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Code · REGISTER · 2007-08-22 · Delaware River Basin Commission · Proposed Rules

Proposed Rules. Proposed rule; notice of public hearing

22,578 words·~103 min read·/register/2007/08/22/07-4077

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BILLING CODE 4910-13-M DELAWARE RIVER BASIN COMMISSION 18 CFR Part 410 Proposed Temporary Amendments to the Water Quality Regulations, Water Code and Comprehensive Plan To Extend the Designation of the Lower Delaware River as a Special Protection Water AGENCY: Delaware River Basin Commission. ACTION: Proposed rule; notice of public hearing. SUMMARY: The Delaware River Basin Commission (“Commission” or DRBC) will hold a public hearing to receive comments on a proposed amendment to the Commission's *Water Quality Regulations, Water Code,* and *Comprehensive Plan* to extend through May 15, 2008 the temporary classification of the Lower Delaware River as Significant Resource Waters (SRW).
Permanent classification is anticipated following an additional notice and comment rulemaking that is expected to begin shortly. Extending the temporary classification will help to protect the exceptional scenic, recreational and water quality values of the Lower Delaware from degradation pending completion of that process. DATES: The public hearing will take place on Wednesday, September 26, 2007 during the Commission's regular business meeting, beginning at 1:30 p.m. Written comments will be accepted through the close of the public hearing; however earlier submittals would be appreciated.
Persons wishing to testify are asked to register in advance with the Commission Secretary, at
(609)883-9500 ext. 203. ADDRESSES: The public hearing will take place at the Commission's office building, located at 25 State Police Drive, West Trenton, New Jersey. Directions are available on the Commission's Web site, *http://www.drbc.net.* Please do not rely upon MapQuest or other Internet mapping services for driving directions, as they may not provide accurate directions to the DRBC. Written comments may be submitted by e-mail to *paula.schmitt@drbc.state.nj.us;* by U.S. Mail to Commission Secretary, DRBC, P.O. Box 7360, West Trenton, NJ 08628-0360; or by fax to 609-883-9522. In all cases, the commenter's name, affiliation if any, and address should be provided in the comment document, and “Lower Delaware SPW Extension” should appear in the subject line. FOR FURTHER INFORMATION CONTACT: For further information, please contact Pamela M. Bush, Commission Secretary and Assistant General Counsel, Delaware River Basin Commission, at 609-883, 9500 ext. 203. SUPPLEMENTARY INFORMATION: The Lower Delaware extends from the southern boundary of the Delaware Water Gap National Recreation Area at River Mile (“RM”) 209.4 to the head of tide at Trenton, New Jersey, RM 144.4. The effect of temporary classification of the Lower Delaware as SRW has been to make this portion of the main stem Delaware River and its drainage area subject to all applicable provisions of the Commission's Special Protection Waters regulations, Section 3.10.3 A.2 of the Commission's *Water Code* and *Water Quality Regulations,* incorporated by reference at 18 CFR Part 410, except those that depend for implementation upon the use of numeric values for existing water quality. Key provisions of the Special Protection Waters Regulations that will continue to apply within the drainage area to the Lower Delaware River if the proposed extension of the SRW classification is approved include but are not limited to the following: Subsections 3.10.3 A.2.c.1 through 3, in part requiring that no new or expanded wastewater discharges may be permitted in waters classified as Special Protection Waters until all non-discharge-load reduction alternatives have been fully evaluated and rejected because of technical or financial infeasibility; subsections 3.10.3 A.2.d.1. through 7., setting forth requirements for wastewater treatment facilities; and subsections 3.10.3 A.2.e.1. and 2., conditioning project approval on the existence of an approved Non-Point Source Pollution Control Plan for the project area and requiring that approval of a new or expanded withdrawal and/or wastewater discharge project be subject to the condition that new connections to the project system be limited to service areas regulated by a non-point source pollution control plan approved by the Commission. Temporary SRW classification of the Lower Delaware was enacted by Commission Resolution No. 2005-2 on January 19, 2005 and initially was due to expire on September 30, 2005. By Resolution No. 2005-15 approved on September 26, 2005, the temporary classification was extended through September 30, 2006 in order to allow time for the Commission to evaluate implementation options and establish numeric values for existing water quality. By Resolution No. 2006-22 on September 27, 2006, the Commission extended temporary designation a second time, through September 30, 2007, because it had not completely resolved implementation issues. The Commission has nearly resolved all remaining issues with respect to implementation, but in order to allow time to complete this process and conduct notice and comment rulemaking on permanent designation of the Lower Delaware as Special Protection Waters, the Commission is proposing to extend the temporary classification for approximately eight months more. If approved, the classification would thus expire on May 15, 2008 unless the Commission should either permanently classify the Lower Delaware River or once again extend the temporary classification by rule amendment prior to that date. Previous **Federal Register** notices concerning designation of the Lower Delaware River as Special Protection Waters include notices published on September 23, 2004 (69 FR 57008) (proposed Special Protection Waters designation), August 22, 2005 (70 FR 48923) (proposed extension through September 30, 2006), and August 21, 2006 (71 FR 48497) (proposed extension through September 30, 2007). The proposed and final versions of the initial designation, approved by Resolution No. 2005-2, and the subsequent extensions approved by Resolutions Nos. 2005-15 (extension through September 30, 2006) and 2006-22 (extension through September 30, 2007) were also published on the Commission's Web site, *http://www.drbc.net.* Resolution No. 2005-2, temporarily amending the *Water Quality Regulations, Water Code,* and *Comprehensive Plan* of the Commission by designating the Lower Delaware River a Special Protection Water, and Resolutions Nos. 2005-15 and 2006-22, extending the temporary amendment approved by Resolution No. 2005-2, are available on the Commission's Web site at *http://www.drbc.net* or upon request from the Delaware River Basin Commission, P.O. Box 7360, West Trenton, NJ 08628-0360. Maps depicting the designated area are also available on the Web site. Dated: August 16, 2007. Pamela M. Bush, Commission Secretary. [FR Doc. E7-16549 Filed 8-21-07; 8:45 am] BILLING CODE 6360-01-P DEPARTMENT OF THE TREASURY 26 CFR Part 1 [REG-143397-05] RIN 1545-BE99 Partner's Distributive Share AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Notice of proposed regulations and notice of public hearing. SUMMARY: This document contains regulations that provide rules concerning the application of sections 704(c)(1)(B) and 737 to distributions of property after two partnerships engage in an assets-over merger. The proposed regulations affect partnerships and their partners. This document also provides a notice of public hearing on these proposed regulations. DATES: Written or electronic comments must be received by November 20, 2007. Outlines of the topic to be discussed at the public hearing scheduled for December 5, 2007 at 10 a.m. must be received by November 21, 2007. ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-143397-05), room 5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday, between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-143397-05), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC or sent electronically via the Federal eRulemaking Portal at *http://www.regulations.gov* (IRS REG-143397-05). The public hearing will be held in the Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW., Washington, DC. FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Jason Smyczek or Laura Fields
(202)622-3050, concerning submissions of comments, the hearing, and/or to be placed on the building access list to attend the hearing, Richard Hurst, *Richard.A.Hurst@irscounsel.treas.gov* ,
(202)622-7180 (not toll-free numbers). SUPPLEMENTARY INFORMATION: Background Section 704(c)(1)(B) provides that a partner that contributes section 704(c) property to a partnership must recognize gain or loss on the distribution of such property to another partner within seven years of its contribution to the partnership in an amount equal to the gain or loss that would have been allocated to such partner under section 704(c) if the distributed property had been sold by the partnership to the distributee partner for its fair market value at the time of the distribution. Section 737(a) provides that a partner that contributes section 704(c) property to the partnership and then receives a distribution of property (other than money) within seven years of its contribution must recognize gain in an amount equal to the lesser of
(1)The excess (if any) of
(A)the fair market value of property (other than money) received in the distribution over
(B)the adjusted basis of the partner's interest in the partnership immediately before the distribution reduced (but not below zero) by the amount of money received in the distribution, or
(2)the net precontribution gain of the partner. Section 737(b) provides that for purposes of section 737, the term “net precontribution gain” means the net gain (if any) which would have been recognized by the distributee partner under section 704(c)(1)(B) if all property which
(1)Had been contributed to the partnership by the distributee partner within seven years of the distribution, and
(2)is held by the partnership immediately before the distribution, had been distributed by the partnership to another partner. Rev. Rul. 2004-43, 2004-1 CB 842, ( *see* § 601.601(d)(2) of this chapter) issued on April 12, 2004, addressed the application of sections 704(c)(1)(B) and 737 in an assets-over partnership merger described in § 1.708-1(c)(3). Rev. Rul. 2004-43 held that section 704(c)(1)(B) applies to newly created section 704(c) gain or loss in property contributed by the transferor partnership to the transferee partnership in an assets-over partnership merger. The revenue ruling also held that for purposes of section 737(b), net precontribution gain includes newly created section 704(c) gain or loss in property contributed by the transferor partnership to the transferee partnership in an assets-over partnership merger. In addition, the revenue ruling held that section 704(c)(1)(B) will not apply to, and, for purposes of section 737, net precontribution gain will not include, reverse section 704(c) gain or loss resulting from a revaluation of property of the transferee partnership. Some commentators argued that Rev. Rul. 2004-43 was not consistent with the existing regulations under sections 704(c)(1)(B) and 737, and that the conclusions contained in the ruling should not be applied retroactively. In response to these comments, the Treasury Department and the IRS issued Notice 2005-15, 2005-7 IRB 527, ( *see* § 601.601(d)(2) of this chapter) indicating their intent to issue regulations under sections 704(c)(1)(B) and 737 implementing the principles of the ruling, and issued Rev. Rul. 2005-10, 2005-7 IRB 492 ( *see* § 601.601(d)(2) of this chapter) officially revoking Rev. Rul. 2004-43. The Notice provided that any such regulations would be effective for distributions made after January 19, 2005. Explanation of Provisions A. Assets-Over Partnership Mergers These proposed regulations implement the principles articulated in Rev. Rul. 2004-43. The proposed regulations under § 1.704-4(c)(4) and § 1.737-2(b) provide that in an assets-over merger, sections 704(c)(1)(B) and 737 do not apply to the transfer by a partnership (the transferor partnership) of all of its assets and liabilities to another partnership (the transferee partnership), followed by a distribution of the interests in the transferee partnership in liquidation of the transferor partnership as part of the same plan or arrangement. The proposed regulations, however, provide that section 704(c)(1)(B) applies to a subsequent distribution by the transferee partnership of section 704(c) property contributed in the assets-over merger by the transferor partnership to the transferee partnership. The proposed regulations also provide that section 737 applies when a partner of the transferor partnership receives a subsequent distribution of property (other than money) from the transferee partnership. The proposed regulations provide that for property contributed to the transferor partnership (original contribution), the amount of original section 704(c) gain or loss is the difference between the property's fair market value and the contributing partner's adjusted basis at the time of contribution to the extent such difference has not been eliminated by section 704(c) allocations, prior revaluations, or in connection with the merger. In the case of property contributed with original section 704(c) loss, section 704(c)(1)(C) which was added by the American Jobs Creation Act of 2004 provides special rules for determining the basis of the property contributed. The Treasury Department and IRS are currently developing guidance that will implement the provisions of section 704(c)(1)(C). Thus, the proposed regulations do not address the impact of section 704(c)(1)(C) in applying these rules. However, when finalized, these regulations will clarify the application of section 704(c)(1)(C) to these rules. The proposed regulations provide that the seven year period will not restart with respect to the original section 704(c) gain or loss as a result of the merger. Accordingly, a subsequent distribution by the transferee partnership of property with original section 704(c) gain or loss is subject to sections 704(c)(1)(B) and 737 if the distribution occurs within seven years of the contribution of the property to the transferor partnership (original contribution). However, with respect to new section 704(c) gain or loss, the regulations provide that the seven-year period in sections 704(c)(1)(B) and 737 begins on the date of merger. Thus, a subsequent distribution by the transferee partnership of property with new section 704(c) gain or loss is subject to sections 704(c)(1)(B) and 737 if the distribution occurs within seven years of the merger. The regulations further provide that no original section 704(c) gain or loss will be recognized under section 704(c)(1)(B) or section 737 if property that was originally contributed to the transferor partnership is distributed to the original contributor. If property has new section 704(c) gain or loss, then a subsequent distribution of such property within seven years of the merger to one of the former partners of the transferor partnership (former partner) is subject to section 704(c)(1)(B) only to the extent of the other former partners' shares of such gain or loss. New section 704(c) gain or loss shall be allocated among the partners of the transferor partnership in a manner consistent with the principles of §§ 1.704-3(a)(7) and newly designated 1.704-3(a)(10) (previously § 1.704-3(a)(9)). In addition, the partners of the transferor partnership are deemed to have contributed an undivided interest in the assets of the partnership. The proposed regulations provide that the determination of the partners' undivided interest for this purpose shall be made by the transferor partnership using any reasonable method. The Treasury Department and the IRS request comments on methods that should be considered reasonable for this purpose. The proposed regulations also provide that if less than all of a section 704(c) property is distributed, then a proportionate amount of original and new section 704(c) gain or loss must be recognized under section 704(c)(1)(B). Similarly, if gain is required to be recognized under section 737, a proportionate amount of original and new section 704(c) gain must be recognized under section 737. Each partner must recognize its respective proportionate share of gain or loss required to be recognized. The proposed regulations further provide a subsequent merger rule. This rule provides that if the transferee partnership is subsequently merged (a subsequent merger) the new section 704(c) gain or loss that resulted from the original merger shall be subject to section 704(c)(1)(B) for seven years from the time of the original merger and the new section 704(c) gain or loss that resulted from the subsequent merger will be subject to section 704(c)(1)(B) for seven years from the time of the subsequent merger. In addition, the proposed regulations provide an identical ownership and a de minimis change in ownership exception to sections 704(c)(1)(B) and 737 with regard to assets-over partnership mergers. Under the identical ownership exception, section 704(c)(1)(B) will not apply to, and section 737 net precontribution gain will not include, new section 704(c) gain or loss in any property contributed in an assets-over partnership merger where the ownership of both partnerships is identical. In order for merging partnerships to qualify for the identical ownership exception, each partner must own identical interests in book capital and in each item of income, gain, loss, deductions and credit, and identical shares of distributions and liabilities in each of the transferor and transferee partnerships. Where ownership of both partnerships is identical, the merger more accurately represents a change in form, and should have no substantive tax consequences. The same principles apply where the change in ownership is de minimis. For purposes of the de minimis exception, a difference in ownership is de minimis if ninety seven percent of the interests in book capital, items of income, gain, loss, deduction and credit and share of distributions and liabilities of the transferor partnership and transferee partnership are owned by the same owners in the same proportions. Proposed regulations under § 1.704-3(c)(4)(iii) provide that taxpayers may distinguish between the original and new portions of section 704(c) gain or loss. The proposed regulations provide that the transferee partnership may continue to use the section 704(c) allocation method adopted by the transferor partnership with respect to original section 704(c) property, or it may adopt another reasonable section 704(c) method. In addition, the transferee partnership may adopt any reasonable section 704(c) method with respect to new section 704(c) gain or loss. With respect to both the original and the new section 704(c) gain or loss, the transferee partnership must use a reasonable method that is consistent with the purpose of sections 704(b) and 704(c). B. Miscellaneous Provisions As part of this proposed regulation, the Treasury Department and the IRS are also making certain regulatory changes to reflect statutory changes that occurred as part of the Taxpayer Relief Act of 1997 (Public Law 105-34). Effective June 8, 1997, Congress lengthened the period of time from five years to seven for accounting for section 704(c) gain or loss with respect to distributions. Consistent with the statutory changes, various provisions in § 1.704-4 and § 1.737-1 have been amended. Effective Dates Except as otherwise provided, these proposed regulations will be effective for any distributions of property after January 19, 2005, if such property was contributed in an assets-over merger after May 3, 2004. Provisions relating to the change in the regulations in § 1.704-4 and § 1.737-1 from the previous five-year rule to the seven-year rule will be effective August 22, 2007. 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 also 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, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Comments and 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 IRS request comments on the clarity of the proposed rules and how they may be made easier to understand. All comments will be available for public inspection and copying. A public hearing has been scheduled for December 5, 2007, 10 a.m. in the Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW., Washington, DC. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 15 minutes before the hearing starts. For information about having your name placed on the building access list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section of this preamble. The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments at the hearing must submit written or electronic comments by November 20, 2007 and an outline of the topics to be discussed and time to be devoted to each topic (a signed original and eight
(8)copies) by November 21, 2007. A period of 10 minutes will be allotted to each person for making comments. An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing. Drafting Information The principal authors of these proposed regulations are Jason Smyczek and Laura Fields, Office of the Associate Chief Counsel (Passthroughs and Special Industries), IRS. However, other personnel from the IRS and the Treasury Department participated in their development. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. 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 * * * Section 1.704-3 also issued under 26 U.S.C. 704. * * * **Par. 2.** Section 1.704-3 is amended as follows: 1. Paragraphs (a)(9) through (a)(12) are redesignated as paragraphs (a)(10) through (a)(13) respectively. 2. New paragraph (a)(9) is added. 3. Paragraph
(f)is amended by revising the paragraph heading and adding one additional sentence at the end of the paragraph. The revisions and additions read as follows: § 1.704-3 Contributed Property.
(a)* * *
(9)*Section 704(c) property transferred in an assets-over merger.* Assets transferred to a transferee partnership from the transferor partnership in an assets-over merger as defined in § 1.708-1(c)(3) (the transferor partnership being the partnership considered to have been terminated under § 1.708-1(c)(1) and the transferee partnership being the partnership considered to be the resulting partnership under § 1.708-(1)(c)(1)) may have both original section 704(c) gain or loss (see § 1.704-4(c)(4)(ii)(A) for the definition of original section 704(c) gain or loss) and new section 704(c) gain or loss. The transferee partnership may continue to use the section 704(c) allocation method adopted by the transferor partnership with respect to section 704(c) property originally contributed to the transferor partnership or it may adopt another reasonable section 704(c) method. Also, the transferee partnership may continue to use the section 704(c) allocation method adopted by the transferor partnership with respect to new section 704(c) gain or loss to account for differences between book value and adjusted tax basis as a result of a prior revaluation. In addition, the transferee partnership may adopt any reasonable section 704(c) method with respect to new section 704(c) gain or loss in excess of the amount of new section 704(c) gain or loss described in the prior sentence. With respect to both original and new section 704(c) gain or loss, the transferee partnership must use a reasonable method that is consistent with the purpose of sections 704(b) and 704(c).
(f)*Effective/applicability date.* * * * Paragraph (a)(9) is effective for any distribution of property after January 19, 2005, if such property was contributed in a merger using the assets-over form after May 3, 2004. **Par. 3.** Section 1.704-4 is amended as follows: 1. Paragraph (a)(1) is amended by removing the phrase “five years” and adding in its place the phrase “seven years.” 2. Paragraph (a)(4)(i) is amended by removing the phrase “five-year” and adding in its place “seven-year.” 3. Paragraph (a)(4)(ii) is amended by removing the phrase “five-year” and adding in its place the phrase “seven-year.” 4. Paragraphs (c)(4)(i) and (c)(4)(ii) are added. 5. Paragraph (c)(7) is redesignated as paragraph (c)(8). 6. A new paragraph (c)(7) is added. 7. Paragraphs (f)(2), Examples
(1)and
(2)are amended by removing the language “five-year” and replacing it with the language “seven-year” wherever it appears throughout both examples. 8. Paragraph
(g)is amended by revising the paragraph heading and adding two sentences at the end of the paragraph. The revisions and additions read as follows: § 1.704-4 Distribution of contributed property.
(c)* * *
(4)*Complete transfer to another partnership (Assets-Over Merger).* —
(i)*In general.* Section 704(c)(1)(B) and this section do not apply to the transfer in an assets-over merger as defined in § 1.708-1(c)(3) by a partnership (the transferor partnership, which is considered to be the terminated partnership as a result of the merger) of all of its assets and liabilities to another partnership (the transferee partnership, which is considered to be the resulting partnership after the merger), followed by a distribution of the interest in the transferee partnership in liquidation of the transferor partnership as part of the same plan or arrangement.
(ii)*Subsequent distributions.* Except as provided in paragraph (c)(4)(E) below, section 704(c)(1)(B) and this section apply to the subsequent distribution by the transferee partnership of section 704(c) property contributed by the transferor partnership to the transferee partnership in an assets-over merger, as provided in paragraphs (c)(4)(ii)(A) through
(D)of this section.
(A)*Original section 704(c) gain or loss.* The seven-year period in section 704(c)(1)(B) does not restart with respect to original section 704(c) gain or loss as a result of the transfer of the section 704(c) property to the transferee partnership. For purposes of this paragraph (c)(4)(ii)(A), the amount of original section 704(c) gain or loss is the difference between the property's fair market value and the contributing partner's adjusted tax basis, at the time of contribution, to the extent such difference has not been eliminated by section 704(c) allocations, prior revaluations, or in connection with the merger. See §§ 1.704-4(a) and
(b)for post-merger distributions of property contributed to the transferee partnership prior to the merger. A subsequent distribution by the transferee partnership of property with original section 704(c) gain or loss to a partner other than the partner that contributed such property to the transferor partnership is subject to section 704(c)(1)(B) if the distribution occurs within seven years of the contribution of the property to the transferor partnership. See § 1.704-4(c)(4)(ii)(B) for rules relating to the distribution of property with new section 704(c) gain or loss. See § 1.737-2(b)(1)(ii)(A) for a similar rule in the context of section 737.
(B)*New section 704(c) gain or loss.* A subsequent distribution of property with new section 704(c) gain or loss by the transferee partnership to a partner other than the contributing partner is subject to section 704(c)(1)(B) if the distribution occurs within seven years of the contribution of the property to the transferee partnership by the transferor partnership. For these purposes, a partner of the transferor partnership is deemed to have contributed to the transferee partnership an undivided interest in the property of the transferor partnership. The determination of the partners' undivided interest for this purpose shall be determined by the transferor partnership using any reasonable method. New section 704(c) gain or loss shall be allocated among the partners of the transferor partnership in a manner consistent with the principles of §§ 1.704-3(a)(7) and 1.704-3(a)(10). See § 1.737-2(d)(4) for a similar rule in the context of section 737.
(C)*Ordering Rule.* —
(1)*Post-merger partial recognition.* For purposes of this section, if less than all of a section 704(c) property is distributed, then a proportionate amount of original and new section 704(c) gain or loss must be recognized.
(2)*Post-merger revaluation.* Revaluations after a merger that reflect a reduction in the amount of built-in gain or loss inherent in property will reduce new section 704(c) gain or loss prior to reducing original section 704(c) gain or loss.
(D)*Subsequent Mergers.* If the transferee partnership (first transferee partnership) is subsequently merged into another partnership (new transferee partnership) the new section 704(c) gain or loss that resulted from the merger of the transferor partnership into the first transferee partnership shall be subject to section 704(c)(1)(B) for seven years from the time of the contribution by the transferor partnership to the first transferee partnership (original merger) and new section 704(c) gain or loss that resulted from the merger of the first transferee into the new transferee (subsequent merger) shall be subject to section 704(c)(1)(B) for seven years from the time of the subsequent merger. See § 1.737-2(b)(1)(ii)(D) for a similar rule in the context of section 737.
(E)*Identical Ownership or De Minimis Change in Ownership Exception.* Section 704(c)(1)(B) and this section do not apply to new section 704(c) gain or loss in property transferred by the transferor partnership to the transferee partnership if both the transferor partnership and the transferee partnership are owned by the same owners in the same proportions or the difference in ownership is *de minimis* . The transferor partnership and the transferee partnership are owned by the same owners in the same proportions if each partner owns identical interests in book capital and in each item of income, gain, loss, deduction, and credit, and identical shares of distributions and liabilities in each of the transferor and transferee partnerships. A difference in ownership is *de minimis* if ninety seven percent of the interests in book capital and in each item of income, gain, loss, deduction and credit and shares of distributions, and liabilities of the transferor partnership and transferee partnership are owned by the same owners in the same proportions.
(F)*Examples.* The following examples illustrate the rules of paragraph (c)(4)(ii) of this section. Example (1). New section 704(c) gain.
(i)*Facts.* On January 1, 2005, A contributes Asset 1, with a basis of $200x and a fair market value of $300x, to partnership PRS1 in exchange for a 50 percent interest. On the same date, B contributes $300x of cash to PRS1 in exchange for a 50 percent interest. Also on January 1, 2005, C contributes Asset 2, with a basis of $100x and a fair market value of $200x, to partnership PRS2 in exchange for a 50 percent interest. D contributes $200x of cash to PRS2 in exchange for a 50 percent interest. On January 1, 2008, PRS1 and PRS2 undertake an assets-over partnership merger in which PRS1 is the continuing partnership and PRS2 is the terminating partnership for both state law and federal tax purposes. At the time of the merger, PRS1's only assets are Asset 1, with a fair market value of $900x, and $300x in cash. PRS2's only assets are Asset 2, with a fair market value of $600x, and $200x in cash. After the merger, the partners have book capital and profits interests in PRS1 as follows: A, 30 percent; B, 30 percent; C, 20 percent; and D, 20 percent. PRS1 and PRS2 both have provisions in their respective partnership agreements requiring the revaluation of partnership property upon entry of a new partner. PRS1 would not be treated as an investment company (within the meaning of section 351) if it were incorporated. Neither partnership holds any unrealized receivables or inventory for purposes of section 751. In addition, neither partnership has a section 754 election in place. Asset 1 and Asset 2 are nondepreciable capital assets. On January 1, 2013, PRS1 has the same assets that it had after the merger. Each asset has the same value that it had at the time of the merger. On this date, PRS1 distributes Asset 2 to A in liquidation of A's interest.
(ii)*Analysis.* On the date of the merger of PRS2 into PRS1, the fair market value of Asset 2 ($600x) exceeded its adjusted tax basis ($100x). Thus, pursuant to § 1.704-4(c)(4)(ii)(A), when Asset 2 was contributed to PRS1 in the merger, it was section 704(c) gain property. The total amount of the section 704(c) gain was $500x ($600x (fair market value)−$100x (adjusted basis)). The amount of original section 704(c) gain attributable to Asset 2 equals $100x, the difference between its fair market value ($200x) and adjusted tax basis ($100x) upon contribution to PRS2 by C. The amount of new section 704(c) gain attributable to Asset 2 equals $400x, the total amount of section 704(c) gain ($500x) less the amount of the original section 704(c) gain ($100x). The distribution of Asset 2 to A occurs more than seven years after the contribution by C of Asset 2 to PRS2. Therefore, pursuant to § 1.704-4(c)(4)(ii)(A), section 704(c)(1)(B) does not apply to the $100x of original section 704(c) gain. The distribution of Asset 2 to A, however, occurs within seven years of the contribution in the merger of Asset 2 to PRS1 by PRS2. Pursuant to § 1.704-4(c)(4)(ii)(B), section 704(c)(1)(B) applies to the new section 704(c) gain. As the transferees of PRS2's partnership interest in PRS1, C and D succeed to one-half of the $400x of the new section 704(c) gain created by the merger. Thus, as a result of the distribution of Asset 2 to A within seven years of the merger, C and D are required to recognize $200x of gain each. See § 1.737-2(b)(1)(ii)(F), *Example (1)* for analysis of a similar example under section 737. Example (2). Revaluation gain and merger gain.
(i)*Facts.* The facts are the same as *Example (1),* except that during 2005, PRS2 admitted E as a new partner in PRS2 at a time when the fair market value of Asset 2 was $300x and PRS2's only other asset was cash of $200X. In exchange for a contribution of cash of $250x, E was admitted as a one-third partner in PRS2. In accordance with the terms of PRS2's partnership agreement, the partnership revalued its assets pursuant to § 1.704-1(b)(2)(iv)(f) upon admission of E so that the unrealized gain of $100X attributable to Asset 2 was allocated equally between C and D, or $50X each. On January 1, 2008, PRS2 merges into PRS1. At the time of the merger, PRS1's only assets are Asset 1, with a fair market value of $550x, and $300x in cash. PRS2's only assets are Asset 2, with a fair market value of $400x, and $450x in cash. After the merger, the partners have book capital and profits and loss interests in PRS1 as follows: A, 25%; B, 25%; C, 16.67%; D, 16.67% and E, 16.67%. On January 1, 2011, Asset 2 is distributed to A when its value is still $400x.
(ii)*Analysis.* On the date of the merger of PRS2 into PRS1, the fair market value of Asset 2 ($400x) exceeded its adjusted tax basis ($100x). Thus, when Asset 2 was contributed to PRS1 in the merger, it was section 704(c) gain property. The total amount of the section 704(c) gain was $300x ($400x (fair market value)−$100x (adjusted basis)). The amount of the original section 704(c) gain attributable to Asset 2 equals $100x, the difference between its fair market value of $200x and adjusted tax basis $100x upon contribution to PRS2 by C. The amount of the new section 704(c) gain attributable to Asset 2 equals $200x, the total section 704(c) gain ($300x) less the amount of the original section 704(c) gain ($100x). The distribution of Asset 2 to A occurs within seven years after the contribution by C to PRS2. Therefore, pursuant to § 1.704-4(c)(4)(ii)(A), section 704(c)(1)(B) applies to the original section 704(c) gain. The distribution of Asset 2 to A also occurs within seven years of the contribution of Asset 2 to PRS1 by PRS2. Pursuant to § 1.704-4(c)(4)(ii)(B), section 704(c)(1)(B) applies to the new section 704(c) gain. As the transferees of PRS2's partnership interest in PRS1, C and D each succeed to $50x of new section 704(c) gain as a result of the revaluation of Asset 2 upon admission of E as a partner. Moreover, C, D and E each succeed to $33.33x of new section 704(c) gain as a result of the merger. C also has $100 of original section 704(c) gain as a result of the original contribution of Asset 2 to PRS2. Thus, as a result of the distribution of Asset 2 to A within seven years of the merger, C, D and E are each required to recognize gain. C will recognize a total of $183.33x of gain ($100x of original section 704(c) gain and $83.33x of new section 704(c) gain). D will recognize a total of $83.33x of gain (all new section 704(c) gain) and E will recognize $33.33x of gain (all new section 704(c) gain). See § 1.737-2(b)(1)(ii)(F), *Example (2)* for a similar example under section 737. Example (3). Revaluation loss and merger gain.
(i)*Facts.* The facts are the same as *Example (1)* except that during 2005, PRS2 admitted E as a new partner in PRS2 at a time when the fair market value of Asset 2 was $150x and PRS2's only other asset was cash of $200x. In exchange for a contribution of cash of $175x, E was admitted as a one-third partner in PRS2. In accordance with the terms of PRS2's partnership agreement, the partnership revalued its assets upon admission of E so that the unrealized loss of $50x attributable to Asset 2 was allocated equally between C and D, or $25x each. On January 1, 2008, PRS2 merges into PRS1. At the time of the merger, PRS1's only assets are Asset 1, with a fair market value of $900x, and $300x in cash. PRS2's only assets are Asset 2, with a fair market value of $600x, and $375x in cash. After the merger, the partners have book capital and profits and loss interests in PRS1 as follows: A, 27.5%; B, 27.5%; C, 15%; D, 15% and E, 15%. On January 1, 2013, Asset 2 is distributed to A when its value is still $600.
(ii)*Analysis.* On the date of the merger of PRS2 into PRS1, the fair market value of Asset 2 ($600x) exceeded its adjusted tax basis ($100x). Thus, when Asset 2 was contributed to PRS1 in the merger, it was section 704(c) gain property. The total amount of the section 704(c) gain was $500x ($600x (fair market value)−100x (adjusted basis)). The amount of the original section 704(c) gain attributable to Asset 2 equals $50x, the difference between its fair market value ($200x) and adjusted tax basis ($100x) upon contribution to PRS2 by C, less the unrealized loss ($50X) attributable to the revaluation of PRS2 on the admission of E as a partner in PRS2. The amount of the new section 704(c) gain attributable to Asset 2 equals $450x, the total section 704(c) gain ($500x) less the amount of the original section 704(c) gain ($50x). The distribution of Asset 2 to A occurs more than seven years after the contribution by C to PRS2. Therefore, pursuant to § 1.704-4(c)(4)(ii)(A), section 704(c)(1)(B) does not apply to the original section 704(c) gain. The distribution of Asset 2 to A, however, occurs within seven years of the contribution of Asset 2 to PRS1 and PRS2. Pursuant to § 1.704-4(c)(4)(ii)(B), section 704(c)(1)(B) applies to the new section 704(c) gain. As the transferees of PRS2's partnership interest in PRS1, C, D and E each succeed to $150 of new section 704(c) gain. Thus, as a result of the distribution of Asset 2 to A within seven years of the merger, C, D and E are each required to recognize $150 of gain. Example (4). Reverse section 704(c) gain.
(i)*Facts.* The facts are the same as *Example (1),* except that on January 1, 2013, PRS1 distributes Asset 1 to C in liquidation of C's interest in PRS1.
(ii)*Analysis.* The distribution of Asset 1 to C occurs more than seven years after the contribution of Asset 1 to PRS1. Thus, pursuant to § 1.704-4(c)(4)(ii)(A), section 704(c)(1)(B) does not apply to the original section 704(c) gain. Pursuant to § 1.704-4(c)(7), section 704(c)(1)(B) does not apply to reverse section 704(c) gain in Asset 1 resulting from a revaluation of PRS1's partnership property at the time of the merger. Accordingly, neither A nor B will recognize gain under section 704(c)(1)(B) as a result of the distribution of Asset 1 to C. See § 1.737-2(b)(1)(ii)(F), *Example (4)* for a similar example under section 737. Example (5). Identical ownership exception.
(i)*Facts.* In 1990, A, an individual, and B, a subchapter C corporation, formed PRS1, a partnership. A owned 75 percent of the interests in the book capital (as determined for purposes of § 1.704-1(b)(2)(iv)), profits, losses, distributions, and liabilities (under section 752) of PRS1. B owned the remaining 25 percent interest in the book capital, profits, losses, distributions, and liabilities of PRS1. In the same year, A and B also formed another partnership, PRS2, with A owning 75 percent of the interests in the book capital, profits, losses, distributions, and liabilities of PRS2 and B owning the remaining 25 percent of the book capital, profits, losses, distributions, and liabilities. Upon formation of the partnerships, A contributed the Asset X to PRS1 and Asset Y to PRS2 and B contributed cash. Both Assets X and Y had section 704(c) built-in gain at the time of contribution to the partnerships.
(ii)In January 2005, PRS1 is merged into PRS2 in an assets-over merger in which PRS1 is the terminating partnership and PRS2 as the continuing partnership for both state law and federal income tax purposes. At the time of the merger, both Asset X and Y had increased in value from the time they were contributed to PRS1 and PRS2, respectively. As a result, a new layer of section 704(c) gain was created with respect to Asset X in PRS1, and reverse section 704(c) gain was created with respect to Asset Y in PRS2. After the merger, A had a 75 percent interest in PRS2's capital, profits, losses, distributions, liabilities, and all other items. B held the remaining 25 percent interest in PRS2's capital, profits, losses, distributions, liabilities, and all other items. In 2006, PRS2 distributes all of Asset X to A.
(iii)*Analysis.* The 2006 distribution of Asset X occurs more than seven years after the formation of the partnerships and the original contribution of both Assets X and Y to the partnerships. Therefore, the original layer of built-in gain created on the original contribution of Asset X to PRS1 is not taken into account in applying section 704(c)(1)(B) to the proposed distribution. In addition, paragraph (c)(4)(ii)(E) of this section provides that section 704(c)(1)(B) and paragraph (c)(4)(ii)(B) of this section do not apply to new section 704(c) gain or loss in property transferred by the transferor partnership to the transferee partnership if both the transferor partnership and the transferee partnership are owned by the same owners in the same proportions. The transferor partnership and the transferee partnership are owned by the same owners in the same proportions if each partner's percentage interest in the transferor partnership's book capital, profits, losses, distributions, and liabilities, is the same as the partner's percentage interest in those items of the transferee partnership. In this case, A owned 75 percent and B owned 25 percent of the interests in the book capital, and in each item of income, gain, loss and credit, and share of distributions and liabilities of PRS1 and PRS2 prior to the merger and 75 percent and 25 percent, respectively, of PRS2 after the merger. As a result, the requirements of the identical ownership exception of paragraph (c)(4)(ii)(E) of this section are satisfied. Thus, the new built-in gain created upon contribution of Asset X in connection with the partnership merger will not be taken into account in applying section 704(c)(1)(B) to the proposed distribution. See § 1.737-2(b)(1)(ii)(F), *Example (5)* for a similar example under section 737.
(7)*Reverse section 704(c) gain or loss.* Section 704(c)(1)(B) and this section do not apply to reverse section 704(c) gain or loss as described in § 1.704-3(a)(6)(i).
(g)*Effective/applicability date.* * * * Paragraphs (a)(1), (a)(4)(i), (a)(4)(ii), and (f)(2), *Examples
(1)and (2)* are effective August 22, 2007. Paragraphs (c)(4)(i), (c)(4)(ii), (c)(4)(ii)(A), (c)(4)(ii)(B), (c)(4)(ii)(C), (c)(4)(ii)(D), (c)(4)(ii)(E), (c)(4)(ii)(F), and (c)(7) are effective for any distributions of property after January 19, 2005, if such property was contributed in a merger using the assets-over form after May 3, 2004. **Par. 4.** Section 1.737-1(c)(1) is amended by removing the phrase “five years” and adding in its place the phrase “seven years”. **Par. 5.** Section 1.737-2 is amended as follows: 1. Paragraph
(b)is revised. 2. Paragraph
(f)is added. The additions and revisions read as follows: § 1.737-2 Exceptions and special rules.
(b)*Transfers to another partnership.* —(1) *Complete transfer to another partnership (Assets-over merger)* .—(i) *In General.* Section 737 and this section do not apply to a transfer in an assets-over merger as defined in § 1.708-1(c)(3) by a partnership (the transferor partnership, which is considered to be the terminated partnership as a result of the merger) of all of its assets and liabilities to another partnership (the transferee partnership, which is considered to be the resulting partnership after the merger) followed by a distribution of the interest in the transferee partnership in liquidation of the transferor partnership as part of the same plan or arrangement.
(ii)*Subsequent distributions.* —(A) *Original section 704(c) gain.* If, immediately before the assets-over merger, the transferor partnership holds property that has original built-in gain (as defined in § 1.704-4(c)(4)(ii)(A)), the seven year period in section 737(b) does not restart with respect to such gain as a result of the transfer of such section 704(c) property to the transferee partnership. A subsequent distribution of other property by the transferee partnership to the partner who contributed the original section 704(c) gain property to the transferor partnership is only subject to section 737 with respect to the original section 704(c) gain if the distribution occurs within seven years of the time such property was contributed to the transferor partnership. See § 1.704-4(c)(4)(ii)(A) for a similar provision in the context of section 704. See § 1.737-1 for post-merger distribution of property contributed to the transferee partnership prior to the merger.
(B)*New section 704(c) gain.* Except as provided in paragraph (b)(1)(ii)(E) of this section, if new built-in gain is created upon the contribution of assets by the transferor partnership to the transferee partnership, a subsequent distribution by the transferee partnership of property to a partner of the transferee partnership (other than property deemed contributed by such partner) is subject to section 737, if such distribution occurs within seven years of the contribution by the transferor partnership to the transferee partnership. For these purposes, a partner of the transferor partnership is deemed to have contributed to the transferee partnership an undivided interest in the property of the transferor partnership. The determination of the partner's undivided interest for this purpose shall be determined by the transferor partnership using any reasonable method. See § 1.704-4(c)(4)(ii)(B) for a similar provision in the context of section 704.
(C)*Ordering Rule.* For purposes of this section, if a partner is required to recognize gain under this section, the partner shall recognize a proportionate amount of original and new section 704(c) gain.
(D)*Subsequent Mergers.* If the transferee partnership (first transferee partnership) is subsequently merged into another partnership (new transferee partnership) the section 704(c) gain that resulted from the merger of the transferor partnership into the first transferee partnership shall be subject to section 737 for seven years from the time of the contribution by the transferor partnership to the first transferee partnership (original merger) and section 704(c) gain that resulted from the merger of the first transferee partnership into the new transferee partnership shall be subject to section 737 for seven years from the time of the contribution by the first transferee partnership to the new transferee partnership (subsequent merger). See § 1.704-4(c)(4)(ii)(D) for a similar rule in the context of section 704.
(E)*Identical Ownership or De Minimis Change in Ownership.* For purposes of section 737(b) and this section, net precontribution gain does not include new section 704(c) gain in property transferred by the transferor partnership to the transferee partnership if both the transferor partnership and the transferee partnership are owned by the same owners in the same proportions or if the difference in ownership is de minimis. The transferor partnership and the transferee partnership are owned by the same owners in the same proportions if each partner owns identical interests in book capital and each item of income, gain, loss, deduction, and credit, and identical shares of distributions and liabilities in each of the transferor and transferee partnerships. A difference in ownership is de minimis if ninety-seven percent of interests in book capital and each item of income, gain, loss, deduction and credit and shares in distributions and liabilities of the transferor partnership and transferee partnership are owned by the same owners in the same proportions. See § 1.704-4(c)(4)(ii)(E) for a similar provision in the context of section 704.
(F)*Examples.* The following examples illustrate the rules of paragraph (b)(3) of this section. Example (1). No net precontribution gain.
(i)*Facts.* On January 1, 2005, A contributes Asset 1, with a basis of $200x and a fair market value of $300x, to partnership PRS1 in exchange for a 50 percent interest. On the same date, B contributes $300x of cash to PRS1 in exchange for a 50 percent interest. Also on January 1, 2005, C contributes Asset 2, with a basis of $100x and a fair market value of $200x, to partnership PRS2 in exchange for a 50 percent interest. D contributes $200x of cash to PRS2 in exchange for a 50 percent interest. On January 1, 2008, PRS1 and PRS2 undertake an assets-over partnership merger in which PRS1 is the continuing partnership and PRS2 is the terminating partnership for both state law and federal tax purposes. At the time of the merger, PRS1's only assets are Asset 1, with a fair market value of $900x, and $300x in cash. PRS2's only assets are Asset 2, with a fair market value of $600x and $200x in cash. After the merger, the partners have capital and profits interests in PRS1 as follows: A, 30 percent; B, 30 percent; C, 20 percent; and D, 20 percent. PRS1 and PRS2 both have provisions in their respective partnership agreements requiring the revaluation of partnership property upon entry of a new partner. PRS1 would not be treated as an investment company (within the meaning of section 351) if it were incorporated. Neither partnership holds any unrealized receivables or inventory for purposes of section 751. In addition, neither partnership has a section 754 election in place. Asset 1 and Asset 2 are nondepreciable capital assets. On January 1, 2013, PRS1 has the same assets that it had after the merger. Each asset has the same value that it had at the time of the merger. On this date, PRS1 distributes Asset 2 to A in liquidation of A's interest.
(ii)*Analysis.* Section 737(a) requires A to recognize gain when it receives a distribution of property in an amount equal to the lesser of the excess distribution or the partner's net precontribution gain. The distribution of Asset 2 to A results in an excess distribution of $400x ($600x fair market value of Asset 2−$200x adjusted basis in A's partnership interest). However, the distribution of Asset 2 to A occurs more than seven years after the contribution by A of Asset 1 to PRS1 and A made no subsequent contributions to PRS1. Therefore, A's net precontribution gain for purposes of section 737(b) at the time of the distribution is zero. The $600x of reverse section 704(c) gain in Asset 1, resulting from a revaluation of PRS1's partnership property at the time of the merger, is not net precontribution gain ( *see* § 1.737-2(e)). Accordingly, A will not recognize gain under section 737 as a result of the distribution of Asset 2. See § 1.704-4(c)(4)(ii)(F), *Example (1)* for a similar example under section 704. Example (2). Revaluation gain and merger gain.
(i)*Facts.* The facts are the same as Example (1), except that on January 1, 2007, E joins PRS2 as a one-third partner for $250x in cash. At the time E joins the partnership, Asset 2 has a fair market value of $300x. On January 1, 2008, PRS2 merges into PRS1. At the time of the merger, Asset 1 and Asset 2 both have a fair market value of $400x. On January 1, 2011, Asset 1 is distributed to C when its value is $275x.
(ii)*Analysis.* Section 737(a) requires A to recognize gain when it receives a distribution of property in an amount equal to the lesser of the excess distribution or the partner's net precontribution gain. The distribution of Asset 1 to C results in an excess distribution of $175x ($275x fair market value of Asset 1−$100x adjusted basis in C's partnership interest). The distribution of Asset 1 to C occurs within seven years of the original contribution of Asset 2 by C to PRS2. Therefore, C's net precontribution gain at the time of the distribution is $183.33x, which includes C's original section 704(c) gain from the contribution of Asset 2 to PRS2 of $100x plus C's share of new section 704(c) gain of $83.33x ($50x of reverse section 704(c) gain upon the admission of E, plus $33.33x of additional section 704(c) gain upon merger). C's excess distribution is less than C's net precontribution gain. Thus, C will recognize $175x of gain upon receipt of Asset 1 in accordance with section 737(a). See § 1.704-4(c)(4)(ii)(F), *Example (2)* for a similar example under section 704. Example (3). Fluctuations in the value of an asset.
(i)*Facts.* The facts are the same as *Example (1),* except that on January 1, 2011, Asset 1 is distributed to C when its fair market value is $300x. Immediately prior to the distribution, PRS1 revalues its property in accordance with § 1.704-1(b)(2)(iv)(f).
(ii)*Analysis.* The distribution of Asset 1 to C occurs within seven years of the original contribution of Asset 2 by C to PRS2 and within seven years of the date of the merger. Therefore, C's net precontribution gain at the time of the distribution equals $300x ($100x of original section 704(c) gain from the contribution of Asset 2 to PRS2 and $200x of new section 704(c) gain). The distribution of Asset 1 to C results in an excess distribution of $200x ($300x fair market value of Asset 1−$100x adjusted basis in C's partnership interest). Accordingly, in accordance with section 737(a), C will recognize gain of $200x upon receipt of Asset 1. Example (4). Reverse section 704(c) gain.
(i)*Facts.* The facts are the same as *Example (1),* except that on January 1, 2011, PRS1 distributes Asset 2 to A in liquidation of A's interest in PRS1. At the time of the distribution, Asset 2 has a value of $600x.
(ii)*Analysis.* Section 737(a) requires A to recognize gain when it receives a distribution of property in an amount equal to the lesser of the excess distribution or the partner's net precontribution gain. The distribution of Asset 2 to A results in an excess distribution of $400x ($600x fair market value − $200x adjusted basis in A's partnership interest). The distribution of Asset 2 to A occurs within seven years after the contribution of Asset 1 to PRS1 by A. Thus, A's net precontribution gain for purposes of section 737(b) at the time of the distribution is $100x (A's original section 704(c) gain from the contribution of Asset 1 to PRS1). Under § 1.737-2(e), A's net precontribution gain does not include A's reverse section 704(c) gain upon the revaluation of the Assets of PRS1 prior to the merger. Accordingly, A will recognize $100x of gain (the lesser of the excess distribution or net precontribution gain) under section 737 as a result of the distribution of Asset 2. See § 1.704-4(c)(4)(ii)(F), *Example (4)* for a similar example under section 704. Example (5). Identical ownership exception.
(i)*Facts.* In 1990, A, an individual, and B, a subchapter C corporation, formed PRS1, a partnership. A owned 75 percent of the interests in the book capital, profits, losses, distributions, and liabilities of PRS1. B owned the remaining 25 percent interest in the book capital, profits, losses, distributions, and liabilities of PRS1. In the same year, A and B also formed another partnership, PRS2, with A owning 75 percent of the interests in PRS2 and B owning the remaining 25 percent. Upon formation of the partnerships, A contributed Asset X to PRS1 and Asset Y to PRS2 and B contributed cash. Both Assets X and Y had section 704(c) built-in gain at the time of contribution to the partnerships.
(ii)In January 2005, PRS1 is merged into PRS2 in an assets-over merger in which PRS1 is the terminating partnership and PRS2 is the continuing partnership for both state law and federal income tax purposes. At the time of the merger, both Assets X and Y had increased in value from the time they were contributed to PRS1 and PRS2, respectively. As a result, a new layer of section 704(c) gain was created with respect to Asset X in PRS1. After the merger, A had a 75 percent interest in PRS2's book capital, profits, losses, distributions, and liabilities. B held the remaining 25 percent interest in PRS2's book capital, profits, losses, distributions, and liabilities. In 2006, PRS2 distributes all of Asset X to A.
(iii)*Analysis.* The 2006 distribution by PRS2 occurs more than seven years after the formation of the partnerships and the original contribution of Asset X to the partnerships. Therefore, the original layer of built-in gain created on the original contribution of Asset X to the partnerships should not be taken into account in applying section 737 to the proposed liquidation. In addition, paragraph (b)(1)(ii)(E) of this section provides that section 737(a) does not apply to newly created section 704(c) gain in property transferred by the transferor partnership to the transferee partnership if both the transferor partnership and the transferee partnership are owned by the same owners in the same proportions. The transferor partnership and the transferee partnership are owned by the same owners in the same proportions if each partner's percentage interest in the transferor partnership's book capital, profits, losses, distributions, and liabilities is the same as the partner's percentage interest in those items of the transferee partnership. In this case, A owned 75 percent and B owned 25 percent of the interests in the book capital, profits, losses, distributions, and liabilities of PRS1 and PRS2 prior to the merger and 75 percent and 25 percent, respectively, of PRS2 after the merger. As a result, the requirements of the identical ownership exception of paragraph (b)(1)(ii)(E) of this section are satisfied. Thus, the new built-in gain created upon contribution of Asset X in connection with the partnership merger will not be taken into account in applying section 737 to the proposed distribution. See § 1.704-4(c)(4)(ii)(F), *Example (5)* for a similar example under section 704.
(2)*Certain divisive transactions.* —(i) *In general.* Section 737 and this section do not apply to a transfer by a partnership (transferor partnership) of all of the section 704(c) property contributed by a partner to a second partnership (transferee partnership) in an exchange described in section 721, followed by a distribution as part of the same plan or arrangement of an interest in the transferee partnership (and no other property) in complete liquidation of the interest of the partner that originally contributed the section 704(c) property to the transferor partnership (divisive transactions).
(ii)*Subsequent distributions.* After a divisive transaction referred to in paragraph (b)(2)(i) of this section, a subsequent distribution of property by the transferee partnership to a partner of the transferee partnership that was formerly a partner of the transferor partnership is subject to section 737 to the same extent that a distribution from the transferor partnership would have been subject to section 737.
(f)*Reverse section 704(c) gain.* For purposes of section 737(b), net precontribution gain does not include reverse section 704(c) gain as described in § 1.704-3(a)(6)(i). **Par. 6.** Section 1.737-5 is amended by revising the section heading and adding two additional sentences at the end of the paragraph to read as follows: § 1.737-5 Effective/applicability date. * * * Section 1.737-1(c) is effective as of August 22, 2007. Section 1.737-2(b)(1) is effective for any distribution of property after January 19, 2005, if such property was contributed in a merger using the assets-over form after May 3, 2004. Kevin M. Brown, Deputy Commissioner for Service and Enforcement. [FR Doc. E7-16189 Filed 8-21-07; 8:45 am] BILLING CODE 4830-01-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R04-OAR-2004-SC-0004-200706 (b); FRL-8457-1] Approval and Promulgation of Implementation Plans South Carolina: Revisions to Ambient Air Quality Standards AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: EPA is proposing to approve the State Implementation Plan
(SIP)revisions submitted by the South Carolina Department of Health and Environmental Control (SC DHEC) on November 19, 2004, for the purpose of incorporating EPA's July 18, 1997, revisions to the National Ambient Air Quality Standards and to ensure consistency between state and Federal regulations. The proposed revisions consist of the amendments published in the South Carolina State Register on September 24, 2004, revising Regulation 61-62.5, Standard Number 2, Ambient Air Quality Standards. In the Final Rules Section of this **Federal Register** , EPA is approving the State's SIP revision 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 on this document. Any parties interested in commenting on this document should do so at this time. DATES: Written comments must be received on or before September 21, 2007. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-OAR-2004-SC-0004, by one of the following methods: 1. *http://www.regulations.gov:* Follow the on-line instructions for submitting comments. 2. *E-mail: ward.nacosta@epa.gov.* 3. *Fax:* 404-562-9019. 4. *Mail:* “EPA-R04-OAR-2004-SC-0004”, Regulatory Development Section, Air Planning Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street, SW., Atlanta, Georgia 30303-8960. 5. Hand Delivery or Courier. Deliver your comments to: Nacosta C. Ward, Regulatory Development Section, Air Planning Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street, SW., Atlanta, Georgia 30303-8960. Such deliveries are only accepted during the Regional Office's normal hours of operation. The Regional Office's 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: Nacosta C. Ward, Regulatory Development Section, Air Planning Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street, SW., Atlanta, Georgia 30303-8960. The telephone number is
(404)562-9140. Ms. Ward can also be reached via electronic mail at *ward.nacosta@epa.gov.* SUPPLEMENTARY INFORMATION: For additional information see the direct final rule which is published in the Rules Section of this **Federal Register** . Dated: July 31, 2007. J.I. Palmer, Jr., Regional Administrator, Region 4. [FR Doc. E7-16315 Filed 8-21-07; 8:45 am] BILLING CODE 6560-50-P FEDERAL COMMUNICATIONS COMMISSION 47 CFR Parts 2 and 25 [IB Docket No. 06-123; FCC 07-76] Establishment of Policies and Service Rules for the Broadcasting-Satellite Service AGENCY: Federal Communications Commission. ACTION: Proposed rules. SUMMARY: The Federal Communications Commission initiates a Further Notice of Proposed Rulemaking (FNPRM) to address technical issues related to potential interference unique to the “reverse band” operating environment in the 17/24 GHz BSS. In the *NPRM* in this proceeding, the Commission sought comment on what measures were needed to address issues concerning reverse band operations. These included measures to mitigate against space-path interference between DBS and 17/24 GHz BSS satellites (space-path interference) and to protect 17/24 GHz BSS subscribers from DBS feeder links (ground-path interference). The record on these issues is insufficient to develop requirements. While most commenters advocate certain general approaches, we need more information to build on the generalities and derive specific requirements. Thus, we seek further comment on the issues concerning reverse band operations. DATES: Comments are due on or before November 5, 2007 and reply comments are due on or before December 5, 2007. Public and agency comments on the Initial Paperwork Reduction Act of 1995
(IFRA)analysis are due October 22, 2007. ADDRESSES: You may submit comments, identified by IB Docket No. 06-123, by any of the following methods: • *Federal eRulemaking Portal:* *http://www.regulations.gov.* Follow the instructions for submitting comments. • *Federal Communications Commission's Web Site:* *http://www.fcc.gov/cgb/ecfs/.* Follow the instructions for submitting comments. • *Mail:* Office of the Secretary, Federal Communications Commission, 445 12th Street, SW., Washington, DC 20554. • *People with Disabilities:* Contact the FCC to request reasonable accommodations (accessible format documents, sign language interpreters, CART, etc.) by e-mail: *FCC504@fcc.gov* or phone: 202-418-0530 or TTY: 202-418-0432. For detailed instructions for submitting comments and additional information on the rulemaking process, see the SUPPLEMENTARY INFORMATION section of this document. FOR FURTHER INFORMATION CONTACT: Andrea Kelly
(202)418-7877, Satellite Division, International Bureau, Federal Communications Commission, Washington, DC 20554. For additional information concerning the information collection(s) contained in this document, contact Judith B. Herman at 202-418-0214, or via the Internet at *Judith-B.Herman@fcc.gov.* SUPPLEMENTARY INFORMATION: This is a summary of the Commission's *Further Notice of Proposed Rulemaking* (FNPRM) in IB Docket No. 06-123, FCC 07-76, adopted May 2, 2007 and released on May 4, 2007. The full text of the FNPRM is available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. The document may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 202-488-5300, facsimile 202-488-5563, or via e-mail *FCC@BCPIWEB.com.* Pursuant to the Regulatory Flexibility Act, the Commission has prepared an Initial Regulatory Flexibility Analysis
(IRFA)of the possible significant economic impact on small entities by the rules adopted in the R&O and the proposals considered in the FNPRM. The text of the IRFA is set forth in Appendix H of the R&O and FNPRM. Written public comments are requested on the IRFA. Comments must be filed in accordance with the same filing deadlines for comments on the FNPRM, and they should have a separate and distinct heading designating them as responses to the IRFA. In addition, the Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget
(OMB)to comment on the information collection requirements contained in this document, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. Public and agency comments are due October 22, 2007. Comments should address:
(a)Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility;
(b)the accuracy of the Commission's burden estimates;
(c)ways to enhance the quality, utility, and clarity of the information collected; and
(d)ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, *see* 44 U.S.C. 3506(c)(4), we seek specific comment on how we might “further reduce the information collection burden for small business concerns with fewer than 25 employees.” Paperwork Reduction Act Requirements *OMB Control Number:* 3060-1097. *Title:* Service Rules and Policies for the Broadcasting Satellite Service (BSS). *Form No.:* Not Applicable. *Type of Review:* On-going collection. *Respondents:* Businesses or other for-profit entities. *Number of Respondents:* 4 respondents; 24 responses. *Estimated Time Per Response:* 10 hours. *Frequency of Response:* On occasion and annual reporting requirements. *Estimated Total Annual Burden:* 240 hours. *Estimated Total Annual Costs:* $12,451,700.00. *Privacy Act Impact Assessment:* Not Applicable. *Needs and Uses:* The purpose of this information collection is to address the Paperwork Reduction Act
(PRA)requirements proposed in the Commission's Notice of Proposed Rulemaking (FCC 06-90) to establish policies and service rules for the new Broadcasting Satellite Service under IB Docket No. 06-123. In this FNPRM, the Commission proposes three new information collection requirements applicable to Broadcasting Satellite Service licensees:
(1)Annual reporting requirement on status of space station construction and anticipated launch dates,
(2)milestone schedules and
(3)performance bonds that are posted within 30 days of the grant of the license. Without the information collected through the Commission's satellite licensing procedures, we would not be able to determine whether to permit applicants for satellite licenses to provide telecommunications services in the U.S. Therefore, we would be unable to fulfill our statutory responsibilities in accordance with the Communications Act of 1934, as amended; as well as the obligations imposed on parties to the World Trade Organization
(WTO)Basic Telecom Agreement. Summary of Further Notice of Proposed Rulemaking 1. Further Notice of Proposed Rulemaking: In the *NPRM* , the Commission sought comment on what measures were needed to address issues concerning reverse band operations. These included measures to mitigate against space-path interference between DBS and 17/24 GHz BSS satellites (space-path interference) and to protect 17/24 GHz BSS subscribers from DBS feeder links (ground-path interference). The record on these issues is insufficient to develop requirements. While most commenters advocate certain general approaches, we need more information to build on the generalities and derive specific requirements. Thus, we seek further comment on the issues concerning reverse band operations. 2. Ground-Path Interference in Reverse Band Operations. As discussed in the *NPRM,* ground path interference will occur when the signals from transmitting DBS feeder link earth stations operating in the 17.3-17.7 GHz band are detected at the receiving earth stations of 17/24 GHz BSS subscribers. This interference situation will be the most severe in areas surrounding the DBS feeder uplink stations. In addition, 17/24 GHz BSS operators who choose to co-locate their TT&C earth stations with DBS TT&C earth stations systems may experience difficulty in receiving the downlinked telemetry signal from the 17/24 GHz BSS spacecraft. Although at present there are a relatively small number of DBS feeder link and TT&C earth stations, the *NPRM* recognized that DBS feeder link earth stations that transmit in the Earth-to-space direction may increasingly locate in populated areas, thereby escalating the potential for interference into 17/24 GHz BSS subscriber antennas. The *NPRM* also anticipated that future entrants, such as short-spaced DBS systems, or non-U.S. DBS satellites serving the U.S. market, could result in the deployment of an even greater number of feeder link earth stations at multiple sites within the United States. The *NPRM* also raised concerns that the interference problem could be further exacerbated by the proliferation of small-diameter 17/24 GHz BSS subscriber receiving antennas with relatively poor off-axis discrimination properties. 3. Grandfathering Existing DBS Uplink Facilities. DIRECTV notes that, although DBS operators have recently sought authority for additional feeder link earth stations to uplink local broadcast signals from regional collection sites, the number of such sites is still very small. DIRECTV states, by way of illustration, that it operates DBS feeder links from only four sites across the country, and has no plans for additional regional sites. DIRECTV proposes that we “grandfather” licensed and operating DBS uplink facilities so that they may continue to operate in the manner in which they were designed in reliance on the rules then in effect. Accordingly, DIRECTV does not support off-axis EIRP density or other transmitting power limits for existing DBS feeder link antennas, or a requirement that such be shielded. EchoStar also advocates “grandfathering” of existing DBS feeder link earth stations, arguing that there are relatively few in number, and that the majority are located in less populated areas so that they pose little problem. 4. The Commission did not discuss this issue in the *NPRM* . Nevertheless, based on the record, we tentatively conclude that existing DBS feeder link earth stations should not be subject to new interference-mitigation requirements imposed as a result of this rulemaking. Accordingly, we intend to define an area around existing DBS feeder link earth stations that transmit in the 17.3-17.7 GHz band, within which 17/24 GHz BSS receiving earth stations cannot claim protection from the DBS feeder uplink transmissions. We discuss this issue in more detail below. 5. Protection Zones for Existing DBS Uplink Facilities. We propose to limit any protection zone to some area surrounding the specific geographic location and frequencies within the 17.3-17.7 GHz BSS band in which the DBS feeder link earth station licensee is already authorized to transmit. In addition, we agree that the feeder link operator should have some ability to upgrade facilities at existing sites, as long as the modification does not cause any increase in interference to 17/24 GHz BSS receiving antennas outside of the defined protection zone. 6. We seek comment on these tentative conclusions and on how a protection zone should be defined. One option is to define the boundary of the protection zone as a fixed distance away from the coordinates of the DBS Feeder Link Earth Station. DIRECTV presents an analysis demonstrating that, in the absence of shielding, the separation distance between a DBS feeder link earth station and a receiving 17/24 GHz subscriber antenna can become significant, i.e., on the order of 22 miles. EchoStar suggests that likely separation distances necessary to mitigate groundpath interference are on the order of 10 to 60 miles. SES Americom states that levels of interference could be harmful if the subscriber earth station is located within 20-30 km (12.5-18.6 miles) of the DBS feeder link station. 7. We note too that the DBS feeder link earth station's transmissions will not be equal in all directions, but will vary in part as a function of azimuth and elevation angle, and this picture may be complicated by the presence of multiple transmitting antennas at a particular site. In addition, we recognize that different areas of the country will have differing climate, rainfall and terrain conditions that will also mitigate groundpath interference. Accordingly, a second option is to employ a more detailed methodology that takes into account these site-specific characteristics, rather than impose a uniform radius around the earth station coordinates. Parties supporting this approach should explain in detail how exactly they would adjust for climate, rainfall, or terrain conditions, or any other variables that they believe should be reflected in the protection zone. 8. Thus, we invite comment on each of the two protection zone options set forth above:
(1)To set the boundary at some fixed distance from the DBS feeder link earth station; or
(2)to adjust that boundary to account for climate, terrain, or other considerations. We also seek comment on any other approaches we might adopt. Commenting parties should provide specific details on any such proposal. 9. Upgrades to Grandfathered Facilities. EchoStar urges the Commission to make clear that any protection is afforded to existing DBS uplink sites, and not just to currently licensed earth stations to protect the operator's ability to expand their existing uplink sites. EchoStar argues that this approach would promote efficiency by reducing the number of new geographically diverse sites. Specifically, EchoStar proposes that “grandfathering” would apply both to existing earth stations and to new earth stations located “within a mile of the easternmost, westernmost, northernmost and southernmost coordinates of existing earth stations in each site.” We seek comment on EchoStar's proposal to extend “grandfathered” status to any new earth stations located within a mile of an existing earth station site. Parties commenting on this proposal should explain in detail the reasons for their positions. Among other things, we invite comment on whether, and to what extent, adding new DBS feeder link earth stations within a mile of an existing DBS feeder link earth station is likely to increase the probability of harmful interference to 17/24 GHz BSS receivers. 10. As an alternative approach, we could define a pfd level at the boundary of the protection zone that would take into account the cumulative effect of any modified operations of the existing earth station site. If these modified operations do not exceed this pfd level, the modification would not be subject to the new coordination requirements. We seek comment on this approach. We also seek comment on what pfd level at the boundary might be suitable. 11. Coordination between DBS and 17/24 GHz BSS Operators. Commenters addressing the issue of new DBS feeder link earth stations recognize that to protect the interests of 17/24 GHz BSS consumers, these earth stations will need to be subject to some restrictions. As detailed below, we seek comment on developing a coordination zone and a coordination methodology. 12. Coordination Zone. In the *NPRM* , the Commission observed that its rules do not contain a procedure to coordinate co-frequency, DBS feeder link earth stations with BSS subscriber terminals. Consequently, the Commission proposed to establish “coordination zones” or, in other words, areas around DBS feeder link earth stations in which coordination would be required. The Commission proposed to define these areas based on the methodology outlined in Annex 3 of Appendix 7 of the ITU Radio Regulations. 13. The Commission further observed that it had used Appendix 7 as the basis of other coordination rules it had adopted. The Commission also noted, however, that Table 9b of Appendix 7, which includes data needed for determining the coordination zone for services in several frequency bands, does not include some data needed for determining the coordination zone for services in the 17.3-17.8 GHz band. Accordingly, the Commission invited parties to recommend data for a table based on Table 9b that would allow operators to calculate coordination areas for the 17.3-17.8 GHz band in a way comparable to the method operators in other frequency bands use Table 9b to determine their coordination distances. 14. Consistent with our proposal in the *NPRM,* we tentatively conclude that use of the procedure in Table 9b to establish the coordination zone for DBS feeder link earth stations and BSS subscriber terminals is appropriate. In this *FNPRM,* we seek comment on the specific values for Table 9b as set forth below. We seek comment on the appropriateness of this approach. Parties proposing an alternative set of values should provide a detailed justification for those values. Table 9b.—Parameters Required for the Determination of Coordination Distance for a Transmitting Earth Station in Bands Shared Bidirectionally With Receiving Earth Stations Parameter(s) Value Description Orbit GSO Orbit in which the space service in which receiving earth station operates (GSO or NGSO). Modulation at receiving earth station N Analog or digital. Receiving earth station interference parameters and criteria p <sup>0</sup> (%) 0.003 Percentage of the time during which interference from all sources may exceed the threshold value. N 2 Number of equivalent, equal level, equal probability entries of interference, assumed to be uncorrelated for small percentages of the time. p (%) 0.0015 Percentage of the time during which the interference from one source may exceed the permissible interference power value; since the entries of interference are not likely to occur simultaneously, p=p <sup>0</sup> /n. N <sup>L</sup>
(dB)1 Link noise contribution. M <sup>s</sup>
(dB)5 Link performance margin. W
(dB)0 A thermal noise equivalence factor for interfering emissions in the reference bandwidth; it is positive when the interfering emissions would cause more degradation than thermal noise. Receiving earth station parameters G <sup>m</sup>
(dBi)36 On-axis gain of the receive earth station antenna. G <sup>r</sup> 10 Horizon antenna gain for the receive earth station. ε min 5° Minimum elevation angle of operation in degrees. T <sup>e</sup>
(K)300K The thermal noise temperature of the receiving system at the terminal of the receiving antenna. See 2.1 of Annex 7 to Appendix 7 of the ITU Radio Regulations which provides a default value for two earth stations operating in opposite directions of transmission at frequencies greater than 17/24 GHz. Reference Bandwidth B
(Hz)1.0×10 6 Reference bandwidth (Hz), i.e., the bandwidth in the receiving station that is subject to the interference and over which the power of the interfering emission can be averaged. Permissible interference power P <sup>r</sup>
(dBW)in B −139.5 Permissible interference power of the interfering emission
(dBW)in the reference bandwidth to be exceeded no more than p÷ of the time at the receiving antenna terminal of a station subject to interference, from a single source of interference, using the general formula: P <sup>r</sup>
(p)= 10 log (k T <sup>e</sup> B) + N <sup>L</sup> + 10 log (10 Ms/10 −1)−W. 15. DIRECTV proposes that the Commission establish a coordination zone around any new DBS feeder uplink earth stations and that within this zone, a new the DBS operator would be required to coordinate its operations with 17/24 GHz BSS subscriber earth stations. DIRECTV asserts further that this process would be greatly facilitated if new DBS uplink facilities were required to operate with strict pfd limits on transmissions toward the horizon and/or to employ shielding. Although DIRECTV suggests that this coordination zone could be relatively large ( *e.g.* , 10 km) it proposes no specific methodology for how such a zone might be defined, nor does it propose pfd limits in the direction of the horizon. 16. However, EchoStar proposes that, rather than defining a coordination zone, the Commission should define an area around any new DBS feeder link earth station within which 17/24 GHz BSS earth stations would become, in effect, secondary to the DBS operation and thus would required to accept all interference. For this reason, EchoStar contends that the methodology of Appendix 7 is not likely to determine particularly realistic separation distances, as it is intended to calculate threshold separations to initiate coordination. EchoStar also contends that there are several other methodologies that the Commission might consider for determining the spacing between DBS feeder link stations and 17/24 GHz BSS earth stations. Specifically, EchoStar suggests that ITU-R Recommendation P.452 defines a general propagation model that could be applied, and ITU-R Recommendation S.1712, although intended for the 14 GHz band, might provide additional useful methodologies that could be extrapolated to the 17 GHz band. In addition, EchoStar proposes that the choice of methodology for computing the separation distance should be left to the operators concerned. 17. Accordingly, we seek comment on the above proposals, and which, if any we should adopt to facilitate reverse-band operations in the 17 GHz band. As an initial matter, we request interested parties to discuss whether the Commission should adopt a coordination zone of any type, or whether the defined zone should be an area in which the 17/24 GHz BSS is secondary to DBS as EchoStar recommends. We invite interested parties to discuss whether they prefer to define such a zone using a methodology based on Appendix 7, Annex 3 as proposed in the *NPRM,* or based on one of the ITU recommendations suggested by EchoStar ( *i.e.* , ITU-R Recommendation P.452 or S.1712). We request comment on all these proposals, and invite commenters to propose different coordination or separation distances, provided that they can provide adequate justification on the record for their proposals. 18. In addition, we seek comment on whether we should permit operators to determine jointly among themselves the choice of methodology to calculate the corresponding separation distance as EchoStar suggests. We also seek comment on how, under this approach, established 17/24 GHz BSS subscriber antennas might be protected from interference from newer DBS feeder link operations seeking to locate nearby. Such parties should explain in detail why they support their preferred methodology, and why they believe their methodology is superior to other options. Finally, we invite parties to recommend the appropriate parameter values necessary to employ the method they support. 19. Coordination Methodology. We invite comment here on the methodology to be used within that zone to coordinate DBS feeder links and 17/24 GHz BSS earth stations, should the Commission adopt a coordination zone as discussed above. The *NPRM* envisioned that both DBS operators and 17/24 GHz BSS operators will be deploying new earth stations over time, so that new stations of one service will continually be established among existing stations from the other. The Commission made a similar observation in the *MVDDS Second R&O,* in which it addressed a frequency sharing situation that presented ground path interference issues and gradual build-out of interspersed earth stations similar to those we envision in the 17.3-17.7 GHz band. 20. In the *MVDDS Second R&O,* the Commission concluded that careful MVDDS system design and the use of various mitigation techniques could achieve successful sharing of the 12 GHz frequency band by both services. To accomplish this goal, the Commission adopted, among other things, a coordination procedure that requires that a MVDDS operator entering a market where DBS receivers are already established must satisfy certain requirements in order to protect these customers. In addition, a mechanism is established for information exchange between the operators of both services, in particular to take into account recently acquired DBS customers. The *NPRM* sought comment on whether we should adopt a similar approach to sharing between DBS feeder link earth stations and 17/24 GHz BSS receiving earth stations. We seek further comment here. Specifically we ask whether we should adopt service rules similar to those in § 25.203(c), requiring all applications for new (non-grandfathered) DBS feeder link earth stations or new 17 GHz transmitting TT&C stations to complete prior frequency coordination with existing and planned 17/24 GHz BSS receiving stations. 21. The Commission recognizes that requiring 17/24 GHz BSS operators to make available a list of their subscriber earth stations raises issues of sensitive customer information, particularly if the DBS feeder link applicant is also a competitor. Accordingly, we tentatively conclude that use of a neutral, third-party frequency coordinator is appropriate to assuage such concerns. Thus, we propose that, prior to filing an application with the Commission, a DBS operator planning a new feeder link earth station or 17 GHz transmitting TT&C station must provide certain specified technical information to a qualified frequency coordinator. The frequency coordinator would make this technical information available to all licensed 17/24 GHz operators. Interested parties could obtain both a list of potentially-affected and active 17/24 GHz BSS customer locations that are within a defined coordination area, as well as a list of potentially-affected 17/24 GHz TT&C earth stations for which applications are on file with the Commission within the defined coordination area. The 17/24 GHz BSS operators would be required to provide these lists within 30 days upon receipt of the new DBS feeder link earth station technical information and the notice. A DBS operator would be allowed to file an application with the Commission for a new DBS feeder link or TT&C transmitting earth station within 6 months of successfully completing coordination with all stations on these lists. If the Commission grants a license for the newly proposed 17 GHz transmitting station, any 17/24 GHz receiving earth station not on these lists would be unable to claim protection from this new DBS feeder link earth station. We seek comment on this proposal, and on the method that should be employed to calculate such a coordination area. 22. We also seek comment on the types of technical information DBS feeder link earth station operators should make available for the purposes of earth station coordination with 17/24 GHz BSS operators. In the case of satellite and terrestrial earth station coordination, Commission rules now require that all transmitting satellite earth station applicants submit an interference analysis as required by § 25.203 of the Commission's rules, 47 CFR 25.203(c)(2). § 25.203(c)(2) requires that the earth station applicant provide each terrestrial station licensee with specific technical details. Similarly, we propose that DBS feeder link earth station applicants provide the following information to the qualified frequency coordinator: i. The geographical coordinates of the proposed earth station antenna(s); ii. Proposed operating frequency band(s) and emission(s); iii. Antenna diameter (meters); iv. Antenna center height above ground and ground elevation above mean sea level; v. Antenna gain pattern(s) in the plane of the main beam; vi. Longitude range of geostationary satellite orbit
(GSO)satellites at which an antenna may be pointed, for proposed earth station antenna(s) accessing GSO satellites; vii. Horizon elevation plot; viii. Antenna horizon gain plot(s) determined in accordance with the procedure in section 2.1 of Annex 5 to Appendix 7 of the ITU Radio Regulations; ix. Minimum elevation angle; x. Maximum equivalent isotropically radiated power
(EIRP)density in the main beam in any MHz band; xi. Maximum available RF transmit power density in any 1 MHz band at the input terminals of the antenna(s); xii. A plot of the coordination distance contour(s) and rain scatter coordination distance contour(s) as determined by Table 2 of section 3 to Appendix 7. 23. We ask what reference bandwidths would be appropriate in items
(x)and (xi). In addition, we seek comment on whether the parameters listed here or other technical information would be appropriate to provide in order to facilitate coordination between new DBS feeder link earth stations and receiving 17/24 GHz BSS antennas. 24. Other Measures to Protect 17/24 GHz BSS Operations. In addition to the protection zone and coordination requirements proposed above, some commenters assert that further measures are necessary to protect 17/24 GHz BSS earth stations from harmful interference from DBS feeder link earth stations. Those measures include:
(1)Limits on DBS feeder link earth station EIRP toward the horizon;
(2)placement of new DBS feeder link facilities in low-population density areas;
(3)technical showing requirements for co-located DBS and 17/24 GHz BSS earth stations; and
(4)antenna shielding requirements. These proposed approaches are not necessarily mutually exclusive, and it is entirely possible that we might employ several methods in combination with each other, as well as adopting the protection zone and coordination requirements discussed above. Moreover, as DIRECTV correctly notes, a decision to employ one approach may influence the extent to which we simultaneously apply another. However, no commenter has been specific in its proposals, nor provided a comprehensive approach necessary to definitively address the issue. Consequently, we do not believe that the record is sufficiently developed so that we may determine whether to adopt requirements at this time. 25. Accordingly, we invite further comment on each of the additional measures suggested by commenters. In particular, commenters supporting any of these proposals should explain in detail why that additional measure would be necessary to protect 17/24 GHz BSS earth stations from harmful interference, in the event that we adopt coordination procedures of the kind discussed above. Moreover, such commenters should discuss whether they support adoption of all the additional measures discussed here, or whether some of the additional measures would provide adequate protection from harmful interference. 26. Power Level Limits. In the *NPRM,* the Commission noted that § 25.204(b) of the Commission's rules places limits on earth station EIRP in bands above 15 GHz shared coequally with terrestrial radiocommunication services, in order to facilitate sharing with these services. The Commission sought comment on whether the Commission should extend this requirement to new DBS feeder link earth stations operating in the entire 17.3-17.7 GHz band. The Commission also asked whether the EIRP density limits in § 25.204(b) through
(e)would be sufficient to protect 17/24 GHz BSS earth stations, or if DBS feeder link earth stations should meet some more stringent requirements. We seek further comment on these questions. 27. Under EchoStar's power limit proposal, new DBS earth stations would be constrained only in terms of EIRP density toward the horizon. We invite comment on whether any such limit would be necessary if we adopt a coordination procedure as discussed above. Alternatively, we ask whether the adoption of EIRP density limits toward the horizon would obviate the need for coordination procedures. Advocates of EIRP density limits should include a specific limit in their discussions, and advocates of both approaches should provide adequate justification for their recommendations. 28. Restrictions on Placement of New DBS Earth Stations. DIRECTV and EchoStar advocate requiring DBS feeder link earth station operators to locate their earth stations only in areas of low population density. Although neither define precisely how such sparely populated locations would be determined, DIRECTV notes that counties with populations less that ten people per square mile comprise a significant portion of the contiguous United States. We seek comment on this approach, either alone, or in conjunction with other proposals, and ask how the Commission should determine what constitutes a low-population density site. We also request parties to explain how DBS feeder link operators would be able to protect 17/24 GHz BSS consumer earth stations that are already deployed in these areas. 29. EchoStar makes its proposal to restrict new DBS feeder link earth stations to low population-density areas in conjunction with its proposal to require those earth stations to meet strict off-axis EIRP density limits towards the horizon. Presumably however, even areas of low population density may contain 17/24 GHz BSS subscribers. Thus, although this approach might be applied to new DBS feeder uplink stations locating in areas yet unoccupied by 17/24 GHz BSS subscriber earth stations, EchoStar does not make clear how subscriber terminals would be protected if the DBS applicant sought to locate in an area where 17/24 GHz BSS consumer earth stations were already deployed. We request commenters to address this issue. 30. Technical Showing Requirement for Co-Located Earth Stations. The *NPRM* also addressed groundpath interference that may occur between transmitting DBS feeder uplinks and the receiving telemetry stations of 17/24 GHz BSS systems that choose to locate their TT&C facilities at or near to existing DBS feeder uplink sites. The Commission recognized that choice of facility site is a system design parameter that is under the control of the operator, and does not necessarily require a Commission action to remedy. Moreover, given the large financial investment required to launch and operate a satellite, we believe that 17/24 GHz BSS operators have strong incentive to make correct technical decisions with regard to their choice of TT&C facility sites and equipment design. However, the *NPRM* also recognized that interference into TT&C systems can present a serious problem due to the potential for loss of satellite control, and sought comment on whether the Commission should adopt requirements to guard against such scenarios. 31. Specifically, the Commission proposed to require earth station applicants planning to co-locate their 17/24 GHz BSS TT&C stations with DBS feeder link earth stations to make a technical showing to the Commission demonstrating their ability to maintain sufficient margin in their telemetry links in the presence of the interfering DBS signal. Similarly, the Commission proposed to require DBS feeder link earth station applicants planning to co-locate with their 17/24 GHz BSS telemetry earth stations to make an analogous technical showing to the Commission. The Commission sought comment on these proposals and asked what parameters would be appropriate in such a showing. It also asked whether it should preclude co-location of 17 GHz BSS TT&C and DBS feeder link facilities altogether, or whether it should require some minimum separation between such facilities. 32. DIRECTV responds that, with careful planning, it should be possible to coordinate the operations of these two services, even to the point where the facilities can be co-located. Accordingly, DIRECTV does not believe that the Commission should limit operator flexibility by precluding such co-location or by requiring some minimum separation distance. Rather, DIRECTV supports the Commission's proposal that operators seeking to co-locate such facilities should be required to make a technical showing demonstrating their ability to maintain sufficient margin in the 17/24 GHz BSS telemetry links in the presence of the interfering DBS signal. DIRECTV asserts that this will enable those operators who want to capture the efficiencies of co-location to do so, provided they can prove to the Commission that receipt of critical 17/24 GHz BSS telemetry data will not be subject to disruption. EchoStar also believes that such interference can be avoided by careful frequency planning of the 17 GHz uplink and downlink signals, and believes that this frequency planning can be conducted by the operator alone, within its own earth station complex. Accordingly, we will restate the proposal to require a technical showing to the Commission in the event of co-location of DBS feeder link and 17/24 GHz BSS telemetry earth stations, and seek any further comment on the issue. 33. Shielding. We also seek comment on whether we should impose any additional requirements on either DBS feeder link earth station operators or on 17/24 GHz BSS operators in order to mitigate interference into 17/24 GHz BSS subscriber receiving antennas. We ask whether, as most commenters suggest, a requirement to employ shielding should be adopted in conjunction with any of the approaches discussed above, and if so what form such a requirement might take. 34. Space Path Interference in Reverse Band Operations. The *NPRM* sought comment on how best to manage the problem of space path interference arising when the transmitted signals from 17/24 GHz BSS satellites are received by the feeder link receivers on satellites operating in the DBS service. In addition, the *NPRM* sought comment on the particular instance where applicants sought to locate within the same cluster as co-frequency receiving DBS satellites and asked whether this was feasible at all, and if so what measures might be required to facilitate such co-clustering. The Commission also sought comment on the more general question of locating 17/24 GHz BSS satellites at close distances to co-frequency DBS satellites and asked what measures, including a minimum orbital separation requirement, off-axis EIRP limits, antenna discrimination requirements, or other requirements might be adopted to protect DBS receiving antennas from unacceptable interference. Finally, the *NPRM* sought comment on the particular problem of interference to DBS TT&C transmissions in the 17 GHz band that could result in loss of satellite control. The Commission proposed to require 17/24 GHz BSS space station applicants seeking to co-locate with DBS satellites to make a technical showing demonstrating their ability to sufficiently minimize interference such that adequate margin is maintained in the DBS telecommand links. An analogous requirement was proposed for any future DBS applicant seeking to co-locate with 17/24 BSS satellites to make a similar technical showing demonstrating its ability to maintain sufficient TT&C link margin. 35. Commenters addressing these issues all realize the potential for space path interference between 17/24 GHz BSS and DBS satellites, but generally maintain that co-location is feasible at relatively small orbital separations, typically on the order of a few tenths of a degree. EchoStar asserts that a separation of 0.4 degrees is sufficient, however only if the DBS and 17/24 BSS satellites are operated by the same licensee. EchoStar argues that the risk of interference in such situations is most severe, and is best avoided by assigning space-to-Earth frequencies at that location only to the 17/24 GHz BSS operator that uses these same frequencies in the Earth-to-space direction for its DBS feeder link operations. DIRECTV also believes that co-frequency operation may be possible at small orbital separations, but that this will depend upon a number of factors including the gain toward the GSO of both transmitting and receiving satellites as well as the desired protection level of the DBS system. DIRECTV also believes that given the many uncertainties involved, it is best to permit only operators who control transmissions in both directions at a given location to locate in close proximity as they can best “self coordinate” their operations. DIRECTV also suggest that the Commission may want to consider a strict off-axis gain specification for 17/24 GHz BSS satellites wishing to locate within a certain distance of a DBS satellite. 36. SES Americom and Intelsat oppose the idea that 17/24 GHz BSS satellites seeking to operate at the same frequency and location as DBS satellites should only be licensed to the corresponding DBS licensee, arguing that this restriction is unnecessary and unfairly favors incumbent DBS operators. SES Americom believes that spacepath interference issues can be resolved through the use of offset orbital locations and coordination between operators. Similarly, Intelsat believes that a four-degree orbital spacing plan with small offsets in combination with coordination between operators will be sufficient to mitigate spacepath interference issues between closely spaced 17/24 GHz BSS and DBS satellites. In section III. D. of this Order, we require 17/24 GHz BSS satellite licensees to design their satellites to be capable of operating in a four-degree spacing environment. We will license satellites in this band only if they comply with the orbital spacing rules we adopt in this Order. 37. EchoStar also proposes that the spacepath interference into DBS receivers can be managed by establishing a pfd value at the victim ( *i.e.* , DBS) receiver above which coordination is required. Specifically, EchoStar proposes a pfd threshold level at the victim satellite receiver of -93 dBW/m 2 /24 MHz and derives this value from the ITU 6% ΔT/T requirement used to determine the need for coordination between Administrations, contained in Appendix 30A of the Radio Regulations. EchoStar also proposes that the Commission should require a minimum separation between DBS and 17/24 GHz BSS satellites of at least 0.2-0.3 degrees, although these parameters might be relaxed in the event of agreement among all affected parties. 38. We concur with EchoStar's proposed approach to managing spacepath interference between 17/24 GHz BSS and DBS satellites by requiring coordination when pfd values are exceeded at the DBS satellite receiver. This approach is consistent with the method used by the ITU, *See* Annex 4 of Appendix 30A of the ITU Radio Regulations, and has proved workable for international coordination of satellite systems. However, as EchoStar notes, its proposed pfd value depends in part on certain assumptions about the DBS off-axis receiving antenna gain and may not afford sufficient to protection to all systems, particularly as DBS off-axis antenna gain patterns are not necessarily well known. Accordingly, in order to protect receiving DBS satellites from unacceptable levels of interference, we propose to adopt an off-axis pfd coordination trigger of -93 dBW/m 2 /24 MHz at the DBS receiving antenna. Coordination with affected co-frequency licensees, both existing and planned, would be required in the event that the 17/24 GHz BSS satellite exceeds this level at the DBS receiving antenna; coordination would not be required in cases where no frequency overlap occurs. We seek comment on this proposal and ask whether it is sufficient to protect existing DBS operations from interference, or whether some other approach or additional requirement might better protect DBS receiving antennas from unwanted spacepath interference. We also ask how such a requirement might apply to future DBS operations that might be affected, including in particular any replacement satellites. 39. We also seek comment on the particular information that 17/24 GHz BSS applicants should be required to submit to the Commission. Clearly, reliable information concerning the off-axis transmitting antenna gain of the 17/24 GHz BSS satellite will need to be made available. Presumably this information will need to include all frequencies in the 17.3-17.7(8) GHz range so that any future DBS applicant will also have sufficient information to protect its operations from unwanted interference. We seek comment on what form this information should take ( *i.e.* , measured data, charts, graphs). We ask whether off-axis gain in the plane of the GSO is sufficient and over what angular range it should be provided ( *e.g.* , ±30°, ±45° with respect to the plane passing through the x- and y-axes of the satellite.) 40. In its reply comments EchoStar also proposes the Commission adopt a minimum orbital separation between 17/24 GHz BSS and DBS satellites of 0.2-0.3 degrees. SES Americom also believes that an orbital offset of at least 0.2-0.3 degrees is necessary for co-frequency operation of DBS and 17/24 GHz BSS satellites. DIRECTV however indicates that a minimum orbital separation value as small as 0.05 degrees would be sufficient to permit co-frequency operation, provided modest care in satellite antenna design is employed. We seek comment on EchoStar's proposal to require a minimum orbital separation between co-frequency operation of DBS and 17/24 GHz BSS satellites, and we ask what separation value is appropriate should we adopt such a requirement. We also seek comment on whether such a requirement is necessary should we adopt the pfd threshold and coordination requirements discussed above, particularly if, as EchoStar suggests, this separation value might be relaxed by agreement among the affected operators. 41. Finally, the *NPRM* sought comment on our proposal to protect DBS TT&C operations, particularly in recognition of the potential for loss of satellite control. DIRECTV comments on this proposal, asserting that the Commission should allow co-location of 17/24 GHz BSS and DBS space stations only if the affected DBS operator gives its consent, and only if the 17/24 GHz BSS applicant demonstrates its ability to maintain sufficient margin in the DBS telecommand links in the presence of the interfering 17/24 GHz BSS signal. We believe this proposal has merit, for both 17/24 GHz BSS operators seeking to locate in close proximity to DBS satellites, and also in the case where DBS operators may seek to locate in close proximity to established 17/24 BSS GHz satellites. Accordingly, we propose to adopt a requirement that a 17/24 GHz BSS applicant proposing to locate its satellite in the vicinity of a DBS space station make a technical showing to the Commission demonstrating its ability to sufficiently minimize interference into the DBS systems, such that adequate margin is maintained in the DBS telecommand links in the presence of the interfering BSS signal. Similarly we will require that a DBS applicant proposing to locate its satellite in the vicinity of existing 17/24 GHz BSS space station make a technical showing to the Commission demonstrating its ability to maintain sufficient margin in its telecommand links in the presence of the interfering BSS signal. We seek comment on these proposals. We ask under what circumstances such a technical showing should be required, *e.g.* , co-location at less than some minimum distance, or on the basis of a threshold pfd value. We seek comment on whether the threshold pfd level of -93 dBW/m 2 /MHz proposed above is also a suitable coordination trigger for DBS telecommand links, or whether some other value might be more appropriate. We also seek comment on the maximum orbital separation distance at which would be appropriate to require such a technical showing. 42. SES Americom also commented on 17/24 GHz BSS interference into DBS telecommand links, stating that issues relating to space path interference can be resolved through offset of orbital locations and coordination between the involved operators with respect to TT&C frequencies. SES Americom also stated that it believes that a frequency separation of as little as 500 kHz is adequate to prevent interference from the beacon of a 17/24 GHz BSS satellite into the command carrier of a DBS space station. We seek comment on whether some minimum frequency separation is required between the signals transmitted by a 17/24 GHz BSS space station and the telecommand frequencies of DBS space station located in close proximity to the 17/24 GHz BSS space station, or a combination of frequency separation and pfd limits, and what the appropriate parameters would be. 43. Conclusion. We adopt a Further Notice of Proposed Rulemaking to seek comment on technical issues related to reverse band operations to address potential interference concerns. Ex Parte Presentations 44. This proceeding shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. Persons making oral ex parte presentations are reminded that memoranda summarizing the presentations must contain summaries of the substance of the presentations and not merely a listing of the subjects discussed. More than a one- or two-sentence description of the views and arguments presented is generally required. Other rules pertaining to oral and written presentations are set forth in § 1.1206(b) of the Commission's rules as well. Paperwork Reduction Act 45. The actions contained herein have been analyzed with respect to the Paperwork Reduction Act of 1995 at the initiation of the Notice of Proposed Rulemaking in this proceeding, and we have previously received approval of the associated information collection requirements from the Office of Management and Budget
(OMB)under OMB Control No. 3060-1097. The Report and Order and Further Notice of Proposed Rulemaking does not contain any new or modified “information collection burden for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4). Initial Regulatory Flexibility Analysis 46. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission has prepared this present Initial Regulatory Flexibility Analysis
(IRFA)of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in this item, the Establishment of Policies and Service Rules for the Broadcasting-Satellite Service at the 17.3-17.7 GHz Frequency Band and at the 17.7-17.8 GHz Frequency Band Internationally, and at the 24.75-25.25 GHz Frequency Band for Fixed Satellite Services Providing Feeder Links to the Broadcasting-Satellite Service and for the Broadcasting Satellite Service Operating Bi-Directionally in the 17.3-17.8 GHz Frequency Band, Report and Order and Further Notice of Proposed Rulemaking ( *R&O and FNPRM* ). Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the *FNPRM* provided in paragraph 194 of this *NPRM* . The Commission will send a copy of the *FNPRM* , including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). In addition, the *FNPRM* and IRFA (or summaries thereof) will be published in the **Federal Register** . Need for, and Objectives of, the Proposed Rules 47. The objective of the proposed rules is to address potential interference scenarios which arise in the reverse band operating environment. In the *NPRM* , we sought comment on what measures were needed to address issues concerning reverse band operations. These included measures to mitigate against space-path interference between DBS and 17/24 GHz BSS satellites (space-path interference) and to protect 17/24 GHz BSS subscribers from DBS feeder links (ground-path interference). The record on these issues is insufficient to develop requirements. While most commenters advocate certain general approaches, we need more information to build on the generalities and derive specific requirements. Thus, we seek further comment on the issues concerning reverse band operations. 48. The two types of interference which might occur in the reverse band operating environment are ground path interference and space path interference. Ground path interference will occur when the signals from transmitting DBS feeder link earth stations operating the 17.3-17.7 GHz band are detected at the receiving earth stations of 17/24 GHz BSS subscribers. This interference will be the most severe in areas surrounding the DBS feeder uplink stations. Space path interference will occur when the transmitted signals from 17/24 GHz BSS satellites are received by the feeder link receivers on satellites operating in the DBS service. 49. In order to mitigate against ground path and space path interference, we are proposing a variety of measures, such as the establishment of protection zones, coordination zones, power level limits, geographic restrictions of earth stations, informational requirements for coordination, and required technical showings. Legal Basis 50. This *NPRM* is adopted pursuant to sections 1, 4(i), 7(a), 301, 303(c), 303(f), 303(g), 303(r), 303(y), and 308 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 157(a), 301, 303(c), 303(f), 303(g), 303(r), 303(y), 308. Description and Estimate of the Number of Small Entities to Which the Proposals Will Apply 51. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the rules adopted herein. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which:
(1)Is independently owned and operated;
(2)is not dominant in its field of operation; and
(3)satisfies any additional criteria established by the Small Business Administration (SBA). Below, we further describe and estimate the number of small entity licensees that may be affected by the adopted rules. 52. Satellite Telecommunications. The SBA has developed a small business size standard for the two broad census categories of “Satellite Telecommunications” and “Other Telecommunications.” Under both categories, a business is considered small if it has $13.5 million or less in annual receipts. The category of Satellite Telecommunications “comprises establishments primarily engaged in providing point-to-point telecommunications services to other establishments in the telecommunications and broadcasting industries by forwarding and receiving communications signals via a system of satellites or reselling satellite telecommunications.” For this category, Census Bureau data for 2002 show that there were a total of 371 firms that operated for the entire year. Of this total, 307 firms had annual receipts of under $10 million, and 26 firms had receipts of $10 million to $24,999,999. Consequently, we estimate that the majority of Satellite Telecommunications firms are small entities that might be affected by our action. 53. The category of Other Telecommunications “comprises establishments primarily engaged in
(1)providing specialized telecommunications applications, such as satellite tracking, communications telemetry, and radar station operations; or
(2)providing satellite terminal stations and associated facilities operationally connected with one or more terrestrial communications systems and capable of transmitting telecommunications to or receiving telecommunications from satellite systems.” For this category, Census Bureau data for 2002 show that there were a total of 332 firms that operated for the entire year. Of this total, 259 firms had annual receipts of under $10 million and 15 firms had annual receipts of $10 million to $24,999,999. Consequently, we estimate that the majority of Other Telecommunications firms are small entities that might be affected by our action. 54. Space Stations (Geostationary). Commission records reveal that there are 44 space station licensees. We do not request nor collect annual revenue information concerning such licensees, and thus are unable to estimate the number of geostationary space station licensees that would constitute a small business under the SBA definition cited above, or apply any rules providing special consideration for geostationary space station licensees that are small businesses. 55. 17 GHz Transmitting Earth Stations. Currently there are approximately 47 operational earth stations in the 17.3-17.7 GHz bands. The Commission does not request or collect annual revenue information, and thus is unable to estimate the number of earth stations that would constitute a small business under the SBA definition. 56. Cellular and Other Wireless Telecommunications. The SBA has developed a small business size standard for Cellular and Other Wireless Telecommunications, which consists of all such firms having 1,500 or fewer employees. According to Census Bureau data for 2002, in this category there were 1,397 firms that operated for the entire year. Of this total, 1,378 firms had employment of 999 or fewer employees, and 19 firms had employment of 1,000 employees or more. Thus, under this category and size standard, the majority of firms can be considered small. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements 57. In this Further Notice of Proposed Rulemaking, the Commission invites comment on various issues related to the mitigation of harmful interference in the reverse band operating environment, which is unique to operation in the 17/24 GHz BSS. None of the proposed methods are intended to increase the projected reporting, recordkeeping, and other compliance requirements. Steps Taken To Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered 58. The RFA requires that, to the extent consistent with the objectives of applicable statutes, the analysis shall discuss significant alternatives such as:
(1)The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities;
(2)the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for small entities;
(3)the use of performance, rather than design, standards; and
(4)an exemption from coverage of the rule, or any part thereof, for small entities. 59. The measures proposed are necessary to mitigate against space-path interference between DBS and 17/24 GHz BSS satellites (space-path interference) and to protect 17/24 GHz BSS subscribers from DBS feeder links (ground-path interference). The measures include the establishment of protection zones, coordination zones, power level limits, geographic restrictions of earth stations, and technical showings. We believe that these proposals are the most equitable solutions to the potential interference problems posed by operation in the 17/24 GHz BSS. We seek comment on viable alternatives to these rules or their reporting requirements that would lessen the economic impact on small entities. We also seek comment on the establishment of differing compliance or reporting requirements that take into account the resources available to small entities. Federal Rules That May Duplicate, Overlap, or Conflict With the Proposed Rules 60. None. Comment Filing Procedures 61. Pursuant to §§ 1.415 and 1.419 of the Commission's rules, *47 CFR 1.415, 1.419* , interested parties may file comments in response to this *FNPRM* no later than on or before 75 days after **Federal Register** publication. Reply comments to these comments may be filed no later than on or before 105 days after **Federal Register** publication. All pleadings are to reference IB Docket No. 06-123. Comments may be filed using the Commission's Electronic Comment Filing System
(ECFS)or by filing paper copies. Parties are strongly encouraged to file electronically. See *Electronic Filing of Documents in Rulemaking Proceedings* , 63 FR 24121 (1998). 62. Comments filed through the ECFS can be sent as an electronic file via the Internet to *http://www.fcc/gov/e-file/ecfs.html* . Parties should transmit one copy of their comments to the docket in the caption of this rulemaking. In completing the transmittal screen, commenters should include their full name, U.S. Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic comment by Internet e-mail. To get filing instructions for e-mail comments, commenters should send an e-mail to *ecfs@fcc.gov* and should include the following words in the body of the message, “get form <your e-mail address>.” A sample form and directions will be sent in reply. 63. Parties choosing to file by paper must file an original and four copies of each filing in IB Docket No. 06-123. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail (although we continue to experience delays in receiving U.S. Postal Service mail). If more than one docket or rulemaking number appears in the caption of this proceeding, commenters must submit two additional copies for each additional docket or rulemaking number. The Commission's mail contractor, Natek, Inc., will receive hand-delivered or messenger-delivered paper filings for the Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building. Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service first-class mail, Express Mail, and Priority Mail should be addressed to 445 12th Street, SW., Washington, DC 20554. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission. 64. Comments submitted on diskette should be on a 3.5 inch diskette formatted in an IBM-compatible format using Word for Windows or compatible software. The diskette should be clearly labeled with the commenter's name, proceeding (including the docket number, in this case, IB Docket No. 06-123), type of pleading (comment or reply comment), date of submission, and the name of the electronic file on the diskette. The label should also include the following phrase “Disk Copy—Not an Original.” Each diskette should contain only one party's pleadings, preferably in a single electronic file. 65. All parties must file one copy of each pleading electronically or by paper to each of the following:
(1)The Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone
(202)488-5300, facsimile
(202)488-5563, or via e-mail at *FCC@BCPIWEB.COM.* 66. Comments and reply comments and any other filed documents in this matter may be obtained from Best Copy and Printing, Inc., in person at 445 12th Street, SW., Room CY-B402, Washington, DC 20554, via telephone at
(202)488-5300, via facsimile
(202)488-5563, or via e-mail at *FCC@BCPIWEB.COM.* The pleadings will be also available for public inspection and copying during regular business hours in the FCC Reference Information Center, Room CY-A257, 445 Twelfth Street, SW., Washington, DC 20554 and through the Commission's Electronic Filing System
(ECFS)accessible on the Commission's World Wide Web site, *http://www.fcc.gov.* 67. Comments and reply comments must include a short and concise summary of the substantive arguments raised in the pleading. Comments and reply comments must also comply with § 1.49 and all other applicable sections of the Commission's rules. All parties are encouraged to utilize a table of contents, and to include the name of the filing party and the date of the filing on each page of their submission. We also strongly encourage that parties track the organization set forth in this *NPRM* in order to facilitate our internal review process. 68. Commenters who file information that they believe is proprietary may request confidential treatment pursuant to § 0.459 of the Commission's rules. Commenters should file both their original comments for which they request confidentiality and redacted comments, along with their request for confidential treatment. Commenters should not file proprietary information electronically. *See Examination of Current Policy Concerning the Treatment of Confidential Information Submitted to the Commission, Report and Order, 13 FCC Rcd 24816 (1998), Order on Reconsideration, 14 FCC Rcd 20128 (1999)* . Even if the Commission grants confidential treatment, information that does not fall within a specific exemption pursuant to the Freedom of Information Act
(FOIA)must be publicly disclosed pursuant to an appropriate request. *See 47 CFR 0.461; 5 U.S.C. 552.* We note that the Commission may grant requests for confidential treatment either conditionally or unconditionally. As such, we note that the Commission has the discretion to release information on public interest grounds that does fall within the scope of a FOIA exemption. 69. Accordingly, *it is ordered* that, pursuant to the authority contained in sections 1, 4(i), 4(j), 7(a), 301, 303(c), 303(f), 303(g), 303(r), 303(y), and 308 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 157(a), 301, 303(c), 303(f), 303(g), 303(r), 303(y), 308, this *Further Notice of Proposed Rulemaking is adopted* . 70. *It is further ordered* that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center shall send a copy of this *Further Notice Of Proposed Rulemaking* , including the initial regulatory flexibility analysis, to the Chief Counsel for Advocacy of the Small Business Administration, in accordance with section 603(a) of the Regulatory Flexibility Act, *5 U.S.C. 601, et seq. (1981)* . 71. *It is further ordered* that the Commission *shall send* a copy of this *Further Notice of Proposed Rulemaking* in a report to be sent to Congress and the General Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A). List of Subjects 47 CFR Part 2 Telecommunications. 47 CFR Part 25 Satellites. Federal Communications Commission. Marlene H. Dortch, Secretary. [FR Doc. E7-16565 Filed 8-21-07; 8:45 am] BILLING CODE 6712-01-P FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 73 [DA 07-3558; MB Docket No. 07-165; RM-11371] Radio Broadcasting Services; Blanca, CO AGENCY: Federal Communications Commission. ACTION: Proposed rule. SUMMARY: This document requests comments on a petition for rulemaking filed by Kevin J. Youngers requesting the allotment of Channel 249C2 at Blanca, Colorado, as the community's first local aural transmission service. To accommodate the allotment, United States CP, LLC, permittee on Channel 249A at Westcliffe, Colorado, has consented to substitute Channel 269A for Channel 249A at Westcliffe. Channel 249C2 can be allotted at Blanca, Colorado with a site restriction of 6.6 kilometers (4.1 miles) east of the community at coordinates 37-26-35 NL and 105-26-29 WL . DATES: Comments must be filed on or before October 1, 2007, and reply comments on or before October 16, 2007. ADDRESSES: Federal Communications Commission, 445 Twelfth Street, SW., Washington, DC 20554. In addition to filing comments with the FCC, interested parties should serve the petitioner's counsel as follows: A. Wray Fitch, Esq., Gammon & Grange, PC, 8280 Greensboro Dr., 7th Floor, McLean, VA 22102-3807. FOR FURTHER INFORMATION CONTACT: Victoria McCauley, Media Bureau,
(202)418-2180. SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's Notice of Proposed Rule Making, MB Docket No. 07-165, adopted August 8, 2007, and released August 10, 2007. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY-A257, 445 Twelfth Street, SW, Washington, DC 20554. This document may also be purchased from the Commission's copy contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-378-3160 or *http://www.BCPIWEB.com* . This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, *see* 44 U.S.C. 3506(c)(4). Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding. Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all *ex parte* contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. See 47 CFR 1.1204(b) for rules governing permissible *ex parte* contacts. For information regarding proper filing procedures for comments, see 47 CFR 1.415 and 1.420. List of Subjects in 47 CFR Part 73 Radio, Radio broadcasting For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR Part 73 as follows: PART 73—RADIO BROADCAST SERVICES 1. The authority citation for part 73 continues to read as follows: Authority: 47 U.S.C. 154, 303, 334, 336. § 73.202 [Amended] 2. Section 73.202(b), the Table of FM Allotments under Colorado is amended by adding Blanca, Channel 249C2. Federal Communications Commission. John A. Karousos, Assistant Chief, Audio Division Media Bureau. [FR Doc. E7-16568 Filed 8-21-07; 8:45 am] BILLING CODE 6712-01-P FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 73 [DA 07-3561; MB Docket No. 07-163; RM-11385] Radio Broadcasting Services; Markham, TX AGENCY: Federal Communications Commission. ACTION: Proposed rule. SUMMARY: This document requests comments on a petition for rulemaking filed by Katherine Pyeatt, requesting the allotment of Channel 235A at Markham, Texas, as the community's second local aural transmission service. Channel 235A can be allotted at Markham, Texas, with a site restriction of 12 kilometers (7.5 miles) south at coordinates 28-51-18 NL and 96-02-06 WL . DATES: Comments must be filed on or before October 1, 2007, and reply comments on or before October 16, 2007. ADDRESSES: Federal Communications Commission, 445 Twelfth Street, SW., Washington, DC 20554. In addition to filing comments with the FCC, interested parties should serve the petitioner as follows: Katherine Pyeatt, 3500 Maple Avenue, #1320, Dallas, Texas 75219; Gene Bechtel, Esq., Suite 600, 1050 17th Street, NW., Washington, DC 20036 (Petitioner's counsel). FOR FURTHER INFORMATION CONTACT: Victoria McCauley, Media Bureau,
(202)418-2180. SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's Notice of Proposed Rule Making, MB Docket No. 07-163, adopted August 8, 2007, and released August 10, 2007. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY-A257, 445 Twelfth Street, SW., Washington, DC 20554. This document may also be purchased from the Commission's copy contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-378-3160 or *http://www.BCPIWEB.com* . This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, *see* 44 U.S.C. 3506(c)(4). Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding. Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all *ex parte* contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. See 47 CFR 1.1204(b) for rules governing permissible *ex parte* contacts. For information regarding proper filing procedures for comments, see 47 CFR 1.415 and 1.420. List of Subjects in 47 CFR Part 73 Radio, Radio broadcasting. For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR Part 73 as follows: PART 73—RADIO BROADCAST SERVICES 1. The authority citation for part 73 continues to read as follows: Authority: 47 U.S.C. 154, 303, 334, 336. § 73.202 [Amended] 2. Section 73.202(b), the Table of FM Allotments under Texas is amended by adding Channel 235A at Markham. Federal Communications Commission. John A. Karousos, Assistant Chief, Audio Division Media Bureau. [FR Doc. E7-16566 Filed 8-21-07; 8:45 am] BILLING CODE 6712-01-P DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Part 33 [FAR Case 2006-031; Docket 2007-0001; Sequence 8] RIN 9000-AK79 Federal Acquisition Regulation; FAR Case 2006-031, Enhanced Access for Small Business AGENCIES: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Proposed rule with request for comments. SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) are proposing to amend the Federal Acquisition Regulation
(FAR)to implement Section 857 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364). DATES: Interested parties should submit written comments to the FAR Secretariat on or before October 22, 2007 to be considered in the formulation of a final rule. ADDRESSES: Submit comments identified by FAR case 2006-031 by any of the following methods: • Federal eRulemaking Portal: *http://www.regulations.gov* . Search for any document by first selecting the proper document types and selecting “Federal Acquisition Regulation” as the agency of choice. At the “Keyword” prompt, type in the FAR case number (for example, FAR Case 2006-031) and click on the “Submit” button. You may also search for any document by clicking on the “Advanced search/document search” tab at the top of the screen, selecting from the agency field “Federal Acquisition Regulation”, and typing the FAR case number in the keyword field. Select the “Submit” button. Please include any personal and/or business information inside the document. • Fax: 202-501-4067. • Mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW., Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405. *Instructions* : Please submit comments only and cite FAR case 2006-031 in all correspondence related to this case. All comments received will be posted without change to *http://www.regulations.gov* , including any personal and/or business confidential information provided. FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, Procurement Analyst, at
(202)208-6925 for clarification of content. For information pertaining to status or publication schedules, contact the FAR Secretariat at
(202)501-4755. Please cite FAR case 2006-031. SUPPLEMENTARY INFORMATION: A. Background Section 857 of the John Warner National Defense Authorization Act Fiscal Year 2007 (Pub. L. 109-364) created a higher ceiling for small businesses to use the small claims procedure to appeal a contracting officer’s final decision. This proposed rule amends the FAR to add the higher ceiling at 33.211(a)(4)(v). This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804. B. Regulatory Flexibility Act The Councils do not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, *et seq.* , because this proposed rule does not change the rules for buying and does not add an information collection requirement. An Initial Regulatory Flexibility Analysis has, therefore, not been performed. We invite comments from small businesses and other interested parties. The Councils will consider comments from small entities concerning the affected FAR Part 33 in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 601, *et seq.* (FAR case 2006-031), in correspondence. C. Paperwork Reduction Act The Paperwork Reduction Act does not apply because the proposed changes to the FAR do not impose information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, *et seq.* List of Subjects in 48 CFR Part 33 Government procurement. Dated: August 14, 2007 Al Matera, Director, Office of Acquisition Policy. Therefore, DoD, GSA, and NASA propose amending 48 CFR part 33 as set forth below: 1. The authority citation for 48 CFR part 33 continues to read as follows: Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c). PART 33—PROTESTS, DISPUTES, AND APPEALS 2. Amend section 33.211 by revising paragraph (a)(4) to read as follows: 33.211 Contracting officer’s decision.
(a)* * *
(4)Prepare a written decision that shall include a—
(i)A description of the claim or dispute;
(ii)A reference to the pertinent contract terms;
(iii)A statement of the factual areas of agreement and disagreement;
(iv)A statement of the contracting officer’s decision, with supporting rationale;
(v)Paragraphs substantially as follows: “This is the final decision of the Contracting Officer. You may appeal this decision to the agency board of contract appeals. If you decide to appeal, you must, within 90 days from the date you receive this decision, mail or otherwise furnish written notice to the agency board of contract appeals and provide a copy to the Contracting Officer from whose decision this appeal is taken. The notice shall indicate that an appeal is intended, reference this decision, and identify the contract by number. With regard to appeals to the agency board of contract appeals, you may, solely at your election, proceed under the board’s—
(1)Small claim procedure for claims of $50,000 or less or, in the case of a small business concern (as defined in the Small Business Act and regulations under that Act), $150,000 or less; or
(2)Accelerated procedure for claims of $100,000 or less. Instead of appealing to the agency board of contract appeals, you may bring an action directly in the United States Court of Federal Claims (except as provided in the Contract Disputes Act of 1978, 41 U.S.C. 603, regarding Maritime Contracts) within 12 months of the date you receive this decision”; and
(vi)Demand for payment prepared in accordance with 32.610(b) in all cases where the decision results in a finding that the contractor is indebted to the Government. [FR Doc. 07-4077 Filed 8-21-07; 8:45 am]
Connectionstraces to 14
19 references not yet in our index
  • 18 CFR 410
  • 26 CFR 1
  • Rev. Rul. 2004-43
  • Rev. Rul. 2005-10
  • Pub. L. 105-34
  • 40 CFR 52
  • Pub. L. 104-13
  • Pub. L. 107-198
  • 47 CFR 25.203(c)(2)
  • 47 CFR 1.415
  • 47 CFR 0.461
  • 47 CFR 2
  • 47 CFR 25
  • 47 CFR 73
  • 47 CFR 1.1204(b)
  • 48 CFR 33
  • Pub. L. 109-364
  • 42 USC 2473(c)
  • 41 USC 603
Citation graph
cites case law
Proposed Rules
Proposed rule; notice of public hearing
Fed. Reg.Notices
C.F.R.§ 601.601
U.S.C.§ 7805
U.S.C.§ 704
U.S.C.§ 3506
U.S.C.§ 151
U.S.C.§ 552
U.S.C.§ 601
U.S.C.§ 801
Cite18 CFR 410
Cite26 CFR 1
Rev. Rul.Rev. Rul. 2004-43
Cites 33 · showing 12Cited by 0 across 0 sources
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