CFR part 1 in effect on April 1, 2007. For original consolidated Federal income tax returns due (without extensions) on or before May 30, 2006, see § 1.1502-95 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.1502-95T [Removed] **Par. 41** . Section 1.1502-95T is removed. **Par. 42** . Section 1.1563-3 is amended by revising paragraph (d)(2)(iv), adding paragraph (d)(2)(v) and revising

(e)to read as follows: § 1.1563-3 Rules for determining stock ownership.

(d)* * *

(2)* * *

(iv)*Statement.* If the application of paragraph (d)(2)(ii) or

(iii)of this section does not result in a corporation being treated as a component member of only one controlled group of corporations on a December 31, then such corporation will be treated as a component member of only one such group on such date. Such corporation may elect the group in which it is to be included by including on or with its income tax return a statement entitled, “STATEMENT TO ELECT CONTROLLED GROUP PURSUANT TO § 1.1563-3(d)(2)(iv).” The statement must include—

(A)A description of each of the controlled groups in which the corporation could be included. The description must include the name and employer identification number of each component member of each such group and the stock ownership of the component members of each such group; and

(B)The following representation: [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER OF CORPORATION] ELECTS TO BE TREATED AS A COMPONENT MEMBER OF THE [INSERT DESIGNATION OF GROUP].

(v)*Election* —(A) *Election filed.* An election filed under paragraph (d)(2)(iv) of this section is irrevocable and effective until paragraph (d)(2)(ii) or

(iii)of this section applies or until a change in the stock ownership of the corporation results in termination of membership in the controlled group in which such corporation has been included.

(B)*Election not filed.* In the event no election is filed in accordance with the provisions of paragraph (d)(2)(iv) of this section, then the Internal Revenue Service will determine the group in which such corporation is to be included. Such determination will be binding for all subsequent years unless the corporation files a valid election with respect to any such subsequent year or until a change in the stock ownership of the corporation results in termination of membership in the controlled group in which such corporation has been included.

(e)*Effective/applicability date.* Paragraph (d)(2)(iv) and

(v)of this section apply to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply paragraph (d)(2)(iv) and

(v)of this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see § 1.1563-3 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.1563-3T [Removed] **Par. 43** . Section 1.1563-3T is removed. **Par. 44** . Section 1.6012-2 is amended by revising paragraphs

(c)and

(k)to read as follows: § 1.6012-2 Corporations required to make returns of income.

(c)*Insurance companies* —(1) *Domestic life insurance companies* —(i) *In general.* A life insurance company subject to tax under section 801 shall make a return on Form 1120-L, “U.S. Life Insurance Company Income Tax Return.” Except as provided in paragraph (c)(4) of this section, such company shall file with its return—

(A)A copy of its annual statement which shows the reserves used by the company in computing the taxable income reported on its return; and

(B)A copy of Schedule A (real estate) and of Schedule D (bonds and stocks), or any successor thereto, of such annual statement.

(ii)*Mutual savings banks.* Mutual savings banks conducting life insurance business and meeting the requirements of section 594 are subject to partial tax computed on Form 1120, “U.S. Corporation Income Tax Return,” and partial tax computed on Form 1120-L. The Form 1120-L is attached as a schedule to Form 1120, together with the annual statement and schedules required to be filed with Form 1120-L.

(2)*Domestic nonlife insurance companies.* Every domestic insurance company other than a life insurance company shall make a return on Form 1120-PC, “U.S. Property and Casualty Insurance Company Income Tax Return.” This includes organizations described in section 501(m)(1) that provide commercial-type insurance and organizations described in section 833. Except as provided in paragraph (c)(4) of this section, such company shall file with its return a copy of its annual statement (or a pro forma annual statement), including the underwriting and investment exhibit (or any successor thereto) for the year covered by such return.

(3)*Foreign insurance companies.* The provisions of paragraphs (c)(1) and (c)(2) of this section concerning the returns and statements of insurance companies subject to tax under section 801 or section 831 also apply to foreign insurance companies subject to tax under those sections, except that the copy of the annual statement required to be submitted with the return shall, in the case of a foreign insurance company that is not required to file an annual statement, be a copy of the pro forma annual statement relating to the United States business of such company.

(4)*Exception for insurance companies filing their Federal income tax returns electronically* . If an insurance company described in paragraph (c)(1), (c)(2), or (c)(3) of this section files its Federal income tax return electronically, it should not include on or with such return its annual statement (or pro forma annual statement), or any portion thereof. Such statement must be available at all times for inspection by authorized Internal Revenue Service officers or employees and retained for so long as such statements may be material in the administration of any internal revenue law. See § 1.6001-1(e).

(5)*Definition.* For purposes of this section, the term *annual statement* means the annual statement, the form of which is approved by the National Association of Insurance Commissioners (NAIC), which is filed by an insurance company for the year with the insurance departments of States, Territories, and the District of Columbia. The term annual statement also includes a pro forma annual statement if the insurance company is not required to file the NAIC annual statement.

(k)*Effective/applicability date.* Paragraph

(c)of this section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply paragraph

(c)of this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see § 1.6012-2 as contained in 26 CFR part 1 in effect on April 1, 2006. § 1.6012-2T [Removed] **Par. 45** . Section 1.6012-2T is removed. §§ 1.338(h)(10)-1, 1.382-2T, 1.382-8, 1.1502-13, 1.1502-32, 1.502-92, 1.502-94, 1.502-95, 1.563-3, and 1.6043-2 [Amended] **Par. 46** . For each entry in the “Location” column of the following table, remove the language in the “Remove” column and add the language in the “Add” column in its place: Location Remove Add The last sentence of the introductory text to § 1.302-4 The rules described in paragraph

(a)of § 1.302-4T and in paragraphs

(b)through

(g)of this section apply in determining whether the specific requirements of section 302(c)(2) are met The following rules shall be applicable in determining whether the specific requirements of section 302(c)(2) are met: § 1.338(h)(10)-1(f) § 1.331-1T(d) and § 1.332-6T § 1.331-1(d) and § 1.332-6. § 1.382-2T(a)(2)(ii) § 1.382-11T § 1.382-11. The last sentence of § 1.382-2T(h)(4)(vi)(B) paragraph

(a)of § 1.382-11T § 1.382-11(a). The first sentence of § 1.382-6(b)(2)(i) § 1.382-11T(a) § 1.382-11(a). The second sentence of § 1.382-8(a) paragraphs (c)(1), (c)(3), (c)(4) and (c)(5) of this section and paragraph (c)(2) of § 1.382-8T paragraph

(c)of this section. The third sentence of § 1.382-8(a) paragraphs (c)(1), (c)(3), (c)(4) and (c)(5) of this section and paragraph (c)(2) of § 1.382-8T paragraph

(c)of this section. § 1.382-8(c)(3) paragraph (c)(2) of § 1.382-8T paragraph (c)(2) of this section. The first sentence of § 1.382-8(c)(4) paragraphs (c)(1) and (c)(3) of this section and paragraph (c)(2) of § 1.382-8T paragraphs (c)(1), (2), and

(3)of this section. § 1.382-8(c)(5) paragraphs (c)(1), (c)(3), (c)(4), and (c)(5) of this section, and paragraph (c)(2) of § 1.382-8T this paragraph (c). The fifth sentence of § 1.382-8(f) paragraphs (c)(1), (c)(3), (c)(4), and (c)(5) of this section, and paragraph (c)(2) of § 1.382-8T paragraph

(c)of this section. § 1.382-8(g), *Example* (1)(b)(2) paragraphs (c)(1), (c)(3), (c)(4), and (c)(5) of this section, and paragraph (c)(2) of § 1.382-8T paragraph

(c)of this section. The second sentence of § 1.382-8(g), *Example* (1)(c) paragraphs (c)(1), (c)(3), (c)(4), and (c)(5) of this section, and paragraph (c)(2) of § 1.382-8T paragraph

(c)of this section. § 1.382-8(g), *Example* (2)(c) paragraph (c)(2) of § 1.382-8T paragraph (c)(2) of this section. The first sentence of § 1.382-8(g), *Example* (2)(e) paragraph (c)(2) of § 1.382-8T paragraph (c)(2) of this section. § 1.382-8(g), *Example* (3)(b) paragraph (c)(2) of § 1.382-8T paragraph (c)(2) of this section. § 1.382-8(g), *Example* (3)(c)(1)(B) paragraph (c)(1) of this section and paragraph (c)(2) of § 1.382-8T paragraphs (c)(1) and

(2)of this section. The second sentence of § 1.382-8(g), *Example* (4)(c) paragraph (c)(2) of § 1.382-8T paragraph (c)(2) of this section. The second sentence of § 1.382-8(g), *Example* (5)(c) paragraph (c)(2) of § 1.382-8T paragraph (c)(2) of this section. § 1.1502-13(a)(6)(ii), *Matching rule* , *Example* 13 Manufacturer incentive payments [Reserved]. The first sentence of § 1.1502-32(b)(4)(v)(A) paragraph (b)(4)(iv) of § 1.1502-32T paragraph (b)(4)(iv) of this section. The first sentence of § 1.1502-32(b)(4)(v)(B) paragraph (b)(4)(iv) of § 1.1502-32T paragraph (b)(4)(iv) of this section. § 1.1502-92(e)(1) § 1.382-11T(a) § 1.382-11(a). The first sentence of § 1.1502-92(e)(2) § 1.382-11T(a) § 1.382-11(a). The first sentence of § 1.1502-94(d) § 1.382-11T(a) § 1.382-11(a). The second sentence of § 1.1502-94(d) § 1.382-11T(a) § 1.382-11(a). The last sentence of § 1.1502-95(b)(3) paragraph

(f)of § 1.1502-95T paragraph

(f)of this section. The second sentence of § 1.1563-3(d)(2)(i) paragraphs (d)(2)(ii) and

(iii)of this section, and paragraph (d)(2)(iv) of § 1.1563-3T paragraphs (d)(2)(ii),

(iii)and

(iv)of this section. The first sentence of § 1.6043-2(a) § 1.332-6T(a), § 1.368-3T(a), or § 1.1081-11T § 1.332-6(b), 1.368-3(a), or 1.1081-11. PART 301—PROCEDURE AND ADMINISTRATION **Par. 46a** . The authority citation for part 300 continues to read in part as follows: Authority: 26 U.S.C. 7805. * * * Section 301.6011-5T also issued under 26 U.S.C. 6011. § 301.6011-5T [Amended] **Par. 46b** . In the following table remove the language in the “remove” column and add the text from the “add” column in its place. Location Remove Add The first sentence of § 301.6011-5T(a)(twice) paragraphs (a),

(b)and

(d)through

(j)of § 1.6012-2, and paragraph

(c)of § 1.6012-2T § 1.6012-2. PART 602—OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT **Par. 47** . The authority citation for part 602 continues to read as follows: Authority: 26 U.S.C. 7805. § 602.101 [Amended] **Par. 48** . 1. In § 602.101(b), the following entries to the table are removed: 1.302-2T 1545-2019 1.302-4T 1545-2019 1.331-1T 1545-2019 1.332-6T 1545-2019 1.338-10T 1545-2019 1.351-3T 1545-2019 1.355-5T 1545-2019 1.368-3T 1545-2019 1.381(b)-1T 1545-2019 1.382-8T 1545-2019 1.382-11T 1545-2019 1.1081-11T 1545-2019 1.1221-2T 1545-2019 1.1502-13T 1545-2019 1.1502-31T 1545-2019 1.1502-32T 1545-2019 1.1502-33T 1545-2019 1.1502-95T 1545-2019 1.1563-3T 1545-2019 1.6012-2T 1545-2019 2. The following entries are added in numerical order to the table: 1.332-6 1545-2019 1.351-3 1545-2019 1.355-5 1545-2019 1.368-3 1545-2019 1.382-11 1545-2019 1.1081-11 1545-2019 Kevin M. Brown, Deputy Commissioner for Services and Enforcement. Approved: June 4, 2007. Eric Solomon, Assistant Secretary of the Treasury. [FR Doc. E7-11148 Filed 6-13-07; 8:45 am] BILLING CODE 4830-01-P OFFICE OF MANAGEMENT AND BUDGET Office of Federal Procurement Policy 48 CFR Parts 9901 and 9903 Cost Accounting Standards Board

(CAS)Changes to Acquisition Thresholds AGENCY: Cost Accounting Standards Board, Office of Federal Procurement Policy, OMB. ACTION: Final rule. SUMMARY: The Office of Federal Procurement Policy, Cost Accounting Standards

(CAS)Board, is revising the threshold for the application of CAS to negotiated Government contracts. This rulemaking is authorized pursuant to Section 26 of the Office of Federal Procurement Policy Act. The Board is taking final action on this topic in order to adjust the CAS applicability threshold in accordance with Section 822 of the 2006 National Defense Authorization Act (Pub. L. 109-163). Section 822 amended 41 U.S.C. 422(f)(2)(A) to require that the threshold for CAS applicability be the same as the threshold for compliance with the Truth in Negotiations Act (TINA). DATES: This final rule is effective June 14, 2007. FOR FURTHER INFORMATION CONTACT: Laura Auletta, Manager, Cost Accounting Standards Board, 725 17th Street, NW., Room 9013, Washington, DC 20503 (telephone: 202-395-3256). SUPPLEMENTARY INFORMATION: A. Background On December 15, 2005, the CAS Board issued a proposed rule with request for comment (70 FR 73423) for the purpose of implementing Sec. 807 of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005, Pub. L. 108-375, “Inflation Adjustment of Acquisition-Related Dollar Thresholds.” Section 807 of Pub. L. 108-375 requires the periodic adjustment of acquisition-related thresholds contained in statutes that were in effect on October 1, 2000, with certain exceptions. The Federal Acquisition Regulation

(FAR)Council is authorized to adjust these thresholds based on increases in the Consumer Price Index for all-urban consumers

(CPI)and as prescribed in the Public Law. Based on further review, the Board has determined that its thresholds are not subject to the provisions of Section 807 of the Pub. L 108-375 because these thresholds are not “acquisition related,” as defined by Section 807. Therefore, this final rule does not adjust the CAS thresholds to reflect the provisions of Section 807. However, subsequent to the issuance of the CAS Board's proposed rule, Section 822 of the 2006 National Defense Authorization Act (Pub. L. 109-163) amended 41 U.S.C. 422(f)(2)(A) to require that the threshold for CAS applicability be the same as the threshold for compliance with the Truth in Negotiations Act (TINA). The TINA threshold is currently $650,000 (71 FR 57363). Accordingly, the Board is increasing the CAS applicability threshold to $650,000 to comply with Public Law 109-163. B. Public Comments The Board received three sets of public comments in response to the proposed rule. 1. PL 108-375 Does Not Require Threshold Adjustments *Comment:* Two commenters opined that Section 807 of Public Law 108-375 does not apply to statutory thresholds in the Board's rules, regulations and standards. These commenters asserted that the law applies only to acquisition-related statutory dollar thresholds contained in the FAR. Thus, the Board is not required to adjust its statutory thresholds in response to Pub. L. 108-375. *Response:* After further review of this issue, the Board agrees that Section 807 does not apply to the CAS thresholds. Section 807 of Public Law 108-375 requires the Federal Acquisition Regulatory Council to adjust each “acquisition-related dollar threshold.” Section 807 defines an acquisition-related dollar threshold as “a dollar threshold that is specified in law as a factor in defining the scope of the applicability of a policy, procedure, requirement, or restriction provided in that law to the procurement of property or services by an executive agency, as determined by the Federal Acquisition Regulatory Council.” The scope and applicability of the CAS is within the sole purview of the CAS Board. The Federal Acquisition Regulatory Council does not determine the scope or applicability of the Cost Accounting Standards. Therefore, for purposes of applying Section 807, the thresholds in the CAS do not meet the definition of an “acquisition threshold.” Thus, the requirements of Public Law 108-375 do not apply to the CAS thresholds. However, the Board is issuing a final rule to adjust the CAS applicability threshold required by Public Law 109-163. 2. Consistency Between CAS Applicability and TINA Thresholds *Comment:* One commenter recommended that the CAS applicability threshold be modified to adopt the Truth in Negotiations Act

(TINA)threshold for requiring cost or pricing data (FAR 15.403-4) since it will be very difficult to administer the impact of CAS issues associated with such contracts. *Response:* As previously noted, shortly after the publication of the proposed rule, 41 U.S.C. 422(f)(2)(A) was amended to require that the CAS applicability threshold be equal to the TINA threshold. Accordingly, this final rule adjusts the CAS applicability threshold to $650,000, which is the current TINA threshold. 3. Advisability of Adjusting CAS Thresholds *Comment:* One commenter asserted that the proposed threshold adjustments represent bad public policy and that previous increases in these thresholds have been “simply astounding, and far in excess of any inflationary increases, no matter how measured.” *Response:* Consistent with the intent of the proposed rule, the final rule includes only those adjustments of the CAS applicability threshold that are statutorily required. As such, the Board does not believe the commenter's assertion regarding the adjustments in the final rule has any merit. 4. Failure To Track CAS Thresholds to Inflation Expands CAS Applicability Beyond Its Original Intent *Comment:* One commenter recommended that the Board independently review its thresholds to determine whether “economic factors have caused more contractors to have become subject to CAS coverage” and “consider if there are now contractors covered in 2006 that the Board did not intend to cover in 1992.” *Response:* The purpose of the proposed and final rules was to adjust the CAS thresholds to reflect statutory requirements. As such, the Board is confining the adjustment of CAS thresholds in this final rule to those adjustments required by statute. The Board will consider the commenter's recommendation to review the other CAS thresholds when formulating its agenda for future actions. C. Paperwork Reduction Act The Paperwork Reduction Act, Public Law 96-511, does not apply to this rulemaking, because this rule imposes no paperwork burden on offerors, affected contractors and subcontractors, or members of the public which requires the approval of OMB under 44 U.S.C. 3501, *et seq.* D. Executive Order 12866 and the Regulatory Flexibility Act The Board certifies that this rule will not have a significant effect on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, *et seq.* , because small businesses are exempt from the application of the Cost Accounting Standards. List of Subjects in 48 CFR Part 9903 Accounting, Government procurement. Paul A. Denett, Administrator, Office of Federal Procurement Policy. For the reasons set forth in this preamble, Chapter 99 of Title 48 of the Code of Federal Regulations is amended as set forth below: PART 9901—RULES AND PROCEDURES 1. The authority citation for part 9901 continues to read as follows: Authority: Pub. L. 100-679, 102 Stat. 4056, 41 U.S.C. 422. 2. Revise section 9901.306 to read as follows: 9901.306 Standards applicability. Cost Accounting Standards promulgated by the Board shall be mandatory for use by all executive agencies and by contractors and subcontractors in estimating, accumulating, and reporting costs in connection with pricing and administration of, and settlement of disputes concerning, all negotiated prime contract and subcontract procurements with the United States Government in excess of $650,000, other than contracts or subcontracts that have been exempted by the Board's regulations. PART 9903—CONTRACT COVERAGE 3. The authority citation for part 9903 continues to read as follows: Authority: Pub. L. 100-679, 102 Stat. 4056, 41 U.S.C. 422. Subpart 9903.2—CAS Program Requirements 4. Section 9903.201-1 is amended by revising paragraph (b)(2) to read as follows: 9903.201-1 CAS applicability.

(b)* * *

(2)Negotiated contracts and subcontracts not in excess of $650,000. For purposes of this paragraph (b)(2) an order issued by one segment to another segment shall be treated as a subcontract. 5. Section 9903.201-2 is amended by revising paragraphs (c)(3) and (c)(5) to read as follows: 9903.201-2 Types of CAS coverage.

(c)* * *

(3)*Applicable standards.* Coverage for educational institutions requires that the business unit comply with all of the CAS specified in part 9905 that are in effect on the date of the contract award and with any CAS that become applicable because of later award of a CAS-covered contract. This coverage applies to business units that receive negotiated contracts in excess of $650,000, except for CAS-covered contracts awarded to FFRDCs operated by an educational institution.

(5)*Contract clauses.* The contract clause at 9903.201-4(e) shall be incorporated in each negotiated contract and subcontract awarded to an educational institution when the negotiated contract or subcontract price exceeds $650,000. For CAS-covered contracts awarded to an FFRDC operated by an educational institution, however, the full or modified CAS contract clause specified at 9903.201-4(a) or (c), as applicable, shall be incorporated. 6. Section 9903.201-3 is amended by revising the provision heading and by revising paragraph

(a)in Part I of the provision to read as follows: 9903.201-3 Solicitation provisions. Cost Accounting Standards Notices and Certification (June 2007) I. *Disclosure Statement—Cost Accounting Practices and Certification*

(a)Any contract in excess of $650,000 resulting from this solicitation, except for those contracts which are exempt as specified in 9903.201-1. 7. Section 9903.201-4 is revised to read as follows: 9903.201-4 Contract clauses.

(a)*Cost Accounting Standards.*

(1)The contracting officer shall insert the clause set forth below, Cost Accounting Standards, in negotiated contracts, unless the contract is exempted (see 9903.201-1), the contract is subject to modified coverage (see 9903.201-2), or the clause prescribed in paragraph

(e)of this section is used.

(2)The clause below requires the contractor to comply with all CAS specified in part 9904, to disclose actual cost accounting practices (applicable to CAS-covered contracts only), and to follow disclosed and established cost accounting practices consistently. Cost Accounting Standards (June 2007)

(a)Unless the contract is exempt under 9903.201-1 and 9903.201-2, the provisions of 9903 are incorporated herein by reference and the Contractor in connection with this contract, shall—

(1)(CAS-covered Contracts Only) By submission of a Disclosure Statement, disclosed in writing the Contractor's cost accounting practices as required by 9903.202-1 through 9903.202-5 including methods of distinguishing direct costs from indirect costs and the basis used for allocating indirect costs. The practices disclosed for this contract shall be the same as the practices currently disclosed and applied on all other contracts and subcontracts being performed by the Contractor and which contain a Cost Accounting Standards

(CAS)clause. If the Contractor has notified the Contracting Officer that the Disclosure Statement contains trade secrets, and commercial or financial information which is privileged and confidential, the Disclosure Statement shall be protected and shall not be released outside of the Government.

(2)Follow consistently the Contractor's cost accounting practices in accumulating and reporting contract performance cost data concerning this contract. If any change in cost accounting practices is made for the purposes of any contract or subcontract subject to CAS requirements, the change must be applied prospectively to this contract and the Disclosure Statement must be amended accordingly. If the contract price or cost allowance of this contract is affected by such changes, adjustment shall be made in accordance with subparagraph (a)(4) or (a)(5) of this clause, as appropriate.

(3)Comply with all CAS, including any modifications and interpretations indicated thereto contained in part 9904, in effect on the date of award of this contract or, if the Contractor has submitted cost or pricing data, on the date of final agreement on price as shown on the Contractor's signed certificate of current cost or pricing data. The Contractor shall also comply with any CAS (or modifications to CAS) which hereafter become applicable to a contract or subcontract of the Contractor. Such compliance shall be required prospectively from the date of applicability of such contract or subcontract. (4)(i) Agree to an equitable adjustment as provided in the Changes clause of this contract if the contract cost is affected by a change which, pursuant to subparagraph (a)(3) of this clause, the Contractor is required to make to the Contractor's established cost accounting practices.

(ii)Negotiate with the Contracting Officer to determine the terms and conditions under which a change may be made to a cost accounting practice, other than a change made under other provisions of subparagraph (a)(4) of this clause; provided that no agreement may be made under this provision that will increase costs paid by the United States.

(iii)When the parties agree to a change to a cost accounting practice, other than a change under subdivision (a)(4)(i) of this clause, negotiate an equitable adjustment as provided in the Changes clause of this contract.

(5)Agree to an adjustment of the contract price or cost allowance, as appropriate, if the Contractor or a subcontractor fails to comply with an applicable Cost Accounting Standard, or to follow any cost accounting practice consistently and such failure results in any increased costs paid by the United States. Such adjustment shall provide for recovery of the increased costs to the United States, together with interest thereon computed at the annual rate established under section 6621(a)(2) of the Internal Revenue Code of 1986 (26 U.S.C. 6621(a)(2)) for such period, from the time the payment by the United States was made to the time the adjustment is effected. In no case shall the Government recover costs greater than the increased cost to the Government, in the aggregate, on the relevant contracts subject to the price adjustment, unless the Contractor made a change in its cost accounting practices of which it was aware or should have been aware at the time of price negotiations and which it failed to disclose to the Government.

(b)If the parties fail to agree whether the Contractor or a subcontractor has complied with an applicable CAS in part 9904 or a CAS rule or regulation in part 9903 and as to any cost adjustment demanded by the United States, such failure to agree will constitute a dispute under the Contract Disputes Act (41 U.S.C. 601).

(c)The Contractor shall permit any authorized representatives of the Government to examine and make copies of any documents, papers, or records relating to compliance with the requirements of this clause.

(d)The Contractor shall include in all negotiated subcontracts which the Contractor enters into, the substance of this clause, except paragraph (b), and shall require such inclusion in all other subcontracts, of any tier, including the obligation to comply with all CAS in effect on the subcontractor's award date or if the subcontractor has submitted cost or pricing data, on the date of final agreement on price as shown on the subcontractor's signed Certificate of Current Cost or Pricing Data. If the subcontract is awarded to a business unit which pursuant to 9903.201-2 is subject to other types of CAS coverage, the substance of the applicable clause set forth in 9903.201-4 shall be inserted. This requirement shall apply only to negotiated subcontracts in excess of $650,000, except that the requirement shall not apply to negotiated subcontracts otherwise exempt from the requirement to include a CAS clause as specified in 9903.201-1. (End of Clause)

(b)[Reserved]

(c)*Disclosure and Consistency of Cost Accounting Practices.*

(1)The Contracting Officer shall insert the clause set forth below, Disclosure and Consistency of Cost Accounting Practices, in negotiated contracts when the contract amount is over $650,000 but less than $50 million, and the offeror certifies it is eligible for and elects to use modified CAS coverage (see 9903.201-2, unless the clause prescribed in paragraph

(d)of this subsection is used).

(2)The clause below requires the Contractor to comply with CAS 9904.401, 9904.402, 9904.405, and 9904.406, to disclose (if it meets certain requirements) actual cost accounting practices, and to follow consistently disclosed and established cost accounting practices. Disclosure and Consistency of Cost Accounting Practices (June 2007)

(a)The Contractor, in connection with this contract, shall—

(1)Comply with the requirements of 9904.401, Consistency in Estimating, Accumulating, and Reporting Costs; 9904.402, Consistency in Allocating Costs Incurred for the Same Purpose; 9904.405, Accounting for Unallowable Costs; and 9904.406, Cost Accounting Standard—Cost Accounting Period, in effect on the date of award of this contract, as indicated in part 9904.

(2)(CAS-covered Contracts Only) If it is a business unit of a company required to submit a Disclosure Statement, disclose in writing its cost accounting practices as required by 9903.202-1 through 9903.202-5. If the Contractor has notified the Contracting Officer that the Disclosure Statement contains trade secrets and commercial or financial information which is privileged and confidential, the Disclosure Statement shall be protected and shall not be released outside of the Government. (3)(i) Follow consistently the Contractor's cost accounting practices. A change to such practices may be proposed, however, by either the Government or the Contractor, and the Contractor agrees to negotiate with the Contracting Officer the terms and conditions under which a change may be made. After the terms and conditions under which the change is to be made have been agreed to, the change must be applied prospectively to this contract, and the Disclosure Statement, if affected, must be amended accordingly.

(ii)The Contractor shall, when the parties agree to a change to a cost accounting practice and the Contracting Officer has made the finding required in 9903.201-6(c) that the change is desirable and not detrimental to the interests of the Government, negotiate an equitable adjustment as provided in the Changes clause of this contract. In the absence of the required finding, no agreement may be made under this contract clause that will increase costs paid by the United States.

(4)Agree to an adjustment of the contract price or cost allowance, as appropriate, if the Contractor or a subcontractor fails to comply with the applicable CAS or to follow any cost accounting practice, and such failure results in any increased costs paid by the United States. Such adjustment shall provide for recovery of the increased costs to the United States, together with interest thereon computed at the annual rate established under section 6621(a)(2) of the Internal Revenue Code of 1986 (26 U.S.C. 6621(a)(2)) for such period, from the time the payment by the United States was made to the time the adjustment is effected.

(b)If the parties fail to agree whether the Contractor has complied with an applicable CAS rule, or regulation as specified in parts 9903 and 9904 and as to any cost adjustment demanded by the United States, such failure to agree will constitute a dispute under the Contract Disputes Act (41 U.S.C. 601).

(c)The Contractor shall permit any authorized representatives of the Government to examine and make copies of any documents, papers, and records relating to compliance with the requirements of this clause.

(d)The Contractor shall include in all negotiated subcontracts, which the Contractor enters into, the substance of this clause, except paragraph (b), and shall require such inclusion in all other subcontracts of any tier, except that—

(1)If the subcontract is awarded to a business unit which pursuant to 9903.201-2 is subject to other types of CAS coverage, the substance of the applicable clause set forth in 9903.201-4 shall be inserted.

(2)This requirement shall apply only to negotiated subcontracts in excess of $650,000.

(3)The requirement shall not apply to negotiated subcontracts otherwise exempt from the requirement to include a CAS clause as specified in 9903.201-1. (End of clause)

(d)[Reserved]

(e)*Cost Accounting Standards—Educational Institutions.*

(1)The contracting officer shall insert the clause set forth below, Cost Accounting Standards—Educational Institutions, in negotiated contracts awarded to educational institutions, unless the contract is exempted (see 9903.201-1), the contract is to be performed by an FFRDC (see 9903.201-2(c)(5)), or the provision at 9903.201-2(c)(6) applies.

(2)The clause below requires the educational institution to comply with all CAS specified in part 9905, to disclose actual cost accounting practices as required by 9903.202-1(f), and to follow disclosed and established cost accounting practices consistently. Cost Accounting Standards—Educational Institutions (June 2007)

(a)Unless the contract is exempt under 9903.201-1 and 9903.201-2, the provisions of part 9903 are incorporated herein by reference and the Contractor in connection with this contract, shall—

(1)(CAS-covered Contracts Only) If a business unit of an educational institution required to submit a Disclosure Statement, disclose in writing the Contractor's cost accounting practices as required by 9903.202-1 through 9903.202-5 including methods of distinguishing direct costs from indirect costs and the basis used for accumulating and allocating indirect costs. The practices disclosed for this contract shall be the same as the practices currently disclosed and applied on all other contracts and subcontracts being performed by the Contractor and which contain a Cost Accounting Standards

(2)Follow consistently the Contractor's cost accounting practices in accumulating and reporting contract performance cost data concerning this contract. If any change in cost accounting practices is made for the purposes of any contract or subcontract subject to CAS requirements, the change must be applied prospectively to this contract and the Disclosure Statement, if required, must be amended accordingly. If an accounting principle change mandated under Office of Management and Budget

(OMB)Circular A-21, Cost Principles for Educational Institutions, requires that a change in the Contractor's cost accounting practices be made after the date of this contract award, the change must be applied prospectively to this contract and the Disclosure Statement, if required, must be amended accordingly. If the contract price or cost allowance of this contract is affected by such changes, adjustment shall be made in accordance with subparagraph (a)(4) or (a)(5) of this clause, as appropriate.

(3)Comply with all CAS, including any modifications and interpretations indicated thereto contained in 48 CFR part 9905, in effect on the date of award of this contract or, if the Contractor has submitted cost or pricing data, on the date of final agreement on price as shown on the Contractor's signed certificate of current cost or pricing data. The Contractor shall also comply with any CAS (or modifications to CAS) which hereafter become applicable to a contract or subcontract of the Contractor. Such compliance shall be required prospectively from the date of applicability to such contract or subcontract. (4)(i) Agree to an equitable adjustment as provided in the Changes clause of this contract if the contract cost is affected by a change which, pursuant to subparagraph (a)(3) of this clause, the Contractor is required to make to the Contractor's established cost accounting practices.

(iii)When the parties agree to a change to a cost accounting practice, other than a change under subdivision (a)(4)(i) or (a)(4)(iv) of this clause, negotiate an equitable adjustment as provided in the Changes clause of this contract.

(iv)Agree to an equitable adjustment as provided in the Changes clause of this contract, if the contract cost is materially affected by an OMB Circular A-21 accounting principle amendment which, on becoming effective after the date of contract award, requires the Contractor to make a change to the Contractor's established cost accounting practices.

(b)If the parties fail to agree whether the Contractor or a subcontractor has complied with an applicable CAS or a CAS rule or regulation in 9903 and as to any cost adjustment demanded by the United States, such failure to agree will constitute a dispute under the Contract Disputes Act (41 U.S.C. 601).

(2)This requirement shall apply only to negotiated subcontracts in excess of $650,000.

(3)The requirement shall not apply to negotiated subcontracts otherwise exempt from the requirement to include a CAS clause as specified in 9903.201-1. (End of clause) 8. Section 9903.202-1 is amended by revising: A. Paragraph (c); B. Paragraph (f)(2)(i); and C. Paragraphs (f)(3)(i), (ii), and

(iii)The revisions read as follows: 9903.202-1 General requirements.

(c)When a Disclosure Statement is required, a separate Disclosure Statement must be submitted for each segment whose costs included in the total price of any CAS-covered contract or subcontract exceed $650,000, unless * * *

(f)* * *

(2)* * *

(i)Any business unit of an educational institution that is selected to receive a CAS-covered contract or subcontract in excess of $650,000 and is part of a college or university location listed in Exhibit A of Office of Management and Budget

(OMB)Circular A-21 shall submit a Disclosure Statement before award.* * *

(3)* * *

(i)For business units that are selected to receive a CAS-covered contract or subcontract in excess of $650,000 and are part of the first 20 college or university locations (i.e., numbers 1 through 20) listed in Exhibit A of OMB Circular A-21, Disclosure Statements shall be submitted within six months after the date of contract award.

(ii)For business units that are selected to receive a CAS-covered contract or subcontract in excess of $650,000 and are part of a college or university location that is listed as one of the institutions numbered 21 through 50, in Exhibit A of OMB Circular A-21, Disclosure Statements shall be submitted during the six month period ending twelve months after the date of contract award.

(iii)For business units that are selected to receive a CAS-covered contract or subcontract in excess of $650,000 and are part of a college or university location that is listed as one of the institutions numbered 51 through 99, in Exhibit A of OMB Circular A-21, Disclosure Statements shall be submitted during the six month period ending eighteen months after the date of contract award. [FR Doc. E7-11328 Filed 6-13-07; 8:45 am] BILLING CODE 3110-01-P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 648 RIN 0648-AT60 [Docket No. 061020273-7001-03; I.D. 010307A] Fisheries of the Northeastern United States; Summer Flounder Fishery; Emergency Rule Extension AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Temporary rule; emergency action extended. SUMMARY: NMFS is extending the revised summer flounder total allowable landings

(TAL)implemented on January 19, 2007, until December 31, 2007, the end of the 2007 fishing year. This emergency rule extension specifies allowed harvest limits for both the commercial and recreational summer flounder fisheries. The TAL contained within this emergency rule extension continues the previous harvest limits for summer flounder that became effective on January 19, 2007, which superceded the harvest limits initially implemented on January 1, 2007. This action continues the prohibition on federally permitted commercial vessels landing summer flounder in Delaware in 2007 due to continued quota repayment of previous year's overages. This emergency rule extension is necessary to maintain the increased 2007 summer flounder harvest levels previously found to be consistent with the Magnuson-Stevens Fishery Conservation and Management Reauthorization Act of 2006 (Reauthorized Magnuson-Stevens Act) through the end of the 2007 fishing year. Extending this emergency action will ensure continued compliance with regulations implementing the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan (FMP). In addition, this action will continue to ensure that fishing mortality rates

(F)or exploitation rates, as specified in the FMP, are not exceeded. DATES: Effective from July 18, 2007 through December 31, 2007. ADDRESSES: Copies of the Supplemental Environmental Assessment are available from Patricia A. Kurkul, Regional Administrator, Northeast Region, National Marine Fisheries Service, One Blackburn Drive, Gloucester, MA 01930-2298. This document is also accessible via the Internet at *http://www.nero.noaa.gov* . FOR FURTHER INFORMATION CONTACT: Michael P. Ruccio, Fishery Policy Analyst,

(978)281-9104. SUPPLEMENTARY INFORMATION: Summer flounder is currently under a rebuilding plan. NMFS published a final rule containing the 2007 summer flounder TAL on December 14, 2006 (71 FR 75134). The 12.983-million-lb (5,889-mt) TAL in that rule became effective on January 1, 2007, which was a 45-percent decrease from the TAL specified for 2006. Following the publication of the 2007 summer flounder TAL in the **Federal Register** , the Reauthorized Magnuson-Stevens Act was signed into law on January 12, 2007. Contained within the Reauthorized Magnuson-Stevens Act is a specific provision under section 120(a) that authorizes the Secretary of Commerce (Secretary) to extend the rebuilding time frame for summer flounder to no later than January 1, 2013, provided that several specific conditions are met. The Secretary must determine that: 1. Overfishing is not occurring in the summer flounder fishery and that a mechanism is in place to ensure overfishing does not occur in the fishery and stock biomass levels are increasing; 2. The biomass rebuilding target previously applicable to the summer flounder stock will be met or exceeded within the new time for rebuilding; 3. The extension period is based on the status and biology of the stock and the rate of rebuilding; 4. Monitoring will ensure rebuilding continues; 5. The extension meets the requirements of National Standard 1 found at section 301(a)(1) of the Magnuson-Stevens Act; and 6. The best scientific information available shows that the extension will allow continued rebuilding. On behalf of the Secretary, NMFS previously determined that these six criteria had been met and that there is a reasonable basis to extend the summer flounder rebuilding time frame to no later than January 1, 2013. Based on these determinations, NMFS implemented an emergency rule, effective January 19, 2007 (72 FR 2458), to increase the TAL to 17.112 million lb (7,762 mt). The agency's decision to enact emergency rulemaking was consistent with the policy guidelines for the use of emergency rules published in the **Federal Register** on August 21, 1997 (62 FR 44421). A detailed discussion of the Secretarial determinations made relative to section 120(a) of the revised Magnuson-Stevens Act appears in the initial emergency rule (72 FR 2458, January 19, 2007) and is not repeated here. The emergency rule TAL is based on the revised rebuilding time frame ending no later than January 1, 2013, which supersedes the previous TAL of 12.983 million lb (5,889 mt) that was based on a rebuilding period end date of January 1, 2010. The 17.112-million-lb (7,762-mt) TAL will continue to be allocated 10.27 million lb (4,658 mt) to the commercial sector and 6.84 million lb (3,104 mt) to the recreational sector under this extension. The commercial summer flounder state quotas remain unchanged by this extension from those described in the initial emergency action published on January 19, 2007 (72 FR 2458), and are not repeated here. This emergency rule extension does not alter the previous amount of summer flounder set aside for research in the December 14, 2006, final rule. Four research projects that will utilize the previously established summer flounder RSA of 389,490 lb (177 mt) have been approved by NMFS. Delaware Summer Flounder Closure Under this extension to the January 19, 2007 (72 FR 2458) emergency rule, the amount of the 2006 summer flounder quota overage (inclusive of overharvest from previous years) continues to be greater than the amount of commercial quota allocated to Delaware for 2007. As a result, there continues to be no quota available for 2007 in Delaware. The regulations at § 648.4(b) provide that Federal permit holders, as a condition of their permit, may not land summer flounder in any state that the Regional Administrator has determined no longer has commercial quota available for harvest. Therefore, landings of summer flounder in Delaware by vessels holding commercial Federal summer flounder fisheries permits are prohibited for the duration of this emergency rule extension, unless additional quota becomes available through a quota transfer and is announced in the **Federal Register** . Federally permitted dealers are advised that they may not purchase summer flounder from federally permitted vessels that land in Delaware for the duration of this emergency rule extension, unless additional quota becomes available through a transfer. Comments and Responses NMFS received one comment on the initial emergency action. NMFS received 1,321 form letters prior to the emergency rule comment period that are being considered as comments on the initial emergency rule. Some commenters submitted similar comments on separate occasions. *Comment 1:* This commenter spoke in support of the original TAL implemented for January 1, 2007, and the previously mandated 10-year rebuilding schedule. *Response:* The 12.983-million-lb (5,889-mt) TAL previously implemented by NMFS for the 2007 fishing year was considered sufficiently risk averse to ensure stock rebuilding occurred by January 1, 2010, as previously required by the Magnuson-Stevens Act prior to its 2006 reauthorization. Following the reauthorization of the Magnuson-Stevens Act, the Secretary was afforded specific authority to extend the rebuilding period to no later than January 1, 2013, provided the criteria previously outlined in this rule were met. The criteria within section 120(a) of the Reauthorized Magnuson-Stevens Act were found by the Secretary to have been satisfied and, accordingly, NMFS recalculated the TAL for 2007 based on an extended rebuilding period. The resulting 17.112-million-lb (7,762-mt) TAL implemented by emergency rule (January 19, 2007, 72 FR 2458) and extended by this action has a 75-percent probability of achieving the new F level (Frebuild=0.203) calculated for stock rebuilding by January 1, 2013. The 17.112-million-lb (7,762-mt) TAL has a 99-percent probability of not exceeding the 2007 F <sup>max</sup> threshold (0.28). The 17.112-million-lb (7,762-mt) TAL and associated commercial and recreational management measures will effectively ensure that overfishing does not occur in the summer flounder fishery in 2007. The emergency rule TAL extended by this action will somewhat mitigate the socio-economic impacts associated with the lower TAL initially implemented for 2007 while ensuring that the requirements of the Magnuson-Act and the fishery management plan are met. NMFS asserts that this was the desired effect of the specific rebuilding period extension authority granted to the Secretary by the U.S. Congress through the Reauthorized Magnuson-Stevens Act. *Comment 2:* One thousand three hundred and twenty-one comments were received as form letters from various recreational fishing groups. They spoke in favor of increasing the summer flounder TAL as soon as possible following the enactment of the Reauthorized Magnuson-Stevens Act. These commenters urged NMFS to establish a TAL with no more than a 50-percent probability of not exceeding the 2007 F target. *Response:* The Reauthorized Magnuson-Stevens Act was signed into law on January 12, 2007. NMFS worked as quickly as possible to implement an increased TAL and published an initial emergency rule to increase the TAL from 12.983-million-lb (5,889-mt) to 17.112-million-lb (7,762-mt) on January 19, 2007 (72 FR 2458). NMFS is continuing to implement measures designed to mitigate the retrospective patterns in fishing mortality, stock size, and recruitment by utilizing a more conservative TAL for 2007, to ensure that the necessary fishing mortality target is actually achieved. The risk-averse approach of setting a TAL with a 75-percent probability of not exceeding the 2007 F target was applied in setting the initial 12.983-million-lb (5,889-mt) TAL effective on January 1, 2007 (71 FR 75134). This approach was also applied to the initial emergency action 17.112-million-lb (7,762-mt) TAL implemented on January 19, 2007 (72 FR 2458). Achieving the fishing mortality target level in 2007 is necessary to provide for rebuilding of the summer flounder stock within the extended rebuilding period, ending no later than January 1, 2013, as implemented by the Reauthorized Magnuson-Stevens Act. Classification This emergency rule extension is published under the authority of the Magnuson-Stevens Act. This action has been determined to be not significant for the purposes of Executive Order 12866. Because no general notice of proposed rulemaking is required to be published in the **Federal Register** for this emergency rule extension by 5 U.S.C. 553 or by any other law, the analytical requirements of the Regulatory Flexibility Act do not apply; thus, no Regulatory Flexibility Analysis was prepared. The Assistant Administrator finds it is unnecessary and contrary to the public interest to provide for prior notice and an opportunity for public comment on this emergency rule extension. In the initial emergency rule published on January 19, 2007 (72 FR 2459), NMFS requested, and subsequently received, comments on the increased summer flounder TAL. Therefore, the agency has the authority to extend the emergency action for up to 186 days beyond the July 19, 2007, expiration of the initial emergency action. NMFS, through this action, extends the emergency action to the end of the 2007 fishing year (165 days), which ends on December 31, 2007. The measures of this emergency rule extension remain unchanged from the measures contained in the initial emergency rule that increased the 2007 summer flounder TAL. The extension measures must be in place by July 19, 2007, or the lower TAL based on the 2010 rebuilding target will go into effect. The initial emergency rule implemented a higher TAL in response to authority granted by the reauthorization and amendment of the Magnuson-Stevens Act. Section 120 of the Reauthorized Magnuson-Stevens Act grants the Secretary the ability to extend the rebuilding period for summer flounder from January 1, 2010, to no later that January 1, 2013. Congress intended this provision to be used to mitigate negative socio-economic impacts of the lower TAL for all of the 2007 and subsequent fishing seasons in the rebuilding period, provided the criteria for utilizing the longer rebuilding period were met. In implementing the initial emergency rule, the Secretary determined that the criteria had been met. Extending the provisions of the emergency rule without notice and comment rule will foreclose that possibility that the lower TAL would go into effect and cause disruption of the summer flounder fishery and unnecessary adverse economic impacts. Such a waiver is consistent with both Congressional intent and the expectations of the public. NMFS solicited public comment during the 30-day post-promulgation comment period on the measures contained in the initial emergency action and extended by this action. The comments received were considered and are addressed in the preamble to this rule; however, no change to the emergency action measures were enacted as a result of the comments received. The Council will be developing non-emergency measures for the 2008 fishing year that begins on January 1, 2008, to be implemented through notice and comment rulemaking. The public comments on the emergency rule will be considered in the context of that rulemaking. The measures in this emergency rule extension continue to meet the fishing mortality objectives of the summer flounder fishery management plan and satisfies section 120 of the Reauthorized Magnuson-Stevens Act. Therefore, for the reasons outlined above, the Assistant Administrator finds it is unnecessary and contrary to the public interest to provide any additional notice and opportunity for public comment under 5 U.S.C. 553(b)(B) prior to publishing the emergency rule extension. Dated: June 8, 2007. Samuel D. Rauch III, Deputy Assistant Administrator For Regulatory Programs, National Marine Fisheries Service. [FR Doc. E7-11519 Filed 6-13-07; 8:45 am] BILLING CODE 3510-22-S 72 114 Thursday, June 14, 2007 Proposed Rules DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Parts 1, 101, 400, and 401 [Docket No. FAA-2007-27310; Notice No. 07-06] RIN 2120-AI88 Requirements for Amateur Rocket Activities AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: The Federal Aviation Administration

(FAA)is proposing revisions to amateur rocket regulations and activities to preserve the level of safety associated with amateur rocketry. Current regulations are outdated and do not reflect current industry practice. This action would update our regulations and guidance for amateur rocket activities. We propose to change the amateur rocket classifications, the way we collect information from operators of advanced amateur rocket launches, and the format of the regulations. In addition, we propose to address and correct minor inconsistencies in the present rules. We would take this action to update our regulations and align them with advances in the amateur rocket industry. We would also codify certain operating restrictions that are already widely used but are important enough to be required universally. DATES: Send your comments on or before September 12, 2007. ADDRESSES: You may send comments, identified by Docket No. FAA-2007-27310, using any of the following methods: • *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:* Send comments to the Docket Management Facility; U.S. Department of Transportation, 1200 New Jersey Avenue, SE., West Building Ground Floor, Room W12-140, Washington, DC 20590. • *Fax:* Fax comments to the Docket Management Facility at 202-493-2251. • *Hand Delivery:* Bring comments to the docket Management Facility in Room W12-140 of the West Building Ground Floor at 1200 New Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: For technical questions concerning this proposed rule contact Charles P. Brinkman, Licensing and Safety Division (AST-200), Commercial Space Transportation, Federal Aviation Administration, 800 Independence Avenue, Washington, DC 20591, telephone

(202)267-7715; or Ellen Crum, Office of Airspace and Rules, Air Traffic Organization, Federal Aviation Administration, 202-493-4562. For legal questions concerning this proposed rule contact Gary Michel, Office of the General Counsel, Federal Aviation Administration, 800 Independence Avenue, Washington, DC 20591, telephone

(202)267-3148. SUPPLEMENTARY INFORMATION: Later in this preamble under the Additional Information section, we discuss how you can comment on this proposal and how we will handle your comments. Included in this discussion is related information about the docket, privacy, and the handling of proprietary or confidential business information. We also discuss how you can get a copy of this proposal and related rulemaking documents. Authority for This Rulemaking The FAA's authority to issue rules on aviation safety is found in Title 49 of the United States Code. 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. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart III, Sections 40102, 40103, 40113-40114, and 44701—44702. Under those sections, the FAA is charged with prescribing regulations that govern air traffic rules on the flight of aircraft (which include unmanned rockets). This regulation is within the scope of that authority because it defines classes of unmanned rockets and details the information the FAA would require to issue a waiver to allow launching of an amateur rocket. Authority for this rulemaking is derived from the FAA's mission to regulate commercial launch activities in such a manner as to protect public health and safety and safety of property. Table of Contents I. Background A. Regulatory History B. The Need for New Regulations. 1. Preserve Safety 2. Address Inconsistencies 3. Improve Clarity C. Categories of Amateur Rockets 1. Industry Categorization 2. Current FAA Categorization II. Comments From Public Meeting III. Discussion of the Proposed Regulatory Requirements A. Part 1 Definitions and Abbreviations B. Part 101 1. Section 101.1 Applicability (Subpart A—General) 2. Section 101.21 Applicability (Subpart C—Unmanned Rockets) 3. Operating Limitations 4. Section 101.27 Notice requirements 5. Section 101.29 Information requirements C. Proposed Changes to Chapter III 1. Section 400.2 Scope 2. Section 401.5 Definitions 3. Section 420.3 Applicability IV. Paperwork Reduction Act V. International Compatibility VI. Regulatory Evaluation, Regulatory Flexibility Determination, International Trade Impact Assessment, and Unfunded Mandates Assessment A. Regulatory Flexibility Determination B. International Trade Impact Assessment C. Unfunded Mandates Assessment VII. Executive Order 13132, Federalism VIII. Environmental Analysis IX. Regulations that Significantly Affect Energy Supply, Distribution, or Use X. Additional Information A. Comments Invited B. Addresses C. Availability of Rulemaking Documents XI. List of Subjects in 14 CFR Parts 1, 101, 400, and 401. XII. The Proposed Amendment I. Background A. Regulatory History Regulations governing unmanned rockets are found in Title 14 of the Code of Federal Regulations (14 CFR), Chapter I, part 101 and Chapter III, parts 400 through 499. The definitions of *rocket* and *amateur rocket activities* are found in 14 CFR 1.1 and 401.5, respectively. In 1963, the Federal Government added the first regulations applying to the operations of unmanned rockets to 14 CFR part 101. Part 101 governs the safe operation of unmanned rockets in the National Airspace System (NAS). It requires the advance notice to and approval by the FAA for some rocket launches. The regulations ensure the safety of aircraft flying in the airspace and the safety of persons and property close to the launches. In 1963, the focus was on risks to persons and property near the launches. This was a reasonable focus because the model rockets did not have a great potential for creating hazards far from their launch points. In 1984, Congress passed the Commercial Space Launch Act (CSLA), as codified and amended at 49 U.S.C. Subtitle IX—Commercial Space Transportation, chapter 701, Commercial Space Launch Activities, 49 U.S.C. 70101-70121. 65 FR 63922 (Oct. 25, 2000). The CSLA directs the Department of Transportation and thus the FAA, through delegations, to: • Oversee, license, and regulate commercial launch and reentry activities and the operation of launch and reentry sites as carried out by U.S. citizens or within the United States, • Exercise this responsibility consistent with public health and safety, safety of property, and the national security and foreign policy interests of the United States, • Promote commercial space launches by the private sector, and • Implement regulations in furtherance of the CSLA. In 1988, we issued the “Commercial Space Transportation Licensing Regulations”. Section 401.5 defined amateur rocket activities and exempted launches of limited performance rockets from licensing requirements. Amateur rocket activities are defined as rocket activity that meets all of the following conditions: • Are conducted at a private site, • Are powered by a motor or motors with a total impulse of 200,000 pound-seconds or less, • Have a total burning or operating time of less than 15 seconds, and • Have a ballistic coefficient of less than 12 pounds per square inch. (Ballistic coefficient is defined as the gross weight in pounds divided by the frontal area of the rocket vehicle.) Neither the CSLA nor its legislative history revealed any intent by Congress for amateur rocket activities, which then were conducted primarily for recreational or educational purposes, to be licensed. Although the term amateur was used, and the majority of activity was not done for profit, the regulatory definition did not contain any provisions concerning financial interests. In 1992, the National Association of Rocketry

(NAR)and the Hobby Industry Association

(HIA)petitioned the FAA to raise the upper weight limit on model rockets from 16 ounces (454 grams) to 53 ounces (approximately 1,500 grams). This request addressed the rapid development of larger model rockets. In response, the FAA amended part 101 to include a large model rocket category. The FAA acknowledged that organized rocket groups had done an admirable job in monitoring and preserving safety in launch activities. It also recognized that the larger model rockets posed a greater risk of collision with general aviation aircraft and a greater hazard to persons and property on the ground. In 1995, the Commercial Space Transportation organization and its responsibilities were transferred from an Office under the DOT to a Line of Business under the FAA as the Office of Commercial Space Transportation (AST). The change in structure did not affect operations; AST continued to regulate rocket launches in the same manner as before. The FAA, as a whole, regulates unmanned rocket activities through its Air Traffic and Commercial Space Transportation organizations. Air Traffic grants requests for airspace waivers and takes appropriate actions, such as issuing Notices To Airmen (NOTAMS). FAA Order 7400.2F contains operating procedures for Commercial Space Transportation to review rocket activities—specifically those operations where the maximum altitude is greater than 25,000 feet above ground level (AGL). Regulations for licensed launches are found in 14 CFR parts 101 and 400 through 499, whereas regulations governing amateur rocket activity are found in 14 CFR part 101. Launches conducted by other U.S. Government agencies for the U.S. Government are not subject to FAA licensing requirements. B. The Need for New Regulations Historically, the FAA has relied on state and local regulation, voluntary self-regulation, and its own analysis to fulfill its oversight responsibility for unmanned rocket operations under part 101. The voluntary self-regulation has been carried out by the organizations sponsoring these activities. When we amended part 101 in 1994, we included provisions for large model rockets. The voluntary self-regulation and state and local regulations were effective for purposes of protecting public safety for model and large model rockets. However, amateur rocket performance has continued to improve and participation in amateur rocket launches has increased significantly. Therefore, the once remote possibility of an accident or incident resulting from amateur rocket activities has become more likely. The FAA now believes these activities need regulation appropriate for continued safe operation. This rulemaking is intended to preserve the safety record of amateur rocket activities, address inconsistencies, and clarify existing amateur rocket regulations. 1. Preserve Safety The FAA currently receives airspace waiver requests for launches of rockets that can reach 328,000 feet (100 kilometers) or more. These launches are approaching altitudes where they could pose a threat to objects in orbit. The capability of rockets has advanced to a level far greater than contemplated by existing regulation. We believe any rocket launch that could potentially impact United States or international orbital assets should not be classified as an amateur rocket nor exempted from regulation. We propose to restrict amateur rocket activity to address this concern. A rocket that flies higher can also travel further. Current regulations place no restrictions on range, and unintentionally allow amateur launch activities to expose a foreign country's persons and property to risk. The FAA believes that any rocket launch with potential foreign policy implications should not be classified as an amateur rocket activity nor exempted from regulation. We propose to restrict amateur rocket activity to address this concern. The FAA has identified a need to receive technical data from operators of large amateur rockets in their initial applications to ensure public safety is maintained. The FAA protects people and property from the dangers of advanced rocket operations by using hazard areas and operating limitations. A hazard area is any region where there is a significant potential for harm from the rocket activity. Access to a hazard area is controlled or monitored by the operator (or by others through agreements) to protect the uninvolved public. To calculate these hazard areas and operational limitations, technical information about the rocket and its operations is needed. Currently, the waiver application process requires repeated correspondence between the applicant and the FAA to get the necessary information. This iterative process reduces the time available to the FAA to do analyses, and increases the chance of determining either an insufficient or excessive hazard area. Some recent amateur rocket launch attempts to reach 328,000 ft (100 km) have failed resulting in debris landing outside the calculated hazard areas. Hazard areas that are inaccurately defined can pose a risk to the public. The FAA proposes to collect the necessary information from operators of large amateur rockets as part of the waiver application. This would allow us to determine more accurate hazard areas without repeated requests for information. The amateur rocket regulations were written when the amateur rocket community used mainly solid rocket motors. Since then the amateur rocket community has developed rocket engines that use liquid propellants. We propose to redefine amateur rocket activity to reflect this advanced rocket environment. In addition, the FAA intends to update its regulations by codifying public safety practices that are already widely used. 2. Address Inconsistencies The current regulations applicable to amateur rocket activities are inconsistent. For example, language in § 101.22(b) restricts operations “* * * within 5 miles of an airport runway * * *” Similar language in § 101.23(c) restricts operations “* * * within five miles of the boundary of any airport.” The FAA proposes to clarify and bring consistency to these regulations. The current regulations are also inconsistent with current guidance and practice. Section 101.25 is inconsistent with FAA ATC Order 7930.2J, Sec. 4-1-1. The regulation requires that a person give information to FAA Air Traffic Control

(ATC)“* * *no less than 24 hours prior to and no more than 48 hours prior to beginning the operation.” However, the FAA Order allows acceptance of the required information “* * *provided the occurrence is no more than 3 days in the future.” The FAA uses this information to create a Notice to Airmen (NOTAM). In addition, the information currently given to ATC under § 101.25(c) is not precisely what the Air Traffic Organization uses to issue a NOTAM. For example, the size, weight, launch point, and number of rockets are not used to issue a NOTAM. However, the affected area, the center of its location (which is not always the same as the launch point), and the affected altitudes (from ground to the apogee of the highest-performing rocket) are required to determine boundaries for the NOTAM. By using specific terminology (for example, *affected altitudes* as opposed to *highest altitude* ), the FAA would remove ambiguity and make consistent its use of terms. The FAA's definition of ballistic coefficient is inconsistent with the industry definition. The definition of ballistic coefficient used currently by the FAA is weight divided by frontal area. However, ballistic coefficient (shown by the Greek letter β) is commonly defined in the aerospace technical literature as the weight divided by the product of the frontal area and a drag coefficient, such that EP14JN07.019 . The FAA's current definition of ballistic coefficient ignores the shape of the rocket's nose cone (represented mathematically by the drag coefficient C D ). This inconsistency with the engineering community makes the existing requirement confusing and ignores the importance of nose cone shape. The FAA proposes changes to its regulations that would address this inconsistency. 3. Improve Clarity Currently, the industry and FAA categorize rockets differently. This is because their categories served different purposes. The details of this are explained in a later section. However, using similar categories would improve clarity. The amateur rocket regulations are written in multiple unit systems. The FAA prefers a consistent use of unit systems, and would use this rulemaking to denote both English and metric units on all terms. C. Categories of Amateur Rockets Rocket organizations and federal regulatory agencies use different categories and definitions to define amateur rocketry. Industry uses rocket categories to set operating procedures for amateur rocket events and for self-regulation. Likewise, it is important for the FAA to categorize amateur rocket activities into groups because different types of rockets have different effects on public safety. 1. Industry Categorization Rocket organizations such as the National Association of Rocketry

(NAR)and the Tripoli Rocketry Association

(TRA)divide rockets into categories of model, high-power, and experimental. 1 A significant difference among these categories is total impulse. Total impulse is calculated by multiplying the average thrust (propulsive force) of a rocket motor by the total burn time. Total impulse is a good measure of rocket power and is commonly expressed in Newton-seconds (N-sec) or pound-seconds (lb-sec). The rocket organizations classify motors according to total impulse, and categorize them alphabetically, as shown in Table 1. Each category is described below. 1 The NAR and the TRA are two major rocket organizations. Each has a safety code to protect its members and the public during rocket activities. The NAR and the TRA safety codes were originally developed from safety codes published by the National Fire Protection Association (NFPA), Batterymarch Park, Quincy, Massachusetts. The NFPA has published two safety codes for rocketry:

(1)NFPA 1122, which covers model rocketry, and

(2)NFPA 1127, which covers high-power rocketry. NFPA 1127 includes requirements for rocket construction, launch sites and launches, and requirements for rocket motor use including motor testing and certification. All participants in NAR- and TRA-sanctioned launch events promise to follow their respective safety codes. Table 1.—Range of Total Impulse for Specified Motor Class Installed total impulse (N-sec) Equivalent motor class 0-2.50 A 2.51-5.00 B 5.01-10.00 C 10.01-20.00 D 20.01-40.00 E 40.01-80.00 F 80.01-160.00 G 160.01-320.00 H 320.01-640.00 I 640.01-1280.00 J 1280.01-2560.00 K 2560.01-5120.00 L 5120.01-10,240.00 M 10,240.01-20,480.00 N 20,480.01-40,960.00 O 40,960.01-81,920.00 P 81,920.01-163,840.00 Q Model rockets make up the low-power end of amateur rocket activity, and are comprised of all rocket motors from A through G. Model rockets typically are made of paper, wood, or breakable plastic and contain no substantial metal parts. High-power rockets are the next level up from model rocketry and encompass rocket motor classes H through O, or 160 to 40,960 N-secs (35.97 to 9208 lb-sec). Some of these vehicles have sophisticated electronics to open parachutes or ignite added stages. Operators of high-power rockets are usually associated with either NAR or TRA, and are obliged by their membership to follow the associated safety codes of those organizations. A rocket using non-certified solid rocket motors, an engine using a liquid oxidizer and fuel, or a solid rocket motor or motors producing more than 81,920 N-sec (18,409 lb-secs) of total impulse have sometimes been labeled experimental by various rocketry organizations. Experimental rocketry is a relatively small part of amateur rocket activities as most hobbyists lack expertise and manufacturing ability to design and build higher-powered solid or liquid rocket engines. 2. Current FAA Categorization Currently, the FAA defines and categorizes unmanned rocketry into three groups: Model rockets, large model rockets, and “Other”—everything within unmanned rocketry that falls outside the first two categories. The FAA distinguishes categories by the weight of propellant used, total weight of the rocket, and the manner in which the rocket is operated. Model Rockets In the applicability section, specifically § 101.1(a)(3)(ii), model rockets are exempt from all remaining part 101 regulations. This is any model rocket that:

(a)Uses not more than four ounces of propellant;

(b)Uses a slow-burning propellant;

(c)Is made of paper, wood, or breakable plastic, and contains no substantial metal parts;

(d)Weighs not more than 16 ounces, including the propellant; and

(e)Is operated in a manner that does not create a hazard to persons, property, or other aircraft. Large Model Rockets Large model rockets are defined by the FAA in § 101.22 as model rockets that meet the following conditions:

(a)Uses not more than 125 grams of propellant;

(b)Is constructed of paper, wood, or breakable plastic, and contains no substantial metal parts; and

(c)Weighs not more than 1,500 grams (including propellant). If the operator of a large model rocket complies with all provisions of § 101.25 (ATC Notice Requirements), then the operator is exempt from § 101.23 (b),

(g)and (h). These are the operating restrictions on entering controlled airspace, operating within 1,500 feet of any unassociated person or property, and operating between sunset and sunrise, respectively. An operator is also exempt from § 101.23(c) (operating within 5 miles of an airport runway) if the operator provides a copy of the notification required by ATC to the airport manager. Finally, if launching into restricted airspace, only § 101.23(g) (1,500 ft setback distance) applies. “Other”—Any unmanned rocket that cannot be categorized as a Model Rocket or a Large Model Rocket The FAA defines only the two previous categories of rockets under part 101. Nevertheless, all other unmanned rocket activity that falls outside these categories is covered under part 101, and must comply with all operating limitations in § 101.23 and ATC Notice Requirements in § 101.25. The only exception to the operating limitations in §§ 101.23 and 101.25 is if launching into restricted airspace. In this case only the 1,500-foot setback distance in § 101.23(g) for unassociated people and property applies. II. Comments from Public Meeting On February 28, 2000, the FAA began a two-week public forum on the Internet to invite comments and information from the public on regulating launches of small-scale rockets. (At the time, the FAA was considering changing the term amateur to small-scale.) The two-week online forum was followed by two weeks of written comments to a docket. The online public forum was conducted instead of an Advanced Notice of Proposed Rulemaking (ANPRM) or more traditional public meetings. The FAA posed the following questions: • Does defining amateur rocket activity accurately and adequately exclude from FAA regulatory and licensing scrutiny those activities thought to be either inherently safe, or adequately covered by state, local, or Federal regulation? • If not, what would be a better definition? • Should there be a category of launch activity that would not be licensed but would have certain regulatory requirements imposed by the FAA? • If so, what should those requirements address? About 35 people took part in the online discussion, which produced over 150 pages of text. Six more comments were received during the written comment period. The preliminary conclusion of the public online forum was the current definition of amateur rocket activity was inadequate—it did not exclude some activities from FAA regulatory scrutiny that might be inherently safe. 2 Although several ideas were expressed about what factors should be part of a definition, there was no consensus about what amateur rocket activity should encompass. 2 The online participants intended the phrase “inherently safe” to mean safe for the public, or adequately covered by state, local or other Federal regulation. The written comments from the public forum are available at *http://dms.dot.gov/* ; docket number FAA-1999-6574. To find it, enter the last four digits of the docket number into the search box. III. Discussion of the Proposed Regulatory Requirements The following sections describe in detail the rationale for the proposed regulations. This rationale is intended to serve as a guide and add clarity to the meaning of the regulations. The proposed changes are addressed in numerical order, and each consists of a description of the change followed by the rationale for the change. A. Part 1 Definitions and Abbreviations The FAA proposes to move and change the definition of *amateur rocket activities* . We would move the definition of *amateur rocket activities* from § 401.5 to § 1.1 under the term *amateur rocket* . We would change the definition to read as follows: An amateur rocket is a rocket that: • Is propelled by a motor or motors having a combined total impulse of 889,600 N-sec (200,000 lb-sec) or less, and • Cannot reach an altitude greater than 150 kilometers (93.2 statue miles) above the earth's surface. Further, we would add the following operating limitations to part 101: • Is launched on a suborbital trajectory; • When launched, must not cross into the territory of a foreign country unless there is an international agreement permitting such activity; and • Is unmanned. We believe these parameters and operating limitations better reflect those operations that should be exempt from the part 400 licensing or permitting process than the parameters used today. The proposed definition of amateur rocket keeps the same total impulse criterion as in the current definition, discards the criteria of private site, burn time, and ballistic coefficient, and adds an altitude restriction. New operating limitations would require that amateur rocket launches be suborbital, not reach foreign territories, and be unmanned. Total Impulse The FAA proposes to keep the current total impulse limit for amateur rocketry. We would keep the value of 200,000 lb-secs, which converts to 889,600 N-sec, as the cutoff point because it best describes the launch vehicle size, power, performance, and the potential public safety impacts. It has also been used successfully for over 18 years. Maximum Altitude The FAA believes that a rocket able to exceed an altitude of 150 km (93.2 miles) would not be an amateur rocket. Therefore, we propose to add this altitude limit to the definition. This would ensure an amateur rocket will not affect manned spacecraft and would virtually ensure that it will not affect any operational satellites. Space shuttle history shows a lowest orbit of 226 km (141.2 miles). The international space station maintains a minimum altitude of 310 km (193.7 miles). Based on our analysis of catalogs of all orbiting objects, there are approximately 9 to 11 active satellites with perigees lower than 150 km. Because there are so few active satellites orbiting below 150 km, the FAA believes allowing amateur rocket launches to reach 150 km does not create an unacceptable hazard. Rocket operations exceeding 150 km could pose a threat to operational spacecraft and should be subject to the licensing or permitting process. Suborbital Trajectory The FAA proposes that amateur rocket launches be limited to suborbital trajectories. Although the maximum altitude restriction of 150 km (93.2 miles) should preclude the launch from placing an object into orbit, we want to remove any possibility that an object can reach orbit. Foreign Territory The FAA proposes that amateur rockets not be launched in a manner where they could reach foreign territory unless an agreement is in place between the United States and the foreign government. This restriction would eliminate any potential international implications associated with amateur rockets. Rockets with international implications should not be considered amateur nor be exempt from the licensing or permitting process. Unmanned The FAA proposes that amateur rockets be unmanned. In 2004, Congress legislatively ordered that manned launches require a license or a permit (Commercial Space Launch Amendments Act). The proposed requirement ensures compliance with this Act. Burn Time The FAA proposes to remove burn time as a criterion for distinguishing amateur rockets from non-amateur rockets. This criterion is inappropriate for two reasons. First, burn time should no longer be used to determine risk qualitatively because of the introduction into the amateur rocket community of rocket engines that use liquid propellants. When the regulations were originally written, rockets with similar burn times generally had similar designs. The burning rates of solid propellants used by the amateur community (excluding model rockets) did not vary significantly from one propellant to another. Rockets with similar burn times most likely had similar amounts of propellant and potential energy. This is no longer the case. One important difference between rockets that operate using liquid propellants (informally, *liquid rockets* ) and rockets that operate using solid propellants (informally, *solid rockets* ) is the former can be throttled. Liquid rockets typically have valves for controlling the flow of liquid into the combustion chamber. This allows the operators to regulate their use of propellants as necessary. Because of this flexibility, the burn time of a liquid rocket does not necessarily correspond to its potential energy. This difference argues that burn time should not be used as a criterion to determine the potential safety aspects of a liquid rocket. The second reason for removing burn time as a criterion is that current regulations unnecessarily drive rocket design. In order to ensure that amateur rockets stay under the burn time limit, and thus remain amateur, while maximizing performance, operators have introduced design elements, such as increased thrust and acceleration that introduce a safety concern. Operators of liquid rockets have faced similar pressures when designing their flight paths, and have often opted for less safe, higher-acceleration burns for the same reasons. Higher accelerations on a rocket can make failures more common, as the stresses involved are larger. Ballistic Coefficient The FAA proposes to remove ballistic coefficient as a criterion for several reasons: 1. A rocket with a ballistic coefficient of less than 12 lbs/in 2 can still impact with enough kinetic energy and explosive potential to be dangerous. Therefore, the restriction does not noticeably contribute to safety. 2. The goal of restricting certain parameters is containment within a specified area to minimize risk to the public. By explicitly restricting the altitude (150 km) and indirectly restricting the range (no foreign territory) of a rocket, we would more directly capture the intended result making the restriction on ballistic coefficient unnecessary. 3. The existing definition of ballistic coefficient used by the FAA is inconsistent with the definition common to the field of aerodynamics. This inconsistency makes the existing requirement confusing and ignores the importance of shape. Private Site The FAA proposes to remove from the definition of amateur rocket the requirement to launch from a private site. This is because public safety issues do not depend on this distinction. This restriction unnecessarily burdens both the amateur rocket operator and the FAA. B. Part 101 1. Section 101.1 Applicability (Subpart A—General) The FAA proposes to move the rules governing the operation of model rockets from Subpart A—General (§ 101.1) to Subpart C—Unmanned Rockets (§ 101.21). This proposal would align all definitions and operating requirements pertaining to unmanned rockets in a single subpart. We would continue to allow model rockets to operate without FAA oversight. 2. Section 101.21 Applicability (Subpart C—Unmanned Rockets) The FAA proposes to clarify part 101 by adding two new categories of amateur rocket operations and amending the definitions of the existing categories. We propose to number these categories from Class 1 to Class 4. The two new categories would be Class 3 (high-power rocket) and Class 4 (advanced high-power rocket). Class 1 and Class 2 rockets would be defined using the current definitions of model rocket and large model rocket, respectively. The new categories capture amateur rockets that require significant analyses or operational constraints to preserve safety. Class 1—Model Rockets The proposed Class 1-Model Rockets category takes the place of the current model rocket category with roughly the same definition. Class 1 would be defined as an amateur rocket using less than 125 grams (4.4 ounces) of slow-burning propellant, made primarily of paper, wood, or breakable plastic, containing no substantial metal parts, and weighing no more than 454 grams (16 ounces), including the propellant. This definition differs from the existing definition in two ways—maximum propellant weight and operating limitations. The maximum propellant weight would be increased from the existing 4 ounces to 4.4 ounces, and metric units would also be included in the regulatory text. This change would be made to close the gap in propellant weight between Class 1 and Class 2 rockets. The small increase in maximum propellant weight would not pose an increased risk to the public. The existing definition also contains an operating limitation. A model rocket is defined as a rocket “operated in a manner that does not create a hazard to persons, property, or other aircraft.” However, definitions that include operating limitations can be confusing. For example, a model rocket is a model rocket whether it is operated safely or not. We would keep the operating limitation, but would move it outside the categorical definition. Class 2—Large Model Rockets The proposed definition of Class 2—Large Model Rockets would, like Class 1, move the operating restrictions from the definition to another area of the regulations. With this change, proposed Class 2 would only differ from Class 1 in maximum total weight. Class 2 would continue to allow up to 1,500 grams (53 ounces), including propellant, in contrast to 454 grams (16 ounces) allowed by Class 1. Class 3—High-Power Rockets The FAA proposes to add the term Class 3—High-Power Rockets, which would be defined as an amateur rocket other than a model rocket or large model rocket that is propelled by a motor or motors having a combined total impulse of 163,840 N-sec (36,818 lb-sec) or less. In terms of motor class, this is either a P or a Q motor. The FAA proposes to use total impulse as the distinguishing criterion for high-power rockets because total impulse is a good measure of the size, power, and performance of the rocket. Each of these factors is important for public safety. We propose the total impulse limit because rockets of this size have not required extensive analyses in the past to be launched safely. Class 4—Advanced High-Power Rockets The FAA proposes to add the term Class 4—Advanced High-Power Rockets, which would be any amateur rocket that cannot meet one of the other three Classes. In general, these will be rockets with a combined total impulse above 163,840 N-sec (36,818 lb-sec), that is, a Q-motor. However, the regulation would be written such that other, unforeseen operations or advancements in amateur rocket technology will be captured as Class 4. The risk to the public from launches of this category is often higher due to the large amount of propellant or stored energy within the vehicle. This higher risk factor requires greater scrutiny. As proposed, the Class 4 captures rockets more powerful than those commonly launched at high-power rocket events. Table 2 summarizes the proposed amateur rocket categories. Table 2.—Proposed Amateur Rocket Categories Amateur Rocket: • Is propelled by a rocket motor or motors having a combined nominal total impulse of 889,600 N-sec (200,000 lb-sec) or less. • Cannot reach an altitude of greater than 150 kilometers (492,120 feet). • Must not be launched so that it could reach the territory of a foreign country unless there is an international agreement permitting such activity. • Is launched on a suborbital trajectory. • Is unmanned. The following categories are recognized currently under part 101 and are kept unchanged: 3 Class 1—Model Rockets: • Uses no more than 125 grams (4.4 ounces) of propellant. • Uses a slow-burning propellant. • Is made of paper, wood, or breakable plastic. • Contains no substantial metal parts. • Weighs no more than 454 grams (16 ounces), including the propellant. Class 2—Large Model Rockets: • Uses no more than 125 grams (4.4 ounces) of propellant. • Uses a slow-burning propellant. • Is made of paper, wood, or breakable plastic. • Contains no substantial metal parts. • Weighs no more than 1,500 grams (53 ounces) including propellant. The following are the proposed added sub-categories for Part 101: Class 3—High-Power Rockets: • A rocket other than a Class 1 or Class 2, propelled by a rocket motor or motors having a combined total impulse of 163,840 N-sec (36,818 lb-sec) or less. Class 4—Advanced High-Power Rockets: • Any amateur rocket other than a Class 1, 2, or 3. 3 There is a very minor change to the definition of Class 1—Model Rockets. The maximum propellant weight is increased from 4 ounces to 4.4 ounces. Other Changes to § 101.21 The FAA also proposes to revise § 101.21 so that it will reference 14 CFR chapter III, the commercial space transportation regulations for licensed or permitted launches. Proposed § 101.21 would state that a person operating an unmanned rocket other than an amateur rocket must comply with 14 CFR Chapter III. This change is proposed to alert new operators to existing regulatory requirements. 3. Operating Limitations As previously stated, the FAA currently combines operating limitations for model rockets and large model rockets within their respective definitions. The FAA proposes to separate operating limitations from the rocket definitions. Each rocket class will have a separate section under part 101 addressing the operating limitations for that class. Operating limitations will be addressed in a tiered approach with the limitations for each rocket class building on top of the previous rocket class. The proposed operating limitations are described below in the order they would appear in part 101. Rockets within all classes would have the following operating limitations: • Must be launched on a suborbital trajectory; • Must not cross into the territory of a foreign country unless there is an international agreement permitting such activity; and • Must be unmanned. Operating Limitations for Class 1—Model Rockets The proposed operating limitations for Class 1—Model Rockets would not differ from the current operating limitations. A model rocket must still be “operated in a manner that does not create a hazard to persons, property, or other aircraft.” Operating Limitations for Class 2—Large Model Rockets The proposed operating limitations for Class 2—Large Model Rockets would differ only slightly from the current limitations. The phrase “airport runway or other landing area” would change to “airport boundary.” This change would be made for consistency. Further, current operating limitations for large model rockets, which can be found in §§ 101.22 and 101.23, would be consolidated into a single section for clarity. Operating Limitations for Class 3—High-Power Rockets The proposed rule places new operating limitations on Class 3—High-Power Rockets. Currently, rockets that would be Class 3 operate under the provisions for Large Model Rockets. These limitations remain unchanged, and two more limitations codifying current practice would be added. The first of the new limitations would be that a person at least eighteen years old must be present and in charge of ensuring the safety of the operation. This has been common practice, but it is important to codify the best practices to ensure they are preserved. The second new limitation would require reasonable precautions to report and control a fire. It is prudent and important that operators understand and mitigate the safety hazards of their rockets, including fire. Operators should have a means of controlling small fires (such as brush fires caused by motor ignition) without putting themselves at risk. Operators should also be able to report promptly to a local fire department the location of any fire that they cannot control. This is also current practice that we would codify with this rulemaking. Operating Limitations for Class 4—Advanced High-Power Rockets In addition to the General Operating Limitations of proposed § 101.22 and the operating limitations contained in proposed § 101.25, the FAA may specify operating limitations necessary to ensure that air traffic is not adversely affected and public safety is not jeopardized. As discussed earlier, the proposal is intended to address unforeseen operations or advancements in amateur rocket technology. 4. Section 101.27 Notice Requirements The notice requirements that are currently in § 101.25 would be moved to § 101.27 and updated by this rulemaking. While the notification requirements would be similar to the current requirements, the terminology would more closely match current practice, and would help prevent miscommunication between a rocket operator and a local air traffic controller. Tables 3 and 4 show the current and proposed notification requirements. In Table 3, Classes 2, 3 & 4 are all included under Large Model Rockets. Table 3.—Current ATC Notice Requirements for Amateur Rocket Launches Model rockets Large model rockets Required Information: Operator information (name, address, etc.) X Number of rockets X Size and weight of each rocket X Highest altitudes

(MSL)X Location of launch (Lat & Long) X Date, time and duration of launch X Other information requested by the FAA X Table 4.—Proposed ATC Notice Requirements for Amateur Rocket Launches Class 1—model rockets Class 2—large model rockets Class 3—high-power rockets Class 4—advanced high-power rockets Required Information: Operator information (name, address, etc.) X X X Affected altitudes

(MSL)X X X Location of launch (Lat & Long) X X X Date, time and duration of launch X X X Other information requested by the FAA X X X Location of the center of the affected area in latitude and longitude X X NOTAM Submission Timeline The FAA proposes to change the submission timeline requirements to match current practice and guidance. Currently, § 101.25 requires ATC notification to be given to the nearest FAA ATC “no less than 24 hours and no more than 48 hours prior to beginning the operation.” The FAA proposes to change this timeline to “no less than 24 hours before and no more than 3 days before beginning the operation.” This change would make FAA regulations consistent with current guidance as documented in ATC Order 7930.2J, Sec. 4-1-1, and with current practice. 5. Section 101.29 Information Requirements Currently, an operator wishing to launch a rocket into controlled airspace files Form 7711-2 before the operation to request authorization. The FAA uses the information submitted on this form to calculate hazard areas and operating restrictions, and to impose terms and conditions that preserve an adequate level of safety for the public. This rulemaking proposes to codify the current information gathering process for larger amateur rockets (Classes 3 and 4). This will allow the level of risk to the public to be managed adequately as the activity grows. By codifying the required information, the safety process would become more standardized and streamlined. This, in turn, would improve safety and facilitate the activity by establishing clear regulatory paths. For a Class 3 or Class 4 rocket operation, a person would complete FAA Form 7711-2 and send it (in triplicate) to the FAA so that it is received at least 45 days before the proposed operation. The minimum amount of time the FAA needs to process and evaluate the public safety implications of a launch is 45 days. An amateur rocket with advanced technology or other complicated systems could take more time to evaluate. Therefore, we encourage persons who plan to launch such rockets to contact the FAA as early as practical. Due to the low risk posed by Class 1—Model Rockets, operators of this class rocket would continue to be exempt from information requirements. The information requirements for Class 2—Large Model Rockets would remain the same. Table 5 summarizes the proposed information requirements. Table 5.—Proposed Information for Submission to the FAA Unmanned rockets Amateur rocket classes Class 1—model rockets Class 2—large model rockets Class 3—high-power rockets Class 4—advance high-power rockets Other— government and FAA- licensed launches Notice requirements • • • • Operator: Name(s) and Address(es) • • • • Affected altitudes [formerly Highest Altitude] • • • • Affected Area and location of center [formerly Location of launch] • • • • Date/time/duration • • • • Other pertinent information requested by the FAA • • • • Additional Information Requirements None None Additional below Additional below None. Submission of Form 7711-2 (time before event) Not required Not required 45 days 45 days 45 days. Estimated number of rockets in each total impulse class • • Type of propulsion, fuel(s), oxidizer(s), manufacturer, and certification, if any • • Description of launcher(s) planned to be used, including any airborne platform(s) • • Description of recovery system • • Description of how applicant will meet operating limitations of § 101.25 • • Highest altitude, above ground level, expected to be reached • • Launch site latitude, longitude, and elevation • • Any additional safety procedures that will be followed • • Maximum possible range • Dynamic stability characteristics for the entire flight profile • Description of all major rocket systems • Description of other support equipment necessary for safe operation • Planned flight profile and sequence of events • All nominal impact areas within three standard deviations • Launch commit criteria • Countdown procedures • Description of how applicant will meet operating limitations of § 101.26 • Mishap procedures • The FAA only proposes to codify current reporting practices for the new categories of Class 3 and Class 4 rockets. An operator of a Class 4 rocket would have to conduct technical analyses to get some of the required information. These analyses demand more technical knowledge than the simpler information requirements of Class 3 rockets. The FAA believes that this is an appropriate requirement because of the risk to the public that these advanced rockets can pose. Any applicant proposing to launch above 7,620 meters (25,000 feet) above ground level, is encouraged to follow the FAA guidance document, “Supplemental Application Guidance for Unguided Suborbital Launch Vehicles, August 1998,” available at *http://www.faa.gov/about/office_org/headquarters_offices/ast/licenses_permits/launch_reentry/reusable/safety/guidelines/sag_uslv/* . Following the guidance provided in this document will help the FAA determine suitable terms and conditions to attach to a part 101 waiver, and will help streamline the approval process. Operators falling under the “Other” category (government-conducted and FAA-licensed launches) would continue to file the same data they currently enter on Form 7711-2. The FAA would rely on the established safety processes to capture and evaluate the safety of this kind of launch. C. Proposed Changes to Chapter III Existing §§ 400.2, 401.5 and 420.3 would be modified to accommodate the new regulatory structure proposed. 1. Section 400.2 Scope The proposed change to § 400.2 is to replace “amateur rocket activities” with “activities of amateur rockets, as defined in 14 CFR § 1.1.” This change is necessary because of adding the definition of *amateur rocket* to § 1.1 and the proposed changes mentioned below. 2. Section 401.5 Definitions Section 401.5 would be amended by deleting the definition “amateur rocket activities,” because it is proposed to be defined in 14 CFR part 1. 3. Section 420.3 Applicability Existing § 420.3 would be modified to reference the definition of amateur rocket activities in part 1 instead of § 401.5. IV. Paperwork Reduction Act Information collection requirements associated with this NPRM have been approved previously by the Office of Management and Budget

(OMB)under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) and have been assigned OMB Control Number 2120-0027. V. International Compatibility In keeping with U.S. obligations under the Convention on International Civil Aviation, it is FAA policy to comply with International Civil Aviation Organization

(ICAO)Standards and Recommended Practices to the maximum extent practicable. The FAA has determined that there are no ICAO Standards and Recommended Practices that correspond to these proposed regulations. VI. Regulatory Evaluation, Regulatory Flexibility Determination, International Trade Impact Assessment, and Unfunded Mandates Assessment Changes to Federal regulations must undergo several economic analyses. First, Executive Order 12866 directs that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, the Trade Act requires agencies to consider international standards and, where appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation with base year of 1995). This portion of the preamble summarizes the FAA's analysis of the economic impacts of this proposed rule. Department of Transportation Order DOT 2100.5 prescribes policies and procedures for simplification, analysis, and review of regulations. If the expected cost impact is so minimal that a proposed or final rule does not warrant a full evaluation, this order permits that a statement to that effect and the basis for it be included in the preamble if a full regulatory evaluation of the cost and benefits is not prepared. Such a determination has been made for this proposed rule. The reasoning for this determination is explained below. The proposed rule defines four classes of amateur rockets that essentially incorporate the existing classifications. Therefore, no additional costs are expected as a result of the new classifications. These proposed definitions reflect current industry practice. A positive effect of the proposed new classifications and definitions is that they allow for the unlicensed launching of liquid rockets at their optimum burn rates. Today, someone who wanted to launch a liquid rocket at its optimum burn rate would have to obtain a license that requires complicated analyses that can cost up to $100,000. An alternative would be to adjust the burn rate of the proposed liquid rocket to meet the current requirements. This alternative would result in either reduced rocket performance or reduced rocket safety. Therefore, the proposed rule provides both potential cost savings and performance and safety improvements. The remaining provisions of the proposed rule primarily update the existing rules to reflect current industry practice and streamline the FAA data collection process. The proposed rule would clarify the required information that is currently provided to the FAA before a launch in a paper form. This information submittal would result in saving time for launchers and for the FAA as we currently collect some of this information by telephone before a launch. The proposed rule would have virtually no impact upon the proposed Class 1 and 2 rockets. These classes would continue to operate essentially the same as they did before the proposed rule. The information requirements discussed above apply primarily to the proposed Class 3—High-Power Rocket and Class 4—Advanced High-Power Rockets categories. However, much of this data is already required to be provided to the FAA before a proposed launch. In many cases, the FAA calls the launch operator before the proposed launch and requests additional information. Therefore, the proposed rule does not increase the information required for a proposed launch, but rather formalizes and streamlines the process of providing the information to the FAA prior to the launch. Therefore, the FAA estimates that any incremental costs associated with this proposed rule would be minimal. An example of the potential effects of the proposed rule is provided by a launch proposed by Montana State University in 2006. The University proposed the launch under the existing rules. 4 However, because the existing application form did not specify all the information needed by the FAA, we requested the remaining information by telephone. Under the proposed rule, their launch would be categorized as a Class 3 launch. The revised form for the University would specifically list all of the necessary information. This form would streamline and speed up the application process for both the University and the FAA. 5 The proposed rule would have a similar effect upon proposed class 4 launches. 4 The University submitted an application with the basic information required to the FAA. 5 Their proposed launch occurred in 2006. The proposed rule provides benefits. As listed below, this proposed rule would: • Proactively preserve the existing high safety level of amateur rocket activities; • Update the Federal Aviation Regulations to reflect current industry standards and procedures; • Eliminate inconsistencies in the existing rules; • Provide new definitions of amateur rocket categories that would allow amateur rocketeers to more easily determine what, if any, regulations they would have to comply with; • Allow unlicensed launches of liquid rockets at optimum performance levels; • Streamline and clarify the data collection process in cases where a proposed launch would require that the launches proposer provide data to the FAA; • Insure that amateur rocket activities would be conducted in accordance with all international treaties; • Insure that amateur rocket activities would not interfere with objects in orbit. U.S. amateur rocketeers may receive cost savings by clarifications in the FAA requirements for amateur rocket activities. The proposed clarifications should make it quicker and easier for launch applicants to provide the needed information to the FAA. The FAA is likely also to incur cost savings because of this. The FAA, however, has not attempted to quantify the cost savings that may accrue due to this specific proposed rule. The expected outcome of the proposed rule would be a minimal cost impact with positive net benefits. The FAA requests comments with supporting justification about the FAA determination of minimal impact. Based on the minimal cost finding the FAA has, therefore, determined that this proposed rule is not a “significant regulatory action” as defined in section 3(f) of Executive Order 12866, and is not “significant” as defined in DOT's Regulatory Policies and Procedures. A. Regulatory Flexibility Determination The Regulatory Flexibility Act of 1980 (Pub. L. 96-354)

(RFA)establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation. To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.” The RFA covers a wide-range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions. Agencies must perform a review to determine whether a rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA. However, if an agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear. The FAA believes that this proposed rule would not have a significant economic impact on a substantial number of small entities. The proposed rule would affect a large number of small entities. These small entities would include the individuals, organizations, and firms involved in launching amateur rockets. However, although the proposed rule would affect a large number of small entities, the impact of the proposed rule is expected to be minimal. The proposed rule would have virtually no impact upon the proposed Class 1 and 2 rockets. These classes would continue to operate essentially the same as they did before the proposed rule. The proposed rule would have some effect on the proposed Class 3 and 4 rockets. However, the major effect is expected to be a change in the way that pre-launch information is provided to the FAA. The proposed procedures are expected to reduce application approvals and therefore lower costs for launchers of Class 3 and Class 4 rockets. Therefore the FAA certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities. The FAA solicits comments, with supporting data, regarding this determination. B. International Trade Impact Assessment The Trade Agreements Act of 1979 (Pub. L. 96-39) prohibits Federal agencies from establishing any standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety, are not considered unnecessary obstacles. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. The proposed rule would not have an impact on international trade because it applies only to launches conducted in the United States. The proposed rule would, however, insure compliance with all international treaties with respect to space and amateur rocket launches would be complied with. The FAA has assessed the potential effect of this proposed rule and has determined that it would have only a domestic impact and therefore no effect on international trade. C. Unfunded Mandates Assessment Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (adjusted annually for inflation with the base year 1995) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $128.1 million in lieu of $100 million. This proposed rule does not contain such a mandate. The requirements of Title II do not apply. VII. Executive Order 13132, Federalism The FAA has analyzed this proposed rule under the principles and criteria of Executive Order 13132, Federalism. We determined that this action 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, and, therefore, would not have federalism implications. VIII. Environmental Analysis FAA Order 1050.1E identifies FAA actions that are categorically excluded from preparation of an environmental assessment or environmental impact statement under the National Environmental Policy Act in the absence of extraordinary circumstances. The FAA has determined this proposed rulemaking action qualifies for the categorical exclusion identified in paragraph 312f and involves no extraordinary circumstances. IX. Regulations That Significantly Affect Energy Supply, Distribution, or Use The FAA has analyzed this NPRM under Executive Order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (May 18, 2001). We have determined that it is not a “significant energy action” under the executive order because it is not a “significant regulatory action” under Executive Order 12866, and it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. X. Additional Information A. Comments Invited The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. We ask that you send us two copies of written comments. We will file in the docket all comments we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. The docket is available for public inspection before and after the comment closing date. If you wish to review the docket in person, go to the address in the ADDRESSES section, which appears at the end of this preamble, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. You may also review the docket using the Internet at the web address in the ADDRESSES section. *Privacy Act:* Using the search function of our docket Web site, anyone can find and read the comments received into any of our dockets, including the name of the individual sending the comment (or signing the comment for 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.* Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed late if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive. If you want the FAA to acknowledge receipt of your comments on this proposal, include with your comments a pre-addressed, stamped postcard on which the docket number appears. We will stamp the date on the postcard and mail it to you. B. Addresses You may send comments identified by Docket Number FAA-2007-27310 using any of the following methods: • *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:* 1-202-493-2251. • *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. *Privacy:* We will post all comments we receive, without change, to *http://dms.dot.gov,* including any personal information you provide. For more information, see the Privacy Act discussion under the Comments Invited section. *Docket:* To read background documents or comments received, go to *http://dms.dot.gov* at any time or to 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. C. Availability of Rulemaking Documents You can get an electronic copy of rulemaking documents using the Internet by— Searching the Department of Transportation's electronic Docket Management System

(DMS)Web page ( *http://dms.dot.gov/search* ); Visiting the FAA's Regulations and Policies Web page at *http://www.faa.gov/regulations_policies/* ; or Accessing the Government Printing Office's Web page at *http://www.gpoaccess.gov/fr/index.html.* You can also get a copy by sending a request to the Federal Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence Avenue SW, Washington, DC 20591, or by calling

(202)267-9680. Make sure to identify the docket number, notice number, or amendment number of this rulemaking. You may access all documents the FAA considered in developing this proposed rule, including economic analyses and technical reports, from the internet through the Department of Transportation's DMS referenced in paragraph (1). List of Subjects in 14 CFR Parts 1, 101, 400, and 401 Aircraft, Aviation safety, Life-limited parts, Reporting and recordkeeping requirements. The Proposed Amendment In consideration of the foregoing, the Federal Aviation Administration proposes to amend parts 1, 101, 400, 401, and 420 of Title 14, Code of Federal Regulations, as follows: PART 1—DEFINITIONS AND ABBREVIATIONS 1. The authority citation for part 1 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. 2. Add in alphabetical order the following definition for “amateur rocket” to § 1.1: § 1.1 General definitions. *Amateur rocket* means an unmanned rocket that:

(1)Is propelled by a motor or motors having a combined total impulse of 889,600 Newton-seconds (200,000 pound-seconds) or less; and

(2)Cannot reach an altitude greater than 150 kilometers (93.2 statue miles) above the earth's surface. PART 101—MOORED BALLOONS, KITES, UNMANNED ROCKETS AND UNMANNED FREE BALLOONS 3. The authority citation for part 101 continues to read as follows: Authority: 49 U.S.C. 106(g), 40103, 40113-40114, 45302, 44502, 44514, 44701-44702, 44721, 46308. 4. Amend § 101.1 by revising paragraph (a)(3) to read as follows: § 101.1 Applicability.

(a)* * *

(3)Any unmanned rocket except aerial firework displays. 5. Revise § 101.21 to read as follows: § 101.21 Applicability and definitions.

(a)This subpart applies to operating unmanned rockets. However, a person operating an unmanned rocket within a restricted area must comply only with § 101.25(d) and with any additional limitations imposed by the using or controlling agency.

(b)A person operating an unmanned rocket other than an amateur rocket as defined in § 1.1 must comply with 14 CFR Chapter III.

(c)The following definitions apply to this subpart: *(1) Class 1—Model rocket* means an amateur rocket that:

(i)Uses no more than 125 grams (4.4 ounces) of propellant;

(ii)Uses a slow-burning propellant;

(iii)Is made of paper, wood, or breakable plastic;

(iv)Contains no substantial metal parts; and

(v)Weighs no more than 454 grams (16 ounces), including the propellant. *(2) Class 2—Large model rocket* means an amateur rocket other than a model rocket, that:

(i)Uses no more than 125 grams (4.4 ounces) of propellant;

(ii)Uses a slow-burning propellant;

(iii)Is made of paper, wood, or breakable plastic;

(iv)Contains no substantial metal parts; and

(v)Weighs no more than 1,500 grams (53 ounces), including the propellant. *(3) Class 3—High-power rocket* means an amateur rocket other than a model rocket or large model rocket that is propelled by a motor or motors having a combined total impulse of 163,840 Newton-seconds (36,818 pound-seconds) or less. *(4) Class 4—Advanced high-power rocket* means an amateur rocket other than a model rocket, large model rocket, or high-power rocket. 6. Revise § 101.22 to read as follows: § 101.22 General operating limitations.

(a)An amateur rocket must be operated in such a manner that it:

(1)Is launched on a suborbital trajectory;

(2)When launched, must not cross into the territory of a foreign country unless an agreement is in place between the United States and the country of concern; and

(3)Is unmanned.

(b)The FAA may specify additional operating limitations necessary to ensure that air traffic is not adversely affected, and public safety is not jeopardized. 7. Revise 101.23 to read as follows: § 101.23 Operating Limitations for Class 1—Model Rockets. In addition to the General Operating Limitations of § 101.22, persons operating a Class 1—Model Rocket must operate the rocket in a manner that does not create a hazard to persons, property, or other aircraft. 8. Add § 101.24 to Subpart C to read as follows: § 101.24 Operating Limitations for Class 2—Large Model Rockets. In addition to the General Operating Limitations of § 101.22, no person may operate a Class 2—Large Model Rocket—

(a)In a manner that creates a hazard to persons, property, or other aircraft;

(b)At any altitude where clouds or obscuring phenomena of more than five-tenths coverage prevails;

(c)At any altitude where the horizontal visibility is less than five miles; and

(d)Into any cloud;

(e)Unless that person complies with § 101.27; and,

(f)Within 8 kilometers (5 miles) of any airport boundary unless the information required in § 101.27 is provided to the manager of the airport. 9. Revise § 101.25 to read as follows: § 101.25 Operating Limitations for Class 3—High Power Rockets. In addition to the General Operating Limitations of § 101.22, no person may operate a Class 3—High-Power Rocket—

(a)Unless that person complies with § 101.24 except paragraph (f);

(b)Within 8 kilometers (5 miles) of any airport boundary;

(c)In controlled airspace without prior authorization from the FAA in accordance with § 101.29(a) of this part;

(d)Within 457 meters (1,500 feet) of any person or property that is not associated with the operations;

(e)Between sunset and sunrise;

(f)Unless a person at least eighteen years old is present, is charged with ensuring the safety of the operation, and has final approval authority for initiating high-power rocket flight; and

(g)Unless reasonable precautions are provided to report and control a fire caused by rocket activity. 10. Add new § 101.26 to Subpart C to read as follows: § 101.26 Operating Limitations for Class 4—Advanced High Power Rockets. In addition to the General Operating Limitations of § 101.22 and the operating limitations contained in § 101.25 of this part, the FAA may specify other operating limitations for Class 4—Advanced High Power Rockets necessary to ensure that air traffic is not adversely affected, and public safety is not jeopardized. 11. Add § 101.27 to Subpart C to read as follows § 101.27 Notice requirements. *ATC notification for all launches* . No person may operate an unmanned rocket other than a Class 1—Model Rocket unless that person gives the following information to the FAA ATC facility nearest to the place of intended operation no less than 24 hours before and no more than three days before beginning the operation:

(a)The names and addresses of the operators; except when there are multiple participants at a single event, the name and address of the person so designated as the event launch coordinator, whose duties include coordination of the required launch data estimates and coordinating the launch event;

(b)Date/time the activity will begin;

(c)Size of the affected area in a nautical mile radius;

(d)Location of the center of the affected area in latitude and longitude coordinates;

(e)Highest affected altitude;

(f)Duration of the activity;

(g)Any other pertinent information requested by the ATC facility. 12. Add § 101.29 to Subpart D to read as follows: § 101.29 Information requirements.

(a)*Information requirements for operating Class 3—High-Power Rockets* . A person operating one or more Class 3—High Power Rockets in controlled airspace must provide the information below on each rocket to the FAA at least 45 days before the proposed operation. The FAA may request additional information if necessary to ensure the proposed operations can be safely conducted. The information shall include:

(1)Estimated number of rockets to be operated in each class,

(2)Type of propulsion, fuel(s), oxidizer(s), manufacturer, and certification, if any,

(3)Description of the launcher(s) planned to be used, including any airborne platform(s),

(4)Description of recovery system,

(5)Description of how applicant will meet § 101.25 (Operating Limitations for Class 3—High Power Rockets).

(6)Highest altitude, above ground level, expected to be reached,

(7)Launch site latitude, longitude, and elevation.

(8)Any additional safety procedures that will be followed.

(b)*Information requirements for operating Class 4—Advanced High-Power Rockets* . A person operating one or more Class 4—Advanced High-Power Rockets in controlled airspace must provide the information below for each rocket to the FAA at least 45 days before the proposed operation. The FAA may request additional information if necessary to ensure the proposed operations can be safely conducted. The information shall include:

(1)The information requirements of paragraph

(a)of this section.

(2)Maximum possible range,

(3)The dynamic stability characteristics for the entire flight profile,

(4)A description of all major rocket systems, including structural, pneumatic, propellant, propulsion, ignition, electrical, avionics, recovery, wind-weighting, flight control, and tracking,

(5)A description of other support equipment necessary for a safe operation,

(6)The planned flight profile and sequence of events,

(7)All nominal impact areas, including those for any spent motors and other discarded hardware, within three standard deviations of the mean impact point,

(8)Launch commit criteria,

(9)Countdown procedures,

(10)A description of how the applicant will meet § 101.26 (Operating Limitations for Class 4—Advanced High Power Rockets), and

(11)Mishap procedures. PART 400—BASIS AND SCOPE 13. The authority citation for part 400 continues to read as follows: Authority: 49 U.S.C. 70101-70121. 14. Revise § 400.2 to read as follows: § 400.2 Scope. These regulations set forth the procedures and requirements applicable to the authorization and supervision under 49 U.S.C. Subtitle IX, chapter 701, of commercial space transportation activities conducted in the United States or by a U.S. citizen. The regulations in this chapter do not apply to activities of amateur rockets, as defined in 14 CFR 1.1, or to space activities carried out by the United States Government on behalf of the United States Government. PART 401—ORGANIZATION AND DEFINITIONS 15. The authority citation for part 401 continues to read as follows: Authority: 49 U.S.C. 70101-70121. § 401.5 [Amended] 16. Amend § 401.5 by removing the term *Amateur rocket activities* and its definition. PART 420—LICENSE TO OPERATE A LAUNCH SITE 17. The authority citation for part 420 continues to read as follows: Authority: 49 U.S.C. 70101-70121. 18. Revise § 420.3 to read as follows: § 420.3 Applicability. This part applies to any person seeking a license to operate a launch site or to a person licensed under this part. A person operating a site that only supports amateur rocket activities as defined in 14 CFR 1.1, does not need a license under this part to operate the site. Issued in Washington, DC on June 5, 2007. Patricia G. Smith, Associate Administrator for Commercial Space Transportation. [FR Doc. E7-11263 Filed 6-13-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG-144540-06] RIN 1545-BG03 Built-in Gains and Losses Under Section 382(h) AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Notice of proposed rule making by cross-reference to temporary regulations. SUMMARY: In the Rules and Regulations section of this issue of the **Federal Register** , the IRS is issuing temporary regulations that apply to corporations that have undergone ownership changes within the meaning of section 382. These regulations provide guidance on the treatment of prepaid income under the built-in gain provisions of section 382(h). The text of the temporary regulations published in this issue of the **Federal Register** serves as the text of these proposed regulations. DATES: Written or electronic comments and requests for a public hearing must be received by September 12, 2007. ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-144540-06), Room 5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-144540-06), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC; or sent electronically, via the Federal eRulemaking Portal at *http://www.regulations.gov* (IRS REG-144540-06). FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Keith Stanley,

(202)622-7750; concerning submission of comments, the hearing, and/or to be placed on the building access list to attend the hearing, Richard Hurst, at

(202)622-2949 (TDD Telephone) (not toll free numbers) and his e-mail address is *Richard.A.Hurst@irscounsel.treas.gov.* SUPPLEMENTARY INFORMATION: Background and Explanation of Provisions Temporary regulations in the Rules and Regulations section of this issue of the **Federal Register** amend the Income Tax Regulations (26 CFR part 1) relating to section 382 of the Code. The text of the temporary regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains the amendments. Special Analyses It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It is hereby certified that these proposed regulations will not have a significant economic impact on a substantial number of small entities. These regulations only apply in the rare circumstance in which a qualifying loss corporation that uses a particular accounting method undergoes an ownership change. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Nevertheless, the IRS and Treasury Department request comments from small entities that believe they might be adversely affected by these regulations. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Comments and Requests for a Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed original and

(8)copies) or electronic comments that are submitted timely to the IRS. Please see the “Comments” section of the temporary regulation on this subject for a description of specific issues on which comments are requested. The IRS and Treasury Department also request comments on the clarity of the proposed rules and how they can be made easier to understand. All comments will be available for public inspection and copying. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the **Federal Register** . Drafting Information The principal author of these regulations is Sean McKeever, Office of Associate Chief Counsel (Corporate). List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Proposed Amendments to the Regulations Accordingly, 26 CFR part 1 is proposed to be amended as follows: PART 1—INCOME TAXES **Paragraph 1.** The authority citation for part 1 is amended by adding an entry in numerical order to read as follows: Authority: 26 U.S.C. 7805 * * * Section 1.382-7 is also issued under 26 U.S.C. 382(m). * * * **Par. 2.** Section 1.382-7 is added to read as follows: § 1.382-7 Built-in gains and losses. [The text of this proposed section is the same as the text of § 1.382-7T(a) through (b)(1) published elsewhere in this issue of the **Federal Register** ]. Kevin M. Brown, Deputy Commissioner for Services and Enforcement. [FR Doc. E7-11444 Filed 6-13-07; 8:45 am] BILLING CODE 4830-01-P OFFICE OF MANAGEMENT AND BUDGET Office of Federal Procurement Policy 48 CFR Part 9903 Cost Accounting Standards Board; Contract Clauses AGENCY: Cost Accounting Standards Board, Office of Federal Procurement Policy, OMB. ACTION: Proposed rule with request for comment. SUMMARY: The Cost Accounting Standards

(CAS)Board is proposing to add a clause for inclusion in CAS-covered contracts and subcontracts awarded to foreign concerns. The Board is taking this action to provide a standard clause for use by Government and contractor personnel in applying the CAS requirements to contracts and subcontracts awarded to foreign concerns. DATES: Interested parties should submit comments in writing on or before August 13, 2007. ADDRESSES: Due to delays in OMB's receipt and processing of mail, respondents are strongly encouraged to submit comments electronically to ensure timely receipt. Comments should indicate case number CAS-2007-01N. Electronic comments may be submitted to *casb2@omb.eop.gov.* Please put the full body of your comments in the text of the electronic message and also as an attachment readable in either MS Word, Corel WordPerfect, or as a pdf. Please include your name, title, organization, postal address, telephone number, and e-mail address in the text of the message. Comments may also be submitted via facsimile to

(202)395-5105. If you must submit via regular mail, please do so at Office of Federal Procurement Policy, 725 17th Street, NW., Room 9013, Washington, DC 20503, ATTN: Laura Auletta. FOR FURTHER INFORMATION CONTACT: Laura Auletta, Manager, Cost Accounting Standards Board, 725 17th Street, NW., Room 9013, Washington, DC 20503 (telephone: 202-395-3256). SUPPLEMENTARY INFORMATION: A. Background Prior to November 4, 1993, modified CAS coverage required a contractor to comply with only CAS 401 and CAS 402. Similarly, 9903.201-1(b)(4) required that foreign concerns comply with only CAS 401 and 402. Thus, prior to November 4, 1993, the contract clause at 9903.201-4(c) was used for both contracts with modified coverage and contracts with foreign concerns. However, on November 4, 1993, the Board revised the definition of modified coverage to include CAS 405 and 406, so that modified coverage currently includes CAS 401, 402, 405, and 406 (see 9903.201-2(b)). In conjunction with the revised definition of modified coverage, the Board also amended the clause at 9903.201-4(c) to include CAS 405 and 406. However, the Board did not change the requirement that foreign concerns comply with only CAS 401 and 402. As a result, the contract clause at 9903.201-4(c) can no longer be used for foreign concerns without modification by the parties. The Board has developed a clause for use in contracts with foreign concerns that will not require modification. Except that it includes only CAS 401 and 402, this clause is identical to the clause currently applicable to contracts subject to modified coverage. To effect this change, the proposed rule would amend 9903.201-4, Contract Clauses, to include the new clause at (f), Disclosure and Consistency of Cost Accounting Practices—Foreign Concerns. B. Paperwork Reduction Act The Paperwork Reduction Act, Public Law 96-511, does not apply to this rulemaking, because this rule imposes no paperwork burden on offerors, affected contractors and subcontractors, or members of the public which requires the approval of OMB under 44 U.S.C. 3501, *et seq.* C. Executive Order 12866 and the Regulatory Flexibility Act The economic impact of this rule on contractors and subcontractors is expected to be minor. As a result, the Board has determined this rule is not significant under the provisions of Executive Order 12866, and that a regulatory impact analysis will not be required. Furthermore, this rule will not have a significant impact on a substantial number of small businesses because small businesses are exempt from the application of the Cost Accounting Standards. Therefore, this rule does not require a regulatory flexibility analysis under the Regulatory Flexibility Act, 5 U.S.C. 601, *et seq.* D. Public Comments Interested persons are invited to participate by submitting data, views or arguments with respect to this proposed rule. All comments must be in writing and submitted to the address indicated in the ADDRESSES section. List of Subjects in 48 CFR Part 9903 Government procurement, Cost Accounting Standards. Paul A. Denett, Administrator, Office of Federal Procurement Policy. For the reasons set forth in this preamble, Chapter 99 of Title 48 of the Code of Federal Regulations is proposed to be amended as set forth below: PART 9903—CONTRACT COVERAGE 1. Section 9903.201-4 is proposed to be amended by adding a new paragraph (f). The proposed paragraph will read as follows: 9903.201-4 Contract Clauses.

(f)*Disclosure and Consistency of Cost Accounting Practices—Foreign Concerns.*

(1)The contracting officer shall insert the clause set forth below, Disclosure and Consistency of Cost Accounting Practices—Foreign Concerns, in negotiated contracts when the contract is with a foreign concern and the contract is not otherwise exempt under 9903.201-1 (see 9903.201-2(e)).

(2)The clause below requires the contractor to comply with 9904.401 and 9904.402, to disclose (if it meets certain requirements) actual cost accounting practices, and to follow consistently disclosed and established cost accounting practices. Disclosure and Consistency of Cost Accounting Practices—Foreign Concerns

(a)*The Contractor, in connection with this contract, shall—*

(1)Comply with the requirements of 9904.401, Consistency in Estimating, Accumulating, and Reporting Costs; and 9904.402, Consistency in Allocating Costs Incurred for the Same Purpose, in effect on the date of award of this contract, as indicated in Part 9904.

(b)If the parties fail to agree whether the Contractor has complied with an applicable CAS rule, or regulation as specified in Parts 9903 and 9904 and as to any cost adjustment demanded by the United States, such failure to agree will constitute a dispute under the Contract Disputes Act (41 U.S.C. 601).

(2)This requirement shall apply only to negotiated subcontracts in excess of $650,000.

(3)The requirement shall not apply to negotiated subcontracts otherwise exempt from the requirement to include a CAS clause as specified in 9903.201-1. (End of Clause) [FR Doc. E7-11332 Filed 6-13-07; 8:45 am] BILLING CODE 3110-01-P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 697 [Docket No. 070516106-7106-01; I.D. 041907A] RIN 0648-AV44 Atlantic Coastal Fisheries Cooperative Management Act Provisions; Weakfish Fishery AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Proposed rule; request for comments. SUMMARY: NMFS proposes to decrease the incidental catch allowance for weakfish caught in the Exclusive Economic Zone

(EEZ)from 300 lb (135 kg) to no more than 150 lb (67 kg) per day or trip, whichever is longer in duration. The intent of this proposed rule is to modify regulations for the Atlantic coast stock of weakfish to be more compatible with the Atlantic States Marine Fisheries Commission's (Commission) Interstate Fishery Management Plan (ISFMP) for weakfish, as set forth in the Atlantic Coastal Fisheries Cooperative Management Act (Atlantic Coastal Act). DATES: Written comments must be received on or before July 16, 2007. ADDRESSES: You may submit comments by any of the following methods: • E-Mail: *Weakfish.150@noaa.gov* . Include in the subject line the following identifier: “Comments on Weakfish Bycatch 150.” • Federal e-rulemaking portal: *http:/www.regulations.gov* • Mail: Chris Moore, Chief, Partnerships and Communications Division (SF8), Office of Sustainable Fisheries, National Marine Fisheries Service, 1315 East-West Highway, Suite 13317, Silver Spring, MD 20910. Mark the outside of the envelope: “Comments on Weakfish Bycatch 150 Proposed Rule.” • Fax:

(301)713-0596 FOR FURTHER INFORMATION CONTACT: Tom Meyer, 301-713-2334. SUPPLEMENTARY INFORMATION: Background NMFS is proposing to modify weakfish conservation measures in the EEZ under the authority of the Atlantic Coastal Fisheries Cooperative Management Act (Atlantic Coastal Act), 16 U.S.C. 5103, which states that, in the absence of an approved and implemented Fishery Management Plan under the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) (16 U.S.C. 1801 *et seq.* ) and, after consultation with the appropriate Fishery Management Council(s), the Secretary of Commerce (Secretary) may implement regulations to govern fishing in the EEZ, i.e., from 3 to 200 nm offshore. These regulations must be

(1)compatible with the effective implementation of an ISFMP developed by the Commission, and

(2)consistent with the national standards set forth in section 301 of the Magnuson-Stevens Act. On February 1, 2007, the Commission's Weakfish Management Board (Board) approved Addendum II to Amendment 4 to the ISFMP for Weakfish. Under the Addendum, the states of Massachusetts through North Carolina will be required to implement a six fish creel limit at their current size limit for the recreational fishery. For the commercial fishery, the Addendum reduces the allowable bycatch limit from 300 pounds to 150 pounds per day or trip. There is currently a bycatch limit of no more than 300 pounds in the EEZ. Addendum II also establishes two management triggers that will require the Board to reconsider the management program if met:

(1)when the coastwide commercial landings reach 2.99 million pounds (80 percent of the mean from 2000 2004), and

(2)when any state's landings exceed its five year average by more than 25 percent. States are required to fully implement the addendum measures by October 29, 2007. The Board's action was taken in response to a significant decline in stock abundance and increasing total mortality since 1999. As a result of weakfish's depleted stock size, the Board is required under Amendment 4 to adjust the management program to help rebuild spawning stock biomass. This issue is compounded by the fact that natural mortality, rather than fishing mortality, has been indicated as the lead cause for stock decline in the Commission's October 25, 2006, Fishery Management Plan Review for the Weakfish Fishery. Status of the Weakfish Fishery The most recent stock assessment (December 2006) was not upheld by an external peer review panel. Therefore, there is uncertainty in the stock status of weakfish. Analyses do indicate that biomass is low and that overfishing is not the cause. The Weakfish Technical Committee, in response to the peer review panel's report, supported five conclusions based on significant evidence that the Board has accepted for management use:

(1)The stock is declining;

(2)total mortality is increasing;

(3)there is not much evidence of overfishing;

(4)something other than fishing mortality is causing the decline in the stock; and

(5)there is a strong chance that regulating the fishery will not, in itself, reverse stock decline. Proposed Action NMFS believes that the proposed decrease of the incidental catch allowance for weakfish is warranted even given the conclusions of the Weakfish Technical Committee. Pursuant to the Atlantic Coastal Act, 16 U.S.C. 5103, the Secretary has a statutory obligation to support the Commission's Interstate Fishery Management Program. The Commission recently adopted Addendum II to Amendment 4, which included a decrease in the commercial bycatch limit. The proposed rule would implement this decrease, consistent with Addendum II, allowing non-directed fisheries using a mesh size less than 3 1/4-inch square stretch mesh or 3 3/4-inch diamond stretch mesh for trawls and 2 7/8-inch stretch mesh for gillnets to possess no more than 150 lb (67 kg) of weakfish during any one day or trip, whichever is longer in duration; a decrease of 150 lb (67 kg) per day or trip from the current Federal regulation of 300 lb (135 kg) at § 697.7(a)(4)). This action supports the Commission's Interstate Fishery Management Program by being compatible with the effective implementation of the Commission's Weakfish Plan, is consistent with the national standards set forth in section 301 of the Magnuson Stevens Act, and would continue regulatory uniformity in state and Federal waters. This action would also be beneficial insofar as incongruous regulations can confuse stakeholders and complicate management. Classification This proposed rule is published under the authority of the Atlantic Coastal Act. Paragraphs

(A)and

(B)of section 804(b)

(1)of the Atlantic Coastal Act, 16 U.S.C. 5103(a)-(b), authorizes the Secretary to implement regulations in the EEZ in the absence of a Magnuson-Stevens Act FMP. Such regulations must be compatible with the effective implementation of a Commission's ISFMP, and consistent with the national standards set forth in section 301 of the Magnuson-Stevens Act. The Assistant Administrator for Fisheries has preliminarily determined that this action is compatible with the effective implementation of the Commission's ISFMP for weakfish and consistent with the national standards of the Magnuson-Stevens Act. The Secretary, before making the final determination, will take into account data, views, and comments received during the comment period. Preliminary review of the proposed action in relation to NOAA Administrative Order

(NAO)216 6, including the criteria used to determine significance, suggests that the proposed action would not have a significant effect, individually or cumulatively on the human environment. Furthermore, NMFS has preliminarily determined that the proposed action is categorically excluded from the requirement to prepare an Environmental Impact Statement or an EA in accordance with 5.05(b) of NAO 216 6, because a prior NEPA document (EA dated August 2003) analyzed the impacts of landing 150 pounds versus 300 pounds of weakfish bycatch. That document found that neither the 150 lb. nor the 300 lb. bycatch limit created a significant impact on the quality of human environment. Although the stock's downward trend is apparent now versus when analyzed in 2003, that trend would not alter the environmental analyses or conclusions rendered in 2003. Specifically, fishing effort (number of tows) and practices (where fished) would remain the same. Nor would the number of weakfish actually caught and killed increase or decrease, because those weakfish that are not retained as incidental catch are discarded as bycatch. The action would, however, continue regulatory uniformity in state and Federal waters, which, as was also the case in 2003, is beneficial insofar as incongruous regulations can confuse stakeholders and complicate management. Accordingly, there would be no significant impact on the physical or human environment resulting from this action and the need to perform further analysis is categorically excluded pursuant to Section 5.05(b) of NAO 216 6. The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities. NMFS prepared a regulatory flexibility analysis

(RFA)that described the economic impacts on small entities for a similar action described in the final rule to increase the permitted non-directed incidental catch of weakfish from 150 lb (67 kg) to no more than 300 lb (135 kg) per day or trip (68 FR 56789, October 2, 2003). The RFA found that the economic impacts on small entities were not significant and would be at most a positive impact of $1,600 for the entire fishery for the entire year. This proposed action would return the allowable incidental catch back to 150 lb (67 kg) from the current 300 lb (135 kg) level. NMFS does not have an estimate of the number of small entities to which the proposed action would apply because vessels most likely to be impacted are not required to hold a permit to fish for weakfish in the EEZ. The action would only apply to those fishermen who capture weakfish incidentally (as bycatch) while fishing for other species using a smaller mesh size than is allowed in the directed weakfish fishery. This proposed action would not alter current fishing practices or effort, or increase or decrease the number of weakfish caught because weakfish that are not retained as incidental catch are discarded as bycatch. However, fishermen who catch weakfish incidentally would be able to sell only 150 lb. of weakfish retained per trip rather than 300 lb. The price per pound of weakfish is $0.795 per pound, using the most recent 2005 data. The economic analysis provided in the 2003 rule explains the impact, now a negative impact, that would accrue to the fishermen as a result of the proposed rule. (68 FR 56789, October 2. 2003). Using the updated price per pound of weakfish, that negative impact would be at most $2072 for the whole fishery. NMFS does not consider the economic impact to be significant because the incidental weakfish catch is only a small portion of the entire catch and resulting revenue of these vessels. Using 2005 data, the average annual revenue of those vessels was $243,000, so the impact would be less than 1 percent. Therefore, NMFS has preliminarily determined that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities. As a result, an initial regulatory flexibility analysis is not required and none has been prepared. This proposed rule has been determined to be not significant for E.O. 12866 purposes. List of Subjects in 50 CFR Part 697 Fisheries, Fishing. Dated: June 8, 2007. Samuel D. Rauch III, Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service. For the reasons set out in the preamble, 50 CFR part 697, is proposed to be amended as follows: PART 697—ATLANTIC COASTAL FISHERIES COOPERATIVE MANAGEMENT 1. The authority citation for 50 CFR part 697 continues to read as follows: Authority: 16 U.S.C. 5101 *et seq.* 2. In § 697.7, paragraph (a)(4) is revised to read as follows: § 697.7 Prohibitions.

(a)* * *

(4)Possess more than 150 lb (67 kg) of weakfish during any one day or trip, whichever is longer, in the EEZ when using a mesh size less than 3 1/4 -inch (8.3 cm) square stretch mesh(as measured between the centers of opposite knots when stretched taut) or 3 3/4 -inch (9.5 cm) diamond stretch mesh for finfish trawls and 2 7/8-inch (7.3 cm) stretch mesh for gillnets. [FR Doc. E7-11524 Filed 6-13-07; 8:45 am] BILLING CODE 3510-22-S 72 114 Thursday, June 14, 2007 Notices JOINT BOARD FOR THE ENROLLMENT OF ACTUARIES Meeting of the Advisory Committee; Meeting AGENCY: Joint Board for the Enrollment of Actuaries. ACTION: Notice of Federal Advisory Committee meeting. SUMMARY: The Executive Director of the Joint Board for the Enrollment of Actuaries gives notice of a meeting of the Advisory Committee on Actuarial Examinations (portions of which will be open to the public) in Washington, DC at the Office of Professional Responsibility on June 25 and June 26, 2007. DATES: Monday, June 25, 2007, from 9 a.m. to 5 p.m., and Tuesday, June 26, 2007, from 8:30 a.m. to 5 p.m. ADDRESSES: The meeting will be held in Room 6505IR, 1111 Constitution Avenue, NW., Washington, DC. FOR FURTHER INFORMATION CONTACT: Patrick W. McDonough, Executive Director of the Joint Board for the Enrollment of Actuaries, 202-622-8225. SUPPLEMENTARY INFORMATION: Notice is hereby given that the Advisory Committee on Actuarial Examinations will meet in Room 6505IR, 1111 Constitution Avenue, NW., Washington, DC on Monday, June 25, 2007, from 9 a.m. to 5 p.m., and Tuesday, June 26, 2007, from 8:30 a.m. to 5 p.m. The purpose of the meeting is to discuss topics and questions which may be recommended for inclusion on future Joint Board examinations in actuarial mathematics and methodology referred to in 29 U.S.C. 1242(a)(1)(B) and to review the May 2007 Basic (EA-1) and Pension (EA-2B) Joint Board Examinations in order to make recommendations relative thereto, including the minimum acceptable pass score. Topics for inclusion on the syllabus for the Joint Board's examination program for the November 2007 Pension (EA-2A) Examination will be discussed. A determination has been made as required by section 10(d) of the Federal Advisory Committee Act, 5 U.S.C. App., that the portions of the meeting dealing with the discussion of questions which may appear on the Joint Board's examinations and review of the May 2007 Joint Board examinations fall within the exceptions to the open meeting requirement set forth in 5 U.S.C. 552b(c)(9)(B), and that the public interest requires that such portions be closed to public participation. The portion of the meeting dealing with the discussion of the other topics will commence at 1 p.m. on June 25 and will continue for as long as necessary to complete the discussion, but not beyond 3 p.m. Time permitting, after the close of this discussion by Committee members, interested persons may make statements germane to this subject. Persons wishing to make oral statements must notify the Executive Director in writing prior to the meeting in order to aid in scheduling the time available and must submit the written text, or at a minimum, an outline of comments they propose to make orally. Such comments will be limited to 10 minutes in length. All other persons planning to attend the public session must also notify the Executive Director in writing to obtain building entry. Notifications of intent to make an oral statement or to attend must be faxed, no later than June 19, 2007, to 202-622-8300, Attn: Executive Director. Any interested person also may file a written statement for consideration by the Joint Board and the Committee by sending it to the Executive Director: Joint Board for the Enrollment of Actuaries, c/o Internal Revenue Service, Attn: Executive Director SE:OPR, 1111 Constitution Avenue, NW., Washington, DC 20224. Dated: May 22, 2007. Patrick W. McDonough, Executive Director, Joint Board for the Enrollment of Actuaries. [FR Doc. E7-11436 Filed 6-13-07; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF AGRICULTURE Food and Nutrition Service Agency Information Collection Activities: Proposed Collection; Comment Request—Enhancing Food Stamp Certification: Food Stamp Modernization Efforts AGENCY: Food and Nutrition Service, USDA. ACTION: Notice. SUMMARY: In accordance with the Paperwork Reduction Act of 1995, this notice invites the general public and other public agencies to comment on proposed information collections. This notice announces the Food and Nutrition Service's

(FNS)intent to request approval from the Office of Management and Budget

(OMB)for new information collection. The Food and Nutrition Service plans to systematically examine the range of efforts States are undertaking to enhance food stamp certification and modernize the Food Stamp Program (FSP). This review will consist of a qualitative study relying on the responses of State and local food stamp staff, partners, food stamp applicants and participants, and eligible non-participants and a quantitative study using extant data. Information obtained will inform FNS policy discussions, provide technical and procedurally relevant information to States, and provide a comprehensive and centralized source of information for assessing ways to improve food stamp certification and respond efficiently to the variety of stakeholder queries received. DATES: Written comments must be received on or before August 13, 2007. ADDRESSES: Comments are invited on

(a)whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility;

(b)the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;

(c)ways to enhance the quality, utility, and clarity of the information to be collected; and

(d)ways to minimize the burden of the collection of information on those who are to respond, including use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. Comments may be sent via U.S. mail to Carol Olander, Food and Nutrition Service, U.S. Department of Agriculture, 3101 Park Center Drive, Room 1022, Alexandria, VA 22302. Comments may also be submitted via fax to the attention of Carol Olander at

(703)305-2576 or via e-mail to *carol.olander@fns.usda.gov.* All written comments will be open for public inspection at the office of the Food and Nutrition Service, through prior arrangement with Rosemarie Downer, the project officer, during regular business hours (8:30 a.m., to 5 p.m., Monday through Friday) at 3101 Park Center Drive, Alexandria, Virginia 22302, Room 1022. Rosemarie Downer can be reached at *rosemarie.downer@fns.usda.gov.* All responses to this notice will be summarized and included in the request for OMB approval. All comments will be a matter of public record. FOR FURTHER INFORMATION CONTACT: Requests for additional information or copies of this information collection should be directed to Rosemarie Downer at

(703)305-2129. SUPPLEMENTARY INFORMATION: *Title:* Enhancing Food Stamp Certification: Food Stamp Modernization Efforts. *OMB Number:* Not Yet Assigned. *Expiration Date:* To be determined. *Type of Request:* New collection of information. *Abstract:* Over the past decade, increased awareness of the importance of the FSP as a basic safety net as well as a critical work support has led to a variety of efforts to expand eligibility, increase program access and reengineer the FSP. At the same time, States are also focusing on ways to increase operational and administrative efficiency and program integrity. In an effort to document and understand the range of efforts States are employing to enhance the FSP certification process and to modernize FSP administration, FNS plans to develop a comprehensive, national inventory of FSP modernization efforts undertaken in all the States; document key features and outcomes associated with food stamp modernization; systematically describe and compare techniques States are using to modernize the FSP; identify promising practices; and create a single, comprehensive information source on State modernization initiatives. Results of this study will inform FNS policy discussions, provide technical and procedurally relevant information to States, and provide a comprehensive and centralized source of information for assessing ways to improve food stamp certification and responding efficiently to the variety of stakeholder queries received. Specifically, the study will focus on four types of modernization efforts: policy changes to modernize FSP application, case management, and recertification procedures; reengineering of administrative functions; increased or enhanced use of technology; and partnering arrangements with businesses and nonprofit organizations. The study will examine the impact of these modernization efforts on four types of outcomes: program access, administrative cost, program integrity, and customer services. To address these objectives, the study will implement a survey of all 50 States (and the District of Columbia, Guam, Puerto Rico, and the Virgin Islands) that includes State and local FSP administrators and community organizations and for-profit organizations assisting State modernization efforts. Data will also be obtained through:

(1)Descriptive case studies incorporating qualitative data through interviews with local and State-level staff as well as community organizations and for-profit contractors;

(2)discussion groups with food stamp participants and eligible non-participants and

(3)a limited number of brief in-person exit interviews with food stamp applicants and participants. The study will rely on extant data to describe FSP performance before and after the implementation of State modernization efforts with respect to application approval rates, participation rates, payment accuracy, administrative costs and other outcomes. Survey, interview and focus group questions will be kept as simple and respondent-friendly as possible. Responses to all questions will be voluntary. The Food and Nutrition Service will take the following steps to treat the data provided in a confidential manner:

(1)No data will be released in a form that identifies individual respondents by name and

(2)information collected through interviews will be combined across other respondents in the same category and reported in aggregate form. Respondents will be notified of the confidentiality measures during data collection. *Affected Public:* Staff involved in or knowledgeable about modernization efforts at the State level, including FSP directors, policy and operations staff, Management Information System

(MIS)and data reporting staff and call center staff; staff from local food stamp offices; State and local staff from community organizations and for-profit contractors assisting with food stamp modernization efforts; and food stamp applicants, participants, and eligible non-participants. *Estimated Number of Respondents:* 804. This number represents the sum of State-level FSP staff involved in food stamp modernization efforts, community organization staff or for-profit contractor staff involved in food stamp modernization efforts, food stamp applicants and participants, and eligible non-participants. *Estimated Number of Responses per Respondent:* 1. For the State-level respondents, 14 will be respondents twice (once to a survey and once to an in-person interview) and the rest will respond once. For the local-level respondents, 28 respondents will be respondents twice and the rest will respond once. *Estimated Annual Responses:* 804. *Estimated Hours per Response:* 1.75. All burden estimates include respondents' time to prepare for and complete surveys, administrative interviews, focus groups, or exit interviews with FSP applicants and participants. Surveys: 2 hours each for State and local level FSP interviews and 1 hour each for community representative or for-profit contractors; in-person administrative interviews: 1 hour each; focus groups: 1.5 hours per participant; exit interviews with FSP applicants and participants: 10 minutes each. *Estimated Total Annual Burden:* 1404 hours. Dated: June 7, 2007. Roberto Salazar, Administrator, Food and Nutrition Service. [FR Doc. E7-11482 Filed 6-13-07; 8:45 am] BILLING CODE 3410-30-P DEPARTMENT OF AGRICULTURE Food and Nutrition Service National Advisory Council on Maternal, Infant and Fetal Nutrition; Notice of Meeting AGENCY: Food and Nutrition Service, USDA. ACTION: Notice of meeting. SUMMARY: Pursuant to the Federal Advisory Committee Act, this notice announces a meeting of the National Advisory Council on Maternal, Infant and Fetal Nutrition. DATES: July 25-27, 2007, 9 a.m.-5 p.m. ADDRESSES: The meeting will be held at the Hilton Springfield, 6550 Loisdale Road, Springfield, Virginia 22150. FOR FURTHER INFORMATION CONTACT: Anne Bartholomew, Supplemental Food Programs Division, Food and Nutrition Service, Department of Agriculture,

(703)305-2086. SUPPLEMENTARY INFORMATION: The Council will continue its study of the Special Supplemental Nutrition Program for Women, Infants and Children, and the Commodity Supplemental Food Program. The agenda items will include a discussion of general program issues. Meetings of the Council are open to the public. Members of the public may participate, as time permits. Members of the public may file written statements before or after the meeting with Anne Bartholomew, Supplemental Food Programs Division, 3101 Park Center Drive, Room 522, Alexandria, Virginia 22302. If members of the public need special accommodations, please notify Ms. Anita Cunningham by June 18, 2007, at

(703)305-0986, or by e-mail at *anita.cunningham@fns.usda.gov* . Dated: May 31, 2007. Roberto Salazar, Administrator. [FR Doc. E7-11485 Filed 6-13-07; 8:45 am] BILLING CODE 3410-30-P DEPARTMENT OF AGRICULTURE Forest Service Lassen National Forest, CA, Creeks Forest Health Recovery Project AGENCY: Forest Service, USDA. ACTION: Cancellation of Notice of Intent. SUMMARY: This notice cancels the Notice of Intent to prepare a Supplement to the Environmental Impact Statement for the Creeks Forest Health Recovery Project on the Lassen National Forest, published in the **Federal Register** on December 7, 2006, (Volume 71, Number 235, page 70946). ADDRESSES: Almanor District Ranger, Lassen National Forest, P.O. Box 767, Chester, CA 96020. FOR FURTHER INFORMATION CONTACT: Rick Atwell, Interdisciplinary Team Leader, may be contacted by phone at

(530)258-2141. SUPPLEMENTARY INFORMATION: A Notice of Intent to prepare a Supplement to the Environmental Impact Statement for the Creeks Forest Health Recovery Project is cancelled due to additional information related to the California spotted owl analysis, conducted in concert with Pacific Southwest Research Station, for the Creeks project area. Dated: June 8, 2007. Elizabeth Norton, Acting Forest Supervisor. [FR Doc. 07-2935 Filed 6-13-07; 8:45 am]

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