Rules and Regulations. Final rule

69,748 words·~317 min read·/register/2007/07/30/07-3680

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

BILLING CODE 4910-13-M DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-27359; Directorate Identifier 2006-NM-042-AD; Amendment 39-15136; AD 2007-15-07] RIN 2120-AA64 Airworthiness Directives; Boeing Model 747-100, 747-100B, 747-200B, 747-200C, 747-200F, 747-300, 747SR, and 747SP Series 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 Boeing Model 747-100, 747-100B, 747-200B, 747-200C, 747-200F, 747-300, 747SR, and 747SP series airplanes. This AD requires repetitive high frequency eddy current inspections for cracks of the fuselage skin at stringer 5 left and right between stations 340 and 350, and corrective actions if necessary. This AD results from reports of fatigue cracks in the fuselage skin near stringer 5 between stations 340 and 350. We are issuing this AD to detect and correct fatigue cracking of the fuselage skin near stringer 5. Cracks in this area could join together and result in in-flight depressurization of the airplane. DATES: This AD becomes effective September 4, 2007. The Director of the Federal Register approved the incorporation by reference of a certain publication listed in the AD as of September 4, 2007. ADDRESSES: You may examine the AD docket on the Internet at *http://dms.dot.gov* or in person at the U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC. Contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207, for service information identified in this AD. FOR FURTHER INFORMATION CONTACT: Ivan Li, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)917-6437; fax

(425)917-6590. SUPPLEMENTARY INFORMATION: Examining the Docket You may examine the airworthiness directive

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

(800)647-5527) is located on the ground floor of the West Building at the street address stated in the ADDRESSES section. Discussion The FAA issued a notice of proposed rulemaking

(NPRM)to amend 14 CFR part 39 to include an AD that would apply to certain Boeing Model 747-100, 747-100B, 747-200B, 747-200C, 747-200F, 747-300, 747SR, and 747SP series airplanes. That NPRM was published in the **Federal Register** on March 6, 2007 (72 FR 9877). That NPRM proposed to require repetitive high frequency eddy current inspections for cracks of the fuselage skin at stringer 5 left and right between stations 340 and 350, and corrective actions if necessary. Comments We provided the public the opportunity to participate in the development of this AD. We have considered the comments received. Support for the NPRM Boeing concurs with the NPRM. Request for Alternative Method of Repair Air Transport Association

(ATA)on behalf of its member United Parcel Service (UPS), requests that we allow the use of an alternate method of repair. UPS notes that “Boeing Alert Service Bulletin 747-53A2542 allows operators to install a repair in accordance with the Boeing 747-100/200/300 Structural Repair Manual

(SRM)53-30-03, provided that the repair is removed and replaced with the Boeing Service Bulletin 747-53-2272 modification prior to the threshold of AD 90-06-06.” (We referred to Service Bulletin 747-53-2272, Revision 17, dated November 18, 1999; and Revision 18, dated May 16, 2002; as appropriate sources of service information for doing the terminating action specified in paragraph

(g)of the NPRM.) UPS believes that this option is beneficial to operators, in that it would allow operators to effect repairs (if necessary) in an expedient manner, and that this is especially important given that the proposed initial inspection compliance time of 250 cycles may not be sufficient to allow accomplishing the initial inspection in a normal C-check environment. UPS believes that the NPRM should be re-formatted to more clearly specify inspection, repair, and terminating action requirements. Therefore, UPS requests that paragraph

(f)be modified to include a standard repair per Boeing 747-100/200/300 SRM 53-30-03 as an acceptable alternative for repairing the crack(s), for airplanes which have not reached the incorporation threshold of AD 90-06-06 (20,000 flights is one incorporation threshold described by AD 90-06-06). The SRM repair would then be removed and replaced by the permanent repair per Service Bulletin 747-53-2272, Revision 18 or earlier, prior to reaching 20,000 total aircraft cycles (flights). Further, to clarify the inspection, repair and terminating action requirements, UPS provides a revised paragraph

(f)and suggests new paragraphs

(g)and (h), which would lead to re-identifying subsequent existing paragraphs. We agree with UPS that the described SRM repair option is beneficial to operators and should be allowed. However, this option is already allowed. Paragraph

(f)of the AD requires doing applicable corrective actions in accordance with Boeing Alert Service Bulletin 747-53A2542, dated February 16, 2006. The corrective actions described in the alert service bulletin permit operators to choose the option of doing the SRM repair followed by eventual replacement with the permanent repair described in Boeing Service Bulletin 747-53-2272, Revision 18, dated May 16, 2002. Therefore, we have determined that the option described by UPS is already available to the operators, and no change is needed to the AD in this regard. Change Made to Paragraph

(b)of the AD We have revised this action to clarify the effects of AD 90-06-06, amendment 39-6490 (55 FR 8374, March 7, 1990) on the repetitive inspection requirements of paragraph

(f)of this AD. We have moved the reference to AD 90-06-06 from paragraph

(b)to new paragraph

(g)of this AD, and reidentified existing paragraphs

(g)and

(h)of this AD accordingly. Change Made to Paragraph

(g)of the AD We have changed paragraph

(g)of the AD to specify that the actions required in that paragraph must be done in accordance with a method approved by the Manager, Seattle Aircraft Certification Office, FAA, and that Boeing Service Bulletin 747-53-2272, Revision 18, dated May 16, 2002, and earlier revisions, are one approved method of compliance for doing the required actions. After the effective date of this AD, no revision of Service Bulletin 747-53-2272 other than Revision 18 is acceptable as an approved method of compliance. Further, as described above, we have re-identified existing paragraph

(g)as paragraph

(h)of this AD. 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 have carefully reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting the AD with the changes described previously. We have determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD. Costs of Compliance There are about 281 airplanes of the affected design in the worldwide fleet. This AD will affect about 92 airplanes of U.S. registry. The required inspection will take about 4 work hours per airplane, at an average labor rate of $80 per work hour. Based on these figures, the estimated cost of the inspection for U.S. operators is $29,440, or $320 per airplane, per inspection cycle. For Group 2 airplanes (about 4 of U.S. registry), the mandatory terminating action for the repetitive inspections will take about 1,240 work hours, at an average labor rate of $80 per work hour. The manufacturer states that it will supply required parts to the operators at no cost. Based on these figures, the estimated cost of the terminating action for U.S. operators is $396,800, or $99,200 per airplane. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that this AD:

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

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

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

(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **2007-15-07 Boeing:** Amendment 39-15136. Docket No. FAA-2007-27359; Directorate Identifier 2006-NM-042-AD. Effective Date

(a)This AD becomes effective September 4, 2007. Affected ADs

(b)Installing external skin doublers as required only for Group 2 airplanes by paragraph

(h)of this AD, ends the repetitive inspections of the fuselage skin required by paragraph

(f)of AD 2005-08-01, amendment 39-14053, only for the area near the flight deck windows modified by the external skin doublers. Applicability

(c)This AD applies to Boeing Model 747-100, 747-100B, 747-200B, 747-200C, 747-200F, 747-300, 747SR, and 747SP series airplanes, certificated in any category; as identified in Boeing Alert Service Bulletin 747-53A2542, dated February 16, 2006. Unsafe Condition

(d)This AD results from reports of fatigue cracks in the fuselage skin near stringer 5 between body stations 340 and 350. We are issuing this AD to detect and correct fatigue cracking of the fuselage skin near stringer 5. Cracks in this area could join together and result in in-flight depressurization 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. Inspections and Corrective Actions

(f)For any airplane that has not had external skin doublers installed around the left- or right-side Number 3 flight deck window in accordance with Boeing Service Bulletin 747-53-2272, Revision 18, dated May 16, 2002, or an earlier revision: Do the applicable actions described in paragraphs (f)(1) and (f)(2) of this AD. Do all the actions in and in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 747-53A2542, dated February 16, 2006. Do the actions at the compliance times specified in paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 747-53A2542, dated February 16, 2006, on the side(s) of the airplane on which the doubler installation has not been done; except where the service bulletin specifies compliance times after the date on the service bulletin, this AD requires compliance times after the effective date of this AD. Installing external skin doublers around the left- or right-side Number 3 flight deck windows in accordance with Boeing Service Bulletin 747-53-2272, Revision 18, or an earlier revision, ends the repetitive high-frequency eddy current

(HFEC)inspections required by this paragraph on the side of the airplane on which the doublers are installed. After the effective date of this AD, only Boeing Service Bulletin 747-53-2272, Revision 18, may be used to install the external skin doublers around the left- and right-side Number 3 flight deck windows.

(1)Do a HFEC inspection for cracks of the fuselage skin at stringer 5, between body stations 340 and 350; and do all applicable corrective actions before further flight.

(2)Repeat the HFEC inspection thereafter at the applicable interval specified in paragraph 1.E. of Boeing Alert Service Bulletin 747-53A2542, dated February 16, 2006. Credit for Actions of Alternative AD

(g)For Group 1 airplanes only: External skin doublers installed around the left- or right-side Number 3 flight deck windows in accordance with the requirements of AD 90-06-06, amendment 39-6490, end the repetitive HFEC inspections required by paragraph

(f)of this AD on the side of the airplane on which the doublers are installed. Terminating Action

(h)For Group 2 airplanes only: Before accumulating 24,000 total flight cycles, or within 250 flight cycles after the effective date of the AD, whichever occurs later, install external skin doublers around the left- and right-side Number 3 flight deck windows; in accordance with a method approved by the Manager, Seattle Aircraft Certification Office (ACO), FAA. Boeing Service Bulletin 747-53-2272, Revision 17, dated November 18, 1999, and Revision 18, dated May 16, 2002, describe one approved method of compliance for doing the required actions. After the effective date of this AD, only Revision 18 is acceptable as an approved method of compliance. Accomplishing this action ends the repetitive inspections required by paragraph

(f)of this AD. Alternative Methods of Compliance (AMOCs) (i)(1) The Manager, Seattle Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

(2)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.

(j)You must use Boeing Alert Service Bulletin 747-53A2542, dated February 16, 2006, to perform the actions that are required by this AD, unless the AD specifies otherwise. The Director of the Federal Register approved the incorporation by reference of this document in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207, 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 July 15, 2007. Stephen P. Boyd, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-14140 Filed 7-27-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-28157 Directorate Identifier 2007-CE-046-AD; Amendment 39-15138; AD 2007-15-09] RIN 2120-AA64 Airworthiness Directives; Pilatus Aircraft Limited Model PC-6 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 aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as: This Airworthiness Directive

(816)329-4059; fax:

(816)329-4090. SUPPLEMENTARY INFORMATION: 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 May 30, 2007 (72 FR 29895). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states: This Airworthiness Directive

(AD)is prompted due to the discovery of cracks in the upper wing strut fittings of some PC-6 aircraft. It is possible that the spherical bearing of the wing strut fittings installed in the underwing can be loose in the fitting or cannot rotate because of corrosion. In this condition, the joint cannot function as designed and fatigue cracks may then develop. Undetected cracks in this area could lead to failure of upper the attachment fitting. This could result in the failure of the wing structure with subsequent loss of control of the airplane. In order to correct and monitor this situation, the present AD mandates a one time inspection of the wing strut fittings and replacement of damaged wing strut fittings with new ones. This AD also requires examination of the spherical bearings installed in the wing strut fittings and their replacement for bearings that do not pass the examination criteria. Comments We gave the public the opportunity to participate in developing this AD. We have considered the comment received. Comment Issue: Allow a Dye-Penetrant Inspection One commenter requested that we allow a dye-penetrant inspection as an option to the eddy current inspection. Without specific procedures and proposed intervals, the FAA is not able to approve dye-penetrant inspection as an approved method for this AD. The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community and Pilatus (the design organization approval holder) only approved using an eddy current procedure for this inspection. Pilatus has only established procedures to detect cracks in the affected areas using the eddy current method. The FAA will not change the AD to allow for dye-penetrant inspections in place of eddy current as called out for in the NPRM per the Pilatus service bulletin

(SB)without having specific procedures and intervals that we can coordinate with EASA and Pilatus. An operator may propose these procedures and intervals to the FAA using the alternative method of compliance

(AMOC)process specified in 14 CFR 39.19 and the AD. The AMOC proposal must provide the complete method of inspection that the operator believes will provide an acceptable level of safety as that proposed in the AD. The FAA will then coordinate the proposed AMOC with Pilatus and EASA to determine if the method provides an acceptable level of safety. If so, an AMOC can be granted for the FAA issued AD. We are making no changes to the final rule AD action based on this comment. Conclusion We reviewed the available data, including the comment received, 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 50 products of U.S. registry. We also estimate that it will take about 7 work-hours per product to comply with basic requirements of this AD. The average labor rate is $80 per work-hour. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $28,000 or $560 per product. In addition, we estimate that any necessary follow-on actions would take about 15 work-hours and require parts costing $2,500, for a cost of $3,700 per fitting or $7,400 per product if both fittings are replaced. We have no way of determining the number of products that may need these actions. 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: **2007-15-09 Pilatus Aircraft Limited:** Amendment 39-15138; Docket No. FAA-2007-28157; Directorate Identifier 2007-CE-046-AD. Effective Date

(a)This airworthiness directive

(AD)becomes effective September 4, 2007. Affected ADs

(b)None. Applicability

(c)This AD applies to Models PC-6, PC-6-H1, PC-6-H2, PC-6/350, PC-6/350-H1, PC-6/350-H2, PC-6/A, PC-6/A-H1, PC-6/A-H2, PC-6/B-H2, PC-6/B1-H2, PC-6/B2-H2, PC-6/B2-H4, PC-6/C-H2, and PC-6/C1-H2 airplanes; manufacturer serial numbers

(MSN)101 through 951, and MSN 2001 through 2092; that are certificated in any category. These airplanes are also identified as Fairchild Republic Company PC-6 airplanes, Fairchild Industries PC-6 airplanes, Fairchild Heli Porter PC-6 airplanes, or Fairchild-Hiller Corporation PC-6 airplanes. Subject

(d)Air Transport Association of America

(ATA)Code 57: Wings. Reason

(e)The mandatory continuing airworthiness information

(MCAI)states: This Airworthiness Directive

(f)Unless already done, do the following actions:

(1)*For MSN 2001 through MSN 2092:* Within the next 100 hours time-in-service

(TIS)on the upper wing strut fitting after September 4, 2007 (the effective date of this AD) or within 3 months after September 4, 2007 (the effective date of this AD), whichever occurs first, and repetitively thereafter at intervals not to exceed 12 months, do the actions specified in paragraph (f)(3) of this AD.

(2)*For MSN 101 through MSN 951* do the following actions, as applicable:

(i)If the upper wing strut fitting has less than 3,500 hours TIS or has been installed for less than 84 months (7 years): Within the next 1,000 hours TIS on the upper wing strut fitting after September 4, 2007 (the effective date of this AD) or within 24 months after September 4, 2007 (the effective date of this AD) without exceeding 3,600 hours TIS or 87 months (7 years, 3 months), whichever occurs first, and repetitively thereafter at intervals not to exceed 12 months, do the actions specified in paragraph (f)(3) of this AD, or;

(ii)If the upper wing strut fitting has 3,500 or more hours TIS or has been installed for 84 months (7 years) or longer: Within the next 100 hours TIS on the upper wing strut fitting after September 4, 2007 (the effective date of this AD) or within 3 months after September 4, 2007 (the effective date of this AD), whichever occurs first, and repetitively thereafter at intervals not to exceed 12 months, do the actions specified in paragraph (f)(3) of this AD. Note 1: If the TIS of the upper wing strut fittings cannot be positively determined by a review in the airplane maintenance records, then by default the upper wing strut fittings were installed from the date of original Certificate of Airworthiness.

(3)Do the following at the times specified in paragraph (f)(1) or (f)(2) of this AD:

(i)Perform a visual and non-destructive inspection of the upper wing strut fittings for cracks following the Accomplishment Instructions in Pilatus Aircraft Ltd. Service Bulletin No. 57-004, dated April 16, 2007.

(ii)Examine for conformity the spherical bearings following the Accomplishment Instructions in Pilatus Aircraft Ltd. Service Bulletin No. 57-004, dated April 16, 2007.

(4)If during any inspection required by paragraph (f)(3)(i) of this AD cracks are found in the upper wing strut fitting, before further flight replace the wing strut fitting with a new part number (P/N) 111.35.06.185 (left side) or P/N 111.35.06.186 (right side) following the Accomplishment Instructions in Pilatus Aircraft Ltd. Service Bulletin No. 57-004, dated April 16, 2007. Replacement of the upper wing strut fitting does not terminate the repetitive inspection specified in paragraph (f)(3) of this AD.

(5)If during any inspection required by paragraph (f)(3)(ii) of this AD the spherical bearing is found not in conformity, before further flight replace the bearing with a new P/N 944.61.00.109 following the Accomplishment Instructions in Pilatus Aircraft Ltd. Service Bulletin No. 57-004, dated April 16, 2007. Replacement of the spherical bearing does not terminate the repetitive inspection specified in paragraph (f)(3) of this AD.

(6)Report to Pilatus Aircraft Ltd. Customer Liason Manager results of the inspection/examination using Table 1 of Pilatus Aircraft Ltd. Service Bulletin No. 57-004, dated April 16, 2007. FAA AD Differences Note 2: This AD differs from the MCAI and/or service information as follows:

(1)The FAA AD is requiring repetitive inspections and reporting results to the manufacturer, not just a one-time inspection and report as required in the MCAI.

(2)The Service Bulletin specifies “subsequent inspections for cracks will be included in Chapter 5 of the Aircraft Maintenance Manual (AMM).” The only way we

(FAA)can mandate these repetitive inspections is through an AD. Other FAA AD Provisions

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

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

(816)329-4059; fax:

(816)329-4090. 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 (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: 2007-0114, dated May 02, 2007; and Pilatus Aircraft Ltd. Service Bulletin No. 57-004, dated April 16, 2007, for related information. Material Incorporated by Reference

(i)You must use Pilatus Aircraft Ltd. Service Bulletin No. 57-004, dated April 16, 2007, 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 Pilatus Aircraft Ltd., Customer Liaison Manager, CH-6371 STANS, Switzerland; telephone: +41 (0)41 619 6580; fax: +41 (0)41 619 6576; e-mail: *fodermatt@pilatus-aircaft.com.*

(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 July 19, 2007. Kim Smith, Manager, Small Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-14428 Filed 7-27-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2006-26441; Directorate Identifier 2006-NM-204-AD; Amendment 39-15139; AD 2007-15-10] RIN 2120-AA64 Airworthiness Directives; Boeing Model 747 Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. SUMMARY: The FAA is adopting a new airworthiness directive

(AD)for all Boeing Model 747 airplanes. This AD requires an inspection of the No. 2 and No. 3 windows on the left and right sides of the airplane to determine their part numbers, and related investigative and corrective actions if necessary. This AD results from loss of a No. 3 window in-flight. We are issuing this AD to detect and correct cracking in the fail-safe interlayer of certain No. 2 and No. 3 glass windows, which could result in loss of the window and consequent rapid loss of cabin pressure. Loss of the window could also result in crew communication difficulties or incapacitation of the crew. DATES: This AD becomes effective September 4, 2007. The Director of the Federal Register approved the incorporation by reference of a certain publication listed in the AD as of September 4, 2007. ADDRESSES: You may examine the AD docket on the Internet at *http://dms.dot.gov* or in person at the U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC. Contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207, for service information identified in this AD. FOR FURTHER INFORMATION CONTACT: Steve Fox, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)917-6425; fax

(425)917-6590. SUPPLEMENTARY INFORMATION: Examining the Docket You may examine the airworthiness directive

(800)647-5527) is located on the ground floor of the West Building at the street address stated in the ADDRESSES section. Discussion The FAA issued a notice of proposed rulemaking

(NPRM)to amend 14 CFR part 39 to include an AD that would apply to all Boeing Model 747 airplanes. That NPRM was published in the **Federal Register** on December 8, 2006 (71 FR 71099). That NPRM proposed to require an inspection of the No. 2 and No. 3 windows on the left and right sides of the airplane to determine their part numbers, and related investigative and corrective actions if necessary. Comments We provided the public the opportunity to participate in the development of this AD. We have considered the comments received. Support for the NPRM Boeing supports the NPRM, and British Airways supports the intent of the NPRM. Request To Extend Grace Period Qantas Airways states that the compliance times given in calendar time (units of years) in Tables 1, 2, and 3 of Boeing Alert Service Bulletin 747-56A2012, dated August 24, 2006, are not relevant for windows installed after the issue date of the service bulletin. As an example, the commenter states that a window installed on an airplane 5 years from now will have already surpassed the compliance time at the time of installation. Qantas Airways, therefore, requests that the calendar times in Tables 1, 2, and 3 of the service bulletin be revised as follows: “Within 2 (or 3) years after the date on this service bulletin, or after the window was installed, whichever occurs last.” Qantas Airways asserts that this change will ensure that the inspection of newly installed windows is controlled by calendar and flight-hour constraints. We agree to clarify the compliance time for newly installed windows. If a discrepant window is replaced with a new window, then the initial detailed inspection of the new window must be accomplished within either 5,500 or 22,000 flight hours after installing the window, depending on the window part number. The inspection must be repeated at the interval stated in Table 2 or 3, as applicable, of the Boeing service bulletin. We have revised paragraph

(g)of this AD to clarify the compliance time. Request To Include Terminating Action GKN Aerospace states that it manufactures some of the affected windows identified in Boeing Alert Service Bulletin 747-56A2012, dated August 24, 2006. GKN Aerospace states that it is concerned about the potential removal rates of in-service airplanes to address the unsafe condition; therefore, it is working to certify an improved window design that incorporates a new, improved interlayer, which is less susceptible to the cracking experienced with the existing windows. We infer the commenter would like us to include a terminating action in this AD. We agree that improving the window design to prevent cracking is a preferable solution than requiring long-term repetitive inspections. In the preamble of the NPRM, we stated that we considered this action to be an interim action. When a final action is identified, we may consider further rulemaking. We have not changed this AD in this regard. Request To Skip Inspection To Determine Part Number Boeing Aerospace Operations Engineering and Logistics Services requests that we allow operators to skip the window identification procedure and accomplish the rest of the service bulletin as though the part number could not be identified. The commenter states that since some airplanes are equipped with unique No. 2 and No. 3 windows, the window identification cannot be accomplished according to Part 1 of the Boeing Alert Service Bulletin 747-56A2012, dated August 24, 2006, or the replacement according to Part 2, step 4 of the service bulletin. We do not agree to delete the inspection to determine the part numbers of the windows. Operators who inspect and determine that the affected windows are not installed on an airplane are not required to accomplish the related investigative and corrective actions. Therefore, accomplishing the inspection to determine the window part numbers may relieve some operators of the on-condition requirements. However, under the provisions of paragraph

(h)of this AD, we may consider requests for approval of an alternative method of compliance

(AMOC)if sufficient data are submitted to substantiate that such a design change would provide an acceptable level of safety. We have not changed this AD in this regard. Request To Revise Compliance Times British Airways states that the compliance times in Tables 2 and 3 of Boeing Alert Service Bulletin 747-56A2012, dated August 24, 2006, should be revised as follows: • For part numbers (P/Ns) 65B27042-( ) and 65B27043-( ), the initial inspection should be extended from 5,500 flight hours to 9,000 flight hours. • For P/Ns 65B27046-( ) and 65B27047-( ), the initial inspection should be reduced from 22,000 flight hours to 15,000 flight hours, and the repetitive interval should be reduced from 7,500 flight hours to 3,000 flight hours (to match the repetitive interval for P/Ns 65B27042-( ) and 65B27043-( )). British Airways asserts that, based on its experience, the longer compliance times for P/Ns 65B27046-( ) and 65B27047-( ), are not justified. British Airways also asserts that requiring different repetitive intervals for different windows does not make sense since many airlines use a mix of windows on their airplanes. We acknowledge British Airways' comments but disagree with revising the compliance times as proposed by the commenter. In developing the compliance time for this AD action, we considered not only the safety implications of the identified unsafe condition, but the recommendations of the manufacturer, known service experience, average utilization rate of the affected fleet, and the availability of required parts. British Airways refers to its service experience but does not provide any data to support its comment. We invite British Airways to submit, to Boeing, any data it has that supports its comments related to changing certain compliance times. We would consider further rulemaking should such data support changing the compliance times of this AD. To further delay this AD would be inappropriate considering the need to correct a known safety problem in a timely manner. Further, operators are always permitted to accomplish the requirements of an AD at an earlier time than the required compliance time; therefore, an operator may choose to inspect P/Ns 65B27046-( ) and 65B27047-( ) at repetitive intervals of 3,000 flight hours. We have determined that the compliance times recommended in the service bulletin are appropriate for addressing the unsafe condition and we have not changed this AD in this regard. Request To Delete Grace Period British Airways states that the grace period of 1,000 flight hours after the date on the service bulletin is obsolete, since this time period will have been exceeded by the time we issued an AD. We infer that the commenter would like us to delete the grace period from Tables 2 and 3 of Boeing Alert Service Bulletin 747-56A2012, dated August 24, 2006. We disagree with deleting the grace period. We would like to point out that in paragraph

(g)of the NPRM, which is retained in this AD, we stated that the compliance times given in the service bulletin are to be counted from the effective date of this AD, not from the date on the service bulletin. We have not changed this AD in this regard. Request To Rephrase Compliance Time British Airways requests that we delete the word “or” where the service bulletin compliance times are restated in the “Relevant Service Information” section of the NPRM. As justification, the commenter states that using the word “or” gives an operator the choice of choosing between two compliance times. We disagree with revising this AD, since the “Relevant Service Information” section is not retained in a final rule. We have reviewed the NPRM and find that the wording used throughout the NPRM is consistent with the service bulletin. Further, where we restated the service bulletin compliance times in the NPRM, the lead-in statements clearly specify doing the proposed actions at the earlier of the compliance times; therefore, the compliance time cannot be chosen at an operator's discretion. We have not changed this AD in this regard. Request To Revise Costs of Compliance • British Airways requests that we make the following changes to the “Costs of Compliance” section: • Add the cost of replacing a cracked window. The commenter states that the “Costs of Compliance” section is wrong because it does not estimate the cost of replacing a cracked window. • Include the cost of having to remove an airplane from service 40% more frequently to accomplish the repetitive actions. • Revise the estimated work hours. The commenter asserts that it should take 1/2 hour to inspect a window to determine its part number, and that the inspection for cracks would require 2 people and would take 1 hour. We do not agree to revise the “Cost of Compliance” section as the commenter proposes. The economic analysis of an AD is limited to the cost of actions that are actually required. The economic analysis does not consider the costs of conditional actions, such as repairing a crack detected during a required inspection (“repair, if necessary”). Such conditional repairs would be required—regardless of AD direction—to correct an unsafe condition identified in an airplane and to ensure that the airplane is operated in an airworthy condition, as required by the Federal Aviation Regulations. Furthermore, we do not consider it appropriate to attribute the costs associated with aircraft “down time” to the AD. Also, we have determined the cost of compliance from information contained in the manufacturer's service information. We recognize that individual operators might incur costs less than or more than our estimate. It is impossible to estimate such individual variations. We have not changed this AD in this regard. Request To Revise Service Bulletin British Airways submitted several comments on the accuracy and clarity of Boeing Alert Service Bulletin 747-56A2012, dated August 24, 2006. We infer that the commenter would like us delay issuance of the AD until the service bulletin is revised to incorporate its comments. We acknowledge the value of the information submitted by the commenter. British Airways' comments will be of benefit to any future revisions of the service bulletin. In this case, however, the service bulletin is acceptable for ensuring that the unsafe condition is addressed. Therefore, we do not agree to delay this action until the service bulletin has been revised. To do so would be inappropriate, since we have determined that an unsafe condition exists, and that inspections must be conducted to ensure continued safety. We have not changed this AD in this regard. Clarification of 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 have carefully reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting the AD with the change described previously. We have determined that this change will neither increase the economic burden on any operator nor increase the scope of the AD. Costs of Compliance There are about 949 airplanes of the affected design in the worldwide fleet. This AD affects about 153 airplanes of U.S. registry. The required inspection to determine the window part numbers takes about 4 work hours per airplane, at an average labor rate of $80 per work hour. Based on these figures, the estimated cost of the AD for U.S. operators is $48,960, or $320 per airplane. The detailed inspection, if necessary, takes about 1 work hour per airplane, at an average labor rate of $80 per work hour. Based on these figures, the estimated cost of the detailed inspection for U.S. operators is $80 per airplane, per inspection cycle, if necessary. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that this AD:

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

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

(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **2007-15-10 Boeing:** Amendment 39-15139. Docket No. FAA-2006-26441; Directorate Identifier 2006-NM-204-AD. Effective Date

(a)This AD becomes effective September 4, 2007. Affected ADs

(b)None. Applicability

(c)This AD applies to all Boeing Model 747-100, 747-100B, 747-100B SUD, 747-200B, 747-200C, 747-200F, 747-300, 747-400, 747-400D, 747-400F, 747SR, and 747SP series airplanes, certificated in any category. Unsafe Condition

(d)This AD results from loss of a No. 3 window in-flight. We are issuing this AD to detect and correct cracking in the fail-safe interlayer of certain No. 2 and No. 3 glass windows, which could result in loss of the window and consequent rapid loss of cabin pressure. Loss of the window could also result in crew communication difficulties or incapacitation of the crew. 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. Inspection, Related Investigative Actions, and Corrective Action

(f)Inspect the No. 2 and No. 3 windows on the left and right sides of the airplane to determine their part numbers, and do all the applicable related investigative and corrective actions, by accomplishing all of the actions specified in the Accomplishment Instructions of Boeing Alert Service Bulletin 747-56A2012, dated August 24, 2006, as applicable. Do all of these actions at the compliance times specified in Tables 1, 2, and 3 of paragraph 1.E. of the service bulletin, as applicable, except as provided by paragraph

(g)of this AD. A review of airplane maintenance records is acceptable in lieu of the inspection if the part numbers of the windows can be conclusively determined from that review. Repeat the related investigative and corrective actions thereafter at the interval specified in Table 2 or 3 of the service bulletin, as applicable. Exceptions to Compliance Times

(g)Where Tables 1, 2, and 3 of paragraph 1.E. of Boeing Alert Service Bulletin 747-56A2012, dated August 24, 2006, specify counting the compliance time from “. . . after the date on this service bulletin,” this AD requires counting the compliance time from the effective date of this AD. After replacing a discrepant window with a new window, do the initial detailed inspection of the new window at the applicable compliance time:

(1)within 5,500 flight cycles after installing part number (P/N) 65B27042-( ) or 65B27043-( ), or

(2)within 22,000 flight cycles after installing P/N 65B27046-( ) or 65B27047-( ). Alternative Methods of Compliance (AMOCs) (h)(1) The Manager, Seattle Aircraft Certification Office, FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

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

(i)You must use Boeing Alert Service Bulletin 747-56A2012, dated August 24, 2006, to perform the actions that are required by this AD, unless the AD specifies otherwise. The Director of the Federal Register approved the incorporation by reference of this document in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207, 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 July 18, 2007. Stephen P. Boyd, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-14426 Filed 7-27-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9336] RIN 1545-BF82 Return Required by Subchapter T Cooperatives Under Section 6012 AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final regulations. SUMMARY: This document contains final regulations that prescribe the form that cooperatives must use to file their income tax returns. The regulations affect all cooperatives that are currently required to file an income tax return on either Form 1120, “U.S. Corporation Income Tax Return,” or Form 990-C, “Farmers' Cooperative Association Income Tax Return.” The new form will help the IRS to properly identify cooperatives and differentiate between cooperatives that must file returns within 2 1/2 months of the end of the taxable year and those that must file within 8 1/2 months of the end of the taxable year. DATES: *Effective date:* July 30, 2007. *Applicability date:* These regulations apply to returns for taxable years ending on or after December 31, 2007. In addition, taxpayers may rely on the regulations in filing returns for taxable years ending on or after December 31, 2006, and before December 31, 2007. FOR FURTHER INFORMATION CONTACT: Matthew P. Howard,

(202)622-4910 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background Under existing regulations, all cooperatives to which subchapter T applies (Subchapter T cooperatives) are required to make income tax returns. Except in the case of farmers' cooperatives, the regulations require that the return be made on Form 1120. In the case of farmers' cooperatives, the regulations require that the return be made on Form 990-C. Most taxpayers required to make an income tax return on Form 1120 must file their return on or before the 15th day of the third month following the close of the taxpayer's taxable year (2 1/2 month deadline). Some Subchapter T cooperatives that make their returns on Form 1120 are required to file by the 2 1/2 month deadline, but others are not required to file their returns until the 15th day of the ninth month following the close of the taxpayer's taxable year (8 1/2 month deadline). Because the Form 1120 does not distinguish between Subchapter T cooperatives that must file by the 2 1/2 month deadline and those that must file by the 8 1/2 month deadline, the IRS has difficulty determining which filing deadline applies and deciding whether to assert delinquency and failure to pay penalties in the case of returns filed after the 2 1/2 month deadline. The Proposed Regulations On July 29, 2005, a notice of proposed rulemaking was published in the **Federal Register** (REG-149436-04, 70 FR 43811). The proposed regulations in this notice of proposed rulemaking would require all Subchapter T cooperatives to make their income tax returns on Form 1120-C, “U.S. Income Tax Return for Cooperative Associations,” or such other form as may be designated by the Commissioner. One telephone comment was received in response to the notice of proposed rulemaking. The comment suggested that the new form might have a negative effect on consolidated filing. No public hearing was requested or held. Explanation of Provisions After consideration of the comment, the proposed regulations are adopted as revised by this Treasury decision. The final regulations retain the requirement that Subchapter T cooperatives file their returns on Form 1120-C. The information that Subchapter T cooperatives will be required to provide on new Form 1120-C will assist taxpayers and the IRS in determining the appropriate filing deadline. Having that information will reduce the burden on taxpayers and will help the IRS avoid asserting penalties in inappropriate cases. Having all Subchapter T cooperatives make their income tax returns on Form 1120-C will also eliminate confusion over which form to file and will promote efficiency in addressing income tax issues common to Subchapter T cooperatives. The IRS and Treasury Department believe that this requirement will not have a negative effect on consolidated filing. Subchapter T cooperatives may continue to file returns on behalf of consolidated groups by indicating their filing status on Form 1120-C and complying with the regulations under section 1502 of the Internal Revenue Code (Code). This requirement to use Form 1120-C was proposed to be effective for taxable years ending on or after December 31, 2006. Because the regulations were not finalized before the end of 2006, the final regulations delay the proposed effective date. The final regulations apply beginning with the first taxable year ending on or after December 31, 2007. Cooperatives may rely on the regulations as proposed, however, and file returns on Form 1120-C for taxable years ending on or after December 31, 2006, and before December 31, 2007. Effect on Other Documents The following publications are removed as of July 30, 2007: Announcement 84-26, 1984-11 IRB 42. Announcement 84-37, 1984-17 IRB 32. Special Analyses 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 also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulation does not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small businesses. Drafting Information The principal author of these regulations is Matthew P. Howard, Office of Assistant Chief Counsel (Procedure & Administration). List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Adoption of Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows: PART 1—INCOME TAXES **Paragraph 1.** The authority citation for part 1 continues to read, in part, as follows: Authority: 26 U.S.C. 7805 * * * **Par. 2.** Section 1.6012-2 is amended by revising paragraph

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

(f)*Subchapter T cooperatives* —(1) *In general* . For taxable years ending on or after December 31, 2007, a cooperative organization described in section 1381 (including a farmers' cooperative exempt from tax under section 521) is required to make a return, whether or not it has taxable income and regardless of the amount of its gross income, on Form 1120-C, “U.S. Income Tax Return for Cooperative Associations,” or such other form as may be designated by the Commissioner.

(2)*Farmers' cooperatives* . For taxable years ending before December 31, 2007, a farmers' cooperative organization described in section 521(b)(1) (including a farmers' cooperative that is not exempt from tax under section 521) is required to make a return on Form 990-C, “Farmers’ Cooperative Association Income Tax Return.”

(3)*Effective/applicability date.* This paragraph

(f)is applicable on or after July 30, 2007. Kevin M. Brown, Deputy Commissioner of Services and Enforcement. Approved: June 27, 2007. Eric Solomon, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. E7-13489 Filed 7-27-07; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9345] RIN 1545-BA93 Section 1248 Attribution Principles AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final regulations. SUMMARY: This document contains final regulations under section 1248 of the Internal Revenue Code

(Code)that provide guidance for determining the earnings and profits attributable to stock of controlled foreign corporations (or former controlled foreign corporations) that are

(were)involved in certain nonrecognition transactions. The final regulations are necessary in order to supplement and clarify existing guidance in the regulations under section 1248. The final regulations affect persons subject to the regulations under section 1248, as well as persons to which regulations under other Code provisions, such as section 367(b), apply to the extent that those regulations incorporate the principles of the section 1248 regulations. In addition, the final regulations provide that with respect to the sale by a foreign partnership of the stock of a corporation, the partners in such foreign partnership shall be treated as selling or exchanging their proportionate share of the stock of such corporation for purposes of section 1248. DATES: *Effective Date:* These regulations are effective on July 30, 2007. *Applicability Dates:* For dates of applicability, see §§ 1.1248-1(g) and 1.1248-8(d). FOR FURTHER INFORMATION CONTACT: Michael Gilman at

(202)622-3850 (not a toll-free number). SUPPLEMENTARY INFORMATION Background On June 2, 2006, proposed revisions to the regulations under section 1248(a) of the Code (REG-135866-02) were published in the **Federal Register** (71 FR 31985-01). On August 14, 2006, two corrections to those proposed regulations were published in the **Federal Register** (71 FR 46415 and 71 FR 46416). Two written comments were received. A public hearing was not requested and none was held. After consideration of the written comments and other comments, the June 2, 2006, proposed regulations are adopted as amended by this Treasury decision. Summary of Comments and Explanation of Revisions With respect to attribution of earnings and profits to stock of an acquiring corporation held by a non-exchanging shareholder, § 1.1248-8(b)(4) of the proposed regulations provides a rule by cross-reference to § 1.1248-2 or § 1.1248-3 (whichever is applicable) and § 1.1248-8(b)(6) (as applicable). A commentator asserted that the proposed regulations did not adequately explain which earnings and profits were attributed to the stock of the non-exchanging shareholder. This commentator thought that the rule was better explained in the preamble to the proposed regulations, which states that generally the earnings and profits attributable to stock of an acquiring corporation held by a non-exchanging shareholder immediately prior to a restructuring transaction continue to be attributed to such stock, and the earnings and profits of the acquired corporation accumulated prior to the restructuring transaction attributable to the stock of an acquired corporation are not attributed to the non-exchanging shareholder's stock in the acquiring corporation. In order to clarify the regulations, this language from the preamble to the proposed regulations is included in § 1.1248-8(b)(4) of the final regulations. Under § 1.1248-1(a)(4) of the proposed regulations, the partners in a foreign partnership shall be treated as selling or exchanging their proportionate share of stock of a corporation sold or exchanged by the foreign partnership. The proposed regulations also apply section 1248(a) in cases where the stock in a corporation that is sold or exchanged is held through tiers of foreign partnerships. This treatment is necessary to reflect properly each partner's share of the corporation's earnings and profits as a dividend. A commentator noted that § 1.1248-1(a)(4) of the proposed regulations could be read to apply to the sale by a partner of its interest in a partnership holding the stock of a corporation. The Treasury Department and the IRS did not intend that interpretation because it would be contrary to section 1248(g)(2)(B). An amount that is received by a partner in exchange for all or part of its partnership interest is treated as ordinary income under section 751(a) and

(c)to the extent attributable to stock in a foreign corporation as described in section 1248. Section 1248(g)(2)(B) provides that section 1248 will not apply if any other provision of the Code treats an amount as ordinary income. Accordingly, § 1.1248-1(a)(4) in the final regulations is revised to clarify that a foreign partnership is treated as an aggregate for this purpose only when a foreign partnership sells or exchanges stock of a corporation. Finally, a commentator requested that the final regulations allow a taxpayer to elect to apply the rule in § 1.1248-1(a)(4) to taxable years ending before the effective date of the final regulations. The Treasury Department and the IRS regard this rule as a clarification of existing law, but recognize that some practitioners have expressed the view that prior law was not entirely clear. Accordingly, the final regulations allow taxpayers to apply the rule in § 1.1248-1(a)(4) to open years provided that the taxpayer consistently applies the rule in all such years. A partner makes this election by treating its distributive share of gain attributable to a sale of shares in a controlled foreign corporation as gain recognized on a sale or exchange of stock in a foreign corporation within the meaning of section 1248(a). In order to clarify the application of § 1.1248-8, the definition of controlled foreign corporation at § 1.1248-8(b)(1)(iii) has been revised to provide that a controlled foreign corporation includes corporations described in either section 953(c)(1)(B) or section 957. A commentator requested the addition of an example to § 1.367(b)-4(d) to clarify that earnings and profits attributable to certain lower-tier subsidiaries are not taken into account in determining the all earnings and profits amount attributable to transactions described in § 1.367(b)-3. In response to this comment, such an example is included in § 1.367(b)-4(d) of the final regulations. Special Analyses 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 5 U.S.C. chapter 5 does not apply to these regulations, and, because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act, 5 U.S.C. chapter 6, does not apply. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small businesses. Drafting Information The principal author of the final regulations is Michael I. Gilman of the Office of Associate Chief Counsel (International). However, other personnel from the Treasury Department and the IRS participated in their development. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Adoption of 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 entries in numerical order to read in part as follows: Authority: 26 U.S.C. 7805 * * * Sections 1.367(b)-2(c)(1) and

(2)also issued under 26 U.S.C. 367(b)(1) and (2). Section 1.367(b)-2(d)(3) also issued under 26 U.S.C. 367(b)(1) and (2). * * * Section 1.367(b)-4(d) also issued under 26 U.S.C. 367(b)(1) and (2). * * * Sections 1.1248-1(a)(1), (4), and

(5)also issued under 26 U.S.C. 1248(a) and (c)(1) and (2). * * * Section 1.1248-8 also issued under 26 U.S.C. 1248(a) and (c)(1) and (2). * * * § 1.367(b)-2 [Amended] **Par. 2.** Section 1.367(b)-2 is amended by: 1. Removing the language “, as modified by § 1.367(b)-4(d) (as applicable).” from the last sentence of paragraph (c)(1)(ii) and adding the language “. See § 1.1248-8.” in its place. 2. Removing paragraphs (c)(2) *Example 4* and (d)(3)(ii). 3. Removing the language “, as modified by paragraph (d)(3)(ii) of this section and § 1.367(b)-4(d) (as applicable).” from the last sentence of paragraph (d)(3)(i)(B)(2) and adding the language “. See § 1.1248-8.” in its place. 4. Redesignating paragraph (d)(3)(iii) as paragraph (d)(3)(ii). **Par. 3.** Section 1.367(b)-4(d) is revised to read as follows: § 1.367(b)-4 Acquisition of foreign corporate stock or assets by a foreign corporation in certain nonrecognition transactions.

(d)*Rules for subsequent sales or exchanges* —(1) *Rule* . If an exchanging shareholder (as defined in § 1.1248-8(b)(1)(iv)) is not required to include in income as a deemed dividend the section 1248 amount under paragraph

(b)of this section in a section 367(b) exchange described in paragraph

(a)of this section (non-inclusion exchange), then, for purposes of applying section 367(b) or section 1248 to subsequent sales or exchanges, and subject to the limitation of § 1.367(b)-2(d)(3)(ii) (in the case of a transaction described in § 1.367(b)-3), the determination of the earnings and profits attributable to the stock an exchanging shareholder receives in the non-inclusion exchange shall be determined pursuant to the rules of section 1248 and the regulations under that section.

(2)*Example* . The following example illustrates the rules of this section. For purposes of the example, assume that—

(i)There is no immediate gain recognition pursuant to section 367(a)(1) and the regulations under that section (either through operation of the rules or because the appropriate parties have entered into a gain recognition agreement under §§ 1.367(a)-3(b) and 1.367(a)-8);

(ii)References to earnings and profits are to earnings and profits that would be includible in income as a dividend under section 1248 and the regulations under that section if stock to which the earnings and profits are attributable were sold or exchanged by its shareholder;

(iii)Each corporation has only a single class of stock outstanding and uses the calendar year as its taxable year; and

(iv)Each transaction is unrelated to all other transactions. Example. *Acquisition of the stock of a foreign corporation that controls a foreign acquiring corporation in a reorganization described in section 368(a)(1)(C)* .

(i)*Facts* . DC1, a domestic corporation, has owned all the stock of CFC1, a controlled foreign corporation, since its formation on January 1, year 1. CFC1 has owned all the stock of CFC2, a controlled foreign corporation, since its formation on January 1, year 1. FC, a foreign corporation that is not a controlled foreign corporation, has owned all of the stock of FC2, a foreign corporation, since its formation on January 1, year 2. On December 31, year 3, pursuant to a restructuring transaction that was a triangular reorganization described in section 368(a)(1)(C), CFC1 transfers all of its assets, including the CFC2 stock, to FC2 in exchange for 80% of the voting stock of FC. CFC1 transfers the voting stock of FC to DC1 and the CFC1 stock is cancelled. Pursuant to section 1223(1), DC1 is considered to have held the stock of FC since January 1, year 1. Under section 1223(2), FC2 is considered to have held the stock of CFC2 since January 1, year 1. On December 31, year 3, CFC1 has $100 of earnings and profits. From January 1, year 4, until December 31, year 5, FC (a controlled foreign corporation after the restructuring transaction) accumulates an additional $50 of earnings and profits. FC2, a controlled foreign corporation after the restructuring transaction, accumulates $100 of earnings and profits from January 1, year 4, until December 31, year 5. On December 31, year 5, FC is liquidated into DC1 in a transaction described in section 332.

(ii)*Result* . Generally, this paragraph

(d)requires that DC1 include in income the earnings and profits attributable to its stock in FC as determined under § 1.1248-8. However, since the liquidation of FC into DC1 is a transaction described in § 1.367(b)-3, the earnings and profits attributable to the stock of FC are limited by § 1.367(b)-2(d) (3)(ii) to that portion of the earnings and profits accumulated by FC itself before or after the restructuring transaction, and do not include the earnings and profits of FC's subsidiaries accumulated before or after the restructuring transaction. Thus, DC1 will include $40 of earnings and profits in income (80% of the $50 of earnings and profits accumulated by FC after the restructuring transaction). **Par. 4.** Section 1.1248-1 is amended by: 1. Removing the language “(or was considered as held by reason of the application of section 1223)” from the first sentence of paragraph (a)(1) and adding the language “(or was considered as held by reason of the application of section 1223, taking into account § 1.1248-8)” in its place and adding a new third sentence. 2. Redesignating paragraph (a)(4) as paragraph (a)(5). 3. Adding new paragraphs (a)(4) and (g). 4. Adding *Example 4* in newly-designated paragraph (a)(5). The additions read as follows: § 1.1248-1 Treatment of gain from certain sales or exchanges of stock in certain foreign corporations.

(a)*In general.*

(1)* * * See § 1.1248-8 for additional rules regarding the attribution of earnings and profits to the stock of a foreign corporation following certain nonrecognition transactions. * * *

(4)For purposes of paragraph (a)(1) of this section, if a foreign partnership sells or exchanges stock of a corporation, the partners in such foreign partnership shall be treated as selling or exchanging their proportionate share of the stock of such corporation. Stock which is considered to have been sold or exchanged by a partner by reason of the application of this paragraph (a)(4) shall for purposes of applying such sentence be treated as actually sold or exchanged by such partner.

(5)* * * Example 4.

(i)*Facts.* X, a domestic corporation, and Y, a foreign corporation that is not a controlled foreign corporation, are partners in foreign partnership Z. X has a 60% interest in Z, and Y has a 40% interest in Z. All parties are calendar year taxpayers. On January 1, year 1, Z forms foreign corporation H, a controlled foreign corporation that conducts a business in Country C. Z and H's functional currency is the United States dollar. In years 1 and 2, H did not earn subpart F income as defined in section 952(a). On December 31, year 2, Z sells all of the H stock for $600 when Z's adjusted basis in the stock is $100. Therefore, Z recognizes a gain of $500 on the sale, of which $300 is allocable to X as a 60% partner. At the time of the sale, H had $300 of earnings and profits, $180 of which (that is, 60% of $300) is attributable to X's 60% share of the H stock.

(ii)*Result.* Pursuant to section 1248(a) and paragraphs (a)(1) and

(4)of this section, X and Y are treated as selling 60% and 40%, respectively, of the H stock. X includes in its gross income as a dividend $180 of the gain recognized on the sale. Because Y is a foreign corporation that is not a CFC, neither section 1248 nor section 964 applies to the sale of Y's 40% share of the H stock.

(iii)*Alternative facts.* If, instead, X owned its 60% interest in Z through another foreign partnership, the result would be the same.

(g)*Effective/applicability date.* The third sentence in paragraph (a)(1), paragraph (a)(4), and paragraph (a)(5) *Example 4* of this section apply to income inclusions that occur on or after July 30, 2007. A taxpayer may elect to apply paragraph (a)(4) of this section to income inclusions in open taxable years provided that it consistently applies paragraph (a)(4) for income inclusions in the first year for which the election is applicable and in all subsequent years. §§ 1.1248-2, 1.1248-3, 1.1248-7 [Amended] **Par. 5.** In §§ 1.1248-2, 1.1248-3, and 1.1248-7, for each entry in the “Section” column, remove the language in the “Remove” column and add the language in the “Add” column in its place. Section Remove Add § 1.1248-2(a)(1) (or was considered to be held by reason of the application of section 1223) (or was considered to be held by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-2(a)(2)(ii) (or is considered to have held by reason of the application of section 1223) (or is considered to have held by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-2(a)(3) (or is considered to have held by reason of the application of section 1223) (or is considered to have held by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-2(c)(4) (or is considered to have held by reason of the application of section 1223) (or is considered to have held by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-2(e)(1), introductory text (or is considered to have held by reason of the application of section 1223) (or is considered to have held by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-2(e)(2) (or is considered as held by reason of the application of section 1223) (or is considered as held by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-2(e)(3)(i) (or is considered to have held by reason of the application of section 1223) (or is considered to have held by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-3(a)(1) (or was considered to be held by reason of the application of section 1223) (or was considered to be held by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-3(c)(1)(ii) (or was considered to have held by reason of the application of section 1223) (or was considered to have held by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-3(e)(2)(i) (during the period such share, or block, was considered to be held by such person by reason of the application of section 1223) (during the period such share, or block, was considered to be held by such person by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-3(e)(3) (during the period such share, or block, was considered to be held by such person by reason of the application of section 1223) (during the period such share, or block, was considered to be held by such person by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-3(e)(5) (or another person who actually owned the stock during such taxable year and whose holding of the stock is attributed by reason of the application of section 1223 to the person who sold or exchanged the stock) (or another person who actually owned the stock during such taxable year and whose holding of the stock is attributed by reason of the application of section 1223, taking into account § 1.1248-8, to the person who sold or exchanged the stock). § 1.1248-3(e)(6), two places by reason of the application of section 1223 to such person by reason of the application of section 1223 to such person, taking into account § 1.1248-8. § 1.1248-3(f)(2)(ii) (or was considered to have held by reason of the application of section 1223) (or was considered to have held by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-3(f)(5)(ii) (during the period such stock was considered to be held by such person by reason of the application of section 1223) (during the period such stock was considered to be held by such person by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-3(f)(5)(iv) (during the period such share (or block) was considered to be held by such person by reason of the application of section 1223) (during the period such share (or block) was considered to be held by such person by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-7(b)(3)(i) (or was considered to have held by reason of the application of section 1223) (or was considered to have held by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-7(b)(3)(iii) (or is considered to have held by reason of the application of section 1223) (or is considered to have held by reason of the application of section 1223, taking into account § 1.1248-8). § 1.1248-7(b)(4) introductory text (or was considered to have held by reason of the application of section 1223) (or was considered to have held by reason of the application of section 1223, taking into account § 1.1248-8). **Par. 6.** Section 1.1248-8 is added to read as follows: § 1.1248-8 Earnings and profits attributable to stock following certain non-recognition transactions.

(a)*Scope.* This section sets forth rules for the attribution of earnings and profits for purposes of section 1248 and § 1.1248-1(a)(1) and to supplement the rules in §§ 1.1248-2 and 1.1248-3 with respect to—

(1)*Stock that an exchanging shareholder receives, or an acquiring corporation receives, in restructuring transactions.* Except as otherwise provided in this paragraph (a), stock of a foreign corporation that an exchanging shareholder receives, or an acquiring corporation receives, pursuant to a restructuring transaction (as defined in paragraph (b)(1)(vii) of this section) in which the holding period of such stock is determined by application of section 1223(1) or 1223(2), whichever is appropriate. This section shall not apply to an exchange otherwise described in this paragraph (a)(1) if, as a result of the exchange, the exchanging shareholder is required to include in income as a deemed dividend the section 1248 amount pursuant to § 1.367(b)-4(b). See paragraphs (b)(2) and

(3)of this section;

(2)*Nonexchanging shareholders.* Stock of a foreign corporation that participates in a restructuring transaction that is held by a non-exchanging shareholder (as defined in paragraph (b)(1)(vi) of this section) in the restructuring transaction. See paragraph (b)(4) of this section;

(3)*Application of section 381.* Stock of a foreign corporation that receives assets in a transfer to which section 361(a) applies in connection with a reorganization described in section 368(a)(1)(A), (C), (D), (F), or (G), or in a distribution to which section 332 applies, and to which section 381(c)(2)(A) and § 1.381(c)(2)-1(a) apply. See paragraph (b)(6) of this section; or

(4)*Section 332 liquidations.* Stock of a foreign corporation that receives the assets and liabilities of a foreign corporation in a complete liquidation described in section 332 if the foreign distributee is a foreign corporate shareholder (as defined in paragraph (b)(1)(v) of this section) of the liquidating corporation. See paragraph

(c)of this section.

(b)*Earnings and profits attributable to stock following a restructuring transaction* —(1) *Definitions.* The following definitions apply for purposes of this section:

(i)*Acquired corporation* is a corporation whose stock or assets are acquired in exchange for stock in (or stock in and other property of) either the acquiring corporation or a foreign corporation that controls, within the meaning of section 368(c), the acquiring corporation in a restructuring transaction.

(ii)*Acquiring corporation* is a corporation that acquires the stock or assets of an acquired corporation in a restructuring transaction.

(iii)*Controlled foreign corporation* is a corporation described in either section 953(c)(1)(B) or section 957.

(iv)*Exchanging shareholder* is a person that exchanges—

(A)In a restructuring transaction qualifying as a nonrecognition transaction within the meaning of section 7701(a)(45) and described in section 354, 356, or 361(a), stock in an acquired corporation for stock in either a foreign acquiring corporation or a foreign corporation that is in control, within the meaning of section 368(c), of an acquiring corporation (whether domestic or foreign); or

(B)In a restructuring transaction qualifying as a nonrecognition transaction within the meaning of section 7701(a)(45) and described in section 351, property (including stock) for stock in a foreign acquiring corporation.

(v)*Foreign corporate shareholder* is a foreign corporation that—

(A)Owns stock of another foreign corporation; and

(B)Has a section 1248 shareholder that is also a section 1248 shareholder of the other foreign corporation.

(vi)*Non-exchanging shareholder* is, at the time the acquiring corporation participates in a restructuring transaction, either a section 1248 shareholder or a foreign corporate shareholder of the acquiring corporation that is not an exchanging shareholder with respect to that corporation.

(vii)*Restructuring transaction* is a transaction qualifying as a nonrecognition transaction within the meaning of section 7701(a)(45) and described in section 351, 354, 356, or 361.

(viii)*Section 1248 shareholder* is any United States person that satisfies the ownership requirements of section 1248(a)(2) and § 1.1248-1(a)(2) with respect to a foreign corporation.

(2)*Earnings and profits attributable to stock that an exchanging shareholder receives in a restructuring transaction.* Where, in a restructuring transaction, an exchanging shareholder receives stock in a foreign corporation, the holding period of which is determined under section 1223(1), and the exchanging shareholder is either a section 1248 shareholder or a foreign corporate shareholder with respect to that foreign corporation immediately after the restructuring transaction, the earnings and profits attributable to the stock the exchanging shareholder receives shall be determined pursuant to the rules in paragraphs (b)(2)(i), (ii), and

(iii)of this section.

(i)*Exchanging shareholder exchanges property that is not stock of a foreign acquired corporation with respect to which the exchanging shareholder is a section 1248 shareholder or a foreign corporate shareholder.* Where the exchanging shareholder exchanges in a restructuring transaction property that is not stock of a foreign acquired corporation with respect to which the exchanging shareholder is a section 1248 shareholder or a foreign corporate shareholder immediately before such transaction, the earnings and profits attributable to the stock that the exchanging shareholder receives in the restructuring transaction shall be determined in accordance with § 1.1248-2 or § 1.1248-3, whichever is applicable, without regard to any portion of the section 1223(1) holding period in that stock that is prior to the restructuring transaction. See paragraph (b)(7) *Example 1* of this section.

(ii)*Exchanging shareholder exchanges stock of a foreign corporation with respect to which the exchanging shareholder is either a section 1248 shareholder or a foreign corporate shareholder.* Except as provided in paragraph (b)(2)(iii) of this section, where the exchanging shareholder exchanges in a restructuring transaction stock of a foreign acquired corporation with respect to which the exchanging shareholder is either a section 1248 shareholder or a foreign corporate shareholder immediately before such restructuring transaction, the earnings and profits attributable to the stock that the exchanging shareholder receives in the restructuring transaction shall be the sum of the earnings and profits attributable to—

(A)The stock of the foreign acquired corporation exchanged (determined in accordance with § 1.1248-2 or § 1.1248-3, whichever is applicable, and this section, if applicable) that was accumulated before the restructuring transaction; and

(B)The stock of the foreign corporation that the exchanging shareholder receives in the restructuring transaction (determined in accordance with § 1.1248-2 or § 1.1248-3, whichever is applicable, and this section, if applicable), without regard to any portion of the section 1223(1) holding period in that stock that is prior to the restructuring transaction. See paragraph (b)(7) *Example 2, Example 4,* and *Example 6* of this section.

(iii)*Exchanging shareholder receives stock in a foreign corporation that controls a domestic acquiring corporation.* Where the acquiring corporation is a domestic corporation and the exchanging shareholder receives in a restructuring transaction stock in a foreign corporation that controls (within the meaning of section 368(c)) the domestic acquiring corporation, the earnings and profits attributable to the stock that the exchanging shareholder receives in the restructuring transaction shall consist solely of the amount of earnings and profits attributable to such stock (determined in accordance with § 1.1248-2 or § 1.1248-3, whichever is applicable, and this section, if applicable) without regard to any portion of the section 1223(1) holding period in that stock that is prior to the restructuring transaction. See paragraph (b)(7) *Example 5* of this section.

(3)*Earnings and profits attributable to stock in a foreign corporation certain acquiring corporations receive in a restructuring transaction.* Where an acquiring corporation receives, in a restructuring transaction, stock in a foreign acquired corporation, the holding period of which is determined under section 1223(2), and the acquiring corporation is either a section 1248 shareholder or a foreign corporate shareholder with respect to that foreign acquired corporation immediately after the restructuring transaction, the earnings and profits attributable to the foreign acquired corporation stock that the acquiring corporation receives shall be determined pursuant to the rules in paragraphs (b)(3)(i) and

(ii)of this section.

(i)*Stock of a foreign corporation with respect to which the exchanging shareholder is neither a section 1248 shareholder nor a foreign corporate shareholder.* The earnings and profits attributable to the stock of the foreign acquired corporation that the acquiring corporation receives in a restructuring transaction where the exchanging shareholder is neither a section 1248 shareholder nor a foreign corporate shareholder with respect to that foreign acquired corporation immediately before the restructuring transaction shall be determined in accordance with § 1.1248-2 or § 1.1248-3, whichever is applicable, without regard to any portion of the section 1223(2) holding period in that stock that is prior to the restructuring transaction.

(ii)*Stock of a foreign corporation with respect to which the exchanging shareholder is either a section 1248 shareholder or a foreign corporate shareholder.* The earnings and profits attributable to the stock of a foreign acquired corporation that the acquiring corporation receives in the restructuring transaction where the exchanging shareholder is either a section 1248 shareholder or a foreign corporate shareholder with respect to that foreign corporation immediately before the restructuring transaction shall be determined in accordance with § 1.1248-2 or § 1.1248-3, whichever is applicable, with regard to the portion of the section 1223(2) holding period of the stock that the exchanging shareholder took into account for purposes of attributing earnings and profits to that stock (determined in accordance with this section). See paragraph (b)(7) *Example 3, Example 5,* and *Example 7* of this section.

(4)*Earnings and profits attributable to stock held by a non-exchanging shareholder in a foreign acquiring corporation.*

(i)Except to the extent paragraph (b)(4)(ii) of this section applies, the earnings and profits attributable to stock of a foreign acquiring corporation held by a non-exchanging shareholder immediately prior to a restructuring transaction continue to be attributed to such stock, and the earnings and profits of the acquired corporation accumulated prior to the restructuring transaction attributable to the stock of an acquired corporation are not attributed to the non-exchanging shareholder's stock in the foreign acquiring corporation. See § 1.1248-2 or § 1.1248-3 (whichever is applicable) and, as applicable, paragraph (b)(6) of this section; see also paragraph (b)(7) *Example 2* and *Example 4* of this section.

(ii)Where a non-exchanging shareholder holds stock in a foreign corporation that is also an exchanging shareholder and a foreign acquiring corporation in the same restructuring transaction—

(A)The earnings and profits attributable to such stock shall be the sum of the earnings and profits attributable to the stock of such foreign corporation immediately before the restructuring transaction (including amounts attributed under section 1248(c)(2)) and the earnings and profits attributable to the stock of the foreign acquiring corporation accumulated after the restructuring transaction (including amounts attributed under section 1248(c)(2)); and

(B)Paragraph (b)(6) of this section applies. See paragraph (b)(7) *Example 8* of this section.

(iii)Where the acquiring corporation is a foreign corporate shareholder with respect to stock of a foreign acquired corporation, paragraph (b)(3) of this section shall not apply for purposes of determining the earnings and profits attributable to stock in the foreign acquiring corporation owned by a non-exchanging shareholder thereof (see section 1248(c)(2)). See paragraph (b)(7) *Example 6* of this section.

(5)*Reduction in earnings and profits attributable to stock to prevent multiple inclusions with respect to the same earnings and profits.* To the extent consistent with the principles of section 1248, adjustments to earnings and profits attributable to stock shall be made such that section 1223(1) and

(2)and this section are applied in a manner that results in earnings and profits being taken into account only once. Thus, for example, when a controlled foreign corporation sells or exchanges all or part of the stock of another foreign corporation to which earnings and profits are attributable pursuant to this paragraph

(b)or paragraph

(c)of this section, proportionate reductions shall be made to the earnings and profits attributed to the stock of the selling foreign corporate shareholder owned by a section 1248 shareholder. See paragraph (b)(7) *Example 7* of this section.

(6)*Special rule regarding section 381.* Solely for purposes of determining the earnings and profits (or deficit in earnings and profits) attributable to stock pursuant to this paragraph (b), the earnings and profits of a corporation shall not include earnings and profits that are treated as received or incurred under section 381(c)(2)(A) and § 1.381(c)(2)-1(a). See paragraph (b)(7) *Example 4* of this section.

(7)*Examples.* The application of this paragraph

(b)is illustrated by the following examples. Unless otherwise indicated, in the following examples assume that—

(ii)There is no income inclusion required pursuant to section 367(b) and the regulations under that section, and all reporting requirements in those regulations are complied with;

(iii)References to earnings and profits are to earnings and profits that would be includible in income as a dividend under section 1248 and the regulations under that section if stock to which the earnings and profits are attributable were sold or exchanged by its shareholder;

(iv)Each corporation has only a single class of stock outstanding and uses the calendar year as its taxable year; and

(v)Each transaction is unrelated to all other transactions. Example 1. *A section 351 exchange of property other than stock in a foreign corporation with respect to which the exchanging shareholder is either a section 1248 shareholder or a foreign corporate shareholder.*

(i)*Facts.* DC1, a domestic corporation, has owned all the stock of CFC, a foreign corporation, since CFC's formation on January 1, year 3. On December 31, year 5, DC2, a domestic corporation unrelated to DC1, contributes property it has held since January 1, year 1, to CFC in exchange for voting stock of CFC in a restructuring transaction that is an exchange under section 351. The property that DC2 contributes is not stock in a foreign corporation with respect to which DC2 was either a section 1248 shareholder or a foreign corporate shareholder. DC2 receives 80% of the voting stock of CFC in the restructuring transaction and its holding period in that CFC stock, determined pursuant to section 1223(1), began on January 1, year 1. CFC has $100 of accumulated earnings and profits on December 31, year 5. On December 31, year 7, when the accumulated earnings and profits of CFC are $200, DC2, a section 1248 shareholder with respect to CFC, sells its CFC stock.

(ii)*Result.* Under paragraph (b)(2)(i) of this section, the earnings and profits attributable to the CFC stock sold by DC2 are $80. This amount consists of none of the $100 of earnings and profits accumulated by CFC before the restructuring transaction, and 80% of the $100 of earnings and profits of CFC accumulated after the restructuring transaction. Example 2. *A section 351 exchange of controlled foreign corporation stock by a United States person for stock in a controlled foreign corporation in a restructuring transaction.*

(i)*Facts.* The facts are the same as in *Example 1* except as follows. The property that DC2 contributes is 100% of the stock in CFC2, a foreign corporation. DC2 has owned all the stock of CFC2 since CFC2's formation on January 1, year 2, and CFC2 has $200 of earnings and profits as of December 31, year 5. CFC2 does not accumulate any additional earnings and profits from December 31, year 5, to December 31, year 7. On December 31, year 7, when the accumulated earnings and profits of CFC are $200, DC2, a section 1248 shareholder with respect to CFC, sells its CFC stock. Also on that date, DC1 sells its CFC stock.

(ii)*Result.*

(A)*DC2 sale.* Pursuant to paragraph (b)(2)(ii) of this section, the earnings and profits attributable to the CFC stock sold by DC2 are $280. This amount consists of all of the $200 of earnings and profits of CFC2 accumulated before the restructuring transaction (see also section 1248(c)(2)), none of the $100 of earnings and profits accumulated by CFC before the restructuring transaction, and 80% of the $100 of earnings and profits of CFC accumulated after the restructuring transaction.

(B)*DC1 sale.* Pursuant to paragraph (b)(4) of this section, the earnings and profits attributable to the CFC stock sold by DC1, a non-exchanging shareholder in the restructuring transaction, are $120. This amount consists of all of the $100 of earnings and profits of CFC accumulated before the restructuring transaction, none of the $200 of earnings and profits of CFC2 accumulated before the restructuring transaction, and 20% of the $100 of earnings and profits of CFC accumulated after the restructuring transaction. Example 3. *A section 351 exchange of controlled foreign corporation stock by a United States person for stock in a domestic corporation in a restructuring transaction.*

(i)*Facts.* DC1, a domestic corporation, has owned all of the stock of CFC, a foreign corporation, since CFC's formation on January 1, year 1. DC1 has also owned all the stock of DC2, a domestic corporation, since DC2's formation on January 1, year 1. On December 31, year 2, DC1 contributes the stock of CFC to DC2 in exchange for stock in DC2 in a restructuring transaction that is an exchange described in section 351. On December 31, year 2, CFC has $100 of accumulated earnings and profits. DC2 has a basis in the CFC stock determined under section 362, and is considered to have held the CFC stock since January 1, year 1, pursuant to section 1223(2). On December 31, year 4, when the accumulated earnings and profits of CFC are still $100, DC2 sells its CFC stock.

(ii)*Result.* Under paragraph (b)(3)(ii) of this section, $100 of accumulated earnings and profits of CFC is attributable to the stock of CFC sold by DC2, even though DC2 did not hold the stock of CFC during the time CFC accumulated the earnings and profits. Example 4. *Acquisition of a controlled foreign corporation by a controlled foreign corporation in a reorganization described in section 368(a)(1)(C) (or section 368(a)(1)(B)).*

(i)*Facts.* DC1, a domestic corporation, has owned all the stock of CFC1, a foreign corporation, since its formation on January 1, year 1. DC2, a domestic corporation unrelated to DC1, has owned all of the stock of CFC2, a foreign corporation, since its formation on January 1, year 2. On December 31, year 3, pursuant to a restructuring transaction that is a reorganization described in section 368(a)(1)(C), CFC1 transfers all of its assets to CFC2 in exchange for 25% of the voting stock of CFC2. CFC1 distributes the CFC2 stock to DC1 and the CFC1 stock is cancelled. DC1's holding period in the CFC2 stock, determined under section 1223(1), begins on January 1, year 1. On December 31, year 3, CFC1 has $100 of accumulated earnings and profits and CFC2 has $200 of accumulated earnings and profits. CFC2 succeeds to the $100 of CFC1 accumulated earnings and profits in the reorganization under section 381. From January 1, year 4 to December 31, year 5, CFC2 incurred a deficit in earnings and profits in the amount of ($200). On December 31, year 5, both DC1 and DC2 sell their stock in CFC2.

(ii)*Result.*

(A)*DC1.* Pursuant to paragraph (b)(2)(ii) of this section, $50 of earnings and profits is attributable to the CFC2 stock sold by DC1. This amount consists of $100 of CFC1's earnings and profits accumulated before the restructuring transaction, reduced by 25% of CFC2's ($200) post-restructuring transaction deficit in earnings and profits. None of the $200 of CFC2's earnings and profits accumulated by CFC2 prior to the reorganization is attributed to the CFC2 stock sold by DC1. Also, none of the earnings and profits CFC2 succeeded to under section 381 is attributed to the CFC2 stock sold by DC1, pursuant to paragraph (b)(6) of this section.

(B)*DC2.* Pursuant to paragraph (b)(4) of this section, there is $50 of accumulated earnings and profits attributable to the CFC2 stock sold by DC2. This amount consists of all of the $200 of CFC2's earnings and profits accumulated by CFC2 prior to the reorganization, reduced by 75% of CFC2's deficit in earnings and profits in the amount of ($200) incurred after the restructuring transaction. None of the $100 of CFC1 accumulated earnings and profits succeeded to under section 381 is attributable to the CFC2 stock sold by DC2, pursuant to paragraph (b)(6) of this section.

(C)*Section 368(a)(1)(B) reorganization.* If, instead of DC1 acquiring its 25% interest in CFC2 pursuant to a reorganization described in section 368(a)(1)(C), DC1 had transferred the stock of CFC1 to CFC2 in exchange for 25% of the voting stock of CFC2 in a reorganization described in section 368(a)(1)(B), the results would be the same as described in paragraphs

(A)and

(B)of this *Example 4* . Example 5. *Acquisition of the stock of a foreign corporation that controls a domestic acquiring corporation in a triangular reorganization described in section 368(a)(1)(C).*

(i)*Facts.* DC1, a domestic corporation, has owned all the stock of CFC1, a foreign corporation, since its formation on January 1, year 1. CFC1 has owned all the stock of CFC2, a foreign corporation, since its formation on January 1, year 1. FC, a foreign corporation that is not a controlled foreign corporation, has owned all of the stock of DC2, a domestic corporation, since its formation on January 1, year 2. On December 31, year 3, pursuant to a restructuring transaction that was a triangular reorganization described in section 368(a)(1)(C), CFC1 transfers all of its assets, including the CFC2 stock, to DC2 in exchange for 60% of the voting stock of FC. CFC1 transfers the voting stock of FC to DC1 and the CFC1 stock is cancelled. Pursuant to section 1223(1), DC1 is considered to have held the stock of FC since January 1, year 1. Under section 1223(2), DC2 is considered to have held the stock of CFC2 since January 1, year 1. On December 31, year 3, CFC1 has $100 of earnings and profits, CFC2 has $300 of earnings and profits, and FC has $200 of earnings and profits. DC1 includes the $100 all earnings and profits amount attributable to its CFC1 stock in income as a deemed dividend under § 1.367(b)-3 upon the exchange of CFC1 stock for FC stock. Pursuant to the lower-tier earnings exclusion of § 1.367(b)-2(d)(3)(ii), that amount does not include the $300 of earnings and profits of CFC2. From January 1, year 4, until December 31, year 5, FC (now a controlled foreign corporation) accumulates an additional $50 of earnings and profits. From January 1, year 4 until December 31, year 5, CFC2 accumulates an additional $100 of earnings and profits. On December 31, year 5, DC1 sells its stock in FC and DC2 sells its stock in CFC2.

(ii)*Result.*

(A)*DC1.* Pursuant to paragraph (b)(2)(iii) of this section, there is $30 of earnings and profits attributable to the stock of FC sold by DC1. This amount consists of 60% of the $50 of earnings and profits accumulated by FC after the restructuring transaction, and none of the earnings and profits accumulated by CFC1, CFC2, or FC before the restructuring transaction.

(B)*DC2.* Pursuant to paragraph (b)(3)(ii) of this section, there is $400 of earnings and profits attributable to the stock of CFC2 sold by DC2. This amount consists of all of the earnings and profits accumulated by CFC2 during DC2's section 1223(2) holding period. Example 6. *Acquisition of the stock of a foreign corporation that controls a foreign acquiring corporation in a reorganization described in section 368(a)(1)(C).*

(i)*Facts.* DC1, a domestic corporation, has owned all the stock of CFC1, a foreign corporation, since its formation on January 1, year 1. CFC1 has owned all the stock of CFC2, a foreign corporation, since its formation on January 1, year 1. FC, a foreign corporation that is not a controlled foreign corporation, has owned all of the stock of FC2, a foreign corporation, since its formation on January 1, year 2. On December 31, year 3, pursuant to a restructuring transaction that was a triangular reorganization described in section 368(a)(1)(C), CFC1 transfers all of its assets, including the CFC2 stock, to FC2 in exchange for 60% of the voting stock of FC. CFC1 transfers the voting stock of FC to DC1 and the CFC1 stock is cancelled. Pursuant to section 1223(1), DC1 is considered to have held the stock of FC since January 1, year 1. Under section 1223(2), FC2 is considered to have held the stock of CFC2 since January 1, year 1. On December 31, year 3, CFC1 has $100 of earnings and profits, CFC2 has $300 of earnings and profits, FC has $200 of earnings and profits, and FC2 has no earnings and profits. From January 1, year 4, until December 31, year 5, FC (now a controlled foreign corporation) accumulates an additional $50 of earnings and profits. From January 1, year 4 until December 31, year 5, CFC2 accumulates an additional $100 of earnings and profits. FC2, a controlled foreign corporation after the restructuring transaction, accumulates $100 of earnings and profits from January 1, year 4, until December 31, year 5. On December 31, year 5, DC1 sells its stock in FC.

(ii)*Result.* Pursuant to paragraphs (b)(2)(ii) and (b)(4)(iii) of this section, there is $550 of earnings and profits attributable to the stock of FC sold by DC1. This amount consists of all $400 of the CFC1 and CFC2 earnings and profits accumulated before the restructuring transaction (see also section 1248(c)(2)), and 60% of the $250 of the earnings and profits accumulated by FC, FC2, and CFC2 after the restructuring transaction. Example 7. *Acquisition of controlled foreign corporation stock by a controlled foreign corporation in a reorganization described in section 368(a)(1)(B), followed by a sale of the acquired stock by the acquiring controlled foreign corporation.*

(i)*Facts.* DC1, a domestic corporation, has owned all of the outstanding stock of CFC1, a foreign corporation, since its formation on January 1, year 1. CFC1 has owned all of the outstanding stock of CFC3, a foreign corporation, since its formation on January 1, year 1. DC2, a domestic corporation unrelated to DC1, has owned all of the outstanding stock of CFC2, a foreign corporation, since its formation on January 1, year 2. On December 31, year 3, pursuant to a restructuring transaction that is a reorganization described in section 368(a)(1)(B), CFC1 transfers all of the stock of CFC3 to CFC2 in exchange for 40% of CFC2's stock. On December 31, year 3, CFC2 and CFC3 have, respectively, $40 and $20 of earnings and profits. On December 31, year 5, when the accumulated earnings and profits of CFC3 are $50 ($20 of earnings and profits as of December 31, year 3, plus $30 of earnings and profits generated from January 1, year 4, through December 31, year 5), CFC2 sells the stock of CFC3 in a transaction to which section 964(e) applies.

(ii)*Result.*

(A)*CFC2.* Pursuant to paragraph (b)(3)(ii) of this section, there is $50 of earnings and profits attributable to the CFC3 stock sold by CFC2. This amount consists of the accumulated earnings and profits attributable to CFC2's entire section 1223(2) holding period in the CFC3 stock.

(B)*CFC1, DC2, and DC1.* Under paragraph (b)(5) of this section, the earnings and profits attributable to the CFC2 stock held by CFC1 and DC2, and the earnings and profits attributable to the CFC1 stock held by DC1, will be reduced (regardless of whether CFC2 recognizes gain on its sale of CFC3 stock). ( *1* ) *CFC1.* The earnings and profits attributable to the CFC2 stock held by CFC1 will be reduced by $32, or the amount of earnings and profits as of December 31, year 5, that would have been attributable to the CFC2 stock held by CFC1 pursuant to paragraph (b)(2)(ii) of this section. This amount consists of all of the $20 of earnings and profits accumulated by CFC3 before the restructuring transaction and 40% of the $30 of earnings and profits accumulated by CFC3 after the restructuring transaction (.40 × $30 = $12). ( *2* ) *DC1.* The earnings and profits attributable to the CFC1 stock held by DC1 will also be reduced by $32, or the amount of earnings and profits that would have been attributable to the CFC1 stock held by DC1 as of December 31, year 5. ( *3* ) *DC2.* The earnings and profits attributable to the CFC2 stock held by DC2 will be reduced by $18, or the amount of earnings and profits that would have been attributable to the CFC2 stock held by DC2 as of December 31, year 5, under paragraph (b)(4) of this section. This amount consists of 60% of the $30 (.60 × $30 = $18) of earnings and profits accumulated by CFC3 after the restructuring transaction.

(C)*Partial sale by CFC2.* If, instead of selling 100% of the CFC3 stock, on December 31, year 5, CFC2 sells only 50% of its CFC3 stock, paragraph (b)(5) of this section requires CFC1 to reduce the earnings and profits of CFC3 attributable to its CFC2 stock to $16. Similarly, DC1 would be required to reduce the earnings and profits of CFC3 attributable to its CFC1 stock by $16. Paragraph (b)(5) of this section also requires DC2 to reduce the CFC3 earnings and profits attributable to its CFC2 stock by $9. These reductions occur without regard to whether CFC2 recognizes gain on its sale of CFC3 stock. Example 8. *Acquisition of the assets of a lower-tier controlled foreign corporation by an upper-tier controlled foreign corporation in a restructuring transaction described in section 368(a)(1)(C).*

(i)*Facts.* DC, a domestic corporation, has owned all the stock of CFC1, a controlled foreign corporation, since its formation on January 1, year 1. CFC1 is a holding company that has owned 79% of the stock of CFC2, a controlled foreign corporation, since its formation on January 1, year 1. The other 21% of CFC2 stock is owned by X, an unrelated party. On December 31, year 1, CFC2 has $200 of earnings and profits. On December 31, year 1, CFC1 has no accumulated earnings and profits. On December 31, year 1, pursuant to a restructuring transaction described in section 368(a)(1)(C), CFC2 transfers all its properties to CFC1. In exchange, CFC1 assumes the liabilities of CFC2 and transfers to CFC2 voting stock representing 21% of the stock of CFC1. CFC2 distributes the voting stock to X and liquidates. The liabilities assumed do not exceed 20% of the value of the properties of CFC2. From January 1, year 2, to December 31, year 3, CFC1 accumulates $100 of earnings and profits. On December 31, year 3, DC sells its CFC1 stock.

(ii)*Result.* Pursuant to paragraph (b)(4)(ii) of this section, there is $237 of earnings and profits attributable to DC's CFC1 stock. This amount consists of 79% of CFC2's $200 of earnings and profits accumulated before the restructuring transaction (see section 1248(c)(2)), and 79% of CFC1's $100 of earnings and profits accumulated after the restructuring transaction. Pursuant to paragraph (b)(6) of this section, none of CFC2's $200 of earnings and profits to which CFC1 succeeded under section 381 would be attributable to DC's CFC1 stock.

(c)*Earnings and profits attributable to stock of a foreign distributee corporation that is a foreign corporate shareholder with respect to a foreign liquidating corporation* —(1) *General rule.* If a foreign corporation (liquidating corporation) makes a distribution of property in complete liquidation under section 332 to a foreign corporation (distributee), and immediately before the liquidation the distributee was a foreign corporate shareholder with respect to the liquidating foreign corporation, the amount of earnings and profits attributable to the distributee stock upon its subsequent sale or exchange will be determined under this paragraph (c)(1). The earnings and profits attributable will be the sum of the earnings and profits attributable to the stock of the distributee immediately before the liquidation (including amounts attributed under section 1248(c)(2)) and the earnings and profits attributable to the stock of the distributee accumulated after the liquidation (including amounts attributed under section 1248(c)(2)).

(2)*Special rule regarding section 381.* Solely for purposes of determining the earnings and profits (or deficit in earnings and profits) attributable to stock under this paragraph (c), the attributed earnings and profits of a corporation shall not include earnings and profits that are treated as received or incurred pursuant to section 381(c)(2)(A) and § 1.381(c)(2)-1(a).

(3)Example.

(i)*Facts.* DC, a domestic corporation, has owned all of the stock of CFC1, a foreign corporation, since its formation on January 1, year 1. CFC1 is an operating company that has owned all of the stock of CFC2, a foreign corporation, since its formation on January 1, year 1. On December 31, year 2, CFC1 has $200 of accumulated earnings and profits and CFC2 has a ($200) deficit in earnings and profits. On December 31, year 2, CFC2 distributes all of its assets and liabilities to CFC1 in a liquidation to which section 332 applies. From January 1, year 3, until December 31, year 4, CFC1 accumulates no additional earnings and profits. On December 31, year 4, DC sells its stock in CFC1.

(ii)*Result.* Pursuant to paragraph (c)(1) of this section, there are no earnings and profits attributable to DC's CFC1 stock. This amount consists of the sum of the earnings and profits attributable to the CFC1 stock immediately before the liquidation (100% of the $200 accumulated earnings and profits of CFC1 and 100% of CFC2's ($200) deficit in earnings and profits) and the amount of earnings and profits accumulated after the section 332 liquidation (see also section 1248(c)(2)).

(d)*Effective/applicability date.* This section applies to income inclusions that occur on or after July 30, 2007. Kevin M. Brown, Deputy Commissioner for Services and Enforcement. Approved: July 16, 2007. Eric Solomon, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. E7-14466 Filed 7-27-07; 8:45 am] BILLING CODE 4830-01-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R09-OAR-2007-0236; FRL-8444-3] Partial Withdrawal of Direct Final Rule Revising the California State Implementation Plan, San Joaquin Valley Air Pollution Control District AGENCY: Environmental Protection Agency (EPA). ACTION: Final rule; partial withdrawal. SUMMARY: On May 30, 2007 (72 FR 29886), EPA published a direct final approval of revisions to the California State Implementation Plan (SIP). These revisions concerned San Joaquin Valley Air Pollution Control District (SJVAPCD) Rule 4307, Boilers, Steam Generators and Process Heaters—2.0 MMBtu/hr to 5.0 MMBtu/hr; Rule 4308, Boilers, Steam Generators and Process Heaters—0.075 MMBtu/hr to 2.0 MMBtu/hr; Rule 4309, Dryers, Dehydrators, and Ovens; Rule 4352, Solid Fuel Fired Boilers, Steam Generators and Process Heaters; and Rule 4905, Natural Gas-Fired, Fan-Type Residential Central Furnaces. The direct final action was published without prior proposal because EPA anticipated no adverse comment. The direct final rule stated that if adverse comments were received by June 29, 2007, EPA would publish a timely withdrawal in the **Federal Register** . EPA received timely adverse comments. Consequently, with this revision we are withdrawing the direct final approval of SJVAPCD Rule 4352. EPA will either address the comments in a subsequent final action based on the parallel proposal also published on May 30, 2007 (72 FR 29901), or repropose an alternative action. As stated in the parallel proposal, EPA will not institute a second comment period on a subsequent final action. The other rules approved in the May 30, 2007 direct final action, SJVAPCD Rules 4307, 4308, 4309, and 4905, are not affected by this partial withdrawal and are incorporated into the SIP as of the effective date of the May 30, 2007 direct final action. DATES: This rule and withdrawal are effective July 30, 2007. ADDRESSES: EPA has established docket number EPA-R09-OAR-2007-0236 for this action. The index to the docket is available electronically at *http://www.regulations.gov* and in hard copy at EPA Region IX, 75 Hawthorne Street, San Francisco, California. While all documents in the docket are listed in the index, some information may be publicly available only at the hard copy location ( *e.g.* , copyrighted material), and some may not be publicly available in either location ( *e.g.* , CBI). To inspect the hard copy materials, please schedule an appointment during normal business hours with the contact listed in the FOR FURTHER INFORMATION CONTACT section. FOR FURTHER INFORMATION CONTACT: Francisco Dóñez, EPA Region IX,

(415)972-3956, *Donez.Francisco@epa.gov* . List of Subjects in 40 CFR Part 52 Environmental protection, Air pollution control, Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements. Dated: July 10, 2007. Keith Takata, Acting Regional Administrator, Region IX. Part 52, chapter I, title 40 of the Code of Federal Regulations is amended as follows: PART 52—[AMENDED] 1. The authority citation for part 52 continues to read as follows: Authority: 42 U.S.C. 7401 *et seq.* 2. Section 52.220 is amended by revising paragraph (c)(347)(i)(A)( *1* ) to read as follows: § 52.220 Identification of plan.

(c)* * *

(347)* * *

(i)* * *

(A)* * * ( *1* ) Rule 4307, adopted on April 20, 2006. [FR Doc. E7-14679 Filed 7-27-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R05-OAR-2007-0292; FRL-8442-9] Approval and Promulgation of Air Quality Implementation Plans; Indiana AGENCY: Environmental Protection Agency (EPA). ACTION: Direct final rule. SUMMARY: EPA is approving Indiana's requests to amend its State Implementation Plan

(SIP)for control of particulate matter in 326 IAC 6.5-7-13. Indiana submitted the SIP revision requests to EPA on November 1, 2005 and March 20, 2007. The revisions would change the source name from St. Mary's to Holy Cross Services Corporation (Saint Mary's Campus), and clarify and revise existing particulate matter

(PM)emission limits for the boilers at that source to reflect current operating conditions. These revisions will not result in an increase in PM. DATES: This direct final rule will be effective September 28, 2007, unless EPA receives adverse comments by August 29, 2007. If adverse comments are received, EPA will publish a timely withdrawal of the direct final rule in the **Federal Register** informing the public that the rule will not take effect. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R05-OAR-2007-0292, by one of the following methods: 1. *http://www.regulations.gov* : Follow the on-line instructions for submitting comments. 2. *E-mail:* *mooney.john@epa.gov.* 3. *Fax:*

(312)886-5824. 4. *Mail:* John M. Mooney, Chief, Criteria Pollutant Section, Air Programs Branch (AR-18J), U.S. Environmental Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. 5. *Hand Delivery:* John M. Mooney, Chief, Criteria Pollutant Section, Air Programs Branch (AR-18J), U.S. Environmental Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. Such deliveries are only accepted during the Regional Office normal hours of operation, and special arrangements should be made for deliveries of boxed information. The Regional Office official hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m. excluding Federal holidays. *Instructions:* Direct your comments to Docket ID No. EPA-R05-OAR-2007-0292. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at *http://www.regulations.gov* , including any personal information provided, unless the comment includes information claimed to be Confidential Business Information

(CBI)or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through *http://www.regulations.gov* or e-mail. The *http://www.regulations.gov* Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through *http://www.regulations.gov* , your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. *Docket:* All documents in the docket are listed in the *http://www.regulations.gov* index. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in *http://www.regulations.gov* or in hard copy at the Environmental Protection Agency, Region 5, Air and Radiation Division, 77 West Jackson Boulevard, Chicago, Illinois 60604. This Facility is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. We recommend that you telephone Charles Hatten, Environmental Engineer, at

(312)886-6031 before visiting the Region 5 office. FOR FURTHER INFORMATION CONTACT: Charles Hatten, Environmental Engineer, Criteria Pollutant Section, Air Programs Branch (AR-18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604,

(312)886-6031, *Hatten.Charles@epa.gov* . SUPPLEMENTARY INFORMATION: Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows: I. To Whom Does This Action Apply? II. What Is EPA Approving? III. What Are the Changes from the Current Rule? IV. What Action Is EPA Taking? V. Statutory and Executive Order Reviews. I. To Whom Does This Action Apply? This action applies to Holy Cross Services Corporation (Saint Mary's Campus), Notre Dame, Indiana. II. What Is EPA Approving? EPA is approving revisions to Indiana's PM SIP for the three boilers located in St. Joseph County, Notre Dame, Indiana. The revisions address Title 326 of the Indiana Administrative Code (IAC), Rule 6.5-7, Section 13, to clarify and amend existing PM emission limits. They also change the source name from St. Mary's to Holy Cross Services Corporation (Saint Mary's Campus). Indiana held public hearings on these revisions February 2, and June 1, 2005; June 7, and August 2, 2006. III. What Are the Changes From the Current Rule? On March 22, 2006 (71 FR 14383), EPA published a direct final rule approving revisions to the Indiana SIP in 326 IAC 6.5-7 to relocate and recodify PM emission limits for all sources in St. Joseph County, Indiana. Today's action revises 326 IAC 6.5-7, Section 13, which contains particulate emission limits for the boilers at St. Mary's College in Notre Dame, Indiana, to reflect current operating conditions and ownership by Holy Cross Services Corporation of those boilers. Currently, SIP rule 326 IAC 6.5-7-13 identifies St. Mary's College as the owner, operator and permittee of the subject boilers. It also incorrectly lists boiler number 1 as 100% natural gas-fired, and boilers number 2 and 3 as coal-fired. According to Indiana, however, boilers numbers 1 and 2 are actually gas-fired, with the capability of burning number 2 fuel oil as a back-up, while boiler number 3 exclusively burns natural gas. The revised rule corrects this error. It also tightens the applicable PM limits for the two boilers that have oil-burning capability (boilers number 1 and 2): from 0.110 lbs/MMBTU (12.90 tons/year) to 0.014 lbs/MMBTU (3.9 tons/year). Finally, the SIP revision amends 326 IAC 6.5-7-13 by correctly identifying the owner, operator and permittee of the St. Mary's boilers as Holy Cross Services. IV. What Action is EPA Taking? EPA is approving source-specific revisions to Indiana's PM SIP in 326 IAC 6.5-7 to change the name of the owner, operator and permittee of the three boilers at St. Mary's College to Holy Cross Services Corporation (Saint Mary's Campus), and to revise the PM limits to reflect current operating conditions of the boilers at St. Mary's College. We are publishing this action without prior proposal because we view this as a noncontroversial amendment and anticipate no adverse comments. However, in the proposed rules section of this **Federal Register** publication, we are publishing a separate document that will serve as the proposal to approve the state plan if relevant adverse written comments are filed. This rule will be effective September 28, 2007 without further notice unless we receive relevant adverse written comments by August 29, 2007. If we receive such comments, we will withdraw this action before the effective date by publishing a subsequent document that will withdraw the final action. All public comments received will then be addressed in a subsequent final rule based on the proposed action. The EPA will not institute a second comment period. Any parties interested in commenting on this action should do so at this time. If we do not receive any comments, this action will be effective September 28, 2007. V. Statutory and Executive Order Reviews Executive Order 12866: Regulatory Planning and Review Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and, therefore, is not subject to review by the Office of Management and Budget. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use Because it is not a “significant regulatory action” under Executive Order 12866 or a “significant energy action,” this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). Regulatory Flexibility Act This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ). Unfunded Mandates Reform Act Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Order 13175: Consultation and Coordination With Indian Tribal Governments This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (59 FR 22951, November 9, 2000). Executive Order 13132: Federalism This action also does not have Federalism implications because it does not have substantial direct effects 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, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act (CAA). Executive Order 13045: Protection of Children From Environmental Health and Safety Risks This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it approves a state rule implementing a Federal Standard. National Technology Transfer Advancement Act In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. In this context, in the absence of a prior existing requirement for the state to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. Paperwork Reduction Act This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ). Congressional Review Act The Congressional Review Act, 5 U.S.C. 801 *et seq.* , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the **Federal Register** . A major rule cannot take effect until 60 days after it is published in the **Federal Register** . This action is not a “major rule” as defined by 5 U.S.C. section 804(2). Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 28, 2007. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).) List of Subjects in 40 CFR Part 52 Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, PM, Reporting and recordkeeping requirements. Dated: July 11, 2007. Bharat Mathur, Acting Regional Administrator, Region 5. For the reasons stated in the preamble, part 52, chapter I, of title 40 of the Code of Federal Regulations is amended as follows: PART 52—[AMENDED] 1. The authority citation for part 52 continues to read as follows: Authority: 42 U.S.C. 7401 *et seq.* Subpart P—Indiana 2. § 52.770 is amended by adding paragraph (c)(180) to read as follows: § 52.770 Identification of plan.

(c)* * *

(180)On November 1, 2005, and supplemented on March 20, 2007, the State of Indiana submitted a source specific revision to its state implementation plan for control of particulate matter in Title 326 of the Indiana Administrative Code (IAC), Rule 6.5-7, Section 13, which contains particulate matter emission limits for Holy Cross Services Corporation, to reflect current operating conditions of the boilers at St. Mary's College, located in Notre Dame, Indiana. The revision in 326 IAC 6.5-7-13 also changes the source name from St. Mary's to Holy Cross Services Corporation (Saint Mary's Campus).

(i)Incorporation by reference. Indiana Administrative Code Title 326: Air Pollution Control Board, Article 6.5: PM Limitations Except Lake County, Rule 7: St. Joseph County, Section 13: Holy Cross Services Corporation (Saint Mary's Campus). Approved by the Attorney General January 18, 2007. Approved by the Governor January 23, 2007. Filed with the Publisher January 26, 2007. Published on the Indiana Register Web site February 14, 2007, Document Identification Number (DIN):20070214-IR-326060121FRA. Effective February 25, 2007. [FR Doc. E7-14476 Filed 7-27-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 52 and 97 [EPA-R06-OAR-2007-0252; FRL-8446-3] Approval and Promulgation of Implementation Plans; Texas; Clean Air Interstate Rule Nitrogen Oxides Annual Trading Program AGENCY: Environmental Protection Agency (EPA). ACTION: Direct final rule. SUMMARY: EPA is taking a direct final action to approve a revision to the Texas State Implementation Plan

(SIP)submitted by the State of Texas on August 4, 2006, as the Texas Clean Air Interstate Rule

(CAIR)Nitrogen Oxides (NO X ) Annual Abbreviated SIP. The abbreviated SIP revision EPA is approving includes the Texas methodologies for allocation of annual NO X allowances for Phase 1 of CAIR, the control periods 2009 through 2014, and for allocating allowances from the compliance supplement pool

(CSP)in the CAIR NO X annual trading program. EPA has determined that the Texas CAIR NO X Annual Abbreviated SIP revision satisfies the applicable requirements of a CAIR abbreviated SIP revision. Upon the effective date of approval of the Texas CAIR NO X Annual Abbreviated SIP revision, EPA by ministerial action will note in the Texas CAIR NO X Annual Federal Implementation Plan's

(FIP)incorporated regulations that the Texas rules for annual NO X allowances under Phase 1 of CAIR and allocating allowances from the CSP apply, rather than the Federal FIP rules. The intended effect of this action is to reduce NO X emissions from the State of Texas that are contributing to nonattainment of the PM 2.5 National Ambient Air Quality Standard (NAAQS or standard) in downwind states. This action is being taken under section 110 of the Federal Clean Air Act (the Act or CAA). DATES: This rule is effective on September 28, 2007 without further notice, unless EPA receives relevant adverse comment by August 29, 2007. If EPA receives such comment, EPA will publish a timely withdrawal in the **Federal Register** informing the public that this rule will not take effect. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R06-OAR-2007-0252, by one of the following methods:

(1)*http://www.regulations.gov* : Follow the on-line instructions for submitting comments.

(2)*E-mail:* Mr. Jeff Robinson at *robinson.jeffrey@epa.gov* . Please also cc the person listed in the FOR FURTHER INFORMATION CONTACT paragraph below.

(3)*U.S. EPA Region 6 “Contact Us” Web site* : *http://epa.gov/region6/r6coment.htm* . Please click on “6PD” (Multimedia) and select “Air” before submitting comments.

(4)*Fax:* Mr. Jeff Robinson, Chief, Air Permits Section (6PD-R), at fax number 214-665-6762.

(5)*Mail:* Mr. Jeff Robinson, Chief, Air Permits Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, Texas 75202-2733.

(6)*Hand or Courier Delivery:* Mr. Jeff Robinson, Chief, Air Permits Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, Texas 75202-2733. Such deliveries are accepted only between the hours of 8:30 a.m. and 4:30 p.m. weekdays except for legal holidays. Special arrangements should be made for deliveries of boxed information. *Instructions:* Direct your comments to Docket ID No. EPA-R06-OAR-2007-0252. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at *http://www.regulations.gov* , including any personal information provided, unless the comment includes information claimed to be Confidential Business Information

(CBI)or other information the disclosure of which is restricted by statute. Do not submit information through *http://www.regulations.gov* or e-mail, if you believe that it is CBI or otherwise protected from disclosure. The *http://www.regulations.gov* Web site is an “anonymous access” system, which means that EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through *http://www.regulations.gov* , your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment along with any disk or CD-ROM submitted. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters and any form of encryption and should be free of any defects or viruses. For additional information about EPA's public docket, visit the EPA Docket Center homepage at *http://www.epa.gov/epahome/dockets.htm* . *Docket:* All documents in the docket are listed in the *http://www.regulations.gov* index. Although listed in the index, some information is not publicly available, *e.g.* , CBI or other information the disclosure of which is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in *http;//www.regulations.gov* or in hard copy at the Air Permits Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733. The file will be made available by appointment for public inspection in the Region 6 FOIA Review Room between the hours of 8:30 a.m. and 4:30 p.m. weekdays except for legal holidays. Contact the person listed in the FOR FURTHER INFORMATION CONTACT paragraph below to make an appointment. If possible, please make the appointment at least two working days in advance of your visit. A 15 cent per page fee will be charged for making photocopies of documents. On the day of the visit, please check in at the EPA Region 6 reception area on the seventh floor at 1445 Ross Avenue, Suite 700, Dallas, Texas. The State submittal related to this SIP revision, and which is part of the EPA docket, is also available for public inspection at the State Air Agency listed below during official business hours by appointment: Texas Commission on Environmental Quality, Office of Air Quality, 12124 Park 35 Circle, Austin, Texas 78753. FOR FURTHER INFORMATION CONTACT: If you have questions concerning today's proposal, please contact Ms. Adina Wiley (6PD-R), Air Permits Section, Environmental Protection Agency, Region 6, 1445 Ross Avenue (6PD-R), Suite 1200, Dallas, TX 75202-2733. The telephone number is

(214)665-2115. Ms. Wiley can also be reached via electronic mail at *wiley.adina@epa.gov.* SUPPLEMENTARY INFORMATION: Throughout this document wherever, any reference to “we,” “us,” or “our” is used, we mean EPA. Table of Contents I. What Action is EPA Taking? II. What is the Regulatory History of CAIR and the CAIR FIP? III. What are the General Requirements of CAIR and the CAIR FIP? IV. What are the Types of CAIR SIP Submittals? V. What is EPA's Analysis of the Texas CAIR NO X Annual Abbreviated SIP Submittal? A. State Budget for NO X Annual Allowance Allocations B. CAIR NO X Annual Cap-and-Trade Programs C. Applicability Provisions for non-EGU NO X SIP Call Sources D. NO X Annual Allowance Allocations E. Allocation of NO X Allowances from the Compliance Supplement Pool F. Individual Opt-in Units VI. Final Action VII. Statutory and Executive Order Reviews I. What Action is EPA Taking? On April 4, 2006, the State of Texas submitted a revision to the Texas SIP. The submittal consists of new regulations to implement the NO X Annual and SO 2 CAIR programs in the state. The affected state regulations that we are approving today as part of the Texas CAIR NO X Annual Abbreviated SIP are 30 TAC, Chapter 101, Subchapter H, Division 7, sections 101.503, 101.504(a)(1), 101.504(b), 101.506(a)(1), 101.506(b)(1), 101.506(c)-(f), and 101.508. EPA is taking a direct final action to approve the State's NO X annual allocation methodology for Phase 1 (the control periods 2009 through 2014) and the State's methodology for allocating the compliance supplement pool

(CSP)in the CAIR NO X annual trading program, as an abbreviated revision to the Texas SIP. EPA is approving the Texas abbreviated SIP revision as meeting 40 CFR 51.123(p)(1) and (p)(2). We will be taking action on the remaining parts of the Texas NO X Annual and SO 2 CAIR SIP revision submittal at a later date and in future **Federal Register** s. Texas is not subject to the CAIR NO X ozone season trading program. Please see the Technical Support Document

(TSD)for further information. The TSD is available as specified in the section of this document identified as ADDRESSES . The provisions of the Texas CAIR NO X Annual Federal Implementation Plan

(FIP)at 40 CFR 52.2283 require owners and operators of NO X sources located in Texas to meet the Federal NO X annual trading program found at 40 CFR part 97. This Federal trading program's rules include provisions at 40 CFR 97.144(a) and

(b)that if EPA approves the Texas abbreviated SIP revision for NO X annual and CSP allocation methodologies, then the Federal NO X annual and CSP allocation methodologies no longer apply. Instead, if EPA approves the Texas NO X annual allocation methodology into the Texas SIP, then EPA under 40 CFR 52.2283 and 97.144(a) will not make allocations for the CAIR NO X sources in Texas but will use the Texas SIP rules for allocating annual NO X allowances to sources in Texas for Phase 1 of CAIR (2009-2014). The Texas NO X methodology for allocating the CSP in the CAIR NO X Annual Trading Program will be used to allocate allowances from the CSP, instead of the federal methodology for allocating allowances from the CSP. EPA under 40 CFR 52.2283 and 97.144(b) will not make allocations for the CSP for CAIR NO X sources in Texas and will record the allocations of the Texas CSP made under the approved SIP revision. If EPA's direct final action approving the Texas abbreviated SIP becomes effective, then EPA is not required to take any rulemaking action to change the Federal CAIR NO X annual trading program in 40 CFR part 97 or to change the Texas CAIR FIP for NO X annual emissions in 40 CFR 52.2283. Rather EPA, by ministerial action, simply notes in Appendix A, 1 and 2, to Subpart EE of 40 CFR part 97, that Texas has an approved SIP revision for NO X annual allowances for Phase 1 and for NO X allowance allocations from the Texas CSP. Since the Federal CAIR NO X annual trading program's rules at 40 CFR part 97 provide for automatic revision of the Texas CAIR FIP for annual NO X emissions upon approval of such an abbreviated SIP revision, the Texas rules for annual NO X allowances would apply, rather than the Federal rules, upon the effective date of approval. We are publishing this rule without prior proposal because we view this as a noncontroversial amendment and anticipate no relevant adverse comments. However, in the proposed rules section of this **Federal Register** publication, we are publishing a separate document that will serve as the proposal to approve the SIP revision if relevant adverse comments are received. This rule will be effective on September 28, 2007 without further notice unless we receive relevant adverse comment by August 29, 2007. If we receive relevant adverse comments, we will publish a timely withdrawal in the **Federal Register** informing the public that the rule will not take effect. We will address all public comments in a subsequent final rule based on the proposed rule. We will not institute a second comment period on this action. Any parties interested in commenting must do so now. Please note that if we receive adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, we may adopt as final those provisions of the rule that are not the subject of an adverse comment. II. What Is the Regulatory History of the CAIR and the CAIR FIP? EPA promulgated the CAIR on May 12, 2005 (70 FR 25162). In this rule, EPA determined that 28 States and the District of Columbia contribute significantly to nonattainment and interfere with maintenance of the national ambient air quality standards (NAAQS) for fine particles (PM 2.5 ) and/or 8-hour ozone in downwind States in the eastern part of the country. As a result, EPA required those upwind States to revise their SIPs to include control measures that reduce emissions of SO 2 , which is a precursor to PM 2.5 formation, and/or NO X , which is a precursor to both ozone and PM 2.5 formation. For jurisdictions that contribute significantly to downwind PM 2.5 nonattainment, CAIR sets annual State-wide emission reduction requirements ( *i.e.* , budgets) for SO 2 and annual State-wide emission reduction requirements for NO X . Similarly, for jurisdictions that contribute significantly to 8-hour ozone nonattainment, CAIR sets statewide emission reduction requirements for NO X for the ozone season (defined at 40 CFR 97.302 as May 1st to September 30th). Under CAIR, States may implement these emission budgets by participating in the EPA-administered cap-and-trade programs or by adopting and submitting for EPA approval any other control measures. EPA found that Texas significantly contributed to nonattainment of the PM 2.5 standard in Illinois, resulting in Texas being subject to the SO 2 and annual NO X requirements of CAIR. There are no punitive consequences for Texas failing to submit SO 2 and NO X Annual CAIR SIPs. CAIR sets forth what must be included in SIPs to address the requirements of section 110(a)(2)(D) of the Act with regard to interstate transport for the 8-hour ozone and PM 2.5 NAAQS. EPA made national findings, effective May 25, 2005, that the affected States had failed to submit SIPs meeting the requirements of section 110(a)(2)(D). The SIPs were due in July 2000, 3 years after the promulgation of the 8-hour ozone and PM 2.5 NAAQS. These May 25, 2005, findings started a 2-year clock for EPA to promulgate a FIP to address the requirements of section 110(a)(2)(D). Under CAA section 110(c)(1), EPA may issue a FIP anytime after such findings are made and must do so within two years unless a SIP revision correcting the deficiency is approved by EPA before the FIP is promulgated. On April 28, 2006, EPA promulgated FIPs for all States covered by CAIR in order to ensure the emissions reductions required by CAIR are achieved on schedule. See 40 CFR 52.35 and 52.36. Each CAIR State is subject to the FIP until the State fully adopts, and EPA approves, a SIP revision meeting the requirements of CAIR. The CAIR FIPs require certain EGUs to participate in the EPA-administered CAIR SO 2 , NO X annual, and NO X ozone-season trading programs, as appropriate, found at 40 CFR part 97. The CAIR FIPs' SO 2 , NO X annual, and NO X ozone season trading programs impose essentially the same requirements as, and are integrated with, the respective CAIR SIP trading programs. The integration of the CAIR FIP and SIP trading programs means that these trading programs will work together to create effectively a single trading program for each regulated pollutant (SO 2 , NO X annual, and NO X ozone season) in all States covered by the CAIR FIPs' or SIPs' trading program for that pollutant. The CAIR FIPs also allow States to submit abbreviated SIP revisions that, if approved by EPA, will automatically replace or supplement the corresponding CAIR FIP provisions (e.g., the methodology for allocating NO X allowances to sources in the state), while the CAIR FIPs remain in place for all other provisions. *See* 40 CFR 51.123(p)(1)-(3), 71 FR 25328 and 25339 (April 28, 2006). On April 28, 2006, EPA published two more CAIR-related final rules that added the States of Delaware and New Jersey to the list of States subject to CAIR for PM 2.5 and announced EPA's final decisions on reconsideration of five issues without making any substantive changes to the CAIR requirements. On December 13, 2006, EPA published minor, non-substantive revisions that serve to clarify CAIR and the CAIR FIP. III. What Are the General Requirements of CAIR and the CAIR FIP? CAIR establishes State-wide emission budgets for SO 2 and NO X and is to be implemented in two phases. The first phase of NO X reductions starts in 2009 and continues through 2014, while the first phase of SO 2 reductions starts in 2010 and continues through 2014. The second phase of reductions for both NO X and SO 2 starts in 2015 and continues thereafter. CAIR requires States to implement the budgets by either:

(1)Requiring EGUs to participate in the EPA-administered cap-and-trade programs: or,

(2)adopting other control measures of the State's choosing and demonstrating that such control measures will result in compliance with the applicable State SO 2 and NO X budgets. The May 12, 2005 and April 28, 2006 CAIR rules provide model rules that States must adopt (with certain limited changes, if desired) if they want to participate in the EPA-administered trading programs. The December 13, 2006, revisions to CAIR and the CAIR FIPs were non-substantive and, therefore, do not affect EPA's evaluation of a State's SIP revision. With two exceptions, only States that choose to meet the requirements of CAIR through methods that exclusively regulate EGUs are allowed to participate in the EPA-administered trading programs. One exception is for States that adopt the opt-in provisions of the model rules to allow non-EGUs individually to opt into the EPA-administered trading programs. The other exception is for States that include all non-EGUs from their NO X SIP Call trading programs in their CAIR NO X ozone season trading programs. Texas was not subject to the NO X SIP Call and is not subject to the NO X ozone season requirements of CAIR; therefore, the second exception is not applicable. IV. What Are the Types of CAIR SIP Submittals? States have the flexibility to choose the type of control measures they will use to meet the requirements of CAIR. EPA anticipates that most States will choose to meet the CAIR requirements by selecting an option that requires EGUs to participate in the EPA-administered CAIR cap-and-trade programs. For such States, EPA has provided two approaches for submitting and obtaining approval for CAIR SIP revisions. States may submit full SIP revisions that adopt the model CAIR cap-and-trade rules. If approved, these SIP revisions will fully replace the CAIR FIPs. Alternatively, States may submit abbreviated SIP revisions. The provisions in the abbreviated SIP revision, if approved into a State's SIP, will not replace that State's CAIR FIP; however, the requirements for the CAIR FIPs at 40 CFR part 52 incorporate the provisions of the Federal CAIR trading programs in 40 CFR part 97. The Federal CAIR trading programs in 40 CFR part 97 provide that whenever EPA approves an abbreviated SIP revision, the provisions in the abbreviated SIP revision will be used in place of or in conjunction with, as appropriate, the corresponding provisions in 40 CFR part 97 of the State's CAIR FIP ( *e.g.* , the NO X allowance allocation methodology). A State submitting an abbreviated SIP revision, may submit limited SIP revisions to tailor the CAIR FIP's cap-and-trade programs to the state submitting the revision. An abbreviated SIP revision may establish certain applicability and allowance allocation provisions instead of or in conjunction with the corresponding provisions in the CAIR FIP's rules in that State. Specifically, an abbreviated SIP revision may:

(1)Include NO X SIP Call trading sources that are not EGUs under CAIR in the CAIR FIP's NO X ozone season trading program;

(2)Provide for allocation of NO X annual or ozone season allowances by the State, rather than the Administrator, and using a methodology chosen by the State;

(3)Provide for allocation of NO X annual allowances from the CSP by the State, rather than by the Administrator, and using the State's choice of allowed, alternative methodologies; or

(4)Allow units that are not otherwise CAIR units to opt individually into the CAIR FIP's cap-and-trade programs under the opt-in provisions in the CAIR FIP's rules. With approval of an abbreviated SIP revision, the State's CAIR FIP remains in place, as tailored to sources in that State by the approved SIP revision. Abbreviated SIP revisions can be submitted in lieu of, or as part of, CAIR full SIP revisions. States may want to designate part of their full SIP as an abbreviated SIP for EPA to act on first when the timing of the State's submission might not provide EPA with sufficient time to approve the full SIP prior to the deadline for recording NO X allocations. This will help ensure that the elements of the trading programs where flexibility is allowed are implemented according to the State's decisions. Submission of an abbreviated SIP revision does not preclude future submission of a CAIR full SIP revision. In this case, Texas asked EPA to process the submittal as an abbreviated SIP revision while the Texas Legislature considered changes in the State's CAIR authority. Texas anticipates submitting a revised NO X and SO 2 CAIR SIP later for full approval by EPA. V. What Is EPA's Analysis of Texas's CAIR NO X Annual Abbreviated SIP Submittal? A. State Budget for NO X Annual Allowance Allocations The CAIR NO X annual budget for Texas was developed from historical heat input data for EGUs. Using these data, EPA calculated annual regional heat input values, which were multiplied by 0.15 lb/mmBtu, for phase 1, and 0.125 lb/mmBtu, for phase 2, to obtain regional NO X budgets for 2009-2014 and for 2015 and thereafter, respectively. EPA derived the Texas NO X annual budget from the regional budgets using Texas heat input data adjusted by fuel factors. The CAIR SIP requirements and the Texas CAIR NO X annual FIP establish the budgets for Texas as 181,014 tons of NO X annual emissions for 2009-2014 and 150,845 tons of NO X annual emissions in 2015 and thereafter. Texas's submitted rules at 30 TAC, Chapter 101, Subchapter H, Division 7, section 101.503(a) establish that the Texas NO X annual budgets are as listed in 40 CFR 51.123 and 96.140 (181,014 tons in 2009-2014 and 150,845 tons in 2015 and thereafter). The Texas abbreviated SIP revision, being approved today, does not affect these budgets, which are total amounts of allowances available for allocation for each year under the EPA-administered cap-and-trade programs under the Texas CAIR NO X Annual FIP. In short, the Texas abbreviated SIP revision only affects allocations of NO X annual allowances under the established budget for 2009-2014. B. CAIR NO X Annual Cap-and-Trade Program The CAIR NO X annual FIPs for the States largely mirror the structure of the NO X SIP Call model-trading rule in 40 CFR part 96 subparts A through I. While the provisions of the NO X annual FIPs are similar, there are some differences. For example, the NO X Annual FIPs provide for a CSP, which is discussed below and under which allowances may be awarded for early reductions of NO X annual emissions. EPA used the CAIR model trading rules as the basis for the SO 2 , NO X annual, and NO X ozone season trading programs incorporated by reference into the States' CAIR FIPs. The CAIR FIPs' trading programs' rules are virtually identical to the CAIR model trading rules, with changes made to account for federal rather than state implementation. The CAIR model SO 2 , NO X annual trading, and NO X ozone season trading rules and the respective CAIR FIPs' trading programs are designed to work together as integrated SO 2 , NO X annual, and NO X ozone season trading programs. Texas is subject to the CAIR FIP for PM 2.5 . This PM 2.5 CAIR FIP for Texas, 40 CFR 52.2283 and 52.2284, requires owners or operators of each NO X and SO 2 source located in Texas to meet the requirements of the Federal CAIR NO X Annual and SO 2 Trading Programs in 40 CFR part 97. Consistent with the flexibility given to States, States may submit abbreviated SIP revisions that will replace or supplement, as appropriate, certain provisions of its CAIR FIP's trading programs. The August 4, 2006, submission from Texas is such an abbreviated SIP revision and is for the NO X annual trading program. C. Applicability Provisions for Non-EGU NO X SIP Call Sources In general, the CAIR FIPs' trading programs apply to any stationary, fossil-fuel-fired boiler or stationary, fossil-fuel-fired combustion turbine serving at any time, since the later of November 15, 1990 or the start-up of the unit's combustion chamber, a generator with nameplate capacity of more than 25 MWe producing electricity for sale. Because Texas was not included in the NO X SIP Call trading program and is not subject to the NO X ozone season provisions of CAIR, Texas does not have or need the option of expanding the applicability provisions of the CAIR NO X Ozone Season Trading Program. D. NO X Annual Allowance Allocations Under the NO X allowance allocation methodology in the CAIR model trading rules and in the CAIR FIPs' NO X annual trading program, NO X annual allowances are allocated to units that have operated for five years, based on heat input data from a three-year period that are adjusted for fuel type by using fuel factors of 1.0 for coal, 0.6 for oil, and 0.4 for other fuels. The CAIR model trading rules and the CAIR FIPs' NO X annual trading program also provide a new unit set-aside from which units without five years of operation are allocated allowances based on the units' prior year emissions. The CAIR FIPs' provisions provide States with the flexibility to establish a different NO X allowance allocation methodology that will be used to allocate allowances to sources in a State if certain requirements are met concerning the timing of submission of units' allocations to the Administrator for recordation and the total amount of allowances allocated for each control period. In adopting alternative NO X allowance allocation methodologies, States have flexibility with regard to:

(1)The cost to recipients of the allowances, which may be distributed for free or auctioned;

(2)The frequency of allocations;

(3)The basis for allocating allowances, which may be distributed, for example, based on historical heat input or electric and thermal output; and

(4)The use of allowance set-asides and, if used, their size. Consistent with the flexibility given to States in their CAIR FIPs' provisions, Texas has chosen to replace the provisions of the Texas CAIR NO X Annual FIP concerning the allocation of NO X annual allowances for Phase 1 (2009-2014) with its own methodology. The Texas Commission on Environmental Quality was directed by House Bill 2481 of the 79th Texas Legislature to establish regulations that will allocate NO X allowances at no cost to the CAIR subject units in Texas. Accordingly, the TCEQ has adopted provisions establishing the annual NO X allocation methodology at 30 TAC, Chapter 101, Subchapter H, Division 7, sections 101.503, 101.504, and 101.506. Section 101.503(a) establishes that the Texas NO X Annual budgets are as listed in 40 CFR 96.140 (181,014 tons in 2009-2014 and 150,845 tons in 2015 and thereafter). Additionally, section 101.503(b) establishes that the Texas NO X Annual Trading Program will have a new unit set-aside of 9.5 percent of the NO X trading budget for both Phase 1 and Phase 2 of CAIR. (We are not taking action today on the Phase 2 allowance allocation methodology. Please see the TSD for further information.) Section 101.504 establishes the dates by which the TCEQ Executive Director must submit NO X annual allocations to EPA for recordation in CAIR compliance accounts. Per section 101.504(a)(1), the TCEQ Executive Director will submit NO X allowances for units commencing operation before January 1, 2001 (referred to as existing units), by October 31, 2006 for the 2009-2014 control periods. Allocations for these existing units will be distributed proportionally based on the unit's share of the total baseline heat input according to section 101.506(c). The baseline heat input, calculated per section 101.506(b)(1), for each unit is the average of the three highest amounts of the unit's adjusted control period heat input for 2000-2004. A unit's adjusted control period heat input is found by multiplying the control period heat input by a fuel-adjustment factor as follows: 0.90 if the unit is coal-fired during the year; 0.50 if the unit is natural gas-fired during the year; and 0.30 if the unit is not coal or natural gas-fired during the year. Section 101.506(f) provides that a unit's control period heat input, and a unit's status as coal-fired or natural gas-fired for a calendar year must be determine in accordance with the monitoring, recordkeeping, and reporting requirements of 40 CFR part 75 to the extent the unit was otherwise subject to the requirements of part 75 for the year. Or, if a unit was not otherwise subject to part 75, the best available data reported to the TCEQ Executive Director can be used. Under section 101.504(b), the TCEQ Executive Director will submit NO X allowances for units commencing operation on or after January 1, 2001 (referred to as new units), by October 31 of the applicable control period, beginning in 2009. Section 101.506(b)(1) specifies that for each control period in 2009-2014, allowances for new units are allocated from the 9.5 percent new unit set-aside. The new unit set aside allocation methodology is outlined in section 101.506(d). For the first control period in which a CAIR NO X unit commences commercial operation, such unit will not receive a NO X allocation from the new unit set-aside. The CAIR designated representative of a new unit must submit a written request for new unit allowances by July 1 of the first control period for which the allowance is requested and after the date that the unit commences commercial operation. The request for allowances from the new unit set-aside cannot exceed the unit's total tons of NO X emissions as reported to EPA for the calendar year immediately preceding such control period. The TCEQ Executive Director will review all requests for allowances from the new unit set-aside and distribute proportionally based on a unit's share of the total requested allowances. If allowances remain in the new unit set-aside after the TCEQ Executive Director has made allocations to the new units, the Executive Director will proportionally allocate the remaining allowances to existing units according to the provisions of section 101.506(e). Like the requirements for the existing units, the Texas allocation methodology at 101.506(f) requires that the part 75 monitoring, recordkeeping, and reporting requirements be used to determine a unit's total tons of NO X emissions during a calendar year to the extent the unit was otherwise subject to part 75. Or, if a unit was not otherwise subject to part 75, the best available data reported to the TCEQ Executive Director can be used. E. Allocation of NO X Allowances From the Compliance Supplement Pool The CSP provides an incentive for early reductions in NO X annual emissions. The CSP consists of 200,000 CAIR NO X annual allowances of vintage 2009 for the entire CAIR region, and a State's share of the CSP is based upon the State's share of the projected emission reductions under CAIR; Texas's share of the CSP is 772 NO X allowances. States may distribute CSP allowances, one allowance for each ton of early reduction, to sources that make NO X reductions during 2007 or 2008 beyond what is required by any applicable State or Federal emission limitation. States also may distribute CSP allowances based upon a demonstration of need for an extension of the 2009 deadline for implementing emission controls. The CAIR and the Texas CAIR NO X Annual FIP's provisions allocate 772 NO X allowances to the Texas CSP (40 CFR 51.123 and 97.143) and establish specific methodologies for allocations of CSP allowances. States may choose an allowed, alternative CSP allocation methodology to be used to allocate CSP allowances to sources in those States. Consistent with the flexibility given to States in the CAIR FIPs, Texas has chosen to modify the provisions of the Texas CAIR NO X Annual FIP concerning the allocation of allowances from the CSP. The Texas rules distribute CSP allowances using an allocation methodology that is substantively identical to the provisions in 40 CFR 96.143. The provisions for the allocation of CSP allowances in the Texas program are found at section 101.508 of 30 TAC Chapter 101. Section 101.508 authorizes the Texas Commission on Environmental Quality Executive Director to allocate for the control period in 2009 up to the amount of CSP allowances designated for Texas in 40 CFR 96.143 (772 tons of NO X ). The CSP allowances may be allocated, upon request by a CAIR unit's designated representative, to

(1)A unit that has made early NO X emission reductions in 2007 and 2008, or

(2)to a CAIR unit whose compliance during the 2009 control period would create an undue risk to the reliability of electricity supply during such control period. In each instance, the CAIR designated representative of a CAIR unit must submit a written request for CSP allowances to the TCEQ Executive Director by July 1, 2009. The TCEQ Executive Director will determine allocations of the CSP and submit this information to EPA by November 30, 2009. F. Individual Opt-In Units The opt-in provisions of the CAIR and the States FIPs' provisions allow for certain non-EGUs ( *i.e.,* boilers, combustion turbines, and other stationary fossil-fuel-fired devices) that do not meet the applicability criteria for a CAIR trading program to participate voluntarily in ( *i.e.,* opt into) the CAIR trading programs. A non-EGU may opt into one or more of the CAIR trading programs. In order to qualify to opt into a CAIR trading program, a unit must vent all emissions through a stack and be able to meet monitoring, recordkeeping, and reporting requirements of 40 CFR part 75. The owners and operators seeking to opt a unit into a CAIR trading program must apply for a CAIR opt-in permit. If the unit is issued a CAIR opt-in permit, the unit becomes a CAIR unit, is allocated allowances, and must meet the same allowance holding and emissions monitoring and reporting requirements as other units subject to that CAIR trading program. The opt-in provisions provide for two methodologies for allocating allowances for opt-in units, one methodology that applies to opt-in units in general and a second methodology that allocates allowances only to opt-in units that the owners and operators intend to repower before January 1, 2015. States have several options concerning the opt-in provisions. The rules for each of the States' CAIR FIPs' trading programs include opt-in provisions that are essentially the same as those in the respective CAIR SIP model rules, except that the States' CAIR FIPs' opt-in provisions become effective in a State only if the State's abbreviated SIP revision adopts the opt-in provisions. The State may adopt the opt-in provisions entirely or may adopt them but exclude one of the allowance allocation methodologies. The State also has the option of not adopting any opt- in provisions in the abbreviated SIP revision and thereby providing for its CAIR FIP's trading programs to be implemented in the State without the ability for units to opt into the programs. Consistent with the flexibility given to States in the FIPs' provisions, Texas has chosen not to allow non-EGUs to participate in the Texas CAIR FIP NO X annual trading program. Texas is not subject to the CAIR NO X ozone season FIP so the opt-in provisions for the CAIR FIP NO X ozone season trading program are not applicable. We are not taking any action today on the Texas CAIR SO 2 SIP submittal. VI. Final Action EPA is approving a revision to the Texas SIP, the Texas CAIR NO X Annual Abbreviated SIP revision, submitted on August 4, 2006, by the State of Texas (Texas regulations, 30 TAC, Chapter 101, Subchapter H, Division 7, sections 101.503, 101.504(a)(1), 101.504(b), 101.506(a)(1), 101.506(b)(1), and 101.506(c)-(f), and 101.508. Texas is covered by the PM 2.5 CAIR FIP, which requires participation in the EPA-administered CAIR FIP cap-and-trade programs for SO 2 and NO X annual emissions. Under this abbreviated SIP revision and consistent with the flexibility given to Texas in its CAIR NO X Annual FIP's provisions, the Texas provisions for allocating allowances under the Texas CAIR FIP's NO X annual trading program for Phase 1 (2009-2014) of CAIR are approved as part of the Texas SIP. In addition, Texas provisions that establish a methodology for allocating NO X allowances in the CSP are approved as part of the Texas SIP. The abbreviated SIP revision meets the applicable requirements in 40 CFR 51.123(p)(1) and

(2)with regard to NO X annual emissions and NO X CSP allocations. EPA is not making any changes to the Texas CAIR NO X Annual FIP's provisions, except to the extent that if EPA's direct final action on the Texas abbreviated SIP revision becomes effective, then EPA, by ministerial action, will note in Appendix A, 1 and 2, to Subpart EE of part 97, that Texas has an approved SIP revision for NO X annual allowance allocations for Phase 1 and for NO X allowance allocations from the Texas CSP. VII. Statutory and Executive Order Reviews Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason and because this action will not have a significant, adverse effect on the supply, distribution, or use of energy, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects 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, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard and indicates that approval will result in ministerial changes to the appropriate appendices of the CAIR FIP's trading rules and does not alter the relationship or the distribution of power and responsibilities established in the Act. The EPA interprets Executive Order 13045, “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), as applying only to those regulatory actions that concern health or safety risks such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This rule is not subject to Executive Order 13045 because it would approve a State program. Executive Order 12898 (59 FR 7629, February 16, 1994) establishes federal executive policy on environmental justice. Because this rule merely approves a state rule implementing a Federal standard, EPA lacks the discretionary authority to modify today's regulatory decision on the basis of environmental justice considerations. In reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ). List of Subjects 40 CFR Part 52 Environmental protection, Air pollution control, Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides. 40 CFR Part 97 Environmental protection, Air pollution control, Administrative practice and procedure, Intergovernmental relations, Nitrogen oxides, Ozone, Reporting and recordkeeping requirements. Dated: July 16, 2007. Richard E. Greene, Regional Administrator, EPA Region 6. 40 CFR parts 52 and 97 are amended as follows: PART 52—[AMENDED] 1. The authority citation for part 52 continues to read as follows: Authority: 42 U.S.C. 7401 *et seq.* Subpart SS—Texas 2. Section 52.2270 is amended as follows: a. In paragraph

(c)the table entitled “EPA Approved Regulations in the Texas SIP” is amended under Chapter 101—General Air Quality Rules, Subchapter H—Emissions Banking and Trading, by adding in numerical order a new entry for Division 7—Clean Air Interstate Rule. b. In paragraph

(e)the table entitled “EPA Approved Nonregulatory Provisions and Quasi-Regulatory Measures in the Texas SIP” is amended by adding a new entry at the end for the Texas Clean Air Interstate Rule Nitrogen Oxides Annual Trading Program Abbreviated SIP Revision. § 52.2270 Identification of plan.

(c)* * * EPA Approved Regulations in the Texas SIP State citation Title/subject State approval/submittal date EPA approval date Explanation Chapter 101—General Air Quality Rules * * * * * * * Subchapter H—Emissions Banking and Trading * * * * * * * Division 7—Clean Air Interstate Rule Section 101.503 Clean Air Interstate Rule Oxides of Nitrogen Annual Trading Budget 07/12/06 07/30/07 [Insert *FR* page number where document begins] Section 101.504 Timing Requirements for Clean Air Interstate Rule Oxides of Nitrogen Allowance Allocations 07/12/06 07/30/07 [Insert *FR* page number where document begins] Subsections 101.504(a)(2), 101.504(a)(3), 101.504(a)(4), 101.504(c), and 101.504(d) NOT IN SIP. Section 101.506 Clean Air Interstate Rule Oxides of Nitrogen Allowance Allocations 07/12/06 07/30/07 [Insert *FR* page number where document begins] Subsections 101.506(a)(2), 101.506(b)(2), 101.506(b)(3), and 101.506(g) NOT IN SIP. Section 101.508 Compliance Supplement Pool 07/12/06 07/30/07 [Insert *FR* page number where document begins] * * * * * * *

(e)* * * EPA Approved Nonregulatory Provisions and Quasi-Regulatory Measures in the Texas SIP Name of SIP provision Applicable geographic or nonattainment area State submittal/effective date EPA approval date Comments * * * * * * * Texas Clean Air Interstate Rule Nitrogen Oxides Annual Trading Program Abbreviated SIP Revision Statewide 07/12/06 07/30/07 [Insert *FR* page number where document begins] Only CAIR Phase I NO X Annual and CSP Allocations approved into SIP. * * * * * * * PART 97—[AMENDED] 3. The authority citation for part 97 continues to read as follows: Authority: 42 U.S.C. 7401, 7403, 7410, 7426, 7601, and 7651, *et seq.* 4. Appendix A to Subpart EE is amended by adding an entry for “Texas” to paragraphs 1. and 2. to read as follows: Appendix A to Subpart EE of Part 97—States With Approved State Implementation Plan Revisions Concerning Allocations 1. * * * Texas (for control periods 2009-2014) 2. * * * Texas [FR Doc. E7-14485 Filed 7-27-07; 8:45 am] BILLING CODE 6560-50-P 72 145 Monday, July 30, 2007 Proposed Rules DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 1205 [Docket No. AMS-CN-07-0094; CN-07-006] Cotton Research and Promotion Program: Procedures for Conduct of Sign-Up Period AGENCY: Agricultural Marketing Service. ACTION: Proposed rule. SUMMARY: This proposed rule would amend the rules and regulations regarding the procedures for the conduct of a sign-up period for eligible cotton producers and importers to request a continuance referendum on the 1991 amendments to the Cotton Research and Promotion Order (Order) provided for in the Cotton Research and Promotion Act

(Act)amendments of 1990. The amendments would update various dates, name changes, addresses, and make other administrative changes. DATES: Comments must be received on or before August 9, 2007. ADDRESSES: Interested persons are invited to submit written comments concerning this proposed rule to Shethir M. Riva, Chief, Research and Promotion Staff, Cotton Program, AMS, USDA, Stop 0224, 1400 Independence Ave., SW., Room 2639-S, Washington, DC 20250-0224. Comments should be submitted in triplicate. Comments may also be submitted electronically through *www.regulations.gov.* All comments should reference the docket number and the date and page number of this issue of the **Federal Register** . All comments received will be made available for public inspection at Cotton Program, AMS, USDA, Stop 0224, 1400 Independence Ave., SW., Room 2639-S, Washington, DC 20250-0224 during regular business hours. FOR FURTHER INFORMATION CONTACT: Shethir M. Riva, Chief, Research and Promotion Staff, Cotton Program, AMS, USDA, Stop 0224, 1400 Independence Ave., SW., Room 2639-S, Washington, DC 20250-0224, telephone

(202)720-6603, facsimile

(202)690-1718, or e-mail at *Shethir.Riva@usda.gov.* SUPPLEMENTARY INFORMATION: Executive Order 12866 The Office of Management and Budget has waived the review process required by Executive Order 12866 for this action. Executive Order 12988 This rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect. This rule would not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule. The Cotton Research and Promotion Act (7 U.S.C. 2101-2118) provides that administrative proceedings must be exhausted before parties may file suit in court. Under Section 12 of the Act, any person subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and requesting a modification of the order or to be exempted therefrom. Such person is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the District Court of the United States in any district in which the person is an inhabitant, or has his or her principal place of business, has jurisdiction to review the USDA's ruling, provided a complaint is filed within 20 days from the date of the entry of ruling. Regulatory Flexibility Act Pursuant to requirements set forth in the Regulatory Flexibility Act

(RFA)[5 U.S.C. 601 *et seq.* ], the Agricultural Marketing Service has considered the economic effect of this action on small entities and has determined that its implementation will not have a significant economic impact on a substantial number of small entities. There are currently approximately 19,000 producers, and approximately 14,000 importers that are subject to the order. The majority of these producers and importers are small businesses under the criteria established by the Small Business Administration. Only those eligible persons who are in favor of conducting a referendum would need to participate in the sign-up period. Of the 46,220 total valid ballots received in the 1991 referendum, 27,879, or 60 percent, favored the amendments to the Order, and 18,341, or 40 percent, opposed the amendments to the Order. This proposed rule would provide those persons who are not in favor of the continuance of the Order amendments an opportunity to request a continuance referendum. The eligibility and participation requirements for producers and importers are substantially the same as the rules that established the eligibility and participation requirements for the 1991 referendum, and for the 1997 and 2001 sign-up period. The 1997 and 2001 sign-ups did not generate the required number of signatures to hold another referendum. The amendments proposed in this action would update various dates, name changes, addresses, and make other miscellaneous changes. The proposed sign-up procedures would not impose a substantial burden or have a significant impact on persons subject to the Order, because participation is not mandatory, not all persons subject to the Order are expected to participate, and USDA will determine producer and importer eligibility. The information collection requirements under the Paperwork Reduction Act are minimal. Paperwork Reduction Act The information collections proposed by this rule will be carried out under the Office of Management and Budget

(OMB)Control Number 0581-0093. This rule will not add to the overall burden currently approved by OMB and assigned OMB Control Number 0581-0093 under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). This OMB Control Number is referenced in Section 1205.541 of the regulations. Background The 1991 amendments to the Cotton Research and Promotion Order (7 CFR 1205 *et seq.* ) were implemented following the July 1991 referendum. The amendments were provided for in the Cotton Research and Promotion Act (7 U.S.C. 2101-2118) amendments of 1990. These amendments provided for:

(1)Importer representation on the Cotton Board by an appropriate number of persons, to be determined by USDA, who import cotton or cotton products into the U.S., and whom USDA selects from nominations submitted by importer organizations certified by USDA;

(2)assessments levied on imported cotton and cotton products at a rate determined in the same manner as for U.S. cotton;

(3)increasing the amount USDA can be reimbursed for the conduct of a referendum from $200,000 to $300,000;

(4)reimbursing government agencies that assist in administering the collection of assessments on imported cotton and cotton products; and

(5)terminating the right of producers to demand a refund of assessments. On March 6, 2007, USDA issued a determination based on its review, (72 FR 9918), not to conduct a referendum regarding the 1991 amendments to the Order. However, the Act provides that USDA shall nevertheless conduct a referendum at the request of 10 percent or more of the total number of eligible producers and importers that voted in the most recent referendum. The Act provides for a sign-up period during which eligible cotton producers and importers may request that USDA conduct a referendum on continuation of the 1991 amendments to the Order. Accordingly, USDA will provide all eligible Upland cotton producers and importers an opportunity to request a continuance referendum regarding the 1991 amendments to the Order. The sign-up period will be provided for all eligible producers and importers. Eligible cotton producers would be provided the opportunity to sign-up to request a continuance referendum in person at the county FSA office where their farm is located. If the producer's land is in more than one county, the producer shall sign-up at the county office where FSA administratively maintains and processes the producer's farm records. Producers who choose not to visit the county FSA office in person may request a sign-up form in the mail from the same office. USDA would mail sign-up information, including a written request form, to all known, eligible cotton importers. Importers who favor the conduct of a continuance referendum would return their signed request forms to USDA, FSA, DAFO, Attention: Rick Pinkston, PO Box 23103, Washington, DC 20026-3103. Importers who do not receive a request form in the mail by September 4, 2007, and who meet the eligibility requirements to participate in the sign-up, may submit a written, signed request for a continuance referendum. Such request must be accompanied by a copy of the U.S. Customs and Border Protection Form 7501 showing payment of a cotton assessment for calendar year 2006. Requests and supporting documentation should be mailed to USDA, FSA, DAFO, Attention: Rick Pinkston, PO Box 23103, Washington, DC 20026-3103. The sign-up period will be from September 4, 2007, until November 30, 2007. Producer and importer forms shall only be counted if received by USDA during the stated sign-up period. Section 8(c)2 of the Act provides that if USDA determines, based on the results of the sign-up, that 10 percent or more of the total number of eligible producers and importers that voted in the most recent 1991 referendum ( *i.e.* , 4,622) request a continuance referendum on the 1991 amendments, a referendum will be held within 12 months after the end of the sign-up period. In counting such requests, however, not more than 20 percent may be from producers from any one state or from importers of cotton. For example, when counting the requests, the AMS Cotton Program would determine the total number of valid requests from all cotton-producing states and from importers. Not more than 20 percent of the total requests will be counted from any one state or from importers toward reaching the 10 percent for 4,622 total signatures required to call for a referendum. If USDA determines that 10 percent or more of the number of producers and importers who voted in the most recent referendum favor a continuance referendum. A referendum will be held. This proposed rule would amend the procedures for the conduct of the current sign-up period. The current rules and regulations provide for sections on definitions, supervision of the sign-up period, eligibility, participation in the sign-up period, counting requests, reporting results and instructions and forms. In section 1205.18 the term “Producer” is further defined to ensure that all producers that planted cotton during 2006 will be eligible to participate in the sign-up period. In sections 1205.20, 1205.26, and 1205.27 “calendar year 2001” would change to “calendar year 2006.” In sections 1205.27, 1205.28, and 1205.29 sign-up period conduct dates, FSA reporting dates, and mailing addresses have been updated. A 10-day comment period is determined to be appropriate because these proposed eligibility and participation requirements are substantially the same as the eligibility and participation requirements that were used in previous referenda and a sign-up period; participation is voluntary; and this rule, if adopted, should be made effective as soon as possible in order to best reflect applicable time frames in the Act. List of Subjects in 7 CFR Part 1205 Advertising, Agricultural research, Cotton, Marketing agreements, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, 7 CFR part 1205 is proposed to be amended as follows: PART 1205—COTTON RESEARCH AND PROMOTION 1. The authority citation part 1205 continues to read as follows: Authority: 7 U.S.C. 2101-2118. 2. Section 1205.20 is revised to read as follows: § 1205.20 Representative period. The term *representative period* means the 2006 calendar year. 3. In § 1205.26, paragraphs (a)(1) and (a)(2)are revised as follows: § 1205.26 Eligibility.

(a)* * *

(1)Any person who was engaged in the production of Upland cotton during calendar year 2006; and

(2)Any person who was an importer of Upland cotton and imported Upland cotton in excess of the value of $2.00 per line item entry during calendar year 2006. 4. Section 1205.27 is revised to read as follows: § 1205.27 Participation in the sign-up period. The sign-up period will be from September 4, 2007, through November 30, 2007. Those persons who favor the conduct of a continuance referendum and who wish to request that USDA conduct such a referendum may do so by submitting such request in accordance with this section. All requests must be received by the appropriate USDA office by November 30, 2007.

(a)Before the sign-up period begins, FSA shall establish a list of known, eligible, Upland cotton producers in the county that it serves during the representative period, and AMS shall also establish a list of known, eligible Upland cotton importers.

(b)Before the start of the sign-up period, AMS shall mail a request form to each known, eligible, cotton importer. Importers who wish to request a referendum and who do not receive a request form in the mail by September 4, 2007, may participate in the sign-up period by submitting a signed, written request for a continuance referendum, along with a copy of a U.S. Customs and Border Protection form 7501 showing payment of a cotton assessment for calendar year 2006. Importers must submit their requests and supporting documents to USDA, FSA, DAFO, Attention: Rick Pinkston, P.O. Box 23103, Washington, DC 20026-3103. All requests and supporting documents must be received by November 30, 2007.

(c)Each person on the county FSA office lists may participate in the sign-up period. Eligible producers must date and sign their name on the “County FSA Office Sign-up Sheet.” A person whose name does not appear on the county FSA office list may participate in the sign-up period. Such person must be identified on FSA-578 during the representative period or provide documentation that demonstrates that the person was a cotton producer during the representative period. Cotton producers not listed on the FSA-578 shall submit at least one sales receipt for cotton they planted during the representative period. Cotton producers must make requests to the county FSA office where the producer's farm is located. If the producer's land is in more than one county, the producer shall make request at the county office where FSA administratively maintains and processes the producer's farm records. It is the responsibility of the person to provide the information needed by the county FSA office to determine eligibility. It is not the responsibility of the county FSA office to obtain this information. If any person whose name does not appear on the county FSA office list fails to provide at least one sales receipt for the cotton they produced during the representative period, the county FSA office shall determine that such person is ineligible to participate in the sign-up period, and shall note “ineligible” in the remarks section next to the person's name on the county FSA office sign-up sheet. In lieu of personally appearing at a county FSA office, eligible producers may request a sign-up form from the county FSA office where the producer's farm is located. If the producer's land is in more than one county, the producer shall make the request for the sign-up form at the county office where FSA administratively maintains and processes the producer's farm records. Such request must be accompanied by a copy of at least one sales receipt for cotton they produced during the representative period. The appropriate FSA office must receive all completed forms and supporting documentation by October 31, 2007. 7. In § 1205.28, the first sentence is revised to read as follows: § 1205.28 Counting. County FSA offices and FSA, Deputy Administrator for Field Operations (DAFO), shall begin counting requests no later than November 1, 2007. * * * 8. Section 1205.29 is revised to read as follows: § 1205.29 Reporting results.

(a)Each county FSA office shall prepare and transmit to the state FSA office, by December 7, 2007, a written report of the number of eligible producers who requested the conduct of a referendum, and the number of ineligible persons who made requests.

(b)DAFO shall prepare, by December 7, 2007, a written report of the number of eligible importers who requested the conduct of a referendum, and the number of ineligible persons who made requests.

(c)Each State FSA office shall, by December 7, 2007, forward all county reports to DAFO. By December 14, 2007, DAFO shall forward its report of the total number of eligible producers and importers that requested a continuance referendum, through the sign-up period, to the Deputy Administrator, Cotton Program, AMS, Stop 0224, 1400 Independence Ave., SW., Washington, DC 20250-0224. Dated: July 23, 2007. Lloyd C. Day, Administrator, Agricultural Marketing Service. [FR Doc. E7-14608 Filed 7-27-07; 8:45 am] BILLING CODE 3410-02-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-28811; Directorate Identifier 2006-NM-246-AD] RIN 2120-AA64 Airworthiness Directives; Boeing Model 707 Airplanes and Model 720 and 720B Series Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: The FAA proposes to adopt a new airworthiness directive

(AD)for all Boeing Model 707 airplanes and Model 720 and 720B series airplanes. This proposed AD would require identifying the material used in the elevator hinge support fittings of the horizontal stabilizer trailing edge, doing repetitive detailed inspections for cracking of the fittings and corrective actions if necessary, and doing an eventual terminating action. This proposed AD results from a report that stress corrosion cracking of the elevator hinge support fittings has been discovered on several Model 707 airplanes. We are proposing this AD to prevent cracking of the elevator hinge support fittings, which could reduce the elevator support stiffness and lead to in-flight airframe vibration, consequent damage to the elevator and horizontal stabilizer, and reduced controllability of the airplane. DATES: We must receive comments on this proposed AD by September 13, 2007. ADDRESSES: Use one of the following addresses to submit comments on this proposed AD. • *DOT Docket Web site:* Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • *Government-wide rulemaking Web site:* Go to *http://www.regulations.gov* and follow the instructions for sending your comments electronically. • *Mail:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. • *Fax:*

(202)493-2251. • *Hand Delivery:* Room W12-140 on the ground floor of the West Building, 1200 New Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207, for the service information identified in this proposed AD. FOR FURTHER INFORMATION CONTACT: Duong Tran, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)917-6452; fax

(425)917-6590. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed in the ADDRESSES section. Include the docket number “FAA-2007-28811; Directorate Identifier 2006-NM-246-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments. We will post all comments we receive, without change, to *http://dms.dot.gov,* including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of that Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78), or you may visit *http://dms.dot.gov.* Examining the Docket You may examine the AD docket on the Internet at *http://dms.dot.gov,* or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Operations office (telephone

(800)647-5527) is located on the ground floor of the West Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the Docket Management System receives them. Discussion We have received a report indicating that stress corrosion cracking of the elevator hinge support fittings (made of 7079-T6 material) of the horizontal stabilizer trailing edge has been discovered on several Model 707 airplanes. In some cases, multiple fittings on one stabilizer were found to be cracked; excessive cracking at multiple rib locations will reduce the elevator support stiffness. This condition, if not corrected, could lead to in-flight airframe vibration, consequent damage to the elevator and horizontal stabilizer, and reduced controllability of the airplane. Relevant Service Information We have reviewed Boeing 707 Alert Service Bulletin A3518, dated October 9, 2006. The alert service bulletin describes procedures for: • Repetitively verifying whether or not the elevator hinge support fittings of the horizontal stabilizer trailing edge are made of 7079-T6 or 7075-T6 material; • Modifying certain rib web segments by fabricating and installing nutplates to create access to the web area for inspection; • Doing initial and repetitive inspections for cracking of hinge support fittings made of 7079-T6 or 7075-T6 material, and corrective actions if necessary; and • Eventually replacing all affected hinge support fittings with new, improved fittings made of 7075-T7351 material. Corrective actions include repairing or replacing any cracked fitting with a new or serviceable fitting made of 7079-T6 or 7075-T6 material, or with a new, improved fitting. Replacing any affected fitting with a new, improved fitting made of 7075-T7351 material eliminates the need for the repetitive inspections for that fitting. Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. FAA's Determination and Requirements of the Proposed AD We have evaluated all pertinent information and identified an unsafe condition that is likely to exist or develop on other airplanes of this same type design. For this reason, we are proposing this AD, which would require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between the Proposed AD and Service Bulletin.” Differences Between the Proposed AD and Service Bulletin The alert service bulletin specifies to contact Boeing for instructions on how to repair certain conditions, but this proposed AD would require repairing those conditions in one of the following ways: • Using a method that we approve; or • Using data that meet the certification basis of the airplane, and that have been approved by an Authorized Representative for the Boeing Commercial Airplanes Delegation Option Authorization Organization whom we have authorized to make those findings. The alert service bulletin does not specify a number of work hours for modifying the rib web segments. However, we have confirmed with Boeing that this action should take about 6 work hours and have estimated the costs to accomplish this proposed AD accordingly. The alert service bulletin specifies to repeat the verification of the hinge material at intervals not to exceed 180 days after the date on the alert service bulletin or before further flight after the replacement of any hinge support fitting, whichever occurs first. We have confirmed with Boeing that repetitive verification at intervals not to exceed 180 days is not necessary. Therefore, this proposed AD would only require repeat verification of the hinge material before further flight after the replacement of any hinge support fitting. Costs of Compliance There are about 185 airplanes of the affected design in the worldwide fleet. This proposed AD would affect about 52 airplanes of U.S. registry. The following table provides the estimated costs for U.S. operators to comply with this proposed AD, at an average labor rate of $80 per work hour. Estimated Costs Action Work hours Parts Cost per airplane Fleet cost Material verification 1 No parts needed $80 $4,160. Detailed inspections 24, per inspection cycle No parts needed $1,920 $47,840, per inspection cycle. Modification (fabrication and installation of nutplates) 6 Operator supplied $480 $24,960. Terminating action 132 $53,078 1 or $87,750 2 $63,638 1 or $98,310 2 Up to $5,112,120. 1 For Group 1 airplanes. 2 For Group 2 airplanes. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that the proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The Federal Aviation Administration

(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **Boeing:** Docket No. FAA-2007-28811; Directorate Identifier 2006-NM-246-AD. Comments Due Date

(a)The FAA must receive comments on this AD action by September 13, 2007. Affected ADs

(b)None. Applicability

(c)This AD applies to all Model 707-100 long body, -200, -100B long body, and -100B short body series airplanes; Model 707-300, -300B, -300C, and -400 series airplanes; and Model 720 and 720B series airplanes; certificated in any category. Unsafe Condition

(d)This AD results from a report that stress corrosion cracking of the elevator hinge support fittings of the horizontal stabilizer trailing edge has been discovered on several Model 707 airplanes. We are issuing this AD to prevent cracking of the elevator hinge support fittings, which could reduce the elevator support stiffness and lead to in-flight airframe vibration, consequent damage to the elevator and horizontal stabilizer, and reduced controllability 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. Service Bulletin Reference

(f)The term “service bulletin,” as used in this AD, means the Accomplishment Instructions of Boeing 707 Alert Service Bulletin A3518, dated October 9, 2006. Material Identification

(g)Within 180 days after the effective date of this AD or before further flight after any horizontal stabilizer is replaced: Verify the type of material used in the elevator hinge support fittings of the horizontal stabilizer trailing edge, in accordance with Part 1 of the Accomplishment Instructions of the service bulletin, then do the requirements of paragraph (g)(1) or (g)(2) of this AD, as applicable. Repeat the verification before further flight after the replacement of any hinge support fitting.

(1)For any hinge support fitting made of 7075-T7351 material: No further action is required by paragraph

(h)or

(i)of this AD.

(2)For any hinge support fitting made of 7079-T6 or 7075-T6 material: Do the actions required by paragraph

(h)of this AD. Repetitive Inspections, One-Time Modification, and Corrective Actions

(h)Before further flight after doing paragraph

(g)of this AD, do a detailed inspection for cracking of the hinge support fittings and modify certain segments of the rib webs, in accordance with Part 2 of the Accomplishment Instructions of the service bulletin. For any hinge support fitting found to be cracked or damaged, before further flight, do the actions of paragraph (h)(1) or (h)(2) of this AD; in accordance with Part 3 of the Accomplishment Instructions of the service bulletin. Do all actions in accordance with the Accomplishment Instructions of the service bulletin; except where the service bulletin specifies to contact the manufacturer for repair procedures, this AD requires repair using a method approved in accordance with the procedures specified in paragraph

(k)of this AD.

(1)Replace the fitting with a serviceable fitting made of 7079-T6 or 7075-T6 material. Repeat the detailed inspection thereafter at intervals not to exceed 180 days, until the terminating action of paragraph

(i)of this AD has been done.

(2)Replace the fitting with a new, improved fitting made of 7075-T7351 material. Terminating Action

(i)For all airplanes: Within 48 months after the effective date of this AD, replace all hinge support fittings made of 7079-T6 or 7075-T6 material with new, improved fittings made of 7075-T7351 material, in accordance with Part 4 of the Accomplishment Instructions of the service bulletin. Doing this action terminates all requirements of paragraphs

(g)and

(h)of this AD. Parts Installation

(j)As of the effective date of this AD, no person may install, on any airplane, a new or serviceable hinge support fitting made of 7079-T6 or 7075-T6 material, unless the requirements of paragraph (h)(1) of this AD are accomplished. Alternative Methods of Compliance (AMOCs) (k)(1) The Manager, Seattle Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

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

(3)An AMOC that provides an acceptable level of safety may be used for any repair required by this AD, if it is approved by an Authorized Representative for the Boeing Commercial Airplanes Delegation Option Authorization Organization who has been authorized by the Manager, Seattle ACO, to make those findings. For a repair method to be approved, the repair must meet the certification basis of the airplane and the approval must specifically refer to this AD. Issued in Renton, Washington, on July 18, 2007. Stephen P. Boyd, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-14638 Filed 7-27-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-28810; Directorate Identifier 2007-NM-104-AD] RIN 2120-AA64 Airworthiness Directives; Hawker Beechcraft Model Hawker 800XP Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: The FAA proposes to adopt a new airworthiness directive

(AD)for certain Hawker Beechcraft Model Hawker 800XP airplanes. This proposed AD would require doing an inspection of panel DA wiring for clearance and for signs of chafing or exposed conductors, and repairing or replacing the wires and cable ties if necessary. This proposed AD results from reports of wire bundle interference in the DA panel, chafed wire bundles, and exposed conductors. We are proposing this AD to prevent chafing of wire bundles, which could cause an electrical short and consequent loss of several functions essential for safe flight and smoke or fire in the flight compartment and main cabin. DATES: We must receive comments on this proposed AD by September 13, 2007. ADDRESSES: Use one of the following addresses to submit comments on this proposed AD. • *DOT Docket Web site:* Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • *Government-wide rulemaking Web site:* Go to *http://www.regulations.gov* and follow the instructions for sending your comments electronically. • *Mail:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590. • *Fax:*

(202)493-2251. • *Hand Delivery:* Room W12-140 on the ground floor of the West Building, 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Contact Hawker Beechcraft Corporation, 9709 East Central, Wichita, Kansas 67206, for the service information identified in this proposed AD. FOR FURTHER INFORMATION CONTACT: Philip Petty, Aerospace Engineer, Electrical Systems and Avionics, ACE-119W, FAA, Wichita Aircraft Certification Office, 1801 Airport Road, Room 100, Mid-Continent Airport, Wichita, Kansas 67209; telephone

(316)946-4139; fax

(316)946-4107. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed in the ADDRESSES section. Include the docket number “FAA-2007-28810; Directorate Identifier 2007-NM-104-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments. We will post all comments we receive, without change, to *http://dms.dot.gov* , including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of that Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78), or you may visit *http://dms.dot.gov.* Examining the Docket You may examine the AD docket on the Internet at *http://dms.dot.gov,* or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Operations office (telephone

(800)647-5527) is located on the ground level of the West Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the Docket Management System receives them. Discussion We have received reports of wire bundle interference in the DA panel, chafed wire bundles, and exposed conductors, on Hawker Beechcraft Model Hawker 800XP airplanes. These wire bundles consist of wiring for various airplane systems (e.g., primary or secondary flight displays, air data systems, communications, navigation, warnings, and numerous other airplane systems). The cause has been attributed to improper wire routing resulting from inadequate detailed assembly and installation instructions during production of the airplanes. Chafing of wire bundles, if not corrected, could cause an electrical short and consequent loss of several functions essential for safe flight and smoke or fire in the flight compartment and main cabin. Relevant Service Information We have reviewed Raytheon Service Bulletin SB 24-3772, dated February 2006. The service information describes procedures for doing a detailed inspection of panel DA wiring for clearance and for signs of chafing or exposed conductors, and repairing or replacing the wires and cable ties with new ones, if necessary. Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. FAA's Determination and Requirements of the Proposed AD We have evaluated all pertinent information and identified an unsafe condition that is likely to exist or develop on other airplanes of this same type design. For this reason, we are proposing this AD, which would require accomplishing the actions specified in the service information described previously, except as discussed under “Difference Between the Proposed AD and Referenced Service Information.” Difference Between Proposed Rule and Referenced Service Information Operators should note that, although the Accomplishment Instructions of the referenced service information describe procedures for submitting a sheet recording compliance with the service information, this proposed AD would not require that action. Costs of Compliance There are about 438 airplanes of the affected design in the worldwide fleet. This proposed AD would affect about 292 airplanes of U.S. registry. The proposed inspection would take about 2 work hours per airplane, at an average labor rate of $80 per work hour. Based on these figures, the estimated cost of the proposed AD for U.S. operators is $46,720, or $160 per airplane. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that the proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The Federal Aviation Administration

(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **Hawker Beechcraft Corporation:** Docket No. FAA-2007-28810; Directorate Identifier 2007-NM-104-AD. Comments Due Date

(a)The FAA must receive comments on this AD action by September 13, 2007. Affected ADs

(b)None. Applicability

(c)This AD applies to Hawker Beechcraft Model Hawker 800XP airplanes, certificated in any category; as identified in Raytheon Service Bulletin SB 24-3772, dated February 2006. Unsafe Condition

(d)This AD results from reports of wire bundle interference in the DA panel, chafed wire bundles, and exposed conductors. We are issuing this AD to prevent chafing of wire bundles, which could cause an electrical short and consequent loss of several functions essential for safe flight and smoke or fire in the flight compartment and main cabin. 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. Inspection and Corrective Actions

(f)Within 600 flight hours or 12 months after the effective date of this AD, whichever occurs first, do a detailed inspection of panel DA wiring for clearance and for signs of chafing or exposed conductors, in accordance with the Accomplishment Instructions of Raytheon Service Bulletin SB 24-3772, dated February 2006. If any wire is touching the panel, structure, or equipment, or if evidence of chafing or exposed conductors exists, before further flight, repair or replace the wires and cable ties with new ones, in accordance with the service bulletin. Note 1: For the purposes of this AD, a detailed inspection is: “An intensive examination of a specific item, installation, or assembly to detect damage, failure, or irregularity. Available lighting is normally supplemented with a direct source of good lighting at an intensity deemed appropriate. Inspection aids such as mirror, magnifying lenses, etc., may be necessary. Surface cleaning and elaborate procedures may be required.”

(g)Although Raytheon Service Bulletin SB 24-3772, dated February 2006, specifies to submit certain information to the manufacturer, this AD does not include that requirement. Alternative Methods of Compliance (AMOCs) (h)(1) The Manager, Wichita Aircraft Certification Office, FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

(PI)in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO. Issued in Renton, Washington, on July 18, 2007. Stephen P. Boyd, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-14637 Filed 7-27-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-28435; Directorate Identifier 2007-CE-054-AD] RIN 2120-AA64 Airworthiness Directives; GROB-WERKE GMBH & CO KG Models G102 ASTIR CS, G102 CLUB ASTIR III, G102 CLUB ASTIR IIIb, and G102 STANDARD ASTIR III Gliders AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: We propose to adopt a new airworthiness directive

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

(MCAI)originated 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: As a result of the replacement action of the G 103 TWIN ASTIR spar spigot assemblies, the Gliding Federation of Australia issued a directive to inspect the similar main spigots of single-seater sailplanes. The proposed AD would require actions that are intended to address the unsafe condition described in the MCAI. DATES: We must receive comments on this proposed AD by August 29, 2007. ADDRESSES: You may send comments by any of the following methods: • *DOT Docket Web Site:* Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • *Fax:*

(202)493-2251. • *Mail:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. • *Hand Delivery:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. • *Federal eRulemaking Portal:* Go to *http://www.regulations.gov.* Follow the instructions for submitting comments. 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 this proposed AD, 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. FOR FURTHER INFORMATION CONTACT: Greg Davison, Glider Program Manager, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone:

(816)329-4130; fax:

(816)329-4090. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2007-28435; Directorate Identifier 2007-CE-054-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments. We will post all comments we receive, without change, to *http://dms.dot.gov,* including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD. Discussion The Luftfahrt-Bundesamt (LBA), which is the airworthiness authority for Germany, has issued AD 91-5/2 Grob, dated February 1, 1991 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states: As a result of the replacement action of the G 103 TWIN ASTIR spar spigot assemblies, the Gliding Federation of Australia issued a directive to inspect the similar main spigots of single-seater sailplanes. The MCAI requires you to inspect the wing main spigot assembly before the next flight and replace it. You may obtain further information by examining the MCAI in the AD docket. The MCAI compliance time required the wing main spigot assembly to be inspected before the next flight and replacement of the wing spar spigot assembly no later than December 31, 1992. The FAA did not issue an AD on the single-seat versions (Models G102 ASTIR CS, G102 CLUB ASTIR III, G102 CLUB ASTIR IIIb, and G102 STANDARD ASTIR III) at the time the German airworthiness authority issued its AD. Relevant Service Information Grob Luft- und Raumfahrt has issued Service Bulletin TM 306-29; TM 320-5, issue date: October 11, 1990. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI. FAA's Determination and Requirements of the Proposed AD This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with this State of Design Authority, they have notified us of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all information and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design. Differences Between This Proposed 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 proposed 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 proposed AD. Costs of Compliance Based on the service information, we estimate that this proposed AD would affect about 75 products of U.S. registry. We also estimate that it would take about 24 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $80 per work-hour. Required parts would cost about $840 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 costs. 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 the proposed AD on U.S. operators to be $207,000, or $2,760 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 proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify this proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by adding the following new AD: **GROB-WERKE GMBH & CO KG:** Docket No. FAA-2007-28435; Directorate Identifier 2007-CE-054-AD. Comments Due Date

(a)We must receive comments by August 29, 2007. Affected ADs

(b)None. Applicability

(c)This AD applies to the gliders Model G102 ASTIR CS, serial numbers

(SNs)1001 through 1536; Model G102 CLUB ASTIR III, SNs 5501 (suffix C) through 5652 (suffix C); Model G102 CLUB ASTIR IIIb, SNs 5501 (suffix Cb) through 5652 (suffix Cb); and Model G102 STANDARD ASTIR III, SNs 5501 (suffix S) through 5652 (suffix S), that are:

(1)Equipped with any wing spar spigot assembly that has not been replaced following Grob Luft- und Raumfahrt Service Bulletin TM 306-29; TM 320-5, issue date: October 11, 1990; and

(2)Are certificated in any category. Subject

(d)Air Transport Association of America

(ATA)Code 57: Wings. Reason

(e)The mandatory continuing airworthiness information

(MCAI)states: As a result of the replacement action of the G 103 TWIN ASTIR spar spigot assemblies, the Gliding Federation of Australia issued a directive to inspect the similar main spigots of single-seater sailplanes. The MCAI requires you to inspect the wing main spigot assembly before the next flight and replace it. Actions and Compliance

(f)Unless already done, do the following actions:

(1)Within the next 10 hours time-in-service

(TIS)after the effective date of this AD, inspect both wing spar spigot assemblies for cracks using a dye penetrant or magnetic particle method following Grob Luft- und Raumfahrt Service Bulletin TM 306-29; TM 320-5, issue date: October 11, 1990. The use of the magnification method is prohibited. Note 1: If dye penetrant method is used, great care should be exercised when cleaning and/or etching the surfaces and interpreting surface faults.

(2)Replace the wing main spigot assembly following Grob Luft- und Raumfahrt Service Bulletin TM 306-29; TM 320-5, issue date: October 11, 1990, using whichever of the following compliance times that apply:

(i)If cracks are found during the inspection required in paragraph (f)(1) of this AD, before further flight; or

(ii)If no cracks are found during the inspection required in paragraph (f)(1) of this AD, within the next 12 months after the effective date of this AD. FAA AD Differences Note 2: This AD differs from the MCAI and/or service information as follows:

(1)The MCAI compliance time required the wing main spigot assembly to be inspected before the next flight and replacement of the wing spar spigot assembly no later than December 31, 1992. This proposed AD requires inspection within the next 10 hours TIS after the effective date of this AD and replacement prior to further flight after the inspection where cracks are found or 12 months after the effective date of this AD if no cracks are found.

(2)In lieu of authorizing a 10x magnifier for inspection as specified in the MCAI, this proposed AD requires you use either a dye penetrant or magnetic particle inspection method. Other FAA AD Provisions

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

(1)Alternative Methods of Compliance (AMOCs): The Manager, Standards Staff, 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: Greg Davison, Glider Program Manager, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone:

(816)329-4130; fax:

(816)329-4090. 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 Federal Republic of Germany Luftfahrt-Bundesamt AD 91-5/2 Grob, dated February 1, 1991; and Grob Luft-und Raumfahrt Service Bulletin TM 306-29; TM 320-5, issue date: October 11, 1990; for related information. Issued in Kansas City, Missouri, on July 24, 2007. James E. Jackson, Acting Manager, Small Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-14641 Filed 7-27-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG-101001-05] RIN 1545-BE80 Abandonment of Stock and Other Securities AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Notice of proposed rulemaking. SUMMARY: These proposed regulations provide guidance concerning the availability and character of a loss deduction under section 165 of the Internal Revenue Code for losses sustained from abandoned securities. These proposed regulations are necessary to clarify the tax treatment of losses from abandoned securities and will affect any taxpayer claiming a deduction for a loss from abandoned securities after the date these regulations are published as final regulations in the **Federal Register** . DATES: Written or electronic comments and requests for a public hearing must be received by October 29, 2007. ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-101001-05), room 5205, Internal Revenue Service, P.O. 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-101001-05), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC, 20224, or sent electronically, via the IRS Internet site at *http://www.irs.gov/regs* or via the Federal eRulemaking Portal at *http://www.regulations.gov* (indicate IRS REG-101001-05). FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Lisa S. Dobson at

(202)622-7790, or Sean M. Dwyer at

(202)622-5020; concerning submissions of comments and requests for a hearing, Kelly Banks at

(202)622-7180 (not toll-free numbers). SUPPLEMENTARY INFORMATION: Background and Explanation of Provisions This document proposes to amend § 1.165-5 of the Income Tax Regulations (26 CFR part 1) to provide guidance concerning the Federal income tax treatment of abandoned securities. Abandonment of Securities Section 165(a) of the Code allows a deduction for any loss sustained during the taxable year and not compensated for by insurance or otherwise. Section 1.165-1(d)(1) of the Income Tax Regulations provides that a loss is treated as sustained during the taxable year in which the loss occurs, as evidenced by a closed and completed transaction, and as fixed by an identifiable event occurring in such taxable year. Section 165(g)(1) provides that, if any security that is a capital asset becomes worthless during the taxable year, the resulting loss is treated as a loss from the sale or exchange of a capital asset (that is, as a capital loss) on the last day of the taxable year. Section 165(g)(2) defines *security* as a share of stock in a corporation; a right to subscribe for or to receive a share of stock in a corporation; or a bond, debenture, note or certificate or other evidence of indebtedness issued by a corporation or government with interest coupons or in registered form. Section 165(g)(3) provides an exception from capital loss treatment for certain worthless securities in a domestic corporation affiliated with the taxpayer. The legislative history of the predecessor of section 165(g) indicates that the provision was enacted to remove the “peculiar and anomalous results” that followed from treating losses from the worthlessness of securities as ordinary losses or deductions, and losses from the sale or exchange of securities as capital losses, because both losses represent a loss of capital in a transaction entered into for profit. See H. Rep. No. 1860, 75th Cong., 3d Sess., at 18-19 (1938). The Treasury Department and the IRS understand that some taxpayers have taken the position that a loss under section 165(a) resulting from the abandonment of a security is not subject to the loss characterization rules provided in section 165(g). Property that has become worthless to the taxpayer may give rise to a loss deduction under section 165(a). In general, worthlessness is determined by a combination of subjective and objective indicia including a subjective determination of worthlessness to the taxpayer and objective evidence of a closed and completed transaction. See *Echols* v. *Commissioner* , 950 F.2d 209 (5th Cir. 1991); *Boehm* v. *Commissioner* , 326 U.S. 287 (1945). For purposes of section 165(a), the act of abandonment is an event that establishes both of these elements. Rev. Rul. 2004-58, 2004-1 CB 1043, see § 601.601(d)(2)(ii)( *b* ). Although an act of abandonment may be “one of several factors in the analysis of whether the taxpayer's subjective determination of an asset's worthlessness is sustainable, abandonment is not an indispensable requirement for a worthlessness deduction under Code section 165.” *Echols* , 950 F.2d at 212. Identifiable events may include “other acts or events which reflect the fact that the property is worthless.” *Proesel* v. *Commissioner* , 77 T.C. 992, 1005 (1981). The proposed regulations provide that, for purposes of applying the loss characterization rules of section 165(g), the abandonment of a security establishes the worthlessness of the security to the taxpayer. Under the proposed regulations a loss established by the abandonment of a security that is a capital asset is treated as a loss from the sale or exchange, on the last day of the taxable year, of a capital asset, unless the exception in section 165(g)(3) applies. In characterizing losses established by the abandonment of a security in a manner consistent with other worthless security losses, the proposed regulations further the legislative intent to eliminate “peculiar and anomalous results.” See H. Rep. No. 1860, 75th Cong., 3d Sess., at 18-19 (1938). See also § 1.332-2(b) and Rev. Rul. 2003-125, 2003-2 CB 1243, see § 601.601(d)(2)(ii)( *b* ), (wherein the character of a loss established in a transaction in which a shareholder disposes of stock and receives no consideration (specifically, a liquidation that fails to qualify under section 332) is prescribed by section 165(g)). Although a taxpayer need not relinquish legal title to property in all cases to establish abandonment, in view of the nature of a taxpayer's rights in stock and other securities these proposed regulations require that to abandon a security, a taxpayer must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for the security. Abandonment or Cancellation of Other Debt Instruments Section 166(a)(1) allows as a deduction any debt which becomes worthless within the taxable year. Under section 166(b), the basis for determining the amount of the deduction is the adjusted basis of the debt. Section 166(a)(2) permits a deduction for partially worthless debts. It provides that the Secretary, when satisfied that a debt is recoverable only in part, may allow a deduction for the debt in an amount not in excess of the part charged off within the taxable year. The courts have noted that the tests for worthlessness under section 165 and under section 166 are fundamentally the same. See *United States* v. *S.S. White Dental Mfg. Co.,* 274 U.S. 398, 401 (1927). A creditor may not voluntarily cancel a debt that has value and claim a deduction under section 166 because the debt is now valueless. See *Jostens, Inc.* v. *Commissioner,* 956 F.2d 175, 176-77 (8th Cir. 1992). Two categories of worthless debts are excepted from section 166: nonbusiness debts under section 166(d) and debt securities under section 166(e). Under section 166(e), section 166 does not apply to a debt that is evidenced by a security as defined in section 165(g)(2)(C). Accordingly, the tax treatment of debt securities is discussed in the *Abandonment of Securities* section of this preamble. Section 166(d)(1)(A) provides that in the case of a taxpayer other than a corporation, section 166(a) does not apply to a nonbusiness debt. Instead, under section 166(d)(1)(B), a nonbusiness debt that becomes worthless is considered a loss from the sale or exchange of a capital asset held for not more than one year. A *nonbusiness debt* is defined in section 166(d)(2) as a debt that is not created or acquired in connection with, or the worthlessness of which is not incurred in, the taxpayer's trade or business. The legislative intent behind section 166(d) is in part to provide for parity of tax treatment with worthless securities under section 165(g) and other investments. See *Putnam* v. *Commissioner,* 352 U.S. 82, 91-92 (1956). The Treasury Department and the IRS request comments concerning the Federal tax treatment of “abandoned debt” other than debt securities, including nonbusiness debts which, under section 166(d), are deductible when worthless as short-term capital losses, and other debt instruments, the worthlessness of which gives rise to a bad debt deduction under section 166(a). Proposed Effective Date These proposed regulations are proposed to apply to an abandonment of securities occurring after the date these regulations are published as final regulations in the **Federal Register** . No inference is intended regarding the treatment for Federal income tax purposes of an abandonment of securities occurring before these regulations are effective. 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 has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and, because the regulation does not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small businesses. Comments and Requests for a Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight

(8)copies) or electronic comments that are submitted timely to the IRS. The Treasury Department and the IRS specifically request comments on the clarity of the proposed rule and how they can be made easier to understand. All comments will be available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the **Federal Register** . Although the proposed regulations provide that for purposes of section 165(g) the term *worthless* includes abandoned securities for which no consideration is received, there may be other contexts under the Code or regulations in which the tax treatment of abandoned securities is unclear or in which abandonment and worthlessness should be treated differently. In addition to comments concerning the tax treatment of non-security debt instruments, comments are requested concerning the existence and appropriate tax treatment of abandoned securities in other contexts. Drafting Information The principal authors of these regulations are Lisa S. Dobson of the Office of Associate Chief Counsel (Corporate) and Sean M. Dwyer of the Office of Associate Chief Counsel (Income Tax and Accounting). Other personnel from Treasury Department and the IRS participated in their development. 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 continues to read, in part, as follows: Authority: 26 U.S.C. 7805 * * * **Par. 2** . Section 1.165-5 is amended as follows: 1. Paragraph

(i)is redesignated as paragraph (j). 2. A new paragraph

(i)is added. The addition reads as follows: § 1.165-5 Worthless securities.

(i)*Abandonment of securities.* For purposes of section 165 and this section, a security that becomes wholly worthless includes a security described in paragraph

(a)of this section that is abandoned and otherwise satisfies the requirements for a deductible loss under section 165. If the abandoned security is a capital asset and is not described in section 165(g)(3) and paragraph

(d)of this section (concerning worthless securities of certain affiliated corporations), the resulting loss is treated as a loss from the sale or exchange, on the last day of the taxable year, of a capital asset. See section 165(g)(1) and paragraph

(c)of this section. To abandon a security, a taxpayer must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for the security. For purposes of this section, all the facts and circumstances determine whether the transaction is properly characterized as an abandonment or other type of transaction, such as an actual sale or exchange, contribution to capital, dividend, or gift. Linda E. Stiff, Acting Deputy Commissioner for Services and Enforcement. [FR Doc. E7-14616 Filed 7-27-07; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF DEFENSE Department of the Army; Corps of Engineers 33 CFR Part 334 United States Army restricted area, Kuluk Bay, Adak, Alaska AGENCY: U.S. Army Corps of Engineers, DoD. ACTION: Notice of proposed rulemaking and request for comments. SUMMARY: The Corps of Engineers is proposing to establish a restricted area within Kuluk Bay, Adak, Alaska. The purpose of this restricted area is to ensure the security and safety of the Sea Based Radar, its crew, and other vessels transiting the area. The proposed restricted area is within an established moorage restriction area for the U.S. Navy. The restricted area will be marked on navigation charts as a restricted area to insure security and safety for the public. DATES: Written comments must be submitted on or before August 29, 2007. ADDRESSES: You may submit comments, identified by docket number COE-2007-0023, by any of the following methods: *Federal eRulemaking Portal: http://www.regulations.gov.* Follow the instructions for submitting comments. *E-mail: david.b.olson@usace.army.mil.* Include the docket number COE-2007-0023 in the subject line of the message. *Mail: U.S. Army Corps of Engineers, Attn:* CECW-CO (David B. Olson), 441 G Street, NW., Washington, DC 20314-1000. *Hand Delivery/Courier:* Due to security requirements, we cannot receive comments by hand delivery or courier. *Instructions:* Direct your comments to docket number COE-2007-0023. All comments received will be included in the public docket without change and may be made available on-line at *http://regulations.gov,* including any personal information provided, unless the commenter indicates that the comment includes information claimed to be Confidential Business Information

(CBI)or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI, or otherwise protected, through *regulations.gov* or e-mail. The *regulations.gov* Web site is an anonymous access system, which means we will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail directly to the Corps without going through regulations.gov, your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, we recommend that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If we cannot read your comment because of technical difficulties and cannot contact you for clarification, we may not be able to consider your comment. Electronic comments should avoid the use of any special characters, any form of encryption, and be free of any defects or viruses. *Docket:* For access to the docket to read background documents or comments received, go to *http://www.regulations.gov.* All documents in the docket are listed. Although listed in the index, some information is not publicly available, such as CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Consideration will be given to all comments received within 30 days of the date of publication of this notice. FOR FURTHER INFORMATION CONTACT: Mr. David Olson, Headquarters, Operations and Regulatory Community of Practice, Washington, DC at

(202)761-4922, or Mr. Leroy Phillips, Corps of Engineers, Alaska District, Regulatory Branch, at

(907)753-2828. SUPPLEMENTARY INFORMATION: Pursuant to its authorities in Section 7 of the Rivers and Harbors Act of 1917 (40 Stat. 266; 33 U.S.C.1) and Chapter XIX, of the Army Appropriations Act of 1919 (40 Stat. 892; 33 U.S.C.3), the Corps proposes to amend the restricted area regulations in 33 CFR Part 334 by adding § 334.1325 as a restricted area within Kuluk Bay, Adak, Alaska as described below. The proposed restricted area is completely within a moorage restriction area for the United States Navy in Kuluk Bay, Adak, Alaska, which was established at 33 CFR 334.1320 and is designated on NOAA chart 16475. Procedural Requirements a. *Review under Executive Order 12866.* This proposed rule is issued with respect to a military function of the Defense Department and the provisions of Executive Order 12866 do not apply. b. *Review under the Regulatory Flexibility Act.* This proposed rule has been reviewed under the Regulatory Flexibility Act (Pub. L. 96-354) which requires the preparation of a regulatory flexibility analysis for any regulation that will have a significant economic impact on a substantial number of small entities (i.e., small businesses and small Governments). The Corps expects that the economic impact of the identification of this restrictive area would have practically no impact on the public, no anticipated navigational hazard or interference with existing waterway traffic, and accordingly, certifies that this proposed regulation, if adopted, will have no significant economic impact on small entities. c. *Review under the National Environmental Policy Act.* Due to the administrative nature of this action and because there is no intended change in the use of the area, the Corps expects that this regulation, if adopted, will not have a significant impact to the quality of the human environment and therefore preparation of an environmental impact statement is not required. An environmental assessment will be prepared after the public notice period is closed and all comments have been received and considered. It may be reviewed at the district office listed at the end of FOR FURTHER INFORMATION CONTACT , above. d. *Unfunded Mandates Act.* This proposed rule does not impose an enforceable duty among the private sector and, therefore, it is not a Federal private sector mandate and it is not subject to the requirements of either Section 202 or Section 205 of the Unfunded Mandates Act. We have also found under Section 203 of the Act, that small governments will not be significantly and uniquely affected by this rulemaking. List of Subjects in 33 CFR Part 334 Danger zones, Marine safety, Navigation (water), Restricted areas, Waterways. For the reasons set out in the preamble, the Corps proposes to amend 33 CFR Part 334 as follows: PART 334-DANGER ZONE AND RESTRICTED AREA REGULATIONS 1. The authority citation for 33 CFR Part 334 continues to read as follows: Authority: 40 Stat. 266 (33 U.S.C. 1) and 40 Stat. 892 (33 U.S.C. 3). 2. Add § 334.1325 to read as follows: § 334.1325 United States Army restricted area, Kuluk Bay, Adak, Alaska.

(a)*The area.* The area within a radius 1,000 yards around the Sea Base Radar mooring site in all directions from latitude 51°53′05.4″ N, longitude 176°33′47.4″ W (NAD 83).

(b)*The regulation.*

(1)No vessel, person, or other craft shall enter or remain in the restricted area except as may be authorized by the enforcing agency.

(2)A ring of eight lighted and marked navigation buoys marking the perimeter of the mooring anchor system will provide a visible distance reference at a radius of approximately 800 yards from latitude 51°53′05.4″ N, longitude 176°33′47.4″ W (NAD 83). Each buoy has a white light, flashing at 3 second intervals with a 2 nautical mile range. Vessels, persons or other craft must stay at least 200 yards outside the buoys.

(3)The regulation in this section shall be enforced by personnel attached to the Missile Defense Agency and/or by such other agencies as the Director, MDA-AK, Fort Richardson, Alaska, may designate. Dated: July 25, 2007. Mark Sudol, Acting Chief, Operations, Directorate of Civil Works. [FR Doc. E7-14651 Filed 7-27-07; 8:45 am] BILLING CODE 3710-92-P DEPARTMENT OF COMMERCE Patent and Trademark Office 37 CFR Part 41 [Docket No.: PTO-P-2007-0006] RIN 0651-AC12 Rules of Practice Before the Board of Patent Appeals and Interferences in Ex Parte Appeals AGENCY: United States Patent and Trademark Office, Commerce. ACTION: Notice of proposed rule making. SUMMARY: The Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office proposes changes to the rules governing practice before the Board of Patent Appeals and Interferences in ex parte patent appeals. The changes are needed to permit the Board to handle an increasing number of ex parte appeals in a timely manner. The proposed rules seek to provide examiners and Office reviewers with a clear and complete statement of an appellant's position at the time of filing an appeal brief so as to enhance the likelihood that appealed claims will be allowed without the necessity of further proceeding with the appeal, minimize the pendency of appeals before the Office, minimize the need for lengthy patent term adjustments in cases where claims become allowable as a result of an action by the Board in an appeal, provide uniform treatment of requests for an extension of time filed after an appeal brief is filed, and make the decision-making process more efficient. DATES: Comments are solicited from interested individuals or entities. Written comments must be received on or before September 28, 2007. No public hearing will be held. ADDRESSES: Submit comments: 1. By electronic mail to *BPAI.Rules@uspto.gov.* 2. By mail to Mail Stop Interference, Director of the United States Patent and Trademark Office, P.O. Box 1450, Alexandria, VA 22313-1450. 3. By facsimile to 571-273-0042. To the extent reasonably possible, the Office will make the comments available at *http://www.uspto.gov/web/offices/dcom/bpai/.* To facilitate this goal, the Office strongly encourages the submission of comments electronically, in either ASCII format or ADOBE® portable document format (pdf). Regardless of which submission mode is used to make a submission, the submitter should write only “Ex parte Appeal Rules” in the subject line to ensure prompt consideration of any comments. Because the comments will be made available to the public, the comments should not include information that the submitter does not wish to have published. Comments that include confidentiality notices will not be entered into the record. FOR FURTHER INFORMATION CONTACT: Fred E. McKelvey or Allen R. MacDonald at 571-272-9797. SUPPLEMENTARY INFORMATION: Explanation of Proposed Changes Existing rules in Part 1 are denominated as “Rule x” in this supplementary information. A reference to Rule 136(a) is a reference to 37 CFR 1.136(a) (2006). Existing rules in Part 41 are denominated as “Bd.R. x” in this supplementary information. A reference to Bd.R. 41.3 is a reference to 37 CFR 41.3 (2006). Proposed rules are denominated as “Proposed Bd.R.” in this supplementary information. The Board has jurisdiction to consider and decide ex parte appeals in patent applications (including reissue, design and plant patent applications) and ex parte reexamination proceedings. The Board is currently experiencing a large increase in the number of ex parte appeals. In FY 2006, the Board received 3,349 ex parte appeals. In FY 2007, the Board expects to receive more than 4,000 ex parte appeals. In FY 2008, the Board expects to receive over 5,000 ex parte appeals. These rules are proposed to change procedures in such a way as to allow the Board to continue to resolve ex parte appeals in a timely manner. The proposed rules do not propose to change any of the rules relating to inter partes reexamination appeals. Nor do the proposed rules propose to change any of the rules relating to contested cases. In some instances, the rules propose to adopt practices similar to those of the Court of Appeals for the Federal Circuit. For example, an appendix would be required, page limits would be set, and a table of contents and a table of authorities would be required in briefs. Discussion of Specific Rules Definitions Proposed Bd.R. 41.2 would revise Bd.R. 41.2 to eliminate from the definition of “Board” any reference to a proceeding under Bd.R. 41.3 relating to petitions to the Chief Administrative Patent Judge. The Director has delegated authority to the Chief Administrative Patent Judge to decide petitions under Bd.R. 41.3. See Manual of Patent Examining Procedure, § 1002.02(f) (8th ed., Aug., 2006). Proposed Bd. R. 41.2 would also revise Bd.R. 41.2 to eliminate a petition under Proposed Bd.R. 41.3 from the definition of contested case. At the present time, there are no petitions authorized in a contested case. Petitions Bd.R. 41.3 would be revised to include a delegation of authority from the Director to the Chief Administrative Patent Judge to decide certain petitions authorized by Part 41 as proposed to be revised. The delegation of authority would be in addition to that already set out in Manual of Patent Examining Procedure, § 1002.02(f) (8th ed., Aug., 2006). The petitions would include

(1)seeking an extension of time to file certain papers after an appeal brief is filed in an ex parte appeal, and

(2)to enlarge the page limit of an appeal brief, reply brief, supplemental reply brief or request for rehearing. Proposed Bd.R. 41.3(a) would require that a copy of any petition be forwarded to the Chief Administrative Patent Judge, so as to minimize any chance that a petition may be overlooked. Proposed Bd.R. 41.3(b) would define the scope of petitions which can be filed pursuant to the rules. Under Proposed Bd.R. 41.3(b), a petition could not be filed to seek review of issues committed by statute to a panel. *See, e.g., In re Dickinson,* 299 F.2d 954, 958, 133 USPQ 39, 43 (CCPA 1962). Timeliness of Petitions Proposed Bd.R. 41.4(c) would be revised to add the phrase “Except to the extent provided in this part” and to revise paragraph 2 to read: “Filing of a notice of appeal and an appeal brief (see §§ 41.31(c) and 41.37(c)).” The revision would restrict Proposed Bd.R. 41.4(c)(2) to the notice of appeal and appeal brief. The Chief Administrative Patent Judge would determine whether extensions are to be granted for the filing of most other papers during the pendency of the appeal. Definitions Proposed Bd.R. 41.30 would be revised to add a definition of “record on appeal.” The record on appeal would consist of

(1)the specification,

(2)drawings (if any),

(3)U.S. patents cited by the examiner or appellant,

(4)published U.S. applications cited by the examiner or appellant,

(5)the appeal brief, including all appendices,

(6)the examiner's answer,

(7)any reply brief, including any supplemental appendix,

(8)any supplemental examiner's answer,

(9)any supplemental reply brief,

(10)any request for rehearing,

(11)any order or decision entered by the Board or the Chief Administrative Patent Judge, and

(12)any other document or evidence which was considered by the Board as indicated in any opinion accompanying any order or decision. The definition would advise applicants of what documents the Board would consider in resolving the appeal. The definition would also make it clear to any reviewing court what record was considered by the Board. Appeal to Board Proposed Bd.R. 41.31(a) would provide that an appeal is taken from a decision of the examiner to the Board by filing a notice of appeal. The following language would be acceptable under the rule as proposed: “An appeal is taken from the decision of the examiner entered [specify date appealed rejection was entered].” An appeal can be taken when authorized by the statute. 35 U.S.C. 134. The provision of Bd.R. 41.31(b) that a notice of appeal need not be signed has been removed. Accordingly, if promulgated, Proposed Bd.R. 41.31 would no longer provide that a notice of appeal need not be signed. Instead, papers filed in connection with an appeal, including the notice of appeal, would need to be signed. Proposed Bd.R. 41.31(b) would require that the notice of appeal be accompanied by the fee required by law and would refer to the rule that specifies the required fee. Proposed Bd.R. 41.31(c) would specify the time within which a notice of appeal would have to be filed in order to be considered timely. The time for filing a notice of appeal appears in Rule 134. Proposed Bd.R. 41.31(d) would provide that a request for an extension of time to file a notice of appeal in an application is governed by Rule 136(a). Proposed Bd.R. 41.31(d) would also provide that a request for an extension of time to file a notice of appeal in an ex parte reexamination proceeding is governed by Rule 550(c). Proposed Bd.R. 41.31(e) would define a “non-appealable issue” as an issue that is not subject to an appeal under 35 U.S.C. 134. Non-appealable issues are issues

(1)over which the Board does not exercise authority in appeal proceedings and

(2)which are handled by a petition. Non-appealable issues include such matters as an examiner's refusal to

(1)enter a response to a final rejection,

(2)enter evidence presented after a final rejection,

(3)enter an appeal brief or a reply brief, or

(4)withdraw a restriction requirement. The proposed rules contemplate that some petitions relating to non-appealable issues are to be decided by the Chief Administrative Patent Judge. Some of those non-appealable issues include:

(1)A petition to exceed page limit and

(2)a petition to extend time for filing a paper in the appeal after the filing of the appeal brief. An applicant or patent owner dissatisfied with a decision of an examiner on a non-appealable issue would be required to seek review by petition before an appeal is considered on the merits. Failure to timely file a petition seeking review of a decision of the examiner related to a non-appealable issue would generally constitute a waiver to have those issues considered. The language “[f]ailure to timely file” would be interpreted to mean not filed within the time set out in the rules. The object of the rule, as proposed, would be to maximize resolution of non-appealable issues before an appeal is considered on the merits. Under current practice, an applicant or a patent owner often does not timely seek to have non-appealable issues resolved thereby necessitating a remand by the Board to the examiner to have a non-appealable issue resolved. The remand adds to the pendency of an application or reexamination proceeding and, in some instances, may unnecessarily enlarge patent term adjustment. The Office would intend to strictly enforce the waiver provisions of Proposed Bd.R. 41.31(e), if promulgated, with the view of making the appeal process administratively efficient. While the Office will retain discretion to excuse a failure to timely settle non-appealable issues, it is expected that exercise of that discretion will be reserved for truly unusual circumstances. Amendments and Evidence Filed After Appeal and Before Brief Proposed Bd.R. 41.33(a) would provide that an amendment filed after the date a notice of appeal is filed and before an appeal brief is filed may be admitted as provided in Rule 116. Proposed Bd.R. 41.33(b) would give the examiner discretion to permit entry of an amendment filed with or after an appeal brief is filed under two circumstances. A first circumstance would be to cancel claims, provided cancellation of claims does not affect the scope of any other pending claim in the proceedings. A second circumstance would be to rewrite dependent claims into independent form. Proposed Bd.R. 41.33(c) would provide that all other amendments filed after the date of an appeal brief is filed will not be admitted, except as permitted by

(1)Proposed Bd.R. 41.39(b)(1) (request to reopen prosecution after new rejection in an examiner's answer),

(2)Proposed Bd.R. 41.50(b)(1) (request to reopen prosecution after entry of a supplemental examiner's answer following a remand by the Board),

(3)Proposed Bd.R. 41.50(d)(1) (request to reopen prosecution after entry of new rejection by the Board), and

(4)Proposed Bd.R. 41.50(e) (amendment after recommendation by the Board). Proposed Bd.R. 41.33(d) would provide that evidence filed after a notice of appeal is filed and before an appeal brief is filed may be admitted

(1)if the examiner determines that the evidence overcomes some or all rejections under appeal and

(2)appellant shows good cause why the evidence was not earlier presented. The first step in an analysis of whether evidence may be admitted is a showing of good cause why the evidence was not earlier presented. The Office has found that too often an applicant or a patent owner belatedly presents evidence as an afterthought and that the evidence was, or should have been, readily available. Late presentation of evidence is not consistent with efficient administration of the appeal process. Under the rule, as proposed, the Office would strictly apply the good cause standard. *Cf. Hahn* v. *Wong* , 892 F.2d 1028, 13 USPQ2d 1313 (Fed. Cir. 1989). For example, a change of attorneys at the appeal stage or an unawareness of the requirement of a rule would not constitute a showing of good cause. If good cause is not shown, the analysis ends and the evidence would not be admitted. In those cases where good cause is shown, a second analysis will be made to determine if the evidence would overcome all rejections. Even where good cause is shown, if the evidence does not overcome all rejections, the evidence would not be admitted. Alternatively, the examiner could determine that the evidence does not overcome all the rejections and on that basis alone could refuse to admit the evidence. Proposed Bd.R. 41.33(e) would provide that evidence filed after an appeal brief is filed will not be admitted except as permitted by

(1)Proposed Bd.R. 41.39(b)(1) (request to reopen prosecution after new rejection in examiner's answer),

(2)Proposed Bd.R. 41.50(b)(1) (request to reopen prosecution after entry of a supplemental examiner's answer following a remand by the Board), and

(3)Proposed Bd.R. 41.50(d)(1) (request to reopen prosecution after new rejection entered by the Board). Jurisdiction Over Appeal Proposed Bd.R. 41.35(a) would provide that the Board acquires jurisdiction upon entry of a docket notice by the Board. At an appropriate time after proceedings are completed before the examiner, a docket notice would be entered in the application or reexamination proceeding file and sent to the appellant. By delaying the transfer of jurisdiction until the appeal is fully briefed and the position of the appellant is fully presented for consideration by the examiner and the Office reviewers (appeal conferees), the possibility exists that the examiner will find some or all of the appealed claims patentable without the necessity of proceeding with the appeal and invoking the jurisdiction of the Board. For this reason, jurisdiction should transfer to the Board only after

(1)the appellant has filed an appeal brief,

(2)the examiner has entered an answer, and

(3)the appellant has filed a reply brief or the time for filing a reply brief has expired. The current rule (Bd.R. 41.35(a)) provides that the Board acquires jurisdiction upon transmittal of the file, including all briefs and examiner's answers, to the Board. However, under the current practice, an appellant may or may not know the date when a file is transmitted to the Board. Most files are now electronic files (Image File Wrapper or IFW file) as opposed to paper files. Accordingly, a paper file is no longer transmitted to the Board. Under current practice, the Board prepares a docket notice which is

(1)entered in the IFW file and

(2)sent to appellant. Upon receipt of the docket notice, appellant knows that the Board has acquired jurisdiction over the appeal. Proposed Bd.R. 41.35(a) essentially would codify current practice and establish a precise date, known to all involved, as to when jurisdiction is transferred to the Board. Proposed Bd.R. 41.35(b) would provide that the jurisdiction of the Board ends when the Board

(1)orders a remand, or

(2)enters a final decision and judicial review is timely sought, or

(3)enters a final decision and the time for seeking judicial review has expired. There are two occasions when a remand is entered. First, a remand is entered when the Board is of the opinion that clarification on a point of fact or law is needed. *See* Proposed Bd.R. 41.50(b). Second, a remand is entered when an appellant elects further prosecution before the examiner following entry of a new rejection by the Board. *See* Proposed Bd.R. 41.50(d)(1). Upon entry of a remand the Board's jurisdiction ends. The Board also loses jurisdiction as a matter of law when an appeal to the Federal Circuit is filed in the USPTO. *See In re Allen* , 115 F.2d 936, 47 USPQ 471 (CCPA 1940) and *In re Graves* , 69 F.3d 1147, 1149, 36 USPQ2d 1697, 1698 (Fed. Cir. 1995). A final decision is a panel decision which disposes of all issues with regard to a party eligible to seek judicial review and does not indicate that further action is needed. *See* Bd.R. 41.2 (definition of “final”). When a party requests rehearing, a decision becomes final when the Board decides the request for rehearing. A decision including a new rejection is an interlocutory, not a final, order. If an appellant elects to ask for rehearing to contest a new rejection, the decision on rehearing is a final decision for the purpose of judicial review. Bd.R. 41.35(c) would continue current practice and provide that the Director could *sua sponte* order an appeal to be remanded to an examiner before entry of a Board decision. The Director has inherent authority to order a *sua sponte* remand to the examiner. Ordinarily, a rule is not necessary for the Director to exercise inherent authority. However, in this particular instance, it is believed that a statement in the rule of the Director's inherent authority serves an appropriate public notice function. Appeal Brief Proposed Bd.R. 41.37 would provide for filing an appeal brief to perfect an appeal and would set out the requirements for appeal briefs. The appeal brief is a highly significant document in an ex parte appeal. Appeal brief experience under current Bd.R. 41.37 has been mixed. Proposed Bd.R. 41.37 seeks

(1)to take advantage of provisions of Bd.R. 41.37 which have proved useful,

(2)clarify provisions which have been subject to varying interpretations by counsel, and

(3)add provisions which are expected to make the decision-making process more focused and efficient. Proposed Bd.R. 41.37(a) would provide that an appeal brief shall be filed to perfect an appeal. Upon a failure to timely file an appeal brief, proceedings on the appeal process would be considered terminated. The language “without further action on the part of the Office” would provide notice that no action, including entry of a paper by the Office, would be necessary for the appeal to be considered terminated. Proposed Bd.R. 41.37(a) would not preclude the Office from entering a paper notifying an applicant or patent owner that the appeal has been terminated. Any failure of the Office to enter a paper notifying an applicant or patent owner that an appeal stands terminated would not affect the terminated status of the appeal. The language “proceedings are considered terminated” would provide notice that when no appeal brief is filed, the time for filing a continuing application under 35 U.S.C. 120 would be before the time expires for filing an appeal brief. Proposed Bd.R. 41.37(b) would provide the appeal brief shall be accompanied by the fee required by Bd.R. 41.20(b)(2). Proposed Bd.R. 41.37(c) would provide that an appellant must file an appeal brief within two months from the filing of the notice of appeal. Proposed Bd.R. 41.37(d) would provide the time for filing an appeal brief is extendable under the provisions of Rule 136(a) for applications and Rule 550(c) for ex parte reexamination proceedings. Consideration was given to proposing a requirement for a petition to extend the time for filing an appeal brief. However, in view of the pre-appeal conference pilot program (see Official Gazette of July 12, 2005; *http://www.uspto.gov/web/offices/com/sol/og/2005/week28/patbref.htm),* and in an effort to encourage continued participation in that pilot program, further consideration on whether to require a petition will be deferred pending further experience by the Office in the pre-appeal conference pilot program. Proposed Bd.R. 41.37(e) would provide that an appeal brief must contain, under appropriate headings and in the order indicated, the following items:

(1)Statement of the real party in interest,

(2)statement of related cases,

(3)jurisdictional statement,

(4)table of contents,

(5)table of authorities,

(6)status of claims,

(7)status of amendments,

(8)rejections to be reviewed,

(9)statement of facts,

(10)argument, and

(11)an appendix containing

(a)claims section,

(b)claim support section,

(c)drawing analysis section,

(d)means or step plus function analysis section,

(e)evidence section, and

(f)related cases section. The items are otherwise defined in other subsections of Proposed Bd.R. 41.37 and, where applicable, would apply to appeal briefs, reply briefs (Proposed Bd.R. 41.41), and supplemental reply briefs (Proposed Bd.R. 41.44). Proposed Bd.R. 41.37(f) would require a “statement of real party in interest” which would include an identification of the name of the real party in interest. The principal purpose of an identification of the name of the real party in interest is to permit members of the Board to assess whether recusal is required or would otherwise be appropriate. Another purpose is to assist employees of the Board to comply with the Ethics in Government Act. Since a real party in interest can change during the pendency of an appeal, there would be a continuing obligation to update the real party in interest during the pendency of the appeal. Proposed Bd.R. 41.37(g) would require an appeal brief to include a “statement of related cases.” The statement of related cases would identify related cases by

(1)application number, patent number, appeal number or interference number or

(2)court docket number. The statement would encompass all prior or pending appeals, interferences or judicial proceedings known to appellant (or appellant's legal representative or any assignee) that relate to, directly affect, or would be directly affected by or have a bearing on the Board's decision in the appeal. A copy of any final or significant interlocutory decision rendered by the Board or a court in any proceeding identified under this paragraph shall be included in the related cases section of the appendix. A significant interlocutory decision would include

(1)a decision on a patentability motion in an interference, or

(2)a decision interpreting a claim in an interference or by a court. Appellant would be under a continuing obligation to update this item during the pendency of the appeal. Proposed Bd.R. 41.37(h) would require an appeal brief to contain a “jurisdictional statement” which would set out why appellant believes that the Board has jurisdiction to consider the appeal. The jurisdictional statement would include a statement of

(1)the statute under which the appeal is taken,

(2)the date of the decision from which the appeal is taken,

(3)the date the notice of appeal was filed, and

(4)the date the appeal brief is being filed. If a notice of appeal or an appeal brief is filed after the time specified in the rules, appellant would have to indicate

(1)the date an extension of time was requested and

(2)the date the request was granted. A jurisdictional statement would minimize the chance that the Board would consider an appeal when the application on appeal is abandoned or a reexamination proceeding on appeal has terminated. An example of a jurisdictional statement in an application under a heading styled “Jurisdictional statement” would be: “The Board has jurisdiction under 35 U.S.C. 134(a). The Examiner entered a final rejection on August 1, 2006, setting a three-month period for response. The time for responding to the final rejection expired on November 1, 2006. Rule 134. A notice of appeal and a request for a one-month extension of time under Rule 136(a) was filed on November 15, 2006. The time for filing an appeal brief is two months after the filing of a notice of appeal. Bd.R. 41.37(c). The time for filing an appeal brief expired on January 16, 2007 (Monday, January 15, 2007, being a Federal holiday). The appeal brief is being filed on January 16, 2007.” If during the preparation of a jurisdictional statement, an appellant becomes aware that its application is abandoned, appellant could then take steps to revive the application, if revival is appropriate. See Rule 137. Proposed Bd.R. 41.37(i) would require an appeal brief to contain a “table of contents” identifying the items listed in Proposed Bd.R. 41.37(e) along with a page reference where each item begins. In the case of a reply brief, the table of contents would identify the items required by the reply brief rule (Proposed Bd.R. 41.41(d)). In the case of a supplemental reply brief, the table of contents would identify the items required by the supplemental reply brief rule (Proposed Bd.R. 41.44(d)). Proposed Bd.R. 41.37(j) would require an appeal brief to contain a “table of authorities.” This item would list

(1)court and administrative decisions (alphabetically arranged),

(2)statutes, and

(3)other authorities, along with a reference to the pages of the appeal brief where each authority is cited. A similar requirement applies to a reply brief and a supplemental reply brief. Proposed Bd.R. 41.37(k) would require an appeal brief to include a “status of pending claims” (e.g., rejected—appealed, rejected—not appealed, cancelled, allowable, withdrawn from consideration, or objected to). An example of a status of pending claims might read as follows under a heading styled “Status of pending claims:” “Claims 1-7 are pending in the application on appeal: Claim 1 (rejected—not appealed), Claims 2-3 (rejected—appealed), Claim 4 (restricted and withdrawn from consideration), Claim 5 (objected to as depending from rejected claim), and Claims 6-7 (allowable).” Proposed Bd.R. 41.37(l) would require an appeal brief to indicate the “status of amendments” for all amendments filed after final rejection (e.g., entered or not entered). Examples of a status of amendments might read as follows under a heading styled “Status of amendments”:

(1)“No amendment was filed after final rejection.”

(2)“An amendment filed October 31, 2006, was *not* entered by the examiner.”

(3)“An amendment filed November 1, 2006, was entered by the examiner.”

(4)“An amendment filed October 31, 2006, was *not* entered by the examiner, but an amendment filed November 1, 2006, was entered by the examiner.” Proposed Bd.R. 41.37(m) would require an appeal brief to set out the “rejections to be reviewed,” including the claims subject to each rejection. Examples might read as follows under a heading styled “Rejections to be reviewed”:

(1)“Rejection of claim 2 as being anticipated under 35 U.S.C. 102(b) over Johnson.”

(2)“Rejection of claims 2-3 as being unpatentable under 35 U.S.C. 103(a) over Johnson and Young.”

(3)“Rejection of claim 2 as failing to comply with the written description requirement of the first paragraph of 35 U.S.C. 112.”

(4)“Rejection of claim 2 as failing to comply with the enablement requirement of the first paragraph of 35 U.S.C. 112.”

(5)“Rejection of claim 3 under 35 U.S.C. 251 based on recapture.” Proposed Bd.R. 41.37(n) would require a “statement of facts.” Appellant would set out in an objective and non-argumentative manner the material facts relevant to the rejections on appeal, preferably in numbered paragraphs. A clear, concise and complete statement of relevant facts will clarify the position of an appellant on dispositive issues and assist the examiner in reconsidering the patentability of the rejected claims. A fact would be required to be supported by a reference to the page number of the record on appeal. Where appropriate, the citation should also be to a specific line and to a drawing figure and element number of the record on appeal (see Proposed Bd.R. 41.37(t)). Statements of facts should be set out in short declarative sentences, and each sentence should address a single fact. For example, “In rejecting claims 1-5, the examiner cites Jones (App. [App. meaning appendix], page 8, lines x-y).” “Jones describes a widget (App., page 19, col. 8, lines 3-4 and App., page 16, Figure 1, elements 12 and 13).” A compound statement of fact is not proper, e.g., “Jones describes a widget (App., page 19, col. 8, lines 3-4) and Smith does not describe a device.” A statement of facts would have to be non-argumentative, meaning that an appellant would not be able to argue its appeal in the statement of facts. Rather, the statement of facts is designed to require an appellant to set out the facts which the appellant considers material for resolution of the appeal, thereby assisting the examiner initially and, if necessary, the Board thereafter to focus on the dispositive portions of the record. For example, in the case of a rejection for obviousness under § 103, the facts should address at least the scope and content of the prior art, any differences between the claim on appeal and the prior art, and the level of skill in the art. In the past, some appellants have provided minimal factual development in an appeal brief, apparently believing that the Board will scour the record to divine the facts. It should be remembered that when the appeal reaches the Board, the panel members do not know anything about the appellant's invention or the prosecution history of the application on appeal. Likewise, too often an appellant will not support a statement of fact in an appeal brief by an explicit reference to the evidence. A statement of fact based on the specification would be proper if supported by a reference to page and line (and where appropriate also to drawing figure and element number). A statement of fact based on a patent would be proper if it is supported by a reference to a column and line (and where appropriate also to a drawing figure and element number). A statement of fact based on an affidavit would be proper if supported by a reference to a page and line number or to a page and paragraph number of the affidavit; the affidavit would appear in the evidence section of the appendix. The Office is proposing requiring a reference to a specific citation because an appellant should not expect the examiner or the Board to search the record to determine whether a statement of fact is supported by the evidence. Proposed Bd.R. 41.37(n), as well as other proposed rules, is consistent with the approaches taken by federal courts concerning appeal brief practice and other briefing practice:

(1)*Clintec Nutrition Co.* v. *Baxa Corp.,* 988 F. Supp. 1109, 1114, n.16, 44 USPQ2d 1719, 1723, n.16 (N.D. Ill. 1997) (where a party points the court to a multi-page exhibit without citing a specific portion or page, the court will not pour over the documents to extract the relevant information);

(2)*Ernst Haas Studio, Inc.* v. *Palm Press, Inc.,* 164 F.3d 110, 112, 49 USPQ2d 1377, 1379 (2d Cir. 1999) (“Appellant's Brief is at best an invitation to the court to scour the record, research any legal theory that comes to mind, and serve generally as an advocate for appellant. We decline the invitation.”);

(3)*Winner International Royalty Corp.* v. *Wang,* 202 F.3d 1340, 1351, 53 USPQ2d 1580, 1589 (Fed. Cir. 2000) (“[W]e will not search the record on the chance of discovering * * * whether the district court abused its discretion.”);

(4)*Gorence* v. *Eagle Food Centers, Inc* ., 242 F.3d 759, 762-63 (7th Cir. 2001) (“Little has been done * * * to make slogging through the record here either more efficient or more pleasant. And it is simply not true, we want to emphasize, that if a litigant presents an overload of irrelevant or non-probative facts, somehow the irrelevancies will add up to relevant evidence * * *”); and

(5)*DeSilva* v. *DiLeonardi,* 181 F.3d 865, 867 (7th Cir. 1999) (“[An appeal] brief must make all arguments accessible to the judges, rather than ask them to play archaeologist with the record.” *See also*

(1)*Shiokawa* v. *Maienfisch,* 56 USPQ2d 1970, 1975 (Bd. Pat. App. & Int. 2000) and

(2)*LeVeen* v. *Edwards,* 57 USPQ2d 1406, 1413 (Bd. Pat. App. & Int. 2000). Proposed Bd.R. 41.37(o) would require an appeal brief to contain an argument comprising an analysis explaining, as to each rejection to be reviewed, why the appellant believes the examiner erred as to each rejection to be reviewed. The analysis would have to address all points made by the examiner with which the appellant disagrees. The presentation of a concise, but comprehensive, argument in response to the final rejection will efficiently frame any dispute between the appellant and the examiner not only for the benefit of the Board but also for consideration by the examiner and Office reviewers (appeal conferees) and provide the best opportunity for resolution of the dispute without the necessity of proceeding with the appeal. Where an argument has previously been presented to the examiner, the analysis would have to identify where any argument being made to the Board was made in the first instance to the examiner. Where an argument has not previously been made to the examiner, an appellant would be required to say so in the appeal brief so that the examiner would know that the argument is new. An example where an argument might not previously have been made to an examiner might occur under the following fact scenario. A first office action rejects claims over Reference A. Applicant amends the claims to avoid Reference A. The examiner enters a final rejection now relying on References A and B. Applicant elects to appeal without filing a response under Rule 116. While applicants are encouraged to file a response under Rule 116 to possibly avoid an appeal all together, at the present time there is no requirement for an applicant to file a Rule 116 response. Whether such a requirement should be made in the future will be held in abeyance pending experience under the rules as proposed, should they ultimately be promulgated. The Board has found that many arguments made in an appeal brief were never earlier presented to the examiner even though they could have been presented (without filing a Rule 116 response). To promote clarity, Proposed Bd.R. 41.37(o) would also require that each rejection for which review is sought shall be separately argued under a separate heading. Also, Proposed Bd.R. 41.37(o) would provide that any finding made or conclusion reached by the examiner that is not challenged would be presumed to be correct. Proposed Bd.R. 41.37(o) would also refer to paragraphs

(4)through

(8)of the rule where additional requirements for making arguments in response to statutory rejections would be found. Proposed Bd.R. 41.37(o)(1) would provide that when a rejection applies to two or more claims, the appellant could elect to

(1)have all claims stand or fall together or

(2)argue the separate patentability of individual claims. The choice would be up to the appellant. However, if the appeal brief fails to make an explicit or clear election, the Board would

(1)treat all claims subject to the rejection as standing or falling together and

(2)select a single claim to decide the appeal as to that rejection. Any doubt as to whether an election has been made would be resolved against the appellant. For each claim argued separately, a subheading identifying the claim by number would be required. The requirement for a separate subheading in the appeal brief is to minimize any chance the examiner or the Board would overlook an argument directed to the separate patentability of a particular claim. In the past, appellants have been confused about whether a statement of what a claim covers is sufficient to constitute an argument that the claim is separately patentable. It is not. A statement that a claim contains a limitation not present in another claim would not in and of itself be sufficient to satisfy the requirement of Proposed Bd.R. 41.37(o)(1) that a separate argument be made. Unless an appellant plans to argue the separate patentability of a claim, the appellant would not discuss or refer to the claim in the argument section of the appeal brief. A copy of the claims will be before the Board in the “claims section” (Proposed Bd.R. 41.37(p)). In an application containing claims 1-3 where the examiner has made

(1)a Section 102 rejection or

(2)a Section 103 rejection or

(3)both a Section 102 and 103 rejection, examples of a proper statement of “claims standing or falling together” would be as follows:

(1)“With respect to the rejection under Section 102, claims 1- 3 stand or fall together.”

(2)“With respect to the rejection under Section 103, claims 1-2 stand or fall together; claim 3 is believed to be separately patentable.”

(3)“With respect to the rejection under Section 102, claims 1-2 stand or fall together; claim 3 is believed to be separately patentable. With respect to the rejection under Section 103, the claims stand or fall together.” Proposed Bd.R. 41.37(o)(2) would provide that the Board would only consider arguments that

(1)are presented in the argument section of the appeal brief and

(2)address claims set out in the claim support section of the appendix. Appellant would waive all arguments which could have been, but were not, addressed in the argument section of the appeal brief. A first example would be where Argument 1 and Argument 2 are presented in response to a final rejection, but only Argument 1 is presented in the appeal brief. Only Argument 1 would be considered. Argument 2 would be waived. A second example would be where an applicant presents an affidavit under Rule 131 or Rule 132 to the examiner, but does not argue the relevance of the affidavit in the appeal brief. The Board would not consider the affidavit in deciding the appeal. Proposed Bd.R. 41.37(o)(3) would require that, when responding to points made in the final rejection, the appeal brief shall specifically

(1)identify each point made by the examiner and

(2)indicate where appellant previously responded to each point that appellant has not previously responded to the point. In supporting any argument, the appellant shall refer to a page and, where appropriate a line, in the evidence section of the appendix, specification, drawings (if any), U.S. patents, and published U.S. applications. Examples of argument formats that would be acceptable under Proposed Bd.R. 41.37(o)(3) follow. Example 1. In the case where an argument had been previously presented to the examiner, the following format would be acceptable under Proposed Bd.R. 41.37(o)(3). “The examiner states that Reference A teaches element B. Final Rejection, App., page x, lines y-z. In response, appellant previously pointed out to the examiner why the examiner is believed to have erred. App., pages 8-9. The response is [concisely state the response].” A similar format has been successfully used for some years in oppositions and replies filed in interference cases. Example 2. Alternatively, in the case where an argument has not been previously made to the examiner, the following format would be acceptable under Proposed Bd.R. 41.37(o)(3). “In response to the examiner's reliance on Reference C for the first time in the final rejection (App., page 4), appellant's response includes a new argument which has not been previously presented to the examiner. The response is [concisely state the response].” Use of this format will minimize any chance that the examiner will overlook an argument when preparing the examiner's answer. The recommended argument formats are intended to be efficient protocols for assisting the Board in focusing on any differences between the examiner's and appellant's positions. Paragraphs

(4)through

(8)of Proposed Bd.R. 41.37(o) would reinstitute specific requirements not found in Bd.R. 41.37, but that appeared in the prior rule (37 CFR 1.192(c)(8)(i) through (v)) (2004). Since promulgation of Bd.R. 41.37, suggestions from outside the Office have been made to have the Office reinsert the requirements of former Rule 192(c)(8)(i) through

(v)into the rules. These paragraphs would require that appellants expressly address the statutory requirements for patentability. Paragraphs

(4)through (7), as under the Office's prior rules, would address rejections under 35 U.S.C. 102, 103 and 112 (first and second paragraphs). There are, of course, other rejections which are based on other sections of the Patent Law, e.g., 35 U.S.C. 101 (non-statutory subject matter, same invention double patenting, and lack of utility), 35 U.S.C. 251 (recapture and presenting claims in reissue applications that are broader than original patent claims), and 35 U.S.C. 305 (presenting claims in re-examination proceedings that are broader than original patent claims). Likewise, there are non-statutory rejections, such as obvious double patenting and interference estoppel. Since the vast majority of the rejections are based on sections 102, 103 and 112, it is proposed to have requirements in the rules related only to those rejections. Setting out requirements for other rejections is presently viewed as counterproductive and complicated since it would be impossible to address all the various possibilities for those other rejections. Accordingly, a “catch-all” for other rejections is set out in Proposed Bd.R. 41.37(o)(8). Proposed Bd.R. 41.37(o)(4) would require, for each rejection under 35 U.S.C. 112, first paragraph, that the argument shall also specify the errors in the rejection and how the rejected claims comply with the first paragraph of 35 U.S.C. 112, including, as appropriate, how the specification and drawings, if any,

(1)describe the subject matter defined by the rejected claims,

(2)enable any person skilled in the art to which the invention pertains to make and use the subject matter of the rejected claims, or

(3)set forth the best mode contemplated by the inventor of carrying out the claimed invention. Proposed Bd.R. 41.37(o)(5) would require, for each rejection under 35 U.S.C. 112, second paragraph, that the argument shall also specify how the rejected claims particularly point out and distinctly claim the subject matter which appellant regards as the invention. Proposed Bd.R. 41.37(o)(6) would require, for each rejection under 35 U.S.C. 102 (anticipation), that the argument shall also identify any specific limitations in the rejected claims which are not described (explicitly or inherently) in the prior art relied upon in support of the rejection and, therefore, why the rejected claims are patentable under 35 U.S.C. 102. Proposed Bd.R. 41.37(o)(7) would require, for each rejection under 35 U.S.C. 103, that the argument shall

(1)specify the errors in the rejection,

(2)if appropriate, specify the specific limitations in the rejected claims that are not described in the prior art relied upon in support of the rejection, and

(3)explain how those limitations render the claimed subject matter unobvious over the prior art. A general argument that all limitations are not described in a single prior art reference would not satisfy the requirements of this paragraph. Proposed Bd.R. 41.37(o)(8) would require for any rejection other than those mentioned in Proposed Bd.R. 41.37(o)(4) through

(7)that the argument shall specify the errors in the rejection, including where appropriate the specific limitations in the rejected claims upon which the appellant relies to establish error. Proposed Bd.R. 41.37(p) would require an appeal brief to contain a “claims section” in the appendix which would consist of an accurate clean copy in numerical order of all claims pending in the application or reexamination proceeding on appeal. The claims section of the appendix would include all pending claims, not just those under rejection. The status of each claim would have to be indicated. Proposed Bd.R. 41.37(q) would require an appeal brief to contain a “claim support section” of the appendix. The claim support section would replace Bd.R. 41.37(c)(1)(v) which requires a concise explanation of the subject matter defined in each of the independent claims on appeal. The claim support section, for each claim argued separately (see Proposed Bd.R. 41.37(o)(1)), would consist of an annotated copy of the claim indicating in bold face between braces ({}) after each limitation where, by page and line numbers, the limitation is described in the specification as filed. Braces ({}) are used instead of brackets [ ] because brackets are used in reissue claim practice. Unlike the “claims section” (see Proposed Bd.R. 41.37(p)), only those claims being argued separately would need to appear in the “claim support section.” A significant objective of the “claim support section” would be to provide the examiner and the Board with appellant's perspective on where language of the claims (including specific words used in the claims, but not in the specification) finds support in the specification. Finding support for language in the claims can help the examiner and the Board construe claimed terminology and limitations when applying the prior art. The claim support section of the appendix would help the Board to interpret the scope of claims, or the meaning of words in a claim, before applying the prior art. Practice under current Bd.R. 41.37(c)(1)(v) has not been efficient because of the diverse manners in which different appellants have attempted to comply with the current practice. One significant problem faced by the Board under the current practice occurs when the language of a claim does not have direct antecedent language in the specification. In order for the Board to understand the scope of a claim or the meaning of a term in the claim, the Board primarily relies on the specification. Moreover, in practice before the Office, a claim is given its broadest reasonable construction consistent with the specification. However, when the language of the claim does not find correspondence in the specification, as filed, often it is difficult to determine the meaning of a particular word in a claim or to give the claim its broadest reasonable interpretation. The claim support section of the appendix would give the examiner and the Board the appellant's view on where the claim is supported by the application, as filed. The proposed requirement, if promulgated, would significantly improve the efficiency of the Board's handling of appeals. Proposed Bd.R. 41.37(r) would require an appeal brief to contain a “drawing analysis section” in the appendix. For each claim argued separately (see Proposed Bd.R. (o)(1)), the drawing analysis section would consist of an annotated copy of the claim in numerical sequence, indicating in bold face between braces ({}) after each limitation where, by reference or sequence residue number, each limitation is shown in the drawing or sequence. A drawing analysis has been required in interference cases since 1998 and has proven useful to the Board in understanding claimed inventions described in applications and patents involved in an interference. The drawing analysis section is expected to be equally useful in ex parte appeals. If there is no drawing or amino acid or nucleotide material sequence, the drawing analysis section would state that there is no drawing or sequence. The purpose of requiring a statement is to be certain that a drawing analysis has not been overlooked. Proposed Bd.R. 41.37(s) would require an appeal brief to contain a “means or step plus function analysis section” in the appendix. The means or step plus function analysis section would replace the requirement of current Bd.R. 41.37(c)(1)(v) relating to identification of structure, material or acts for means or step plus function claims limitations contained in appealed claims. Under Proposed Bd.R. 41.37(s), the means or step plus function analysis section would include each claim argued separately (see Proposed Bd.R. 41.37(o)(1)) that contains a limitation that appellant regards as a means or step plus function limitation in the form permitted by the sixth paragraph of 35 U.S.C. 112. Further, for each such claim, a copy of the claim would be reproduced indicating in bold face between braces ({}) the specific portions of the specification and drawing that describe the structure material or acts corresponding to each claimed function. If the appealed claims do not contain any means or step plus function limitations, the section would state that there is no means or step plus function limitation in any claim on appeal. The Office is proposing to require a particular format for the means or step plus function analysis section to avoid the confusion that arises from the variety of ways appellants employ under current practice in attempting to comply with the requirements of Bd.R. 41.37(c)(1)(v). A means or step plus function analysis essentially tracking Proposed Bd.R. 41.37(s) has been used in interference cases since 1998 and has been helpful in determining the scope of claims involved. Proposed Bd.R. 41.37(t) would require an appeal brief to contain an “evidence section” in the appendix. The evidence section continues, in part, the practice under Bd.R. 41.37(c)(1)(ix). The evidence section and any supplemental appendix filed pursuant to Proposed Bd.R. 41.41(h), as well as the specification, any drawings, and any cited U.S. patents and published U.S. applications, would constitute the record upon which the appeal would be decided. The word “evidence” would be construed broadly and would include amendments, affidavits or declaration, non-patent literature, foreign patents and publications, published PCT documents, and any other material admitted into the record by the examiner. The evidence section would include

(1)table of contents,

(2)the Office action setting out the rejection on appeal (including any Office action that may be incorporated by reference),

(3)all evidence (except the specification, any drawings, U.S. patents and published U.S. applications) upon which the examiner relied in support of the rejection on appeal,

(4)the relevant portion of papers filed by the appellant during prosecution before the examiner which show that an argument being made on appeal was made in the first instance to the examiner,

(5)affidavits or declarations upon which the appellant relied before the examiner, and

(6)other evidence upon which the appellants relied before the examiner. If the examiner believes that other material should be included in the evidence section, the examiner would be able to attach that evidence to the examiner's answer. Pursuant to Proposed Bd.R. 41.37(v)(1), all pages of an appeal brief or a reply brief (including appendices to those briefs) would be consecutively numbered beginning with page 1. Appeal briefs, examiner's answers, reply briefs, supplemental examiner's answers, supplemental reply briefs, and opinions of the Board would be able to cite the “record” by reference to a page of the evidence section or any supplemental appendix. If the appellant, the examiner, and the Board all cite to a well-defined record, confusion over what a reference to a piece of evidence means should be diminished. Proposed Bd.R. 41.37(u) would require an appeal brief to contain a “related cases section” in the appendix. The related cases section would consist of copies of orders and opinions required to be cited pursuant to Proposed Bd.R. 41.37(g). Proposed Bd.R. 41.37(v) would require an appeal brief to be presented in a particular format. The appeal brief would have to comply with the format of Rule 52 as well as with other requirements set out in Proposed Bd.R. 41.37(v)(1) through (6). Proposed Bd.R. 41.37(v)(1) would require that the pages of an appeal brief, including all appendices, would be consecutively numbered using Arabic numerals beginning with the first page of the appeal brief, which would be numbered page 1. This practice would prevent

(1)re-starting numbering with each section of the appendix or

(2)using Roman numeral page numbers, e.g., I, II, V, etc., or page numbers with letters, e.g., “a”, “b”, “c”, “i”, “ii”, etc. The lines on each page of the appeal brief, and where practical, the appendices, would be consecutively line numbered beginning with line 1 at the top of each page. Line numbering has been used for some time in interference cases and has been found to be useful when making reference in oppositions, replies, and opinions of the Board. Proposed Bd.R. 41.37(v)(2) would require that text in an appeal brief would be double spaced except in headings, tables of contents, tables of authorities, signature blocks and certificates of service. Block quotations would be indented. Footnotes, which are discouraged, would have to be double spaced. Proposed Bd.R. 41.37(v)(3) would require that margins shall be at least one inch (2.5 centimeters) on all sides. Line numbering could appear within the left margin. Proposed Bd.R. 41.37(v)(4) would require that the font would be readable and clean and equivalent to 14 point Times New Roman, including the font for block quotations and footnotes. Proposed Bd.R. 41.37(v)(5) would provide that an appeal brief may not exceed 25 pages, excluding any

(1)statement of the real party in interest,

(2)statement of related cases,

(3)table of contents,

(4)table of authorities,

(5)signature block and

(6)appendix. To give meaning to the 25-page limitation, an appeal brief would not be permitted to incorporate by reference arguments from other papers in the evidence appendices or from any other source. The prohibition against incorporation by reference is necessary to prevent an appellant from adding to the length of an appeal brief. *Cf. DeSilva* v. *DiLeonardi* , 181 F.3d 865, 866-67 (7th Cir. 1999) (“[A]doption by reference amounts to a self-help increase in the length of the appellate brief. * * * [I]ncorporation by reference is a pointless imposition on the court's time. A brief must make all arguments accessible to the judges, rather than ask them to play archaeologist with the record.”) (citation omitted). A prohibition against incorporation by reference has been the practice in interference cases since 1998 and has minimized the chance that an argument is overlooked. Proposed Bd.R. 41.37(v)(6) would require a signature block which would identify the appellant or appellant's representative, as appropriate, and a mailing address, telephone number, fax number and e-mail address. Examiner's Answer Proposed Bd.R. 41.39(a) would provide that within such time and manner as may be directed by the Director and if the examiner determines that the appeal should go forward, the examiner shall enter an examiner's answer responding to the appeal brief. The specific requirements of what would be required in an examiner's answer would appear in the Manual of Patent Examining Procedure. Proposed Bd.R. 41.39(b) would provide that an examiner's answer may include a new rejection. In the past, the rules and the MPEP have used the phrase “new ground of rejection.” The phrase “new rejection” implies that the ground, or basis, for the rejection is new. Accordingly, in Proposed Bd.R. 41.39(b) and elsewhere in the proposed rules, the phrase “new rejection” rather than “new ground of rejection” is used. If an examiner's answer contains a rejection designated as a new rejection, appellant, within two months from the date of the examiner's answer, would be required to exercise one of two options or the application will be deemed to be abandoned or the reexamination proceeding will be deemed to be terminated. Proposed Bd.R. 41.39(b)(1) would provide that the first option would be to request that prosecution be reopened before the examiner by filing a reply under § 1.111 of this title with or without amendment or submission of evidence. Any amendment or evidence would have to be relevant to the new rejection. A request that complies with this paragraph would be entered and the application or patent under reexamination would be reconsidered by the examiner under the provisions of § 1.112 of this title. A request under this paragraph would be treated as a request to withdraw the appeal. Proposed Bd.R. 41.39(b)(2) would provide that the second option would be to request that the appeal be maintained by filing a reply brief as set forth in Proposed Bd.R. 41.41. A reply brief could not be accompanied by any amendment or evidence, except an amendment canceling one or more claims which are subject to the new rejection. A reply brief which is accompanied by evidence or any other amendment would be treated as a request to reopen prosecution pursuant to Proposed Bd.R. 41.39(b)(1). Proposed Bd.R. 41.39(c) would provide that the time for filing a request under Proposed Bd.R. 41.39(b)(1) would be extendable under the provisions of Rule 136(a) as to applications and under the provisions of Rule 550(c) as to reexamination proceedings. However, a request for an extension of time for filing a request under Proposed Bd.R. 41.39(b)(2) would have to be presented as a petition under Proposed Bd.R. 41.3(a) and (c). A decision on the petition would be made by the Chief Administrative Patent Judge or an employee to whom the Chief Administrative Patent Judge has delegated authority to make the decision. The decision would be governed by Rule 41.4(a). The reason for the requirement for a petition is to minimize the time an appeal is pending. In the past, appellants have taken advantage of the provisions of Rule 136(a) to file a reply to maintain the appeal. The length of possible patent term adjustment (35 U.S.C. 154(b)(2)(iii)) is based on the time an appeal is pending. The provisions of Rule 136(a) are not consistent with efficient handling of appeals after the time an appeal brief is filed. The Office does not believe that an applicant should be able to add to any patent term adjustment by the automatic extensions of time that are available through Rule 136(a). Appellants should expect strict application of the “good cause” standard of Bd.R. Rule 41.4(a). Reply Brief Proposed Bd.R. 41.41(a) would provide that an appellant may file a single reply brief responding to the examiner's answer. Proposed Bd.R. 41.41(b) would provide that the time for filing a reply brief would be within two months of the date the examiner's answer is entered. Proposed Bd.R. 41.41(c) would provide that a request for an extension of time shall be presented as a petition under § 41.3(a) and

(c)of this part. A decision on the petition shall be governed by § 41.4(a) of this part. The provisions of Rule 136(a) would no longer apply to extensions of time to file a reply brief. Proposed Bd.R. 41.41(d) would provide that a reply brief shall be limited to responding to points made in the examiner's answer. Except as otherwise set out in these proposed rules, the form and content of a reply brief would be governed by the requirements for an appeal brief as set out in Proposed Bd.R. 41.37. A reply brief would not be able to exceed fifteen pages, excluding any

(1)table of contents,

(2)table of authorities,

(3)statement of timeliness,

(4)signature block and

(5)supplemental appendix. A reply brief would be required to contain, under appropriate headings and in the order indicated, the following items:

(1)Table of contents,

(2)table of authorities,

(3)statement of timeliness,

(4)statement of facts in response to any new rejection in examiner's answer,

(5)argument, and, where appropriate,

(6)supplemental appendix. If the examiner's answer contains a new rejection, designated as such, the page limit would be twenty-five pages and not fifteen pages. Proposed Bd.R. 41.41(e) would require a reply brief to contain a statement of timeliness. The statement of timeliness would have to establish that the reply brief is being timely filed by including a statement of the date the examiner's answer was entered and the date the reply brief is being filed. If the reply brief is filed after the time specified in this subpart, appellant must indicate the date an extension of time was requested and the date the request was granted. An example of a statement of timeliness would be: “The examiner's answer was entered on October 14, 2006. The time for filing a reply brief expired on December 14, 2006. Bd.R. 41.41(b). A request for extension of time to file the reply brief on December 21, 2006, was filed on December 1, 2006, and was granted by the Chief Administrative Patent Judge on December 10, 2006. The reply brief is being timely filed on December 21, 2006.” A reply brief which is not timely filed would not be considered by the examiner or the Board. Proposed Bd.R. 41.41(f) would require a statement of additional facts, but only when the appellant has elected to file a reply brief in response to a new rejection in an examiner's answer entered pursuant to Proposed Bd.R. 41.39(b)(2). When a statement of additional facts is required, it would have to meet the requirements of Proposed Bd.R. 41.37(n), but would have to be limited to facts relevant to the new rejection. If there is no new rejection in the examiner's answer, there would be no statement of additional facts. Proposed Bd.R. 41.41(g) would require that an argument appear in the reply brief, which would be limited to responding to points made in the examiner's answer. No general restatement of the case would be permitted in a reply brief. An argument which could have been, but which was not, made in the appeal brief cannot be made in a reply brief. The Office has found a restatement of the case in a reply brief to be a serious distraction. Adding details or additional arguments, if not responsive to points made by the examiner, does not contribute to the efficient handling of appeals. As a result of appellants adding new details and arguments, an examiner often has to enter a supplemental examiner's answer to respond to details and arguments not previously considered by the examiner and that should have been presented in the appeal brief. An example of an acceptable format for presenting an argument in a reply brief (where there was no new rejection in the examiner's answer) might read as follows: First paragraph: “This is a reply to the examiner's answer entered [insert the date the answer was entered].” Last paragraph: “For the reasons given in this reply brief and in the appeal brief, reversal of the examiner's rejection is requested.” All paragraphs between the first and last paragraphs would read: “On page x, lines y-z of the examiner's answer, the examiner states that [state what the examiner states]. The response is [concisely state the response].” As part of each response, the appellant would have to refer to the page number and line or drawing element number of the evidence section. Any response which is not concise probably would not comply with Proposed Bd.R. 41.41(g). Frequently, new details and arguments surface in reply briefs. By Proposed Bd.R. 41.41(g), the Office seeks to confine reply briefs to what they ought to be—a response to points raised in the examiner's answer. If Proposed Bd.R. 41.41 is promulgated and, notwithstanding what the rule seeks to achieve, it turns out that too many resources of the Office are needed to enforce the reply brief rule and considerable time is wasted in resolving improper reply brief issues. Consideration could be given to further limiting the nature of replies filed in ex parte appeals. Proposed Bd.R. 41.41(h) would require that a supplemental appendix be made part of the reply brief if the examiner entered a new rejection in the examiner's answer and appellant elects to respond to the new rejection in a reply brief. The supplemental appendix would include

(1)table of contents,

(2)examiner's answer, and

(3)all evidence relied upon by the examiner in support of the new rejection which does not already appear in the evidence section of the appendix accompanying the appeal brief, except the specification, any drawings, U.S. patents and published U.S. applications. Proposed Bd.R. 41.41(i) would provide that an amendment or new evidence may not accompany a reply brief. The Office has found that appellants continue to attempt to file amendments and evidence with reply briefs. If an appellant, after reviewing the examiner's answer, believes that an amendment is appropriate, the appellant may file a request for continued examination or, in the case of a reexamination proceeding, ask that the proceeding be reopened. Examiner's Response To Reply Brief Proposed Bd.R. 41.43 would provide that upon consideration of a reply brief, the examiner may withdraw a rejection and reopen prosecution or may enter a supplemental examiner's answer responding to the reply brief. Supplemental Reply Brief Proposed Bd.R. 41.44(a) would provide that, if the examiner enters a supplemental examiner's answer, the appellant would be able to file a single supplemental reply brief responding to the supplemental examiner's answer. Proposed Bd.R. 41.44(b) would provide that the appellant would have to file a supplemental reply brief within two months from the date of the filing of the examiner's supplemental answer. Proposed Bd.R. 41.44(c) would provide that a request for an extension of time shall be presented as a petition under Proposed Bd.R. 41.3(a) and (c). A decision on the petition shall be governed by Bd.R. 41.4(a). Proposed Bd.R. 41.44(d) would provide that, except as otherwise set out in this rule, the form and content of a supplemental reply brief are governed by the requirements for appeal briefs as set out in Proposed Bd.R. 41.37. A supplemental reply brief would have to contain, under appropriate headings and in the order indicated, the following items:

(1)Table of contents,

(2)table of authorities,

(3)statement of timeliness, and

(4)argument. Proposed Bd.R. 41.44(d) would also provide that the argument portion of a supplement reply brief would be limited to ten pages and to responding to points made in the supplemental examiner's answer. A request to exceed the page limit would be presented as a petition under Proposed Bd.R. 41.3. Proposed Bd.R. 41.44(e) would provide that a supplemental reply brief would have to contain a statement of timeliness, including a statement of the date the supplemental examiner's answer was entered and the date the supplemental reply is being filed. If the supplemental reply brief is filed after the time specified in this subpart, appellant would have to indicate the date an extension of time was requested and the date the request was granted. Proposed Bd.R. 41.44(f) would provide that a supplemental reply brief shall be limited to responding to points made in the supplemental examiner's answer. The supplemental reply brief preferably would adhere to the following format: “On page x, lines y-z of the supplemental examiner's answer, the examiner states that [state what the examiner states]. The response is [state the response].” As part of each response, appellant would have to refer to the page number and line or drawing number of the evidence section of the appendix accompanying the appeal brief or supplemental appendix accompanying the reply brief. No general restatement of the case would be permitted in a supplemental reply brief. A new argument would not be able to be made in a supplemental reply brief. Proposed Bd.R. 41.44(g) would provide that an amendment or new evidence may not accompany a supplemental reply brief. Oral Hearing Proposed Bd.R. 41.47(a) would provide that if the appellant desires an oral hearing, appellant must file, as a separate paper, a written request captioned: “REQUEST FOR ORAL HEARING.” Proposed Bd.R. 41.47(b) would provide that a request for oral hearing shall be accompanied by the fee required by § 41.20(b)(3). Proposed Bd.R. 41.47(c) would provide that the time for filing a request for an oral hearing would be within two months of the date of entry of the examiner's answer or a supplemental examiner's answer. Proposed Bd.R. 41.47(d) would provide that a request for an extension of time to request an oral hearing would have to be presented as a petition under § 41.3(a) and

(c)of this part. A decision on the petition shall be governed by § 41.4(a) of this part. Proposed Bd.R. 41.47(e) would provide that if an oral hearing is properly requested, a date for the oral hearing would be set. Proposed Bd.R. 41.47(f) would provide that if an oral hearing is set, then within such time as the Board may order, appellant shall confirm attendance at the oral hearing. Failure to timely confirm attendance would be taken as a waiver of any request for an oral hearing. Proposed Bd.R. 41.47(g) would provide that at the time appellant confirms attendance at the oral hearing, appellant would be required to supply a list of technical terms and other unusual words which can be provided to any individual transcribing an oral hearing. The current practice of the Board is to transcribe all oral arguments. A list of technical terms provided by appellant should improve the accuracy of any transcript. Proposed Bd.R. 41.47(h) would provide that unless otherwise ordered by the Board, argument on behalf of appellant at an oral hearing would be limited to 20 minutes. Proposed Bd.R. 41.47(i) would provide that at oral hearing only evidence that has been previously presented to, entered by and considered by the primary examiner would be considered and that no additional evidence may be offered to the Board in support of the appeal. An argument not presented in a brief could not be made at the oral hearing. Proposed Bd.R. 41.47(j) would provide that notwithstanding Proposed Bd.R. 41.47(i), an appellant could rely on and call the Board's attention to a recent court or Board opinion which could have an effect on the manner in which the appeal is decided. Proposed Bd.R. 41.47(k) would provide that visual aids may be used at an oral hearing. However, visual aids must be limited to copies of documents in the record on appeal. A document not previously entered by the examiner could not be used as a visual aid. When an appellant seeks to use a visual aid, one copy should be provided for each judge and one copy for the record of the appeal. Proposed Bd.R. 41.47(l) would provide that failure of an appellant to attend an oral hearing would be treated as a waiver of the oral hearing. Over the years the Board has become concerned with the large number of requests for postponements. In some cases, multiple requests in a single appeal are submitted for postponement of an oral hearing. Apart from the fact that a postponement can lead to large patent term adjustments, efficiency dictates that the Board be able to set an oral hearing schedule with an expectation that in a large majority of the cases the oral hearing will timely occur or the appellant will waive oral hearing. The Board will continue to handle requests for postponement of oral hearings on an ad hoc basis. However, postponements would no longer be granted on a routine basis. A request for a postponement made immediately after a notice of oral hearing is mailed is more likely to receive favorable treatment, particularly since it may be possible to set an oral hearing date prior to the originally scheduled oral hearing date. Decisions and Other Actions by the Board Proposed Bd.R. 41.50(a) would provide that the Board may affirm or reverse a decision of the examiner in whole or in part on the grounds and on the claims specified by the examiner. Proposed Bd.R. 41.50(a) would continue the practice that an affirmance of a rejection of a claim on any of the grounds specified constitutes a general affirmance of the decision of the examiner on that claim, except as to any ground specifically reversed. Proposed Bd.R. 41.50(b) would provide that the Board may remand an application to the examiner. Upon entry of a remand, the Board would no longer have jurisdiction unless an appellant timely files a request for rehearing. If the request for rehearing does not result in modification of the remand, the Board would then lose jurisdiction. Upon remand, should examiner enter a supplemental examiner's answer in response to the remand, appellant would be required to exercise one of two options to avoid abandonment of the application or termination of the reexamination proceeding. Either option would have to be exercised within two months from the date of the supplemental examiner's answer. Proposed Bd.R. 41.50(b)(1) specifies the first option and would provide that appellant could request that prosecution be reopened before the examiner by filing a reply under Rule 111, with or without amendment or submission of evidence. Any amendment or evidence would have to be relevant to the issues set forth in the remand or raised in the supplemental examiner's answer. A request that complies with this paragraph would be entered and the application or patent under reexamination would be reconsidered by the examiner under the provisions of Rule 112. A request under Proposed Bd.R. 41.50(b)(1) would be treated as a request to dismiss the appeal. Proposed Bd.R. 41.50(b)(2) specifies the second option and would provide that appellant could request that the appeal be re-docketed. The request would have to be accompanied by a reply brief as set forth in Proposed Bd.R. 41.41. An amendment or evidence could not accompany the reply brief. A reply brief that is accompanied by an amendment or evidence would be treated as a request to reopen prosecution pursuant to Proposed Bd.R. 41.50(b)(1). Proposed Bd.R. 41.50(c) would provide that a remand is not a final decision. Following proceedings on remand, and with respect to affirmed rejections and claims not involved in the remand, an appellant could request the Board to enter a final decision so that the appellant could then seek judicial review as to those rejections and claims. Only a final decision of the Board is subject to appeal. *Copelands' Enterprises, Inc.* v. *CNV, Inc.* , 887 F.2d 1065, 12 USPQ2d 1562 (Fed. Cir. 1989) ( *en banc* ). Proposed Bd.R. 41.50(d) would provide that, should the Board have knowledge of a basis not involved in the appeal for rejecting a pending claim, the Board may enter a new rejection. A pending claim could be a claim not rejected by the examiner. A new rejection would not be considered final for purposes of judicial review. A new rejection is not considered a final agency action because the appellant has not explained to the Board, without amendment or new evidence, or to the Office, with an amendment or new evidence or both, why the rejection is not proper. Proposed Bd.R. 41.50(d) places an appellant under a burden to explain to the Board or the Office why a new rejection is not proper before it burdens a court with judicial review. A response by an appellant may convince the Office that a new rejection should be withdrawn. If the Board enters a new rejection, appellant would have to exercise one of two options with respect to the new rejection to avoid dismissal of the appeal as to any claim subject to the new rejection. Either option would have to be exercised within two months from the date of the new rejection. Proposed Bd.R. 41.50(d)(1) specifies that a first option would be to submit an amendment of the claims subject to a new rejection or new evidence relating to the new rejection or both and request that the matter be reconsidered by the examiner. The proceedings would be remanded to the examiner. A new rejection would be binding on the examiner unless, in the opinion of the examiner, the amendment or new evidence overcomes the new rejection. In the event the examiner maintains the rejection, appellant would be able to again appeal to the Board. Proposed Bd.R. 41.50(d)(2) specifies that a second option would be to request rehearing pursuant to Proposed Bd.R. 41.52. The request for rehearing would have to be based on the record before the Board and no new evidence or amendments would be permitted. Proposed Bd.R. 41.50(e) would provide that the Board, in its opinion in support of its decision, could include a recommendation, explicitly designated as such, of how a claim on appeal may be amended to overcome a specific rejection. For the recommendation to be binding, it would have to be explicitly designated as a recommendation. For example, a conclusion or comment by the Board that a claim, notwithstanding appellant's argument, is so broad as to read on the prior art should not be taken as a recommendation that if some undefined limitation is added the claim would be patentable. When the Board makes a recommendation, appellant may file an amendment in conformity with the recommendation. An amendment in conformity with the recommendation would be deemed to overcome the specific rejection. An examiner would have authority to enter an additional rejection of a claim amended in conformity with a recommendation provided that the additional rejection constitutes a new rejection. For example, the examiner may know of additional prior art not known to the Board that would meet the claim as amended. It is because of the possibility that an examiner may know of additional prior art that a recommendation would be expected to be a relatively rare event. Proposed Bd.R. 41.50(f) would provide that the Board could enter an order requiring appellant to brief additional issues or supply additional evidence or both if the Board believes doing so would be of assistance in reaching a decision on the appeal. Proposed Bd.R. 41.50(f) continues a practice which has been in existence since 1999. See, *e.g.* ,

(1)37 CFR 1.196(d)

(1999)and

(2)Bd.R. 41.50(d). Practice under Bd.R. 41.50(d) has been highly useful and complements the authority of Office personnel to request additional material under Rule 105. Appellant would be given a non-extendable time period within which to respond to the order. In setting the length of the non-extendable time period, the Board would take into account the extent of the information requested and the time of year a response would be due. For example, it is not likely that the Board would set a date for response between Christmas Day and New Year's Day. Failure of appellant to timely respond to the order could result in dismissal of the appeal in whole or in part. An appeal might be dismissed in part if the order sought further briefing or evidence or both related to one rejection but not another rejection, particularly where the two rejections apply to different claims. Proposed Bd.R. 41.50(g) would provide for extensions of time to respond to actions of the Board under Proposed Bd.R. 41.50(b) and (d). Proposed Bd.R. 41.50(g) would provide that a request for an extension of time to respond to a request for briefing and information under Proposed Bd.R. 41.50(f) is not authorized. A request for an extension of time to respond to Board action under Proposed Bd.R. 41.50(b) and

(d)would be presented as a petition under Bd.R. 41.3(a) and (c). A decision on the petition shall be governed by Bd.R. 41.4(a). Rehearing Proposed Bd.R. 41.52(a) would authorize an appellant to file a single request for rehearing. Proposed Bd.R. 41.52(b) would provide that a request for rehearing would be due within two months from the date of the decision entered by the Board. Proposed Bd.R. 41.52(c) would provide that a request for an extension of time would have to be presented as a petition under Proposed Bd.R. 41.3(a) and (c). A decision on the petition would be governed by Bd.R. 41.4(a). Proposed Bd.R. 41.52(d) would provide that a request for rehearing shall state with particularity the points believed to have been misapprehended or overlooked by the Board. A request for rehearing would not be able to exceed ten pages, excluding any table of contents, table of authorities, statement of timeliness and signature block. A request for rehearing would have to contain, under appropriate headings and in the order indicated, the following items:

(1)Table of contents,

(2)table of authorities,

(3)statement of timeliness, and

(4)argument. Proposed Bd.R. 41.52(e) would provide that a statement of timeliness establish that the request for rehearing was timely filed by including a statement of the date the decision sought to be reheard was entered and the date the request for rehearing is being filed. If the request for rehearing is filed after the time specified in this subpart, appellant would be required to indicate the date an extension of time was requested and the date the request was granted. Proposed Bd.R. 41.52(f) would provide that in a request for rehearing, the argument preferably should adhere to the following format: “On page x, lines y-z of the Board's opinion, the Board states that [set out what was stated]. The point misapprehended or overlooked was made to the Board in [identify paper, page and line where argument was made to the Board]. The response is [state response].” As part of each response, appellant shall refer to the page number and line or drawing element number of the evidence section. No general restatement of the case would be permitted in a request for rehearing. A new argument could not be made in a request for rehearing, except in two instances. Proposed Bd.R. 41.52(f)(1) would authorize in a first instance an appellant to respond to a new rejection entered pursuant to Proposed Bd.R. 41.50(d)(2). Proposed Bd.R. 41.52(f)(2) would authorize an appellant to rely on and call the Board's attention to a recent decision of a court or the Board that is relevant to an issue decided in the appeal. Generally, the recent court decision would be a decision of the Supreme Court or the Court of Appeals for the Federal Circuit. Proposed Bd.R. 41.52(g) would provide that an amendment or new evidence could not accompany a request for rehearing. Proposed Bd.R. 41.52(h) would provide that a decision will be rendered on a request for rehearing. The decision on rehearing would be deemed to incorporate the decision sought to be reheard except for those portions of the decision sought to be reheard specifically modified on rehearing. A decision on rehearing would be considered final for purposes of judicial review, except when otherwise noted in the decision on rehearing. Action Following Decision Proposed Bd.R. 41.54 would provide that, after a decision by the Board and subject to appellant's right to seek judicial review, the proceeding will be returned to the examiner for such further action as may be consistent with the decision by the Board. Sanctions Proposed Bd.R. 41.56 would provide for sanctions. Proposed Bd.R. 41.56(a) would provide that a sanction could be imposed against an appellant for misconduct, including,

(1)failure to comply with an order entered in the appeal or an applicable rule,

(2)advancing or maintaining a misleading or frivolous request for relief or argument, or

(3)engaging in dilatory tactics. Proposed Bd.R. 41.56(b) would provide that the nature of possible sanctions, includes entry of

(1)an order declining to enter a docketing notice,

(2)an order holding certain facts to have been established in the appeal,

(3)an order expunging a paper or precluding an appellant from filing a paper,

(4)an order precluding an appellant from presenting or contesting a particular issue,

(5)an order excluding evidence,

(6)an order requiring a terminal disclaimer of patent term,

(7)an order holding an application on appeal to be abandoned or a reexamination proceeding terminated,

(8)an order dismissing an appeal,

(9)an order denying an oral hearing, or

(10)an order terminating oral hearing. Whether and which sanction, if any, should be imposed in any specific circumstance would be matters within the discretion of the Board. Rule Making Considerations Administrative Procedure Act The notable changes in the proposed rules are:

(1)Providing additional delegated authority from the Director to the Chief Administrative Patent Judge to decide certain petitions authorized by Part 41 as proposed, including requests for extension of time to file certain papers after the appeal brief and requests to enlarge the page limit on certain appeal papers;

(2)defining the record on appeal to clarify what documents the Board will consider in resolving the appeal;

(3)requiring the notice of appeal to be signed;

(4)providing a definition of non-appealable issues;

(5)transferring jurisdiction of an appeal to the Board upon entry of a docket notice by the Board;

(6)relinquishing the Board's jurisdiction in an appeal when the Board orders a remand or enters a final decision and judicial review is sought or the time for seeking judicial review expires;

(7)changing the format and content of the appeal brief to require the following additional sections:

(a)Jurisdictional statement,

(b)table of contents,

(c)table of authorities, and

(d)statement of facts;

(8)changing the format and content of the appeal brief appendix to include the following additional sections:

(a)claim support section,

(b)drawing analysis section,

(c)means or step plus function analysis section, and

(d)an expanded evidence section to include, inter alia, relevant Office action(s) and portions of papers filed by appellant during prosecution;

(9)providing page limits for all briefs;

(10)prohibiting incorporation by reference in briefs;

(11)establishing a format for a reply brief to include:

(a)Table of contents,

(b)table of authorities,

(c)statement of timeliness,

(d)statement of facts in response to a new ground of rejection in examiner's answer,

(e)argument, and where appropriate,

(f)supplemental appendix;

(12)providing for a supplemental reply brief, if a supplemental examiner's answer is furnished by the examiner;

(13)establishing a format for a supplemental reply brief to include:

(a)Table of contents,

(b)table of authorities,

(c)statement of timeliness, and

(d)argument;

(14)requiring appellant to supply a list of technical terms and other unusual words at the time of confirmation of the oral hearing to aid in transcription at the oral hearing;

(15)eliminating requests for extension of time to respond to a request for further briefing and information by the Board;

(16)establishing a format for a request for rehearing to include:

(a)Table of contents,

(b)table of authorities,

(c)statement of timeliness, and

(d)argument; and

(17)providing sanctions to be imposed on the appellant for misconduct during prosecution of the appeal. The changes in the proposed rules relate solely to the procedure to be followed in filing and prosecuting an ex parte appeal to the Board. Therefore, these rule changes involve interpretive rules, or rules of agency practice and procedure under 5 U.S.C. 553(b)(A), and prior notice and an opportunity for public comment are not required pursuant to 5 U.S.C. 553(b)(A) (or any other law). *See Bachow Communications Inc.* v. *FCC* , 237 F.3d 683, 690 (DC Cir. 2001) (rules governing an application process are “rules of agency organization, procedure, or practice” and exempt from the Administrative Procedure Act's notice and comment requirement); *Merck & Co., Inc.* v. *Kessler* , 80 F.3d 1543, 1549-50, 38 USPQ2d 1347, 1351 (Fed. Cir. 1996) (the rules of practice promulgated under the authority of former 35 U.S.C. 6(a) (now in 35 U.S.C. 2(b)(2)) are not substantive rules (to which the notice and comment requirements of the Administrative Procedure Act apply)); *Fressola* v. *Manbeck* , 36 USPQ2d 1211, 1215 (D.D.C. 1995) (“it is extremely doubtful whether any of the rules formulated to govern patent and trade-mark practice are other than ‘interpretive rules, general statements of policy, * * * procedure, or practice’ ” (quoting C.W. Ooms, *The United States Patent Office and the Administrative Procedure Act* , 38 Trademark Rep. 149, 153 (1948)); *Eli Lilly & Co.* v. *Univ. of Washington* , 334 F.3d 1264, 1269 n.1, 67 USPQ2d 1161, 1165 n.1 (Fed. Cir. 2003) (add parenthetical). Regulatory Flexibility Act As previously discussed, the changes in the proposed rules involve interpretive rules, or rules of agency practice and procedure, and prior notice and an opportunity for public comment are not required pursuant to 5 U.S.C. 553(b)(A) (or any other law). Because prior notice and an opportunity for public comment are not required for the changes in the proposed rules, a final Regulatory Flexibility Act analysis is also not required for the changes in the proposed rules. *See* 5 U.S.C. 603. Nevertheless, the USPTO is publishing a notice of proposed rule making in the **Federal Register** and in the Official Gazette of the United States Patent and Trademark Office, in order to solicit public participation with regard to this rule package. The USPTO received approximately 443,000 patent applications in Fiscal Year 2006. The proposed rules apply only to those applications where an appeal brief is filed with the Board. In Fiscal Year 2006, approximately 18,500 appeal briefs were filed. Of those 18,500 appeal briefs, approximately 4,000 were filed by small entities. Thus, the number of small entities affected by these proposed rule changes is not substantial (approximately 0.9%). Also, the proposed rules do not disproportionately impact small entities. The proposed rules which change the format and content of briefs may require the appellant to spend additional time in preparing a compliant brief. The effect of such rules, however, will be to enhance the likelihood that the appealed claims will be allowed without the necessity of further proceeding with the appeal and improve the efficiency of the decision-making process at the Board. Any additional time burden that is imposed by the proposed rules relating to briefs is believed to be *de minimus* in comparison to the reduction in pendency that appellant gains as a result of early identification of allowable claims or a more efficient decision-making process. Moreover, the fees associated with filing an appeal with the Board are set by statute, and are not proposed for change in this rule making. These proposed procedural rules do not significantly increase the cost of filing or prosecuting an appeal before the Board. Accordingly, these proposed rules do not have significant economic impact on a substantial number of small entities. Executive Order 13132 This rule making does not contain policies with federalism implications sufficient to warrant preparation of a Federalism Assessment under Executive Order 13132 (Aug. 4, 1999). Executive Order 12866 This rule making has been determined to be not significant for purposes of Executive Order 12866 (Sept. 30, 1993). Paperwork Reduction Act This proposed rule involves information collection requirements which are subject to review by the Office of Management and Budget

(OMB)under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ). The collection of information involved in this proposed rule has been reviewed and previously approved by OMB under control number 0651-0031. The United States Patent and Trademark Office is not resubmitting an information collection package to OMB for its review and approval because the changes in this proposed rule would not affect the information collection requirements associated with the information collection under OMB control number 0651-0031. Comments are invited on:

(1)Whether the collection of information is necessary for proper performance of the functions of the agency;

(2)the accuracy of the agency's estimate of the burden;

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

(4)ways to minimize the burden of the collection of information to respondents. Interested persons are requested to send comments regarding these information collections, including suggestions for reducing this burden, to Robert Clarke, Director, Office of Patent Legal Administration, United States Patent and Trademark Office, Washington, DC 20231, or to the Office of Information and Regulatory Affairs, OMB, 725 17th Street, NW., Washington, DC 20503, (Attn: PTO Desk Officer). Notwithstanding any other provision of law, no person is required to respond to nor shall a person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a currently valid OMB control number. List of Subjects in 37 CFR Part 41 Administrative practice and procedure, Inventions and patents, Lawyers. For the reasons stated in the preamble, the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office proposes to amend 37 CFR part 41 as follows: PART 41—PRACTICE BEFORE THE BOARD OF PATENT APPEALS AND INTERFERENCES 1. The authority citation for part 41 is amended to read as follows: Authority: 35 U.S.C. 2(b)(2), 3(a)(2)(A), 21, 23, 32, 132, 133, 134, 135, 306, and 315. Subpart A—General Provisions 1. In § 41.2, revise the definitions of “Board” and “Contested case” to read as follows: § 41.2 Definitions. *Board* means the Board of Patent Appeals and Interferences and includes:

(1)For a final Board action in an appeal or contested case, a panel of the Board.

(2)For non-final actions, a Board member or employee acting with the authority of the Board. *Contested case* means a Board proceeding other than an appeal under 35 U.S.C. 134. An appeal in an inter partes reexamination proceeding is not a contested case. 2. In § 41.3, revise paragraphs

(a)and

(b)to read as follows: § 41.3 Petitions.

(a)*Deciding official* . A petition authorized by this part must be addressed to the Chief Administrative Patent Judge. In addition to complying with all other requirements of this title, a copy of the petition must also be forwarded to the Office addressed to: Chief Administrative Patent Judge, Board of Patent Appeals and Interferences, United States Patent and Trademark Office, P.O. Box 1450, Alexandria, VA 22313-1450. The Chief Administrative Patent Judge may delegate authority to decide petitions.

(b)*Scope* . This section covers petitions on matters pending before the Board, petitions authorized by this part and petitions seeking relief under 35 U.S.C. 135(c); otherwise see §§ 1.181 to 1.183 of this title. The following matters are not subject to petition:

(1)Issues committed by statute to a panel.

(2)In pending contested cases, procedural issues. See § 41.121(a)(3) and § 41.125(c). 3. In § 41.4, revise paragraphs

(b)and

(c)to read as follows: § 41.4 Timeliness.

(b)*Late filings* .

(1)A request to revive an application which becomes abandoned or a reexamination proceeding which becomes terminated under §§ 1.550(d) or 1.957(b) or

(c)of this title as a result of a late filing may be filed pursuant to § 1.137 of this title.

(2)A late filing that does not result in an application becoming abandoned or a reexamination proceeding becoming terminated under §§ 1.550(d) or 1.957(b) or

(c)of this title may be excused upon a showing of excusable neglect or a Board determination that consideration on the merits would be in the interests of justice.

(c)*Scope* . Except to the extent provided in this part, this section governs proceedings before the Board, but does not apply to filings related to Board proceedings before or after the Board has jurisdiction (§ 41.35), such as:

(1)Extensions during prosecution (see § 1.136 of this title).

(2)Filing of a notice of appeal and an appeal brief (see §§ 41.31(c) and 41.37(c)).

(3)Seeking judicial review (see §§ 1.301 to 1.304 of this title). Subpart B—Ex Parte Appeals 4. Revise § 41.30 to add a definition of “record on appeal” to read as follows: § 41.30 Definitions. *Record on appeal.* The record on appeal consists of the specification, drawings, if any, U.S. patents cited by the examiner or appellant, published U.S. applications cited by the examiner or appellant, the appeal brief, including all appendices, the examiner's answer, any reply brief, including any supplemental appendix, any supplemental examiner's answer, any supplemental reply brief, any request for rehearing, any order or decision entered by the Board or the Chief Administrative Patent Judge, and any other document or evidence which was considered by the Board as indicated in any opinion accompanying any order or decision. 5. Revise § 41.31 to read as follows: § 41.31 Appeal to Board.

(a)*Notice of appeal* . An appeal is taken to the Board by filing a notice of appeal.

(b)*Fee* . The notice of appeal shall be accompanied by the fee required by § 41.20(b)(1).

(c)*Time for filing notice of appeal* . A notice of appeal must be filed within the time period provided under § 1.134 of this title.

(d)*Extensions of time to file notice of appeal* . The time for filing a notice of appeal is extendable under the provisions of § 1.136(a) of this title for applications and § 1.550(c) of this title for ex parte reexamination proceedings.

(e)*Non-appealable issues* . A non-appealable issue is an issue not subject to an appeal under 35 U.S.C. 134. An applicant or patent owner dissatisfied with a decision of an examiner on a non-appealable issue shall timely seek review by petition before jurisdiction over an appeal is transferred to the Board (§ 41.35). Failure to timely file a petition seeking review of a decision of the examiner related to a non-appealable issue may constitute a waiver to have that issue considered. 6. Revise § 41.33 to read as follows: § 41.33 Amendments and evidence after appeal.

(a)*Amendment after notice of appeal and prior to appeal brief* . An amendment filed after the date a notice of appeal is filed and prior to the date an appeal brief is filed may be admitted as provided in § 1.116 of this title.

(b)*Amendment with or after appeal brief* . An amendment filed on or after the date an appeal brief is filed may be admitted:

(1)*To cancel claims* . To cancel claims provided cancellation of claims does not affect the scope of any other pending claim in the application or patent under reexamination, or

(2)*To convert dependent claim to independent claim* . To rewrite dependent claims into independent form.

(c)*Other amendments* . No other amendments filed after the date an appeal brief is filed will be admitted, except as permitted by §§ 41.39(b)(1), 41.50(b)(1), 41.50(d)(1) or 41.50(e) of this subpart.

(d)*Evidence after notice of appeal and prior to appeal brief* . Evidence filed after the date a notice of appeal is filed and prior to the date an appeal brief is filed may be admitted if the examiner determines that the evidence overcomes some or all rejections under appeal and appellant shows good cause why the evidence was not earlier presented.

(e)*Other evidence* . All other evidence filed after the date an appeal brief is filed will not be admitted, except as permitted by §§ 41.39(b)(1), 41.50(b)(1) or 41.50(d)(1) of this subpart. 7. Revise § 41.35 to read as follows: § 41.35 Jurisdiction over appeal.

(a)*Beginning of jurisdiction* . The jurisdiction of the Board begins when a docket notice is entered by the Board.

(b)*End of jurisdiction* . The jurisdiction of the Board ends when the Board orders a remand (see § 41.50(b) or § 41.50(d)(1) of this subpart) or enters a final decision (see § 41.2 of this subpart) and judicial review is sought or the time for seeking judicial review has expired.

(c)*Remand ordered by the Director* . Prior to entry of a decision on the appeal by the Board (§ 41.50), the Director may sua sponte order an application or reexamination proceeding on appeal to be remanded to the examiner. 8. Revise § 41.37 to read as follows: § 41.37 Appeal brief.

(a)*Requirement for appeal brief* . An appeal brief shall be timely filed to perfect an appeal. Upon failure to file an appeal brief, the proceedings on the appeal are terminated without further action on the part of the Office.

(b)*Fee* . The appeal brief shall be accompanied by the fee required by § 41.20(b)(2) of this subpart.

(c)*Time for filing appeal brief* . Appellant must file an appeal brief within two months from the date of the filing of the notice of appeal (§ 41.31(a)).

(d)*Extension of time to file appeal brief* . The time for filing an appeal brief is extendable under the provisions of § 1.136(a) of this title for applications and § 1.550(c) of this title for ex parte reexamination proceedings.

(e)*Content of appeal brief* . The appeal brief must contain, under appropriate headings and in the order indicated, the following items:

(1)Statement of the real party in interest.

(2)Statement of related cases.

(3)Jurisdictional statement.

(4)Table of contents.

(5)Table of authorities.

(6)Status of claims.

(7)Status of amendments.

(8)Rejections to be reviewed.

(9)Statement of facts.

(10)Argument.

(11)An appendix containing a claims section, a claim support section, a drawing analysis section, a means or step plus function analysis section, an evidence section and a related cases section.

(f)*Statement of real party in interest* . The “statement of the real party in interest” shall identify the name of the real party in interest. The real party in interest must be identified in such a manner as to readily permit a member of the Board to determine whether recusal would be appropriate. Appellant is under a continuing obligation to update this item during the pendency of the appeal.

(g)*Statement of related cases* . The “statement of related cases” shall identify, by application, patent, appeal, interference, or court docket number, all prior or pending appeals, interferences or judicial proceedings, known to appellant, appellant's legal representative or any assignee, and that are related to, directly affect, or would be directly affected by, or have a bearing on the Board's decision in the appeal. A copy of any final or significant interlocutory decision rendered by the Board or a court in any proceeding identified under this paragraph shall be included in the related cases section of the appendix. Appellant is under a continuing obligation to update this item during the pendency of the appeal.

(h)*Jurisdictional statement* . The “jurisdictional statement” shall establish the jurisdiction of the Board to consider the appeal. The jurisdictional statement shall include a statement of the statute under which the appeal is taken, the date of the decision from which the appeal is taken, the date the notice of appeal was filed, and the date the appeal brief is being filed. If a notice of appeal or an appeal brief is filed after the time specified in this subpart, appellant must also indicate the date an extension of time was requested and, if known, the date the request was granted.

(i)*Table of contents* . A “table of contents” shall list, along with a reference to the page where each item begins, the items required to be listed in the appeal brief (see paragraph

(e)of this section), reply brief (see § 41.41(d) of this subpart) or supplemental reply brief (see § 41.44(d) of this subpart), as appropriate.

(j)*Table of authorities* . A “table of authorities” shall list cases (alphabetically arranged), statutes and other authorities along with a reference to the pages where each authority is cited in the appeal brief, reply brief, or supplemental reply brief, as appropriate.

(k)*Status of pending claims* . The “status of pending claims” shall include a statement of the status of all pending claims (e.g., rejected, allowed, cancelled, withdrawn from consideration, or objected to).

(l)*Status of amendments* . The “status of amendments” shall indicate the status of all amendments filed after final rejection (e.g., whether entered or not entered).

(m)*Rejections to be reviewed* . The “rejections to be reviewed” shall set out the rejections to be reviewed, including the claims subject to each rejection.

(n)*Statement of facts* . The “statement of facts” shall set out in an objective and non-argumentative manner the material facts relevant to the rejections on appeal. A fact shall be supported by a reference to a specific page number and, where applicable, a specific line or drawing numerals of the record on appeal. A general reference to a document as a whole or to large portions of a document does not comply with the requirements of this paragraph.

(o)*Argument* . The “argument” shall explain why the examiner is believed to have erred as to each rejection to be reviewed. Any explanation must address all points made by the examiner with which the appellant disagrees and must identify where the argument was made in the first instance to the examiner or state that the argument has not previously been made to the examiner. Any finding made or conclusion reached by the examiner that is not challenged will be presumed to be correct. Each rejection shall be separately argued under a separate heading. For arguments traversing a rejection made under 35 U.S.C. 102, 103 or 112, see also paragraphs (o)(4) through (o)(7) of this section. For arguments traversing other rejections, see also paragraph (o)(8) of this section.

(1)*Claims standing or falling together* . When a rejection applies to two or more claims, as to that rejection, the appellant may elect to have all claims stand or fall together, or argue the separate patentability of individual claims. If the appeal brief fails to make an explicit election, the Board will treat all claims subject to a rejection as standing or falling together, and select a single claim to decide the appeal as to that rejection. Any doubt as to whether an election has been made or whether an election is clear will be resolved against the appellant. Any claim argued separately shall be placed under a subheading identifying the claim by number. A statement that merely points out what a claim recites will not be considered an argument for separate patentability of the claim.

(2)*Arguments considered* . Only those arguments which are presented in the argument section of the appeal brief and that address claims set out in the claim support section of the appendix will be considered. Appellant waives all other arguments.

(3)*Format of argument* . Unless a response is purely legal in nature, when responding to a point made in the examiner's rejection, the appeal brief shall specifically identify the point made by the examiner and indicate where appellant previously responded to the point or state that appellant has not previously responded to the point. In identifying any point made by the examiner, the appellant shall refer to a page and, where appropriate, a line, of the record on appeal.

(4)*Rejection under 35 U.S.C. 112, first paragraph* . For each rejection under 35 U.S.C. 112, first paragraph, the argument shall also specify the errors in the rejection and how the rejected claims comply with the first paragraph of 35 U.S.C. 112 including, as appropriate, how the specification and drawings, if any, describe the subject matter defined by the rejected claims, enable any person skilled in the art to which the invention pertains to make and use the subject matter of the rejected claims, or set forth the best mode contemplated by the inventor of carrying out the claimed invention.

(5)*Rejection under 35 U.S.C. 112, second paragraph* . For each rejection under 35 U.S.C. 112, second paragraph, the argument shall also specify how the rejected claims particularly point out and distinctly claim the subject matter which appellant regards as the invention.

(6)*Rejection under 35 U.S.C. 102* . For each rejection under 35 U.S.C. 102 (anticipation), the argument shall also specify why the rejected claims are patentable by identifying any specific limitation in the rejected claims which is not described in the prior art relied upon in support of the rejection.

(7)*Rejection under 35 U.S.C. 103* . For each rejection under 35 U.S.C. 103, if appropriate, the argument shall specify the errors in the rejection and, if appropriate, specify the specific limitations in the rejected claims that are not described in the prior art relied upon in support of the rejection, and explain how those limitations render the claimed subject matter unobvious over the prior art. A general argument that all limitations are not described in a single prior art reference does not satisfy the requirements of this paragraph.

(8)*Other rejections* . For each rejection other than those referred to in paragraphs (o)(4) through (o)(7), the argument shall specify the errors in the rejection, including where appropriate, the specific limitations in the rejected claims upon which the appellant relies to establish error.

(p)*Claims section* . The “claims section” of the appendix shall consist of an accurate clean copy in numerical order of all claims pending in the application or reexamination proceeding on appeal. The status of each claim shall be set out after the claim number and in parentheses (e.g., 1 (rejected), 2 (withdrawn), 3 (objected to), and 4 (allowed)).

(q)*Claim support section* . For each claim argued separately (see paragraph (o)(1) of this section), the “claim support section” of the appendix shall consist of an annotated copy of the claim indicating in bold face between braces ({}) the page and line after each limitation where the limitation is described in the specification as filed.

(r)*Drawing analysis section* . For each claim argued separately (see paragraph (o)(1) of this section) and having at least one limitation illustrated in a drawing or amino acid or nucleotide material sequence, the “drawing analysis section” of the appendix shall consist of an annotated copy of the claim indicating in bold face between braces ({}) where each limitation is shown in the drawings or sequence. If there is no drawing or sequence, the drawing analysis section shall state that there is no drawing or sequence.

(s)*Means or step plus function analysis section* . For each claim argued separately (see paragraph (o)(1) of this section) and for each limitation that appellant regards as a means or step plus function limitation in the form permitted by the sixth paragraph of 35 U.S.C. 112, the “means or step plus function analysis section” of the appendix shall consist of an annotated copy of the claim indicating in bold face between braces ({}) the page and line of the specification and the drawing figure and element numeral that describes the structure, material or acts corresponding to each claimed function. If there is no means or step plus function limitation, the means or step plus function analysis section shall state that there are not means or step plus function limitations in the claims to be considered.

(t)*Evidence section* . The “evidence section” shall contain only papers which have been entered by the examiner. The evidence section shall include:

(1)A table of contents.

(2)The Office action setting out the rejection on appeal. If the Office action incorporates by reference any other Office action, then the Office action incorporated by reference shall also appear in the evidence section.

(3)All evidence relied upon by the examiner in support of the rejection on appeal (including non-patent literature and foreign application and patent documents), except the specification, any drawings, U.S. patents or published U.S. applications.

(4)The relevant portion of a paper filed by the appellant before the examiner which shows that an argument being made on appeal was made in the first instance to the examiner.

(5)Affidavits and declarations, if any, and attachments to declarations, relied upon by appellant before the examiner.

(6)Other evidence, if any, relied upon by the appellant before the examiner.

(u)*Related cases section* . The “related cases section” shall consist of copies of orders and opinions required to be cited pursuant to paragraph

(g)of this section.

(v)*Appeal brief format requirements* . An appeal brief shall comply with § 1.52 of this title and the following additional requirements:

(1)*Page and line numbering* . The pages of the appeal brief, including all sections of the appendix, shall be consecutively numbered using Arabic numerals beginning with the first page of the appeal brief, which shall be numbered page 1. The lines on each page of the appeal brief and, where practical, the appendix shall be consecutively numbered beginning with line 1 at the top of each page.

(2)*Double spacing* . Double spacing shall be used except in headings, tables of contents, tables of authorities and signature blocks. Block quotations must be double spaced and indented.

(3)*Margins* . Margins shall be at least one inch (2.5 centimeters) on all sides. Line numbering may be within the left margin.

(4)*Font* . The font shall be readable and clean, equivalent to 14 point Times New Roman, including the font for block quotations and footnotes.

(5)*Length of appeal brief* . An appeal brief may not exceed 25 pages, excluding any statement of the real party in interest, statement of related cases, table of contents, table of authorities, signature block, and appendix. An appeal brief may not incorporate another paper by reference. A request to exceed the page limit shall be made by petition under § 41.3 filed at least ten calendar days prior to the date the appeal brief is due.

(6)*Signature block* . The signature block must identify the appellant or appellant's representative, as appropriate, and a registration number, a correspondence address, a telephone number, a fax number and an e-mail address. 9. Revise § 41.39 to read as follows: § 41.39 Examiner's answer.

(a)*Answer* . If the examiner determines that the appeal should go forward, then within such time and manner as may be established by the Director the examiner shall enter an examiner's answer responding to the appeal brief.

(b)*New rejection in examiner's answer* . An examiner's answer may include a new rejection. If an examiner's answer contains a rejection designated as a new rejection, appellant must, within two months from the date of the examiner's answer, exercise one of the following two options or the application will be deemed to be abandoned or the reexamination proceeding will be deemed to be terminated.

(1)*Request to reopen prosecution* . Request that prosecution be reopened before the examiner by filing a reply under § 1.111 of this title with or without amendment or submission of evidence. Any amendment or evidence must be responsive to the new rejection. A request that complies with this paragraph will be entered and the application or patent under reexamination will be reconsidered by the examiner under the provisions of § 1.112 of this title. A request under this paragraph will be treated as a request to withdraw the appeal.

(2)*Request to maintain the appeal* . Request that the appeal be maintained by filing a reply brief as set forth in § 41.41 of this subpart. A reply brief may not be accompanied by any amendment or evidence, except an amendment canceling one or more claims which are subject to the new rejection. A reply which is accompanied by evidence or any other amendment will be treated as a request to reopen prosecution pursuant to paragraph (b)(1) of this section.

(c)*Extension of time to file request* . The time for filing a request under § 41.39(b)(1) is extendable under the provisions of § 1.136(a) of this title as to applications and under the provisions of § 1.550(c) of this title as to reexamination proceedings. A request for an extension of time for filing a request under paragraph (b)(2) of this section shall be presented as a petition under § 41.3 of this part. 10. Revise § 41.41 to read as follows: § 41.41 Reply brief.

(a)*Reply brief authorized* . An appellant may file a single reply brief responding to the points made in the examiner's answer.

(b)*Time for filing reply brief* . If the appellant elects to file a reply brief, the reply brief must be filed within two months of the date of the mailing of the examiner's answer.

(c)*Extension of time to file reply brief* . A request for an extension of time to file a reply brief shall be presented as a petition under § 41.3 of this subpart.

(d)*Content of reply brief* . A reply brief shall be limited to responding to points made in the examiner's answer. Except as otherwise set out in this section, the form and content of a reply brief are governed by the requirements for an appeal brief as set out in § 41.37 of this subpart. A reply brief may not exceed fifteen pages, excluding any table of contents, table of authorities, statement of timeliness, signature block, and supplemental appendix required by this section. If the examiner enters and designates a rejection as a new rejection, the reply brief may not exceed twenty-five pages, excluding any table of contents, table of authorities, statement of timeliness, signature block, and supplemental appendix required by this section. A request to exceed the page limit shall be made by petition under § 41.3 of this part and filed at least ten calendar days before the reply brief is due. A reply brief must contain, under appropriate headings and in the order indicated, the following items:

(1)Table of contents—see § 41.37(i) of this subpart.

(2)Table of authorities—see § 41.37(j) of this subpart.

(3)Statement of timeliness—see paragraph

(e)of this section.

(4)Statement of facts—see paragraph

(f)of this section.

(5)Argument.

(6)Supplemental appendix.

(e)*Statement of timeliness* . The “statement of timeliness” shall include the date that the examiner's answer was entered and the date that the reply is being filed. If the reply brief is filed after the time specified in this subpart, appellant must indicate the date an extension of time was requested and the date the request was granted.

(f)*Statement of additional facts* . The “statement of additional facts” shall consist of a statement of the additional facts that appellant believes are necessary to address the points raised in the examiner's answer and, as to each fact, must identify the point raised in the examiner's answer to which the fact relates.

(g)*Argument* . A reply brief is limited to responding to points made in the examiner's answer. Arguments generally restating the case will not be permitted in a reply brief.

(h)*Supplemental appendix* . If the examiner entered a new rejection in the examiner's answer and appellant elects to respond to the new rejection in a reply brief, this item shall include:

(1)A table of contents—see § 41.37(i) of this subpart.

(2)The examiner's answer.

(3)All evidence upon which the examiner relied in support of the new rejection that does not already appear in the evidence section accompanying the appeal brief, except the specification, any drawings, U.S. patents and U.S. published applications.

(i)*No amendment or new evidence* . No amendment or new evidence may accompany a reply brief. 11. Revise § 41.43 to read as follows: § 41.43 Examiner's response to reply brief. Upon consideration of a reply brief, the examiner may withdraw a rejection and reopen prosecution or may enter a supplemental examiner's answer responding to the reply brief. 12. Add § 41.44 to read as follows: § 41.44 Supplemental reply brief. [new rule number]

(a)*Supplemental reply brief authorized* . If an examiner enters a supplemental examiner's answer, an appellant may file a single supplemental reply brief responding to the supplemental examiner's answer.

(b)*Time for filing supplemental reply brief* . Appellant must file a supplemental reply brief within two months from the date of the mailing of the examiner's supplemental answer.

(c)*Extension of time to file supplemental reply brief* . A request for an extension of time shall be presented as a petition under § 41.3.

(d)*Content of supplemental reply brief* . Except as otherwise set out in this subparagraph, the form and content of a supplemental reply brief are governed by the requirements for appeal briefs as set out in § 41.37 of this subpart. A supplemental reply brief may not exceed ten pages, excluding the table of contents, table of authorities, and statement of timeliness and signature block. A request to exceed the page limit shall be made by petition under § 41.3 of this part and filed at least ten calendar days before the supplemental reply brief is due. A supplemental reply brief must contain, under appropriate headings and in the order indicated, the following items:

(1)Table of contents—see § 41.37(i) of this subpart.

(2)Table of authorities—see § 41.37(j) of this subpart.

(3)Statement of timeliness—see paragraph

(e)of this section.

(4)Argument—see paragraph

(f)of this section.

(e)*Statement of timeliness* . The “statement of timeliness” shall establish that the supplemental reply brief was timely filed by including a statement of the date the supplemental examiner's answer was entered and the date the supplemental reply brief is being filed. If the supplemental reply brief is filed after the time specified in this subpart, appellant must indicate the date an extension of time was requested and the date the request was granted.

(f)*Argument* . The “argument” shall be limited to responding to points made in the supplemental examiner's answer. Arguments generally restating the case will not be permitted in a supplemental reply brief.

(g)*No amendment or new evidence* . No amendment or new evidence may accompany a supplemental reply brief. 13. Revise § 41.47 to read as follows: § 41.47 Oral hearing.

(a)*Request for oral hearing* . If appellant desires an oral hearing, appellant must file, as a separate paper, a written request captioned: “REQUEST FOR ORAL HEARING”.

(b)*Fee* . A request for oral hearing shall be accompanied by the fee required by § 41.20(b)(3) of this subpart.

(c)*Time for filing request for oral hearing* . Appellant must file a request for oral hearing within two months from the date of the examiner's answer or supplemental examiner's answer.

(d)*Extension of time to file request for oral hearing* . A request for an extension of time shall be presented as a petition under § 41.3 of this subpart.

(e)*Date for oral hearing* . If an oral hearing is properly requested, the Board shall set a date for the oral hearing.

(f)*Confirmation of oral hearing* . Within such time as may be ordered by the Board, appellant shall confirm attendance at the oral hearing. Failure to timely confirm attendance will be taken as a waiver of any request for an oral hearing.

(g)*List of terms* . At the time appellant confirms attendance at the oral hearing, appellant shall supply a list of technical terms and other unusual words which can be provided to any individual transcribing an oral hearing.

(h)*Length of argument* . Unless otherwise ordered by the Board, argument on behalf of appellant shall be limited to 20 minutes.

(i)*Oral hearing limited to record* . At oral hearing only the record on appeal will be considered. No additional evidence may be offered to the Board in support of the appeal. Any argument not presented in a brief cannot be raised at an oral hearing.

(j)*Recent legal development* . Notwithstanding subparagraph

(i)of this section, an appellant or the examiner may rely on and call the Board's attention to a recent court or Board opinion which could have an effect on the manner in which the appeal is decided.

(k)*Visual aids* . Visual aids may be used at an oral hearing, but must be limited to copies of documents in the record on appeal. At the oral hearing, appellant should provide one copy of each visual aid for each judge and one copy for the record.

(l)*Failure to attend oral hearing* . Failure of an appellant to attend an oral hearing will be treated as a waiver of oral hearing. 14. Revise § 41.50 to read as follows: § 41.50 Decisions and other actions by the Board.

(a)*Affirmance and reversal* . The Board may affirm or reverse an examiner's rejection in whole or in part. Affirmance of a rejection of a claim constitutes a general affirmance of the decision of the examiner on that claim, except as to any rejection specifically reversed.

(b)*Remand* . The Board may remand an application to the examiner. If in response to the remand, the examiner enters a supplemental examiner's answer, within two months the appellant shall exercise one of the following two options to avoid abandonment of the application or termination of a reexamination proceeding:

(1)*Request to reopen prosecution* . Request that prosecution be reopened before the examiner by filing a reply under § 1.111 of this title with or without amendment or submission of evidence. Any amendment or evidence must be responsive to the remand or issues discussed in the supplemental examiner's answer. A request that complies with this paragraph will be entered and the application or patent under reexamination will be reconsidered by the examiner under the provisions of § 1.112 of this title. A request under this paragraph will be treated as a request to dismiss the appeal.

(2)*Request to maintain the appeal* . The appellant may request that the Board re-docket the appeal (see § 41.35(a) of this subpart) and file a reply brief as set forth in § 41.41 of this subpart. A reply brief may not be accompanied by any amendment or evidence. A reply brief which is accompanied by an amendment or evidence will be treated as a request to reopen prosecution pursuant to paragraph (b)(1) of this section.

(c)*Remand not final action* . Whenever a decision of the Board includes a remand, the decision shall not be considered a final decision of the Board. When appropriate, upon conclusion of proceedings on remand before the examiner, the Board may enter an order making its decision final.

(d)*New rejection* . Should the Board have a basis not involved in the appeal for rejecting any pending claim, it may enter a new rejection. A new rejection shall be considered an interlocutory order and shall not be considered a final decision. If the Board enters a new rejection, within two months appellant must exercise one of the following two options with respect to the new rejection to avoid dismissal of the appeal as to any claim subject to the new rejection:

(1)*Reopen prosecution* . Submit an amendment of the claims subject to a new rejection or new evidence relating to the new rejection or both, and request that the matter be reconsidered by the examiner. The application or reexamination proceeding on appeal will be remanded to the examiner. A new rejection by the Board is binding on the examiner unless, in the opinion of the examiner, the amendment or new evidence overcomes the new rejection. In the event the examiner maintains the new rejection, appellant may again appeal to the Board.

(2)*Request for rehearing* . Submit a request for rehearing pursuant to § 41.52 of this subpart relying on the record on appeal.

(e)*Recommendation* . In its opinion in support of its decision, the Board may include a recommendation, explicitly designated as such, of how a claim on appeal may be amended to overcome a specific rejection. When the Board makes a recommendation, appellant may file an amendment or take other action consistent with the recommendation. An amendment or other action, otherwise complying with statutory patentability requirements, will overcome the specific rejection. An examiner, however, may enter a new rejection of a claim amended in conformity with a recommendation, when appropriate.

(f)*Request for briefing and information* . The Board may enter an order requiring appellant to brief matters or supply information or both that the Board believes would assist in deciding the appeal. Appellant will be given a non-extendable time period within which to respond to the order. Failure of appellant to timely respond to the order may result in dismissal of the appeal in whole or in part.

(g)*Extension of time to take action* . A request for an extension of time to respond to a request for briefing and information under paragraph

(f)of this section is not authorized. A request for an extension of time to respond to Board action under paragraphs

(b)and

(d)of this section shall be presented as a petition under § 41.3 of this subpart. 15. Revise § 41.52 to read as follows: § 41.52 Rehearing.

(a)*Request for rehearing authorized* . An appellant may file a single request for rehearing.

(b)*Time for filing request for rehearing* . Any request for rehearing must be filed within two months from the date of the decision entered by the Board.

(c)*Extension of time to file request for rehearing* . A request for an extension of time shall be presented as a petition under § 41.3 of this subpart.

(d)*Content of request for rehearing* . A request for rehearing shall state with particularity the points believed to have been misapprehended or overlooked by the Board. The form of a request for rehearing is governed by the requirements of § 41.37(v) of this subpart, except that a request for rehearing may not exceed ten pages, excluding any table of contents, table of authorities, statement of timeliness, and signature block. A request to exceed the page limit shall be made by petition under § 41.3 at least ten calendar days before the request for rehearing is due. A request for rehearing must contain, under appropriate headings and in the order indicated, the following items:

(1)Table of contents—see § 41.37(i) of this subpart.

(2)Table of authorities—see 41.37(j) of this subpart.

(3)Statement of timeliness—see paragraph

(e)of this section.

(4)Argument—see paragraph

(f)of this section.

(e)*Statement of timeliness* . The “statement of timeliness” shall establish that the request for rehearing was timely filed by including a statement of the date the decision sought to be reheard was entered and the date the request for rehearing is being filed. If the request for rehearing is filed after the time specified in this subpart, appellant must indicate the date an extension of time was requested and the date the request was granted.

(f)*Argument* . In filing a request for rehearing, the argument shall adhere to the following format: “On page x, lines y-z of the Board's opinion, the Board states that [set out what was stated]. The point misapprehended or overlooked was made to the Board in [identify paper, page and line where argument was made to the Board]. The response is [state response].” As part of each response, appellant shall refer to the page number and line or drawing number of the record on appeal. No general restatement of the case is permitted in a request for rehearing. A new argument cannot be made in a request for rehearing, except:

(1)New rejection. Appellant may respond to a new rejection entered pursuant to § 41.50(d)(2) of this subpart.

(2)Recent legal development. Appellant may rely on and call the Board's attention to a recent court or Board opinion which is relevant to an issue decided in the appeal.

(g)*No amendment or new evidence* . No amendment or new evidence may accompany a request for rehearing.

(h)*Decision on rehearing* . A decision will be rendered on a request for rehearing. The decision on rehearing is deemed to incorporate the underlying decision sought to be reheard except for those portions of the underlying decision specifically modified on rehearing. A decision on rehearing is final for purposes of judicial review, except when otherwise noted in the decision on rehearing. 16. Revise § 41.54 to read as follows: § 41.54 Action following decision. After a decision by the Board and subject to appellant's right to seek judicial review, the application or reexamination proceeding will be returned to the jurisdiction of the examiner for such further action as may be appropriate consistent with the decision by the Board. 17. Add § 41.56 to read as follows: § 41.56 Sanctions.

(a)*Imposition of sanctions* . A sanction may be imposed against an appellant for misconduct, including:

(1)Failure to comply with an order entered in the appeal or an applicable rule.

(2)Advancing or maintaining a misleading or frivolous request for relief or argument.

(3)Engaging in dilatory tactics.

(b)*Nature of sanction* . Sanctions may include entry of:

(1)An order declining to enter a docketing notice.

(2)An order holding certain facts to have been established in the appeal.

(3)An order expunging a paper or precluding an appellant from filing a paper.

(4)An order precluding an appellant from presenting or contesting a particular issue.

(5)An order excluding evidence.

(6)An order requiring terminal disclaimer of patent term.

(7)An order holding an application on appeal to be abandoned or a reexamination proceeding terminated.

(8)An order dismissing an appeal.

(9)An order denying an oral hearing.

(10)An order terminating an oral hearing. Dated: July 19, 2007. Jon W. Dudas, Under Secretary of Commerce for Intellectual Property, and Director of the United States Patent and Trademark Office. [FR Doc. E7-14645 Filed 7-27-07; 8:45 am] BILLING CODE 3510-16-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R05-OAR-2007-0292; FRL-8443-1] Approval and Promulgation of Air Quality Implementation Plans; Indiana AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: EPA is proposing to approve Indiana's requests to amend its State Implementation Plan

(PM)emission limits for the boilers at that source to reflect current operating conditions. These revisions will not result in an increase in PM emissions. DATES: Comments must be received on or before August 29, 2007. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R05-OAR-2007-0292, by one of the following methods: 1. *http://www.regulations.gov:* Follow the on-line instructions for submitting comments. 2. *E-mail: mooney.john@epa.gov* . 3. *Fax:*

(312)886-5824. 4. *Mail:* John M. Mooney, Chief, Criteria Pollutant Section, Air Programs Branch (AR-18J), U.S. Environmental Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. 5. *Hand Delivery:* John M. Mooney, Chief, Criteria Pollutant Section, Air Programs Branch (AR-18J), U.S. Environmental Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. Such deliveries are only accepted during the Regional Office normal hours of operation, and special arrangements should be made for deliveries of boxed information. The Regional Office official hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m. excluding Federal holidays. Please see the direct final rule which is located in the Rules section of this **Federal Register** for detailed instructions on how to submit comments. FOR FURTHER INFORMATION CONTACT: Charles Hatten, Environmental Engineer, Criteria Pollutant Section, Air Programs Branch (AR-18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604,

(312)886-6031, *Hatten.Charles@epa.gov* . SUPPLEMENTARY INFORMATION: In the Final Rules section of this **Federal Register** , EPA is approving the State's SIP submittal as a direct final rule without prior proposal because the Agency views this as a noncontroversial submittal and anticipates no adverse comments. A detailed rationale for the approval is set forth in the direct final rule. If no adverse comments are received in response to this rule, no further activity is contemplated. If EPA receives adverse comments, the direct final rule will be withdrawn and all public comments received will be addressed in a subsequent final rule based on this proposed rule. EPA will not institute a second comment period. Any parties interested in commenting on this action should do so at this time. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment. For additional information, see the direct final rule which is located in the Rules section of this **Federal Register** . Dated: July 11, 2007. Bharat Mathur, Acting Regional Administrator, Region 5. [FR Doc. E7-14477 Filed 7-27-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 52 and 97 [EPA-R06-OAR-2007-0252; FRL-8446-2] Approval and Promulgation of Implementation Plans; Texas; Clean Air Interstate Rule Nitrogen Oxides Annual Trading Program AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: EPA is proposing to approve a revision to the Texas State Implementation Plan

(SIP)submitted by the State of Texas on August 4, 2006, as the Texas Clean Air Interstate Rule

(CAIR)Nitrogen Oxides (NO X ) Annual Abbreviated SIP. The abbreviated SIP revision EPA is proposing to approve includes the Texas methodologies for allocation of annual NO X allowances for Phase 1 of CAIR, the control periods 2009 through 2014, and for allocating allowances from the compliance supplement pool

(CSP)in the CAIR NO X annual trading program. EPA is proposing to determine that the Texas CAIR NO X Annual Abbreviated SIP revision satisfies the applicable requirements of a CAIR abbreviated SIP revision. Upon the effective date of approval of the Texas CAIR NO X Annual Abbreviated SIP revision, EPA by ministerial action will note in the Texas CAIR NO X Annual Federal Implementation Plan's

(FIP)incorporated regulations that the Texas rules for annual NO X allowances under Phase 1 of CAIR and allocating allowances from the CSP apply, rather than the Federal FIP rules. The intended effect of this action is to reduce NO X emissions from the State of Texas that are contributing to nonattainment of the PM 2.5 National Ambient Air Quality Standard (NAAQS or standard) in downwind states. This action is being taken under section 110 of the Federal Clean Air Act (the Act or CAA). DATES: Comments must be received on or before August 29, 2007. ADDRESSES: Comments may be mailed to Mr. Jeff Robinson, Chief, Air Permits Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, Texas 75202-2733. Comments may also be submitted electronically or through hand delivery/courier by following the detailed instructions in the ADDRESSES section of the direct final rule located in the rules section of this **Federal Register** . FOR FURTHER INFORMATION CONTACT: If you have questions concerning today's proposal, please contact Ms. Adina Wiley (6PD-R), Air Permits Section, Environmental Protection Agency, Region 6, 1445 Ross Avenue (6PD-R), Suite 1200, Dallas, TX 75202-2733. The telephone number is

(214)665-2115. Ms. Wiley can also be reached via electronic mail at *wiley.adina@epa.gov.* SUPPLEMENTARY INFORMATION: In the final rules section of this **Federal Register** , EPA is approving the State's SIP submittal as a direct final rule without prior proposal because the Agency views this as a noncontroversial submittal and anticipates no relevant adverse comments. A detailed rationale for the approval is set forth in the direct final rule. If no relevant adverse comments are received in response to this action, no further activity is contemplated. If EPA receives relevant adverse comments, the direct final rule will be withdrawn and all public comments received will be addressed in a subsequent final rule based on this proposed rule. EPA will not institute a second comment period. Any parties interested in commenting on this action should do so at this time. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of the rule, and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment. For additional information, see the direct final rule which is located in the rules section of this **Federal Register** . Dated: July 16, 2007. Richard E. Greene, Regional Administrator, EPA Region 6. [FR Doc. E7-14484 Filed 7-27-07; 8:45 am] BILLING CODE 6560-50-P 72 145 Monday, July 30, 2007 Notices COMMISSION ON CIVIL RIGHTS Agenda and Notice of Public Meeting of the Tennessee Advisory Committee Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission), and the Federal Advisory Committee Act (FACA), that a planning meeting with briefing of the Tennessee Advisory Committee to the Commission will convene at 1 p.m. and adjourn at 5 p.m. on Monday, August 6, 2007 at the Hamilton County Commissioner Conference Room, 25 Georgia Avenue, Chattanooga, Tennessee. The purpose of the planning meeting with briefing is to give an orientation to members, discuss the Committee's report on school desegregation, receive a briefing on religious freedom for prisoners, and discuss future activities of the Committee. Members of the public are entitled to submit written comments; the comments must be received in the Southern Regional Office by Monday, August 20, 2007. The address is 61 Forsyth Street, SW., Suite 18T40, Atlanta, Georgia 30303. Persons wishing to e-mail their comments, or to present their comments verbally at the meeting, or who desire additional information should contact Peter Minarik, Ph.D., Regional Director, Southern Regional Office, U.S. Commission on Civil Rights at

(404)562-7000 [TDY 202-376-8116], or by e-mail at: *pminarik@usccr.gov.* Hearing-impaired persons who will attend the meeting and require the services of a sign language interpreter should contact the Regional Office at least ten

(10)working days before the scheduled date of the meeting. Records generated from this meeting may be inspected and reproduced at the Southern Regional Office, as they become available, both before and after the meeting. Persons interested in the work of this advisory committee are advised to go to the Commission's Web site, *http://www.usccr.gov,* or to contact the Southern Regional Office at the above e-mail or street address. The meeting will be conducted pursuant to the provisions of the rules and regulations of the Commission and FACA. Dated in Washington, DC, July 23, 2007. Ivy Davis, Acting Chief, Regional Programs Coordination Unit. [FR Doc. E7-14609 Filed 7-27-07; 8:45 am] BILLING CODE 6335-02-P COMMISSION ON CIVIL RIGHTS Agenda and Notice of Public Meeting of the Virginia State Advisory Committee Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights and the regulations of the Federal Advisory Committee Act (FACA), that a conference call of the Virginia Advisory Committee will convene at 11 a.m. and adjourn at 1 p.m. on Friday, August 10, 2007. The purpose of the planning meeting is for the committee to plan conduct an orientation for new committee members and plan future projects. This conference call is available to the public through the following call-in number: 866-270-0762. Any interested member of the public may call this number and listen to the meeting. Callers can expect to incur charges for calls not initiated using the supplied call-in number or over wireless lines, and the Commission will not refund any incurred charges. Callers will incur no charge for calls using the call-in number over land-line connections. Persons with hearing impairments may also follow the proceedings by first calling the Federal Relay Service at 1-800-977-8339 and providing the Service with the conference call number. To ensure that the Commission secures an appropriate number of lines for the public, persons are asked to register by contacting Barbara de La Viez, Civil Rights Analyst, the Eastern Regional Office, 202-376-7533, TTY 202-376-8116, by 4 p.m., August 3, 2007. The meeting will be conducted pursuant to the provisions of the rules and regulations of the Commission and the Federal Advisory Committee Act. Dated at Washington, DC, July 25, 2007. Ivy L. Davis, Acting Chief, Regional Programs Coordination Unit. [FR Doc. E7-14670 Filed 7-27-07; 8:45 am] BILLING CODE 6335-02-P DEPARTMENT OF COMMERCE International Trade Administration [A-570-890] Wooden Bedroom Furniture from the People's Republic of China: Preliminary Results of Antidumping Duty Changed Circumstances Review AGENCY: Import Administration, International Trade Administration, Department of Commerce. SUMMARY: In response to a joint request from Tradewinds Furniture Ltd. (“Tradewinds Furniture”) and Tradewinds International Enterprise Ltd. (“Tradewinds Intl.”), the Department of Commerce (“Department”) initiated a changed circumstances review of the antidumping duty order on wooden bedroom furniture (“WBF”) from the People's Republic of China (“PRC”). We preliminarily find that Tradewinds Furniture is the successor-in-interest to Nanhai Jiantai Woodwork Co. (“Nanhai Jiantai”), but that Tradewinds Intl. is not the successor-in-interest to Nanhai Jiantai's affiliated exporter, Fortune Glory Industrial Limited (“Fortune Glory”). EFFECTIVE DATE: July 30, 2007. FOR FURTHER INFORMATION CONTACT: Juanita H. Chen or Robert A. Bolling, AD/CVD Operations, Office 8, Import Administration, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue, NW, Washington, DC 20230; telephone: 202-482-1904 or 202-482-3434, respectively. SUPPLEMENTARY INFORMATION: Background On January 4, 2005, the Department published in the **Federal Register** the antidumping duty order on WBF from the PRC. * See Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order: Wooden Bedroom Furniture From the People's Republic of China * , 70 FR 329 (January 4, 2005). As part of the antidumping duty order on WBF from the PRC, Nanhai Jiantai and Fortune Glory received a separate rate of 6.65 percent. *See* 70 FR at 331. On November 20, 2006, the Department published in the **Federal Register** an amended final determination and antidumping duty order on WBF from the PRC, as a result of litigation and a decision by the United States Court of International Trade (“CIT”). *See Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order/Pursuant to Court Decision: Wooden Bedroom Furniture From the People's Republic of China* , 71 FR 67099 (November 20, 2006). As a result of the CIT's decision, Nanhai Jiantai and Fortune Glory received an amended separate rate of 7.24 percent. *See* 71 FR at 67101. On November 22, 2006, Tradewinds Furniture and Tradewinds Intl. filed a joint submission requesting that the Department conduct a changed circumstances review of the antidumping duty order on WBF from the PRC to confirm that Tradewinds Furniture and Tradewinds Intl. are the successors-in-interest to Nanhai Jiantai and Fortune Glory, respectively (“Joint Request”). On November 30, 2006, Tradewinds Furniture and Tradewinds Intl. submitted a public version of a sales chart provided in their November 22, 2006, request. On January 18, 2007, the Department published its notice of initiation of a changed circumstances review to determine whether Tradewinds Furniture and Tradewinds Intl. are successors-in-interest to Nanhai Jiantai and Fortune Glory, respectively. *See Wooden Bedroom Furniture from the People's Republic of China: Initiation of Antidumping Duty Changed Circumstances Review* , 72 FR 2262 (January 18, 2007). As part of the notice of initiation, the Department invited interested parties to submit comments on the request for a changed circumstances review within 15 days of publication of the notice. *See* 72 FR at 2264. No interested parties provided comments. On March 30, 2007, the Department issued a questionnaire to Tradewinds Furniture and Tradewinds Intl. regarding their successor-in-interest changed circumstances review request. On April 20, 2007, Tradewinds Furniture and Tradewinds Intl. submitted their response to the Department's questionnaire (“Questionnaire Response”). On June 5, 2007, the Department issued a supplemental questionnaire to Tradewinds Furniture and Tradewinds Intl. On June 12, 2007, Tradewinds Furniture and Tradewinds Intl. submitted their response to the supplemental questionnaire (“Supplemental Response”). Scope of Order The product covered by the order is wooden bedroom furniture. Wooden bedroom furniture is generally, but not exclusively, designed, manufactured, and offered for sale in coordinated groups, or bedrooms, in which all of the individual pieces are of approximately the same style and approximately the same material and/or finish. The subject merchandise is made substantially of wood products, including both solid wood and also engineered wood products made from wood particles, fibers, or other wooden materials such as plywood, oriented strand board, particle board, and fiberboard, with or without wood veneers, wood overlays, or laminates, with or without non-wood components or trim such as metal, marble, leather, glass, plastic, or other resins, and whether or not assembled, completed, or finished. The subject merchandise includes the following items:

(1)wooden beds such as loft beds, bunk beds, and other beds;

(2)wooden headboards for beds (whether stand-alone or attached to side rails), wooden footboards for beds, wooden side rails for beds, and wooden canopies for beds;

(3)night tables, night stands, dressers, commodes, bureaus, mule chests, gentlemen's chests, bachelor's chests, lingerie chests, wardrobes, vanities, chessers, chifforobes, and wardrobe-type cabinets;

(4)dressers with framed glass mirrors that are attached to, incorporated in, sit on, or hang over the dresser;

(5)chests-on-chests 1 , highboys 2 , lowboys 3 , chests of drawers 4 , chests 5 , door chests 6 , chiffoniers 7 , hutches 8 , and armoires 9 ;

(6)desks, computer stands, filing cabinets, book cases, or writing tables that are attached to or incorporated in the subject merchandise; and

(7)other bedroom furniture consistent with the above list. 1 A chest-on-chest is typically a tall chest-of-drawers in two or more sections (or appearing to be in two or more sections), with one or two sections mounted (or appearing to be mounted) on a slightly larger chest; also known as a tallboy. 2 A highboy is typically a tall chest of drawers usually composed of a base and a top section with drawers, and supported on four legs or a small chest (often 15 inches or more in height). 3 A lowboy is typically a short chest of drawers, not more than four feet high, normally set on short legs. 4 A chest of drawers is typically a case containing drawers for storing clothing. 5 A chest is typically a case piece taller than it is wide featuring a series of drawers and with or without one or more doors for storing clothing. The piece can either include drawers or be designed as a large box incorporating a lid. 6 A door chest is typically a chest with hinged doors to store clothing, whether or not containing drawers. The piece may also include shelves for televisions and other entertainment electronics. 7 A chiffonier is typically a tall and narrow chest of drawers normally used for storing undergarments and lingerie, often with mirror(s) attached. 8 A hutch is typically an open case of furniture with shelves that typically sits on another piece of furniture and provides storage for clothes. 9 An armoire is typically a tall cabinet or wardrobe (typically 50 inches or taller), with doors, and with one or more drawers (either exterior below or above the doors or interior behind the doors), shelves, and/or garment rods or other apparatus for storing clothes. Bedroom armoires may also be used to hold television receivers and/or other audio-visual entertainment systems. The scope of the order excludes the following items:

(1)seats, chairs, benches, couches, sofas, sofa beds, stools, and other seating furniture;

(2)mattresses, mattress supports (including box springs), infant cribs, water beds, and futon frames;

(3)office furniture, such as desks, stand-up desks, computer cabinets, filing cabinets, credenzas, and bookcases;

(4)dining room or kitchen furniture such as dining tables, chairs, servers, sideboards, buffets, corner cabinets, china cabinets, and china hutches;

(5)other non-bedroom furniture, such as television cabinets, cocktail tables, end tables, occasional tables, wall systems, book cases, and entertainment systems;

(6)bedroom furniture made primarily of wicker, cane, osier, bamboo or rattan;

(7)side rails for beds made of metal if sold separately from the headboard and footboard;

(8)bedroom furniture in which bentwood parts predominate 10 ;

(9)jewelry armories 11 ;

(10)cheval mirrors 12 ;

(11)certain metal parts 13 ;

(12)mirrors that do not attach to, incorporate in, sit on, or hang over a dresser if they are not designed and marketed to be sold in conjunction with a dresser as part of a dresser-mirror set; and

(13)upholstered beds 14 . 10 As used herein, bentwood means solid wood made pliable. Bentwood is wood that is brought to a curved shape by bending it while made pliable with moist heat or other agency and then set by cooling or drying. *See* Customs' Headquarters' Ruling Letter 043859, dated May 17, 1976. 11 Any armoire, cabinet or other accent item for the purpose of storing jewelry, not to exceed 24'' in width, 18'' in depth, and 49'' in height, including a minimum of 5 lined drawers lined with felt or felt-like material, at least one side door (whether or not the door is lined with felt or felt-like material), with necklace hangers, and a flip-top lid with inset mirror. See Issues and Decision Memorandum from Laurel LaCivita to Laurie Parkhill, Office Director, Concerning Jewelry Armoires and Cheval Mirrors in the Antidumping Duty Investigation of Wooden Bedroom Furniture from the People's Republic of China, dated August 31, 2004. * See also Wooden Bedroom Furniture from the People's Republic of China: Notice of Final Results of Changed Circumstances Review and Revocation in Part * , 71 FR 38621 (July 7, 2006). 12 Cheval mirrors are, *i.e.* , any framed, tiltable mirror with a height in excess of 50″ that is mounted on a floor-standing, hinged base. Additionally, the scope of the order excludes combination cheval mirror/jewelry cabinets. The excluded merchandise is an integrated piece consisting of a cheval mirror, *i.e.* , a framed tiltable mirror with a height in excess of 50 inches, mounted on a floor-standing, hinged base, the cheval mirror serving as a door to a cabinet back that is integral to the structure of the mirror and which constitutes a jewelry cabinet lined with fabric, having necklace and bracelet hooks, mountings for rings and shelves, with or without a working lock and key to secure the contents of the jewelry cabinet back to the cheval mirror, and no drawers anywhere on the integrated piece. The fully assembled piece must be at least 50 inches in height, 14.5 inches in width, and 3 inches in depth. *See Wooden Bedroom Furniture From the People's Republic of China: Final Results of Changed Circumstances Review and Determination To Revoke Order in Part* , 72 FR 38621 (January 9, 2007). 13 Metal furniture parts and unfinished furniture parts made of wood products (as defined above) that are not otherwise specifically named in this scope ( *i.e.* , wooden headboards for beds, wooden footboards for beds, wooden side rails for beds, and wooden canopies for beds) and that do not possess the essential character of wooden bedroom furniture in an unassembled, incomplete, or unfinished form. Such parts are usually classified under the Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 9403.90.7000. 14 Upholstered beds that are completely upholstered, *i.e.* , containing filling material and completely covered in sewn genuine leather, synthetic leather, or natural or synthetic decorative fabric. To be excluded, the entire bed (headboards, footboards, and side rails) must be upholstered except for bed feet, which may be of wood, metal, or any other material and which are no more than nine inches in height from the floor. *See Wooden Bedroom Furniture from the People's Republic of China: Final Results of Changed Circumstances Review and Determination to Revoke Order in Part* , 72 FR 7013 (February 14, 2007). Imports of subject merchandise are classified under subheading 9403.50.9040 of the HTSUS as “wooden . . . beds” and under subheading 9403.50.9080 of the HTSUS as “other . . . wooden furniture of a kind used in the bedroom.” In addition, wooden headboards for beds, wooden footboards for beds, wooden side rails for beds, and wooden canopies for beds may also be entered under subheading 9403.50.9040 of the HTSUS as “parts of wood” and framed glass mirrors may also be entered under subheading 7009.92.5000 of the HTSUS as “glass mirrors . . . framed.” This order covers all wooden bedroom furniture meeting the above description, regardless of tariff classification. Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this proceeding is dispositive. Preliminary Results of Review In a changed circumstances review involving a successor-in-interest determination, the Department typically examines several factors including, but not limited to, changes in:

(1)management;

(2)production facilities;

(3)supplier relationships; and

(4)customer base. *See Certain Cut-to-Length Carbon Steel Plate from Romania: Initiation and Preliminary Results of Changed Circumstances Antidumping Duty Administrative Review* , 70 FR 22847 (May 3, 2005). While no single factor or combination of factors will necessarily be dispositive, the Department generally will consider the new company to be the successor to the predecessor if the resulting operations are essentially the same as those of the predecessor company. *See, e.g., Notice of Initiation of Antidumping Duty Changed Circumstances Review: Certain Forged Stainless Steel Flanges from India* , 71 FR 327 (January 4, 2006). Thus, if the record demonstrates that, with respect to the production and sale of the subject merchandise, the new company operates as the same business entity as the predecessor company, the Department may assign the new company the cash deposit rate of its predecessor. *See, e.g., Fresh and Chilled Atlantic Salmon from Norway: Final Results of Changed Circumstances Antidumping Duty Administrative Review* , 64 FR 9979, 9980 (March 1, 1999). Tradewinds Furniture Ltd. In the Joint Request, Tradewinds Furniture claims that it is the successor-in-interest to Nanhai Jiantai. Tradewinds Furniture submitted documentation showing that in February 2004, a government change in administrative boundaries resulted in a change in name for Nanhai Jiantai to Foshan Jiantai Woodwork Co. (“Foshan Jiantai”). Tradewinds Furniture provided documentation showing that this change was in name only, including the State Council of the PRC's approval of the adjustment to the administrative region in Foshan City ( *see* Joint Request, at Exhibit 1), the People's Government of Guangdong Province's mandate for implementation of the change ( *see* Joint Request, at Exhibit 2), and the alteration detail ( *see* Joint Request, at Exhibit 4). Tradewinds Furniture also provided the business licenses and certificates of approval for both Nanhai Jiantai and Foshan Jiantai, in support of its claim that, other than a name change, all other information remained the same. *See* Joint Request, at Exhibits 3 and 5. Tradewinds Furniture reported that, thereafter, a company (whose name is reported as proprietary, hereinafter referred to as “Company A”) purchased the majority of assets of Foshan Jiantai in August 2004. *See* Joint Request, at Exhibit 6; Questionnaire Response, at Exhibit 22 (Asset Transfer Contract). Company A established Tradewinds Furniture to take over Foshan Jiantai's furniture production operations. Tradewinds Furniture provided the PRC certificate of approval, as well as the Foshan City registration and business license, in support of this contention. *See* Joint Request, at Exhibits 7-8; Questionnaire Response, at 1. Tradewinds Furniture reported that Foshan Jiantai is no longer producing WBF or providing any services. *See* Questionnaire Response, at 3. Tradewinds Furniture also stated that it has taken over complete operational control of the furniture production operations from Foshan Jiantai. *See* Supplemental Response, at 1. Tradewinds Furniture gave a written description of the ownership and management changes from Nanhai Jiantai through to Tradewinds Furniture, which included a discussion of the board of director changes, and noted that 16 out of 19 key management employees of Nanhai Jiantai remain with Tradewinds Furniture. *See* Joint Request, at 6-7 and Exhibits 11-12; Questionnaire Response, at 2; Supplemental Response, at 2-3. Tradewinds Furniture also provided flowcharts in support, which outline these changes from Nanhai Jiantai, through the name change to Foshan Jiantai, and its subsequent acquisition by Company A, through to the establishment of Tradewinds Furniture. *See* Joint Request, at Exhibit 10; Questionnaire Response, at Exhibit 23; Supplemental Response, at Exhibit 28. Tradewinds Furniture also provided charts and descriptions of the changes to the organizational structure, lists of the assets and equipment that were part of Company A's acquisition of Foshan Jiantai, and compared the production facilities and offices used by Nanhai Jiantai to those used by Tradewinds Furniture. *See* Joint Request, at 8-9 and Exhibits 13-16; Questionnaire Response, at 4-5. In addition, Tradewinds Furniture provided a comparison chart of the international suppliers for Nanhai Jiantai and Tradewinds Furniture, as well as copies of purchase orders placed by both, explaining that changes in suppliers were due to standard reevaluations of the relationship, as well as non-competitive pricing. *See* Joint Request, at 9-10 and Exhibits 17-18. Further, Tradewinds Furniture stated that it has “substantially the same” customer base as Nanhai Jiantai, provided a customer comparison chart, and explained that the loss of customers and addition of new customers is typical for any company. *See* Joint Request, at 10 and Exhibit 19. Finally, Tradewinds Furniture provided shipping records for Foshan Jiantai and Tradewinds Furniture and stated that there is “significant parity of shipment quantities and values” (both in pieces and in sales). *See* Joint Request, at 11-12 and Exhibits 20-21. Upon review of the submitted information and material, we preliminarily find that Tradewinds Furniture has provided sufficient evidence in support of its claim that it is the successor-in-interest to Nanhai Jiantai. The name change from Nanhai Jiantai to Foshan Jiantai, Company A's acquisition of the majority of Foshan Jiantai's assets, the creation of Tradewinds Furniture by Company A, and Tradewinds Furniture's current operational control of the furniture production resulted in minimal changes. In their totality, we preliminarily find that Tradewinds Furniture's management, production facilities, supplier relationships and customer base remain essentially the same as that of Nanhai Jiantai. Based upon the above, we preliminarily determine that Tradewinds Furniture is the successor-in-interest to Nanhai Jiantai and, therefore, should be given the same antidumping duty treatment as Nanhai Jiantai. The cash deposit determination from this changed circumstances review will apply to all entries of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this changed circumstances review. *See Notice of Final Results of Antidumping Duty Changed Circumstances Review; Certain Forged Stainless Steel Flanges From India* , 71 FR 31156 (June 1, 2006). This cash deposit rate shall remain in effect until further notice. Tradewinds International Enterprise Ltd. In the Joint Request, Tradewinds Intl. claims that it is the successor-in-interest to Fortune Glory. Tradewinds Intl. states that “Fortune Glory continues to operate as the exporter for Tradewinds Furniture” and outlined its current functions and operations. *See* Joint Request, at 2; Questionnaire Response, at 3 and Exhibit 25. Tradewinds Intl. provided a flowchart that indicated board of director changes from Fortune Glory to Tradewinds Intl. *See* Questionnaire Response, at Exhibit 23; Supplemental Response, at Exhibit 28. Tradewinds Intl. elaborated on and provided various documentation on certain name changes, which resulted in the name Tradewinds Intl. *See* Joint Request, at 5 and Exhibit 9; Questionnaire Response, at 4 and Exhibit 26. Tradewinds Intl. also provided the business registration certificates for Fortune Glory and Tradewinds Intl. *See* Questionnaire Response, at 3-4 and Exhibits 24 and 27. Tradewinds Intl. claims that Fortune Glory will transfer its export functions to Tradewinds Intl. when it is named as the successor-in-interest to Fortune Glory, and that “{n}o structural, management, employee, supplier, customer, or other changes are anticipated as a result of the transfer.” *See* Questionnaire Response, at 4. Upon review of the submitted information and material, we preliminarily find that Tradewinds Intl. has failed to provide sufficient evidence in support of its claim that it is the successor-in-interest to Fortune Glory. Tradewinds Intl. admits that Fortune Glory remains the exporter for Tradewinds Furniture and has not transferred its export functions to Tradewinds Intl. The Department generally will consider the new company to be the successor to the predecessor if the resulting operations are essentially the same as those of the predecessor company. *See Stainless Steel Flanges From India* , 71 FR 31156. As Tradewinds Intl. has not yet taken over the export functions of Fortune Glory, its current operations are not essentially the same as those of Fortune Glory. While Tradewinds Intl. claims that no changes are anticipated to the structure, management, employees, suppliers, customers, or otherwise, such a claim is speculative at this time, and therefore premature. Based upon the above, we preliminarily determine that Tradewinds Intl. is not the successor-in-interest to Fortune Glory at this time and, therefore, should not be given the same antidumping duty treatment as Fortune Glory. Public Comment Interested parties are invited to submit case briefs on these preliminary results no later than seven days after publication of this notice. Rebuttal briefs, limited to arguments raised in the case briefs, may be filed no later than five days after the case brief deadline. Parties are requested to submit with their briefs:

(1)a statement of the issue, and

(2)a brief summary of the argument. Briefs must be served on interested parties in accordance with 19 C.F.R. 351.309. Any interested party may request a hearing within 20 days of publication of this notice. Any hearing, if requested, will be held no later than 25 days after publication of this notice, unless the Department alters this time limit, pursuant to 19 C.F.R. 351.310(d). In accordance with 19 C.F.R. 351.216(e), the Department intends to issue the final results of this changed circumstances review no later than 270 days after the date on which this review was initiated. This notice is issued and published in accordance with sections 751(b)(1) and 777(i)(1) of the Tariff Act of 1930, as amended, and 19 C.F.R. 351.216 and 19 C.F.R. 351.221(c)(3). Dated: July 23, 2007. David M. Spooner, Assistant Secretary for Import Administration. [FR Doc. E7-14668 Filed 7-27-07; 8:45 am] Billing Code: 3510-DS-S DEPARTMENT OF COMMERCE International Trade Administration Applications for Duty-Free Entry of Scientific Instruments Pursuant to Section 6(c) of the Educational, Scientific and Cultural Materials Importation Act of 1966 (Pub. L. 89-651, as amended by Pub. L. 106-36; 80 Stat. 897; 15 CFR part 301), we invite comments on the question of whether instruments of equivalent scientific value, for the purposes for which the instruments shown below are intended to be used, are being manufactured in the United States. Comments must comply with 15 CFR 301.5(a)(3) and

(4)of the regulations and be filed within 20 days with Statutory Import Programs Staff, U.S. Department of Commerce, Room 2104, 14th and Constitution Ave., NW., Washington, DC 20230. Applications may be examined between 8:30 a.m. and 5:00 p.m. in Room 2104, U.S. Department of Commerce. Docket Number: 07-041. Applicant: University of Georgia, Driftmier Engineering Center, Athens, GA. Instrument: Electron Microscope, Model Inspect F. Manufacturer: FEI Company, The Netherlands. Intended Use: The instrument is intended to be used to investigate the morphology, size and size distribution of various synthesized nanomaterials. Results will be used to optimize the growth conditions to achieve controlled growth of nanostructures with desired morphology, size and functionalities. Application accepted by Commissioner of Customs: June 29, 2007. Docket Number: 07-045. Applicant: Florida Fish and Wildlife Research Institute, Saint Petersburg, FL. Instrument: Electron Microscope, Model JEM-1400. Manufacturer: JEOL Ltd., Japan. Intended Use: The instrument is intended to be used to visualize the ultrastructure of various organisms to understand growth and disease processes. Examples include studies of: screening for viruses in sea grass, fish testis and ovarian development, termination of harmful algal blooms and the reproductive developmental processes in the blue crab and in clams. Application accepted by Commissioner of Customs: June 11, 2007. Docket Number: 07-046. Applicant: Howard Hughes Medical Institute, Chevy Chase, MD. Instrument: Electron Microscope, Model Tecnai G2 20 TWIN. Manufacturer: FEI Company, Czech Republic. Intended Use: The instrument is intended to be used initially for a large scale brain imaging effort based on thin sections of tissue from model organisms such as the rat, the fruit fly and the nematode. The objective is to provide complete brain circuitry information based on high resolution imaging of these organisms. Application accepted by Commissioner of Customs: July 16, 2007. Docket Number: 07-048. Applicant: The University of Michigan, Department of Materials Science and Engineering, Ann Arbor, MI. Instrument: Low Voltage Electron Microscope. Manufacturer: Delong Instruments, Czech Republic. Intended Use: The instrument is intended to be used for the design and optimization of materials that can be used to create a stable, sensitive interface between electrically active tissue and electronic devices and to characterize the thickness, morphology, crystallinity, and uniformity of coatings developed to accommodate the variations in mechanical properties, electrical activity, and bioactive response across the interface between a mechanical device and tissue. Application accepted by Commissioner of Customs: July 19, 2007. Docket Number: 07-042. Applicant: University of Arizona, Department of Physics, Tucson, AZ. Instrument: Low Temperature Ultra-high Vacuum Scanning Tunneling Microscope. Manufacturer: Omicron NanoTechnology GmbH, Germany. Intended Use: The instrument is intended to be used to study several low-dimensional materials including carbon nanotubes and semiconductor nanowires in order to:

(1)Correlate electrical properties with optical techniques to understand the role of excitons in the measured optical properties,

(2)Determine the limits to carbon nanotube device performance by measuring the scattering lengths which degrade their performance and

(3)Develop a fundamental understanding of low-dimensional materials in particular unique aspects of one-dimensional metals. The instrument must provide a temperature at the sample down to 5 K, cool down time to 5 K as low as 6 hours, with 15 hours between refills, Z-resolution to 0.01 nm and achievable vacuum to 10 to the 11th mbar with guaranteed atomic resolution in constant current and constant height on Au(111). Application accepted by Commissioner of Customs: June 29, 2007. Dated: July 25, 2007. Faye Robinson, Director, Statutory Import Programs Staff, Import Administration. [FR Doc. E7-14669 Filed 7-27-07; 8:45 am] BILLING CODE 3510-DS-P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration Availability of Seats for the Hawaiian Islands Humpback Whale National Marine Sanctuary Advisory Council AGENCY: National Marine Sanctuary Program (NMSP), National Ocean Service (NOS), National Oceanic and Atmospheric Administration, Department of Commerce (DOC). ACTION: Notice and request for applications. SUMMARY: The Hawaiian Islands Humpback Whale National Marine Sanctuary (HIHWNMS or Sanctuary) is seeking applicants for both primary and alternate members of the following seats on its Sanctuary Advisory Council (Council): Education, Fishing, Hawaii County, Honolulu County, Kauai County, Maui County, Native Hawaiian, and Research. Applicants are chosen based upon their particular expertise and experience in relation to the seat for which they are applying; community and professional affiliations; philosphy regarding the protection and management of marine resources; and possibly the length of residence in the are affected by the Sanctuary. Applicants who are chosen as members should expect to serve 2-year terms, pursuant to the Council's Charter. DATES: Applications are due by August 31, 2006. ADDRESSES: Application kits may be obtained from Mary Grady, 6600 Kalanianaole Hwy, Suite 301, Honolulu, HI 96825 or *Mary.Grady@noaa.gov.* Completed applications should be sent to the same address. Applications are also available online at: *http://hawaiihumpbackwhale.noaa.gov.* FOR FURTHER INFORMATION CONTACT: Naomi McIntosh, 6600 Kalanianaole Hwy, Suite 301, Honolulu, HI 96825 or *Naomi.McIntosh@noaa.gov* or 808.397.2651. SUPPLEMENTARY INFORMATION: The HIHWNMS Advisory Council was established in March 1996 to assure continued public participation in the management of the Sanctuary. Since its establishment, the Council has played a vital role in the decisions affecting the Sanctuary surrounding the main Hawaiian Islands. The Council's twenty-four voting members represent a variety of local user groups, as well as the general public, plus ten local, state and federal governmental jurisdictions. The Council is supported by three committees: a Research Committee chaired by the Research representative, and Education Committee chaired by the Education representative, and a Conservation Committee chaired by the Conservation representative, each respectively dealing with matters concerning research, education and resource protection. The Council represents the coordination link between the Sanctuary and the state and federal management agencies, user groups, researchers, educators, policy makers, and other various groups that help to focus efforts and attention on the humpback whale and its habitat around the main Hawaiian Islands. The Council functions in an advisory capacity to the Sanctuary Manager and is instrumental in helping to develop policies and program goals, and to identify education, outreach, research, long-term monitoring, resource protection and revenue enhancement priorities. The Council works in concert with the Sanctuary Manager by keeping him or her informed about issues of concern throughout the Sanctuary, offering recommendations on specific issues, and aiding the Manager in achieving the goals of the Sanctuary program within the context of Hawaii's marine programs and policies. Authority: 16 U.S.C. 1431, *et seq.* (Federal Domestic Assistance Catalog Number 11.429 Marine Sanctuary Program) Dated: July 19, 2007. Daniel J. Basta, Director, National Marine Sanctuary Program, National Ocean Services, National Oceanic and Atmospheric Administration. [FR Doc. 07-3680 Filed 7-27-07; 8:45 am]

Connectionstraces to 47

Traces to 47 documents