Rules and Regulations. Final rule

38,318 words·~174 min read·/register/2007/11/16/07-5689

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

BILLING CODE 3710-08-M DEPARTMENT OF DEFENSE Department of Navy 32 CFR Part 701 Privacy Act of 1974; Implementation AGENCY: U.S. Marine Corps, DoD. ACTION: Final rule. SUMMARY: The U.S. Marine Corps, as a principal component of the Department of Navy, is making this administrative amendment to combine like systems by removing an exempted system of records notice from its inventory, MMN00018, “Base Security Incident Report System”. The records will be maintained in the Department of Navy's exempted system of record notice NM05580-1, “Security Incident System”.

Therefore, the MMN00018, “Base Security Incident Report System” exemption rule system is being deleted. EFFECTIVE DATE: November 16, 2007. FOR FURTHER INFORMATION CONTACT: Ms. Tracy D. Ross at

(703)614-4008. SUPPLEMENTARY INFORMATION: The Department of Navy's exempted system of record notice NM05580-1, “Security Incident System” was published in the **Federal Register** on January 9, 2007 (72 FR 958). List of Subjects in 32 CFR Part 701 Privacy. Accordingly, 32 CFR part 701 subpart G is to be amended as follows: PART 701—AVAILABILITY OF DEPARTMENT OF THE NAVY RECORDS AND PUBLICATION OF DEPARTMENT OF THE NAVY DOCUMENTS AFFECTING THE PUBLIC Subpart G—Privacy Act Exemptions 1. The authority citation for 32 CFR part 701 continues to read as follows: Authority: 5 U.S.C. 552. § 701.129 [Amended] 2. Section 701.129 is amended by removing and reserving paragraph (a). Dated: November 7, 2007. L.M. Bynum, Alternate OSD Federal Register Liaison Officer, Department of Defense. [FR Doc. E7-22195 Filed 11-15-07; 8:45 am] BILLING CODE 5001-06-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 180 [EPA-HQ-OPP-2006-0995; FRL-8134-6] Pendimethalin; Pesticide Tolerance Technical Amendment AGENCY: Environmental Protection Agency (EPA). ACTION: Final rule; technical amendment. SUMMARY: EPA issued a final rule in the **Federal Register** of May 16, 2007, concerning the establishment of tolerances for combined residues of pendimethalin and its metabolites, 4-[(1-ethylpropyl)amino]-2-methyl-3-5-dinitrobenzyl alcohol in or on various commodities. This document is being issued to correct the amendatory language. DATES: This final rule is effective November 16, 2007. ADDRESSES: EPA has established a docket for this action under docket identification

(ID)number EPA-HQ-OPP-2006-0995. To access the electronic docket, go to *http://www.regulations.gov* , select “Advanced Search,” then “Docket Search.” Insert the docket ID number where indicated and select the “Submit” button. Follow the instructions on the regulations.gov web site to view the docket index or access available documents. All documents in the docket are listed in the docket index available in regulations.gov. Although listed in the index, some information is not publicly available, e.g., Confidential Business Information

(CBI)or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either in the electronic docket at *http://www.regulations.gov* , or, if only available in hard copy, at the Office of Pesticide Programs

(OPP)Regulatory Public Docket in Rm. S-4400, One Potomac Yard (South Bldg.), 2777 S. Crystal Drive Arlington, VA. The hours of operation of this Docket Facility are from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The Docket Facility telephone number is

(703)305-5805. FOR FURTHER INFORMATION CONTACT: Phillip V. Errico, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington DC 20460-0001; telephone number:

(703)305-6663; e-mail address: *errico.phillip@epa.gov* . SUPPLEMENTARY INFORMATION: I. General Information A. Does this Action Apply to Me? The Agency included in the final rule a list of those who may be potentially affected by this action. If you have questions regarding the applicability of this action to a particular entity, consult the person listed under the FOR FURTHER INFORMATION CONTACT . B. How Can I Access Electronic Copies of this Document and Other Related Information? In addition to using regulations.gov, you may access this **Federal Register** document electronically through the EPA Internet under the “ **Federal Register** ” listings at *http://www.epa.gov/fedrgstr* . II. What Does this Correction Do? FR Doc. 07-9428 published in the **Federal Register** of May 16, 2007 (72 FR 27456) (FRL-8120-2) is corrected to clarify the amendatory language to paragraph

(a)of § 180.361 as it appeared on page 27460 of the final rule. III. Why is this Correction Issued as a Final Rule? Section 553 of the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(B), provides that, when an Agency for good cause finds that notice and public procedure are impracticable, unnecessary or contrary to the public interest, the Agency may issue a final rule without providing notice and an opportunity for public comment. EPA has determined that there is good cause for making this technical correction final without prior proposal and opportunity for comment, because the use of notice and comment procedures are unnecessary to effectuate this correction. EPA finds that this constitutes good cause under 5 U.S.C. 553(b)(3)(B). IV. Do Any of the Statutory and Executive Order Reviews Apply to this Action? No. This action only corrects the amendatory language for a previously published final rule and does not impose any new requirements. EPA's compliance with the statutes and Executive Order for the underlying rule is discussed in Unit VI. of the May 16, 2007, final rule (72 FR 27456). V. Congressional Review Act The Congressional Review Act, 5 U.S.C. 801 *et seq.* , generally provides that before a rule may take effect, the Agency promulgating the rule must submit a rule report to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of this final rule in the **Federal Register** . This final rule is not a “major rule” as defined by 5 U.S.C. 804(2). List of Subjects in 40 CFR Part 180 Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements. Dated: November 2, 2007. Lois Rossi, Director, Registration Division, Office of Pesticide Programs. Therefore, 40 CFR part 180 is amended as follows: PART 180--[AMENDED] 1. The authority citation for part 180 continues to read as follows: Authority: 21 U.S.C. 321(q), 346a and 371. 2. Section 180.361 is amended in paragraph

(a)in the table by removing “Bean, lima, seed”; “Bean, lima, succulent”; and “Pea, succulent”; by revising “Bean, forage” and “Bean, hay”; and by alphabetically adding “Beans” and “Peas (except field peas)” to read as follows: § 180.361 Pendimethalin; tolerances for residues.

(a)*General* . * * * Commodity Parts per million * * * * * Beans 0.10 Beans, forage 0.10 Beans, hay 0.10 * * * * * Peas (except field peas) 0.10 * * * * * [FR Doc. E7-22354 Filed 11-15-07; 8:45 am] BILLING CODE 6560-50-S 72 221 Friday, November 16, 2007 Proposed Rules DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 7 CFR Part 331 9 CFR Part 121 [Docket No. APHIS-2007-0033] RIN 0579-AC53 Agricultural Bioterrorism Protection Act of 2002; Biennial Review and Republication of the Select Agent and Toxin List AGENCY: Animal and Plant Health Inspection Service, USDA. ACTION: Proposed rule; reopening of comment period. SUMMARY: We are reopening the comment period for our proposed rule that would amend and republish the list of select agents and toxins that have the potential to pose a severe threat to animal or plant health, or to animal or plant products. This action will allow interested persons additional time to prepare and submit comments. DATES: We will consider all comments that we receive on or before December 3, 2007. ADDRESSES: You may submit comments by either of the following methods: • *Federal eRulemaking Portal:* Go to *http://www.regulations.gov* , select “Animal and Plant Health Inspection Service” from the agency drop-down menu, then click “Submit.” In the Docket ID column, select APHIS-2007-0033 to submit or view public comments and to view supporting and related materials available electronically. Information on using Regulations.gov, including instructions for accessing documents, submitting comments, and viewing the docket after the close of the comment period, is available through the site's “User Tips” link. • *Postal Mail/Commercial Delivery:* Please send four copies of your comment (an original and three copies) to Docket No. APHIS-2007-0033, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please state that your comment refers to Docket No. APHIS-2007-0033. *Reading Room:* You may read any comments that we receive on Docket No. APHIS-2007-0033 in our reading room. The reading room is located in room 1141 of the USDA South Building, 14th Street and Independence Avenue, SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call

(202)690-2817 before coming. *Other Information:* Additional information about APHIS and its programs is available on the Internet at *http://www.aphis.usda.gov* . FOR FURTHER INFORMATION CONTACT: For information concerning the regulations in 7 CFR part 331, contact Ms. Gwendolyn Burnett, Select Agent Program Compliance Manager, PPQ, APHIS, 4700 River Road Unit 2, Riverdale, MD 20737-1231,

(301)734-5960. For information concerning the regulations in 9 CFR part 121, contact Dr. Frederick D. Doddy, Veterinary Medical Officer, Animals, Organisms and Vectors, and Select Agents, VS, APHIS, 4700 River Road Unit 2, Riverdale, MD 20737-1231,

(301)734-5960. SUPPLEMENTARY INFORMATION: On August 28, 2007, we published in the **Federal Register** (72 FR 49231-49236, Docket No. APHIS-2007-0033) a proposal that would amend and republish the list of select agents and toxins that have the potential to pose a severe threat to animal or plant health, or to animal or plant products. Comments on the proposed rule were required to be received on or before October 29, 2007. We are reopening the comment period on Docket No. APHIS-2007-0033 for an additional 15 days from the date of this notice. This action will allow interested persons additional time to prepare and submit comments. We will also consider all comments received between October 30, 2007, and the date of this notice. Authority: 7 U.S.C. 8401; 7 CFR 2.22, 2.80, 371.3, and 371.4. Done in Washington, DC, this 9th day of November 2007. Kevin Shea, Acting Administrator, Animal and Plant Health Inspection Service. [FR Doc. E7-22431 Filed 11-15-07; 8:45 am] BILLING CODE 3410-34-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-0177; Directorate Identifier 2007-SW-19-AD] RIN 2120-AA64 Airworthiness Directives; Bell Helicopter Textron Canada

(BHTC)Model 430 Helicopters AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: We propose to adopt a new airworthiness directive

(AD)for BHTC Model 430 helicopters. This proposed AD results from mandatory continuing airworthiness information

(MCAI)originated by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The aviation authority of Canada, with which we have a bilateral agreement, states in the MCAI: It has been determined that the existing rigging procedures for the tail rotor pitch change mechanism have to be changed due to possibility of parts interference. The cumulative effect of individual part tolerances resulting in the total assemblage of those parts being out of tolerance could result in the tail rotor yoke striking another part other than the flapping stop (parts interference) cited in the MCAI. Also, the misalignment of the tail rotor counterweight bellcrank may result in higher tail rotor pedal forces and a higher pilot workload after failure of the #1 hydraulic system. Both parts interference and the misaligned counterweight bellcrank create an unsafe condition. The proposed AD would require actions that are intended to address these unsafe conditions. DATES: We must receive comments on this proposed AD by December 17, 2007. ADDRESSES: You may send comments by any of the following methods: • *Federal eRulemaking Portal:* Go to *http://www.regulations.gov* . Follow the instructions for submitting comments. • *Fax:* 202-493-2251. • *Mail:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. • *Hand Delivery:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Examining the AD Docket You may examine the AD docket on the Internet at *http://www.regulations.gov* , or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the economic evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone

(800)647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. FOR FURTHER INFORMATION CONTACT: Tyrone Millard, Aviation Safety Engineer, FAA, Rotorcraft Directorate, Rotorcraft Standards Staff, Fort Worth, Texas 76193-0111, telephone

(817)222-5439, fax

(817)222-5961. SUPPLEMENTARY INFORMATION: Streamlined Issuance of AD The FAA is implementing a new process for streamlining the issuance of ADs related to MCAI. This streamlined process will allow us to adopt MCAI safety requirements in a more efficient manner and will reduce safety risks to the public. This process continues to follow all FAA AD issuance processes to meet legal, economic, Administrative Procedure Act, and **Federal Register** requirements. We also continue to meet our technical decision-making responsibilities to identify and correct unsafe conditions on U.S.-certificated products. This proposed AD references the MCAI and related service information that we considered in forming the engineering basis to correct the unsafe condition. The proposed AD contains text copied from the MCAI and for this reason might not follow our plain language principles. Comments Invited We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2007-0177; Directorate Identifier 2007-SW-19-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments. We will post all comments we receive, without change, to *http://www.regulations.gov* , including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD. Discussion Transport Canada, which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF-2007-04, dated April 5, 2007 (referred to after this as “the MCAI”), to correct an unsafe condition for this Canadian-certificated product. The MCAI states: It has been determined that the existing rigging procedures for the tail rotor pitch change mechanism have to be changed due to possibility of parts interference. Because the cumulative effect of the tolerances on the various parts may result in the total assemblage outboard of the counterweight bellcrank being out of tolerance, the tail rotor yoke may contact the nut, P/N 222-012-731-001, before contacting the flapping stop, resulting in less tail rotor travel. Additionally, the manufacturer has indicated that the tail rotor counterweight bellcranks may be misaligned, resulting in higher tail rotor pedal forces and higher pilot workload after failure of the #1 hydraulic system. Both the parts interference and the higher pedal forces constitute unsafe conditions. You may obtain further information by examining the manufacturer's service bulletin and the MCAI in the AD docket. Relevant Service Information Bell Helicopter Textron has issued Service Bulletin 430-07-39, dated January 9, 2007. The actions described in the MCAI are intended to correct the same unsafe condition as that identified in the service information. FAA's Determination and Requirements of This Proposed AD This product has been approved by the aviation authority of Canada, and is approved for operation in the United States. Pursuant to our bilateral agreement with this State of Design Authority, we have been notified of the unsafe condition described in the MCAI and the service information. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design. Differences Between This AD and the MCAI or Service Information We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information. We might also have proposed different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are highlighted in the “Differences Between the FAA AD and the MCAI” section in the proposed AD. Costs of Compliance We estimate that this proposed AD would affect about 58 products of U.S. registry. We also estimate that it would take about 2 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $80 per work-hour. A replacement yoke would cost about $21,218, assuming the part is no longer under warranty. However, because the service information lists this part as covered under warranty, we have assumed that there will be no charge for this part, if needed. Therefore, as we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these assumptions and figures, we estimate the cost of the proposed AD on U.S. operators to be $9,280, or $160 per helicopter. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify this proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared an economic evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by adding the following new AD: **Bell Helicopter Textron Canada:** Docket No. FAA-2007-0177; Directorate Identifier 2007-SW-19-AD. Comments Due Date

(a)We must receive comments by December 17, 2007. Other Affected ADs

(b)None. Applicability

(c)This AD applies to Bell Helicopter Textron Canada

(BHTC)Model 430 helicopters with serial numbers 49001 through 49122, certificated in any category. Reason

(d)The mandatory continuing airworthiness information

(MCAI)states: It has been determined that the existing rigging procedures for the tail rotor pitch change mechanism have to be changed due to possibility of parts interference. This “possibility of parts interference” occurs because the cumulative effect of the tolerances on the various parts may result in the total assemblage outboard of the counterweight bellcrank being out of tolerance and the tail rotor yoke may contact nut, P/N 222-012-731-001, before contacting the flapping stop. Further, the manufacturer has indicated that the tail rotor counterweight bellcranks may be misaligned resulting in higher tail rotor pedal forces and higher pilot workload after failure of the #1 hydraulic system. Both the parts interference and the higher pedal forces constitute unsafe conditions. Actions and Compliance

(e)Within the next 150 hours time-in-service

(TIS)or at the next annual inspection, whichever occurs first, unless already done, do the following actions.

(1)Adjust the rigging of the tail rotor pitch change mechanism in accordance with the Accomplishment Instructions, Paragraphs 1 and 2, in Bell Helicopter Textron Alert Service Bulletin 430-07-39, dated January 9, 2007 (ASB).

(2)If either at full left pedal position or full right pedal position a gap exists between the tail rotor yoke and the flapping stop, replace the tail rotor yoke with an airworthy tail rotor yoke.

(3)If no gap exists between the tail rotor yoke and the flapping stop at either full right or full left pedal position, measure the gap between the tail rotor yoke and nut, P/N 222-012-731-001, adjust the tail rotor pitch change mechanism, and adjust the tail rotor pedal forces in accordance with the Accomplishment Instruction, Paragraphs 4 through 6 of the ASB. Differences Between the FAA AD and the MCAI

(f)This AD requires compliance within the next 150 hours TIS or at the next annual inspection, whichever occurs first, instead of “at the next 150 hour or annual inspection but no later than 31 December 2007.” Subject

(g)Air Transport Association of America

(ATA)Code JASC 6720: Tail Rotor Control System, Tail Rotor Pitch Change. Other Information

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

(1)Alternative Methods of Compliance (AMOCs): The Manager, Safety Management Group, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to ATTN: Tyrone Millard, Aviation Safety Engineer, FAA, Rotorcraft Directorate, Rotorcraft Standards Staff, Fort Worth, Texas 76193-0111, telephone

(817)222-5439, fax

(817)222-5961.

(2)Airworthy Product: Use only FAA-approved corrective actions. Corrective actions are considered FAA-approved if they are approved by the State of Design Authority (or their delegated agent) if the State of Design has an appropriate bilateral agreement with the United States. You are required to assure the product is airworthy before it is returned to service.

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

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

(i)MCAI Transport Canada Airworthiness Directive CF-2007-04, dated April 5, 2007, and Bell Helicopter Textron Alert Service Bulletin

(ASB)No. 430-07-39, dated January 9, 2007, contain related information. Issued in Fort Worth, Texas, on November 2, 2007. David A. Downey, Manager, Rotorcraft Directorate, Aircraft Certification Service. [FR Doc. E7-22440 Filed 11-15-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-0178; Directorate Identifier 2007-SW-20-AD] RIN 2120-AA64 Airworthiness Directives; Bell Helicopter Textron Canada

(BHTC)Model 222, 222B, and 222U Helicopters AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: We propose to adopt a new airworthiness directive

(AD)for BHTC Model 222, 222B, and 222U helicopters. This proposed AD results from mandatory continuing airworthiness information

(MCAI)originated by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The aviation authority of Canada, with which we have a bilateral agreement, states in the MCAI: It has been determined that the existing rigging procedures for the tail rotor pitch change mechanism have to be changed due to possibility of parts interference. The cumulative effect of individual part tolerances resulting in the total assemblage of those parts being out of tolerance could result in the tail rotor yoke striking another part other than the flapping stop (parts interference) cited in the MCAI. Also, the misalignment of the tail rotor counterweight bellcrank may result in higher tail rotor pedal forces and a higher pilot workload after failure of the No. 1 hydraulic system. Both parts interference and the misaligned counterweight bellcrank create an unsafe condition. The proposed AD would require actions that are intended to address these unsafe conditions. DATES: We must receive comments on this proposed AD by December 17, 2007. ADDRESSES: You may send comments by any of the following methods: • *Federal eRulemaking Portal:* Go to *http://www.regulations.gov.* Follow the instructions for submitting comments. • *Fax:* 202-493-2251. • *Mail:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. • *Hand Delivery:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Examining the AD Docket You may examine the AD docket on the Internet at *http://www.regulations.gov* , or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the economic evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone

(817)222-5439, fax

(ASB)222-07-104 and ASB 222U-07-75, both dated January 9, 2007. The actions described in the MCAI are intended to correct the same unsafe condition as that identified in the service information. FAA's Determination and Requirements of This Proposed AD This product has been approved by the aviation authority of Canada, and is approved for operation in the United States. Pursuant to our bilateral agreement with this State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design. Differences Between This AD and the MCAI or Service Information We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information. We might also have proposed different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are highlighted in the “Differences Between the FAA AD and the MCAI” section in the proposed AD. Costs of Compliance We estimate that this proposed AD would affect about 86 products of U.S. registry. Also, we estimate that it would take 2 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $80 per work-hour. A replacement yoke would cost about $21,218, assuming the part is no longer under warranty. However, because the service information lists this part as covered under warranty, we have assumed that there will be no charge for this part. Therefore, as we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $13,760, or $160 per helicopter. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify this proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared an economic evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by adding the following new AD: **Bell Helicopter Textron Canada:** Docket No. FAA-2007-0178; Directorate Identifier 2007-SW-20-AD. Comments Due Date

(a)We must receive comments by December 17, 2007. Other Affected ADs

(b)None. Applicability

(c)This AD applies to Bell Helicopter Textron Canada

(BHTC)Model 222, serial numbers (S/N) 47006 through 47089; Model 222B, S/N 47131 through 47156, and Model 222U, all serial numbers, helicopters, certificated in any category. Reason

(d)The mandatory continuing airworthiness information

(MCAI)states: It has been determined that the existing rigging procedures for the tail rotor pitch change mechanism have to be changed due to possibility of parts interference. This “possibility of parts interference” occurs because the cumulative effect of the tolerances on the various parts may result in the total assemblage outboard of the counterweight bellcrank being out of tolerance and the tail rotor yoke may contact nut, P/N 222-012-731-001, before contacting the flapping stop. Further, the manufacturer has indicated that the tail rotor counterweight bellcranks may be misaligned resulting in higher tail rotor pedal forces and higher pilot workload after failure of the No. 1 hydraulic system. Both the parts interference and the higher pedal forces constitute unsafe conditions. Actions and Compliance

(e)Within the next 150 hours time-in-service

(TIS)or at the next annual inspection, whichever occurs first, unless already done, do the following actions.

(1)Adjust the rigging of the tail rotor pitch change mechanism in accordance with the Accomplishment Instructions, Paragraphs 1 and 2, of the applicable Bell Helicopter Textron Alert Service Bulletin

(ASB)listed in the following Table 1: Table 1 Helicopter model Applicable ASB & date 222 and 222B 222-07-104 dated January 9, 2007. 222U 222U-07-75 dated January 9, 2007.

(2)If either at full left pedal position or full right pedal position a gap exists between the tail rotor yoke and the flapping stop, replace the tail rotor yoke with an airworthy tail rotor yoke.

(3)If no gap exists between the tail rotor yoke and the flapping stop at either full right or full left pedal position, measure the gap between the tail rotor yoke and nut, P/N 222-012-731-001, adjust the tail rotor pitch change mechanism, and adjust the tail rotor pedal forces in accordance with the Accomplishment Instruction, Paragraphs 4 through 6, of the ASB listed in Table 1 of the AD. Differences Between the FAA AD and the MCAI

(g)Air Transport Association of America

(ATA)Code JASC 6720: Tail Rotor Control System, Tail Rotor Pitch Change. Other Information

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

(1)Alternative Methods of Compliance (AMOCs): The Manager, Safety Management Group, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to ATTN: Tyrone Millard, Aerospace Engineer; FAA, Rotorcraft Directorate, Rotorcraft Standards Staff, Fort Worth, Texas 76193-0111, telephone

(817)222-5439, fax

(817)222-5961.

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

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

(i)MCAI Transport Canada Airworthiness Directive CF-2007-07, dated April 11, 2007, and Bell Helicopter Textron ASB Nos. 222-07-104 and 222U-07-75, both dated January 9, 2007, contain related information. Issued in Fort Worth, Texas, on November 5, 2007. David A. Downey, Manager, Rotorcraft Directorate, Aircraft Certification Service. [FR Doc. E7-22441 Filed 11-15-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF THE INTERIOR National Indian Gaming Commission 25 CFR Parts 502, 542, 543, 546, and 547 Notice of Extension of Comment Period AGENCY: National Indian Gaming Commission, DOI. SUMMARY: This notice extends the period for comments on the proposed definition for electronic or electromechanical facsimile (72 FR 60482), Class II game classification standards (72 FR 60483), Class II technical standards (72 FR 60495), and Class II minimum internal control standards (72 FR 60508) published in the **Federal Register** on October 24, 2007. DATES: The comment period for the proposed definition for electronic or electromechanical facsimile, Class II game classification standards, Class II technical standards, and Class II minimum internal control standards regulations is extended from December 10, 2007, to January 24, 2008. FOR FURTHER INFORMATION CONTACT: Penny Coleman, John Hay, or Michael Gross at 202/632-7003; fax 202/632-7066 (these are not toll-free numbers). SUPPLEMENTARY INFORMATION: Congress established the National Indian Gaming Commission (NIGC or Commission) under the Indian Gaming Regulatory Act of 1988 (25 U.S.C. 2701 et seq.)

(IGRA)to regulate gaming on Indian lands. On October 24, 2007, the proposed definition for electronic or electromechanical facsimile (72 FR 60482), Class II game classification standards (72 FR 60483), Class II technical standards (72 FR 60495), and Class II minimum internal control standards (72 FR 60508) regulations were published in the **Federal Register** . Dated: November 5, 2007. Philip N. Hogen, Chairman, National Indian Gaming Commission. Cloyce V. Choney, Vice Chairman, National Indian Gaming Commission. Norman H. DesRosiers, Commissioner, National Indian Gaming Commission. 2 [FR Doc. E7-22409 Filed 11-15-07; 8:45 am] BILLING CODE 7565-01-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG-151884-03] RIN 1545-BD81 Update and Revision of Sections 1.381(c)(4)-1 and 1.381(c)(5)-1 AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Notice of proposed rulemaking. SUMMARY: This document contains proposed regulations that provide guidance under sections 381(c)(4) and (c)(5) of the Internal Revenue Code

(Code)relating to the accounting method or combination of methods, including the inventory method, to use after certain corporate reorganizations and tax-free liquidations. These proposed regulations clarify and simplify the existing regulations under sections 381(c)(4) and (c)(5). The regulations affect corporations that acquire the assets of other corporations in transactions described in section 381(a). DATES: Written or electronic comments and requests for a public hearing must be received by February 14, 2008. ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-151884-03), 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-151884-03), 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-151884-03). FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Cheryl Oseekey at

(202)622-4970; concerning submissions of comments and requests for a hearing, Kelly Banks at

(202)622-7180 (not toll-free numbers). SUPPLEMENTARY INFORMATION: Background and Explanation of Provisions Overview Section 381 of the Code was enacted in 1954 to provide statutory authority for determining the carryover of certain tax attributes, including accounting methods, in certain corporate reorganizations and tax-free liquidations. Regulations implementing section 381(c)(4) were issued on August 5, 1964 (29 FR 11263). On August 23, 1972, the IRS proposed to revise these regulations (37 FR 16947). On December 23, 1998, the IRS withdrew the regulations that had been proposed in 1972 (63 FR 71047). Regulations implementing section 381(c)(5) were issued on January 15, 1975 (40 FR 2684). Section 1.381(c)(4)-1 generally provides that after a section 381(a) transaction, the accounting method or combination of methods used by the parties to the section 381(a) transaction prior to the transaction will continue. However, when the accounting methods used prior to the section 381(a) transaction cannot continue to be used after the transaction, § 1.381(c)(4)-1 identifies the accounting method(s) to use after the transaction. Section 1.381(c)(5)-1 provides similar rules regarding inventory accounting methods. The IRS and the Treasury Department are aware that the current regulations are inconsistent in the treatment of adjustments for inventory methods and for other accounting methods, and that there is confusion regarding the appropriate procedure for making accounting method changes required by section 381. In a notice of proposed rulemaking (68 FR 25310) issued on May 12, 2003, regarding sections 263A and 448, the IRS and the Treasury Department indicated that guidance regarding the accounting method(s) to be used after a section 381(a) transaction was contemplated. This notice of proposed rulemaking provides that guidance. This notice of proposed rulemaking generally continues many of the provisions of the regulations originally issued in 1964 and 1975 regarding the accounting method or combination of methods to be used by the corporation that acquires the assets of another corporation in a section 381(a) transaction. However, the following changes to these regulations are proposed. Consistency Between Sections 381(c)(4) and (c)(5) Under the current regulations, there are several inconsistencies between the rules that apply to accounting method changes made pursuant to section 381(c)(4) and those made under section 381(c)(5). The proposed regulations generally make the rules that apply to accounting method changes made pursuant to section 381(c)(4) consistent with the rules that apply to changes made under section 381(c)(5). Determining the Method To Be Used After the Section 381(a) Transaction In general, the current regulations under both sections 381(c)(4) and (c)(5) provide that the accounting method to be used after a section 381(a) transaction by the party that survives the reorganization or liquidation (acquiring corporation) will depend on whether

(1)The parties to the section 381(a) transaction used (or did not use) the same accounting method on the date of the section 381(a) transaction, and

(2)The businesses of the parties to the section 381(a) transaction are combined after the transaction by the party that survives the transaction. If different methods are used and the combined corporations are operated as a single trade or business after the section 381(a) transaction, then the principal and special method (including the inventory method) rules apply. The parties to the section 381(a) transaction determine the principal method by applying various tests under the regulations. The applicable test depends on whether the method under consideration is the overall accounting method, the method for a particular type of goods for which the Code or regulations provide a special method or methods, or an inventory method. The rules under the current regulations also address situations in which there is no principal method, or the principal method does not clearly reflect income. Currently, the regulations provide that if there is no principal method after applying the appropriate test or if that method is impermissible, the Commissioner shall select a suitable accounting method to use after the transaction. The IRS and the Treasury Department believe that the various tests in the regulations and the need for the Commissioner in some situations to select a suitable accounting method to be used after the transaction have caused confusion and have led to controversies between taxpayers and the IRS. In order to eliminate the confusion and uncertainty and provide simplicity and uniformity, the IRS and the Treasury Department propose to provide rules that are similar to the current regulations but have a default rule to determine the principal method. The proposed regulations generally provide under both sections 381(c)(4) and (c)(5) that the accounting method to be used after a section 381(a) transaction by the acquiring corporation will depend on whether

(1)The businesses of the parties to the section 381(a) transaction are combined after the transaction by the acquiring corporation, and

(2)The method is permissible. As under the current regulations, if the trades or businesses of the parties to the section 381(a) transaction are operated as separate trades or businesses after the section 381(a) transaction, an accounting method used by the parties prior to the section 381(a) transaction carries over and is used by the acquiring corporation provided the method is permissible (carryover method). If the trades or businesses of the parties to the section 381(a) transaction are not operated as separate trades or businesses after the section 381(a) transaction, then the acquiring corporation must determine and use the principal method. The proposed regulations provide a general rule that the principal method generally is the accounting method used by the acquiring corporation prior to the section 381(a) transaction. However, there are two exceptions. First, if the acquiring corporation does not have an accounting method for a particular item or type of goods, the principal method is the accounting method for the item or type of goods used by the distributor or transferor corporation prior to the section 381(a) transaction. Second, if the distributor or transferor corporation is larger than the acquiring corporation, the principal methods for the overall accounting method and for the accounting method for a particular item or type of goods are the methods used by the distributor or transferor corporation prior to the section 381(a) transaction. The principal method continues to be determined separately for the overall accounting method and for any special accounting methods, such as an accounting method used for a long-term contract. Under the proposed regulations, whether the distributor or transferor corporation is larger than the acquiring corporation is determined using the test in § 1.381(c)(4)-1 of the current regulations for determining the overall principal method for methods other than inventory. Therefore, the parties to the section 381(a) transaction will compare their relative sizes in terms of total asset bases and gross receipts for both the overall accounting method and for special accounting methods. For inventory, whether the distributor or transferor corporation is larger than the acquiring corporation will be determined based on the value of the inventory using a test similar to the test in § 1.381(c)(5)-1 of the current regulations. The principal method is the inventory method used by the party with the largest fair market value of a particular type of goods. The regulations provide a simplified election that allows the acquiring corporation to apply the principal method test by comparing the value of the entire inventories of the parties to the section 381(a) transaction rather than the value of each particular type of goods. Under the proposed regulations, if the carryover method or principal method is an impermissible method, the acquiring corporation generally must file a request to change to a permissible accounting method. However, if the carryover method is impermissible solely because only a single accounting method with respect to a particular item may be used by the acquiring corporation on the date of the section 381(a) transaction regardless of the number of separate and distinct trades or businesses operated on that date, the acquiring corporation must use the principal method as determined under § 1.381(c)(4)-1(c) of the proposed regulations. All parties to a section 381(a) transaction may request permission to change their accounting methods for the taxable year in which the transaction occurs or is expected to occur under section 446(e). However, the acquiring corporation need not secure the Commissioner's consent to continue a carryover method or use the principal method. Additionally, there is confusion under the current regulations as to whether an accounting method is established immediately upon use of a carryover method or principal method if the method is impermissible, and as to the appropriate remedy if an acquiring corporation discovers after the deadline for filing a request to change an accounting method for the year of the section 381(a) transaction that the carryover method or principal method is an impermissible method. The proposed regulations make it clear that every accounting method, whether it is a carryover method or a principal method, and whether the method is a permissible or impermissible method, is an established accounting method. Therefore, if an acquiring corporation discovers after the deadline for filing a request to change an accounting method for the year of the section 381(a) transaction that it is using an impermissible method, the acquiring corporation must file for an accounting method change to a permissible accounting method for the taxable year following the section 381(a) transaction. Determining Adjustments Arising From a Change in an Accounting Method Under Sections 381(c)(4) and (c)(5) Under the current regulations in § 1.381(c)(4)-1, once a principal method is determined, any party to the section 381(a) transaction that is required to change its accounting method to the principal method must compute the adjustment necessary to reflect the change by determining the difference between its tax liability as reflected on its actual return computed using its old accounting method, and the tax liability reflected on a hypothetical federal income tax return using the new accounting method. This adjustment is computed as if, on the date of the section 381(a) transaction, each changing corporation initiates an accounting method change. If there is an increase or decrease in tax liability, the acquiring corporation takes into account the hypothetical increase or decrease in tax in the taxable year that includes the date of the section 381(a) transaction. The procedures are different for inventory under the current regulations in § 1.381(c)(5)-1. In lieu of the acquiring corporation taking into account the hypothetical increase or decrease in tax in the taxable year that includes the date of the section 381(a) transaction, the acquiring corporation takes the increase or decrease in income attributable to the accounting method change directly into account. The IRS and the Treasury Department believe that the procedures for implementing changes to a principal method under the current regulations have been inconsistently applied and are another source of confusion. The proposed regulations modify § 1.381(c)(4)-1 and generally apply the adjustment methodology used under section 446(e) and § 1.381(c)(5)-1 of the current regulations. The proposed regulations generally make accounting method changes to a principal method and the resulting section 481(a) adjustment, if any, procedurally consistent with accounting method changes made pursuant to section 446(e). Accordingly, the acquiring corporation computes the section 481(a) adjustment necessary to reflect the accounting method change, if any, as if it had initiated an accounting method change for the trade or business required to implement the principal method. The acquiring corporation takes into account the appropriate amount of the section 481(a) adjustment, if any, computed as of the date of the section 381(a) transaction, from the accounting method change as an increase or decrease to its taxable income on the date of the section 381(a) transaction. Furthermore, to simplify the procedures under section 381(a) for accounting method changes, the proposed regulations provide that the rules governing accounting method changes under section 446(e) apply to determine

(1)Whether the section 381(a) accounting method change is implemented with a section 481(a) adjustment or on a cut-off basis,

(2)The computation of the section 481(a) adjustment, and

(3)The appropriate period of taxable years over which the adjustment is included in taxable income. These rules are contained in applicable administrative published procedures that govern voluntary accounting method changes under section 446(e). (See, for example, Rev. Proc. 2002-9 (2002-1 CB 327) (see § 601.601(d)(2)(ii)( *b* ) of this chapter), as modified and clarified by Announcement 2002-17 (2002-1 CB 561), modified and amplified by Rev. Proc. 2002-19 (2002-1 CB 696) (see § 601.601(d)(2)(ii)( *b* ) of this chapter), and amplified, clarified and modified by Rev. Proc. 2002-54 (2002-2 CB 432), and Rev. Proc. 97-27 (1997-1 CB 680) (see § 601.601(d)(2)(ii)( *b* ) of this chapter), as modified and amplified by Rev. Proc. 2002-19, as amplified and clarified by Rev. Proc. 2002-54). For example, if the current administrative procedures allow a section 481(a) adjustment to be taken into account over a period of four years for a particular accounting method change, an acquiring corporation will take into account one-fourth of the section 481(a) adjustment in the taxable year that includes the section 381(a) transaction, and one-fourth of the section 481(a) adjustment in each of the subsequent three years. Time and Manner of Requesting Permission To Change an Accounting Method Under § 1.381(c)(4)-1 or § 1.381(c)(5)-1 Under the current regulations, if the acquiring corporation cannot use a principal method because it is impermissible, that is, it does not clearly reflect income or it conflicts with a closing agreement, or the acquiring corporation does not want to use the principal method even though it is permissible, there is confusion as to the manner in which a taxpayer requests the Commissioner's permission to use a different accounting method. Specifically, it is unclear whether an acquiring corporation may file a Form 3115, Application for Change in Accounting Method, to request the Commissioner's permission or whether the acquiring corporation must file a request for a private letter ruling. The proposed regulations make it clear that a taxpayer must request an accounting method change consistent with the manner in which accounting method changes are requested pursuant to section 446(e), that is, on a Form 3115. The regulations under section 446(e) currently allow taxpayers to request an accounting method change at any time during the taxable year. See § 1.446-1(e)(3)(i). Under §§ 1.381(c)(4)-1(d) and 1.381(c)(5)-1(d) of the current regulations, the time for filing a request for an accounting method change is inconsistent with the section 446(e) regulations. Although the times for filing under these two regulations were consistent when the regulations were initially published, the section 446(e) regulations were subsequently amended without making conforming changes to §§ 1.381(c)(4)-1(d) and 1.381(c)(5)-1(d) of the current regulations. This inconsistency also has caused confusion. Rev. Proc. 2005-63 (2005-2 CB 491) (see § 601.601(d)(2)(ii)( *b* ) of this chapter) was issued to address the problem. The revenue procedure extends the time to file a request to change an accounting method to the later of

(1)The last day of the taxable year in which the distribution or transfer occurred, or

(2)The earlier of

(a)the day that is 180 days after the section 381(a) transaction date, or

(b)the day on which the acquiring corporation files its tax return for the taxable year in which the distribution or transfer occurred. The proposed regulations generally incorporate the time provided in Rev. Proc. 2005-63 for requesting the Commissioner's consent to change an accounting method. The IRS and the Treasury Department intend by this revision generally to conform the due dates for requesting an accounting method change under sections 381(c)(4) and (c)(5) to the due dates for requesting other accounting method changes under section 446(e), while providing sufficient time to request the Commissioner's consent if the section 381(a) transaction occurs at or near the end of a taxable year. Changing Accounting Methods in the Taxable Year of the Section 381(a) Transaction The existing regulations under sections 381(c)(4) and (c)(5) require certain adjustments attributable to an accounting method change to be taken into account entirely in one taxable year. The adjustment required of the acquiring corporation under the existing section 381(c)(4) regulations is to take into account the hypothetical tax increase due to the accounting method change rather than a section 481(a) adjustment. The administrative procedures applicable to voluntary accounting method changes historically have required a section 481(a) adjustment to be taken into account over a period of taxable years. This discrepancy in when the adjustments are taken into account produced an incentive for taxpayers to request a voluntary accounting method change in the year in which the section 381(a) transaction occurred for changes that would result in a positive adjustment while making changes that would result in a negative adjustment under the rules in § 1.381(c)(4)-1 or § 1.381(c)(5)-1 of the current regulations. The IRS generally declined to entertain requests for an accounting method change that otherwise would be effected pursuant to sections 381(c)(4) and (c)(5). More recently, however, the administrative procedures that apply to voluntary accounting method changes have provided for taking positive section 481(a) adjustments into account over a period of taxable years while allowing negative section 481(a) adjustments to be taken into account in the year in which the method change is effected, which lessens the incentive to make an accounting method change under section 446(e) in lieu of section 381(a). Generally, the proposed regulations provide that the acquiring corporation will be permitted to request an accounting method change for the taxable year in which the section 381(a) transaction occurs. The proposed regulations also provide that the other parties to a section 381(a) transaction will be allowed to request accounting method changes for the taxable year that ends with the section 381(a) transaction. For trades or businesses that will not operate as separate trades or businesses after the section 381(a) transaction, an accounting method change will be granted only if the requested method is the method that will continue to be used after the section 381(a) transaction. For example, an acquiring corporation will be granted permission to change an accounting method only if the proposed method will be the principal method on the date of the section 381(a) transaction. The IRS generally will not grant an accounting method change to a distributor or transferor corporation for the taxable year that ends with the section 381(a) transaction if that method must change to a different method under the principal method rules of §§ 1.381(c)(4)-1(c) and 1.381(c)(5)-1(c) of the proposed regulations. Similarly, the IRS generally will not grant an accounting method change to an acquiring corporation in the taxable year that includes the section 381(a) transaction if that method must change to a different method under the principal method rules of §§ 1.381(c)(4)-1(c) and 1.381(c)(5)-1(c) of the proposed regulations. If and when the proposed regulations are finalized, the IRS and the Treasury Department intend to make changes to the administrative procedures applicable to voluntary accounting methods to generally allow changes during the year of a section 381(a) transaction as previously described and will change relevant terms and conditions, as needed, particularly for taxpayers who are under exam or in appeals. Audit Protection Changes to the principal method under §§ 1.381(c)(4)-1 and 1.381(c)(5)-1 of the current regulations are made without audit protection. The IRS and the Treasury Department believe that audit protection is not warranted when either the carryover method or principal method, as applicable, is used in the context of voluntary compliance under sections 381(c)(4) and (c)(5). Unlike accounting method changes under section 446(e) for which a taxpayer must disclose its use of an improper accounting method as part of the accounting method change process, changes to a principal method pursuant to §§ 1.381(c)(4)-1 and 1.381(c)(5)-1 of the current regulations are made by the taxpayer on the tax return without disclosing the change on a Form 3115, Application for Change in Accounting Method. The IRS and the Treasury Department, however, believe that audit protection is warranted when an accounting method other than the carryover method or principal method is used in the context of voluntary compliance under sections 381(c)(4) and (c)(5). Under the proposed regulations, a taxpayer using an improper accounting method may request permission to change the method at any time before the end of its taxable year. Thus, if the acquiring corporation is using an improper accounting method or would be required to use an improper accounting method because of the application of § 1.381(c)(4)-1 or § 1.381(c)(5)-1 of the proposed regulations, it can request consent to change to a proper accounting method. That change will be accorded the usual audit protection procedures provided in guidance issued under section 446(e) for the requested change. Similarly, if another party to the section 381(a) transaction is using an improper accounting method, it may request consent to change to a proper accounting method at any time prior to the section 381(a) transaction. That change also will be accorded the usual audit protection procedures provided in guidance issued under section 446(e) for the requested change. Proposed Effective/Applicability Date These regulations are proposed to apply to corporate reorganizations and tax-free liquidations described in section 381(a) that occur on or after the date these regulations are published as final regulations in the **Federal Register** . Special Analyses It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It is hereby certified that these regulations will not have a significant economic impact on a substantial number of small entities. Therefore, a regulatory flexibility analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Although there is a lack of available data regarding the extent to which small entities engage in the corporate reorganizations and tax-free liquidations described in section 381(a), this certification is based on the belief of the IRS and the Treasury Department that these transactions generally involve larger entities. Notwithstanding this certification that only large entities are affected, these proposed regulations will not have a significant economic impact on large or small taxpayers. These proposed regulations will reduce burden on taxpayers by clarifying existing rules and simplifying the procedures for requesting changes in accounting methods to methods other than the carryover or principal methods. Additionally, these proposed regulations make the implementation rules more consistent with the general rules for changes in accounting methods. Therefore, because these proposed regulations would generally clarify and simplify existing rules, these regulations will not have a significant economic impact on a substantial number of small entities. The IRS and the Treasury Department specifically solicit comment from any party, particularly affected small entities, on the accuracy of this certification. 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 Requests for Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed original and 8 copies) or electronic comments that are submitted timely to the IRS. The IRS and the Treasury Department want to provide clear, consistent, and administrable rules that will reduce the uncertainty and controversy in this area. Thus, the IRS and the Treasury Department request comments on the clarity of the proposed rules and how they can be made easier to understand. Topics on which comments are requested include:

(1)In determining the relative sizes of the parties to a section 381(a) transaction, is it appropriate to calculate the gross receipts for a representative period by examining the gross receipts that are properly recognized under the acquiring corporation's and the distributor or transferor corporation's accounting method used for that period for federal income tax purposes, and

(2)For a taxpayer using the last-in, first-out

(LIFO)inventory method, should the principal method be applied at the level of each particular type of goods, or to pools of goods? All comments will be made available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the **Federal Register** . Drafting Information The principal author of these regulations is Cheryl Oseekey, Office of Associate Chief Counsel (Income Tax and Accounting). However, other personnel from the IRS and the Treasury Department participated in their development. List of Subjects in 26 CFR 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 1.381(c)(4)-1 also issued under 26 U.S.C. 381(c)(4). * * * Section 1.381(c)(5)-1 also issued under 26 U.S.C. 381(c)(5). * * * **Par. 2.** In § 1.381(a)-1, paragraph (b)(1)(i) is revised and paragraph

(e)is added to read as follows: § 1.381(a)-1 General rule relating to carryovers in certain corporate acquisitions.

(b)* * *

(1)* * *

(i)The complete liquidation of a subsidiary corporation upon which no gain or loss is recognized in accordance with the provisions of section 332;

(e)*Effective/applicability date.* The rules of paragraph (b)(1)(i) of this section apply to corporate reorganizations and tax-free liquidations described in section 381(a) that occur on or after the date of publication of the Treasury decision adopting these rules as final regulations in the **Federal Register** . **Par. 3.** Section1.381(c)(4)-1 is revised to read as follows: § 1.381(c)(4)-1 Accounting method.

(a)*Introduction* —(1) *Purpose.* This section provides guidance regarding the accounting method or combination of methods (other than inventory and depreciation accounting methods) an acquiring corporation must use following a distribution or transfer to which sections 381(a) and (c)(4) apply and how to implement any associated accounting method changes. See § 1.381(c)(5)-1 for guidance regarding the inventory accounting methods an acquiring corporation must use following a distribution or transfer to which sections 381(a) and (c)(5) apply. See § 1.381(c)(6)-1 for guidance regarding the depreciation accounting methods an acquiring corporation must use following a distribution or transfer to which sections 381(a) and (c)(6) apply.

(2)*Carryover requirement* —(i) *In general.* In a transaction to which section 381(a) applies, if an acquiring corporation operates the trades or businesses of the parties to the section 381(a) transaction as separate and distinct trades or businesses after the date of distribution or transfer, then the acquiring corporation generally must use the same accounting method(s) used by the distributor or transferor corporation(s) on the date of distribution or transfer for the acquired trade or business (carryover method). If an acquiring corporation does not operate the trades or businesses of the parties to the section 381(a) transaction as separate and distinct trades or businesses after the date of distribution or transfer, then the acquiring corporation must use a principal method as determined under paragraph

(c)of this section and must take into account any section 481(a) adjustment, if applicable, as required under paragraph (d)(1) of this section. The acquiring corporation need not secure the Commissioner's consent to continue or to use a permissible carryover method or principal method.

(ii)*Carryover method or principal method not permissible.* In general, if a carryover method or principal method is an impermissible accounting method, the acquiring corporation must secure the Commissioner's consent to change to a different accounting method as provided in paragraph (d)(2) of this section. If, however, a carryover method is impermissible solely because only a single accounting method with respect to a particular item may be used by the acquiring corporation after the date of the section 381(a) transaction regardless of the number of separate and distinct trades or businesses operated on that date, the acquiring corporation must use a principal method as determined under paragraph

(c)of this section.

(iii)*Voluntary change.* All parties to a section 381(a) transaction may request permission under section 446(e) to change an accounting method for the taxable year in which the transaction occurs or is expected to occur. For trades or businesses that will not operate as separate trades or businesses after the section 381(a) transaction, an accounting method change will be granted only if the requested method is the method that the acquiring corporation must use after the date of the distribution or transfer in the taxable year that includes the section 381(a) transaction. The time and manner of obtaining the Commissioner's consent to change to a different accounting method is described in paragraph (d)(2) of this section.

(iv)*Examples.* The following examples illustrate the rules of this paragraph (a): *Example 1.* * Separate and distinct trades or businesses after the date of the distribution or transfer * —(i) *Facts.* X Corporation operates an employment agency that uses the overall cash receipts and disbursements accounting method. T Corporation operates an educational institution that uses an overall accrual method. X Corporation acquires the assets of T Corporation in a transaction to which section 381(a) applies. X Corporation operates the employment agency and educational institution as separate and distinct trades or businesses after the date of the section 381(a) transaction.

(ii)*Conclusion.* After the section 381(a) transaction, X Corporation will use the cash receipts and disbursements method for the employment agency and an accrual method for the educational institution. X Corporation need not secure the Commissioner's consent to continue either accounting method. Example 2. Carryover of special accounting * method—*

(i)*Facts* . X Corporation provides personal grooming consulting and T Corporation provides weight management consulting. Both X Corporation and T Corporation use an overall accrual method. X Corporation acquires all of the assets of T Corporation in a transaction to which section 381(a) applies. X Corporation operates the personal grooming and weight management consulting businesses as separate and distinct trades or businesses after the date of the section 381(a) transaction. X Corporation has made an election to use the recurring item exception under § 1.461-4(h). T Corporation has not.

(ii)*Conclusion.* After the section 381(a) transaction, X Corporation will use an overall accrual method for both the personal grooming consulting business and the weight management consulting business. X Corporation must continue to use the recurring item exception under § 1.461-4(h) for the personal grooming consulting business. X Corporation need not secure the Commissioner's consent to continue its overall accrual method and the recurring item exception under § 1.461-4(h) for the personal grooming consulting business. Example 3. One accounting method allowed—

(i)*Facts.* X Corporation is an engineering firm that uses the overall cash receipts and disbursements accounting method and has elected under section 171 to amortize bond premium with respect to its taxable bonds acquired at a premium. T Corporation is a manufacturer that uses an overall accrual accounting method and has not made a section 171 election to amortize bond premium with respect to its taxable bonds acquired at a premium. X Corporation acquires the assets of T Corporation in a transaction to which section 381(a) applies. X Corporation operates the engineering firm and manufacturing operations as separate and distinct trades or businesses after the date of the section 381(a) transaction.

(ii)*Conclusion.* After the section 381(a) transaction, X Corporation will use the cash receipts and disbursements method for the engineering firm and an overall accrual method for the manufacturing operations. X Corporation may not continue separate accounting methods for amortizable bond premium, notwithstanding that it has two separate and distinct trades or businesses, because a taxpayer is permitted only one accounting method for amortizable bond premium. For both trades or businesses, X Corporation must use the principal method for bond premium as determined under paragraph

(c)of this section. X Corporation will make the necessary changes to this principal method using the procedures described in paragraph (d)(1) of this section. Further, if the principal method is not to amortize bond premium, X Corporation may make an election to amortize bond premium to the extent permitted by section 171. See paragraph (e)(2) of this section. *Example 4.* *Voluntary change* —(i) *Facts.* The facts are the same as in *Example 1* except that X Corporation wants to cease using an overall accrual method for the educational institution and change to the cash receipts and disbursements method.

(ii)*Conclusion.* X Corporation must secure the Commissioner's consent to use the cash receipts and disbursements method for the educational institution by filing a Form 3115, Application for Change in Accounting Method, as described in paragraph (d)(2) of this section.

(b)*Definitions* —(1) *Accounting method* has the same meaning as provided in section 446 and any applicable regulations.

(2)*Special accounting method* is a method expressly permitted or required by the Code, Income Tax Regulations, or administrative guidance published in the Internal Revenue Bulletin that deviates from the normal application of the cash receipts and disbursements method or an accrual method. For example, the installment method under section 453 and the mark-to-market method under section 475 are special accounting methods. See § 1.446-1(c)(1)(iii).

(3)*Principal method* is an accounting method that is determined under paragraph

(c)of this section.

(4)*Adopting an accounting method* has the same meaning as provided in § 1.446-1(e)(1).

(5)*Changing an accounting method* has the same meaning as provided in § 1.446-1(e)(2).

(6)*Acquiring corporation* has the same meaning as provided in § 1.381(a)-1(b)(2).

(7)*Distributor corporation* means the corporation, foreign or domestic, that distributes its assets to another corporation described in section 332(b) in a distribution to which section 332 (relating to liquidations of subsidiaries) applies.

(8)*Transferor corporation* means the corporation, foreign or domestic, that transfers its assets to another corporation in a transfer to which section 361 (relating to nonrecognition of gain or loss to corporations) applies, but only if—

(i)The transfer is in connection with a reorganization described in section 368(a)(1)(A), (C), or (F), or

(ii)The transfer is in connection with a reorganization described in section 368(a)(1)(D) or (G), provided the requirements of section 354(b) are met.

(9)*Parties to the section 381(a) transaction* means the acquiring corporation and the distributor or transferor corporation(s) that participate in a transaction to which section 381(a) applies.

(10)*Date of distribution or transfer* has the same meaning as provided in section 381(b)(2) and § 1.381(b)-(1)(b).

(11)*Separate and distinct trades or businesses* has the same meaning as provided in § 1.446-1(d).

(12)*Gross receipts* means all the receipts in the appropriate period that must be recognized under the acquiring corporation's and the distributor or transferor corporation's accounting method actually used in that period (determined without regard to this section) for federal income tax purposes. For example, gross receipts includes income from investments, amounts received for services, rents, total sales (net of returns and allowances) and interest.

(13)*Audit protection* means that the IRS will not require the corporation required to change its accounting method under this section to change its method for the same item for a taxable year prior to the taxable year of the section 381(a) transaction requiring the change in accounting method.

(14)*Section 481(a) adjustment* means an adjustment that must be taken into account as required under section 481(a) to prevent amounts from being duplicated or omitted when the taxable income of a taxpayer is computed under an accounting method different from the method used to compute taxable income for the preceding taxable year.

(15)*Cut-off basis* means an accounting method change made without a section 481(a) adjustment and under which only the items arising on or after the date the accounting method change is made are accounted for under the new accounting method.

(16)*Adjustment period* means the number of taxable years for taking into account the section 481(a) adjustment required as a result of an accounting method change.

(c)*Principal method* —(1) *In general.* The principal methods for the overall accounting method and for all accounting methods for particular items generally are the accounting methods used by the acquiring corporation immediately prior to the date of the section 381(a) transaction (acquiring corporation's carryover method(s)). If, however, the acquiring corporation does not have an accounting method for a particular item or if the distributor or transferor corporation is larger, the principal methods are the methods used by the distributor or transferor corporation immediately prior to the date of the transaction (distributor or transferor corporation's carryover method). The distributor or transferor corporation is larger if the—

(i)Adjusted bases of the distributor or transferor corporation's assets (determined under section 1011 and the regulations thereunder) exceed the adjusted bases of the acquiring corporation's assets immediately prior to the date of distribution or transfer, and

(ii)The distributor or transferor corporation's gross receipts for a representative period (generally the most recent period of 12 consecutive calendar months ending on the date of distribution or transfer) exceed the acquiring corporation's gross receipts for the same period.

(2)*Examples.* The following examples illustrate the rules of this paragraph (c): Example 1. *Principal method is the acquiring corporation's carryover method* —(i) *Facts.* X Corporation and T Corporation operate employment agencies. X Corporation uses the overall cash receipts and disbursements accounting method while T Corporation uses an overall accrual method. X Corporation acquires the assets of T Corporation in a transaction to which section 381(a) applies. The adjusted bases of X Corporation's assets immediately prior to the transaction exceed the adjusted bases of T Corporation's assets and X Corporation's gross receipts for the representative period are more than T Corporation's gross receipts for the period. The employment agencies are not operated as separate and distinct trades or businesses after the date of the distribution or transfer.

(ii)*Conclusion.* Because the adjusted bases of the assets and the gross receipts of X Corporation exceed the adjusted bases of the assets and the gross receipts of T Corporation, the accounting method used by X Corporation immediately prior to the date of the section 381(a) transaction is the principal method. After the section 381(a) transaction, X Corporation uses the cash receipts and disbursements method for the employment agency business operated by X Corporation prior to the section 381(a) transaction. X Corporation need not secure the Commissioner's consent to use this method. However, X Corporation must change the accounting method for the employment agency business acquired from T Corporation to the cash receipts and disbursements method and take into account the applicable section 481(a) adjustment as provided in paragraph (d)(1) of this section. Example 2. *Principal method is the acquiring corporation's carryover method* —(i) *Facts.* The facts are the same as in *Example 1* except that T Corporation's gross receipts for the representative period exceed X Corporation's gross receipts.

(ii)*Conclusion.* Because the gross receipts of T Corporation exceed the gross receipts of X Corporation but the adjusted bases of the assets of T Corporation do not exceed the adjusted bases of the assets of X Corporation, the accounting method used by X Corporation immediately prior to the date of the section 381(a) transaction is the principal method. After the section 381(a) transaction, X Corporation will use the cash receipts and disbursements method for the employment agency business operated by X Corporation prior to the section 381(a) transaction. X Corporation need not secure the Commissioner's consent to use this method. However, X Corporation must change the accounting method for the employment agency business acquired from T Corporation to the cash receipts and disbursements method and take into account the applicable section 481(a) adjustment as provided in paragraph (d)(1) of this section. Example 3. *Principal method is the distributor or transferor corporation's carryover method* —(i) *Facts.* The facts are the same as in *Example 1* except that the adjusted bases of T Corporation's assets immediately prior to the section 381(a) transaction exceed the adjusted bases of Corporation X's assets and T Corporation's gross receipts for the representative period are more than X Corporation's gross receipts for the period.

(ii)*Conclusion.* Because the adjusted bases of the assets and the gross receipts of T Corporation exceed the adjusted bases of the assets and the gross receipts of X Corporation, the accounting method used by T Corporation immediately prior to the date of the section 381(a) transaction is the principal method. After the section 381(a) transaction, X Corporation uses an overall accrual method for the employment agency business operated by T Corporation prior to the section 381(a) transaction. X Corporation need not secure the Commissioner's consent to use this method. However, X Corporation must change the accounting method for the employment agency business operated by X Corporation prior to the section 381(a) transaction to an overall accrual method and take into account the applicable section 481(a) adjustment as provided in paragraph (d)(1) of this section. If X Corporation chooses, it may request the Commissioner's consent to change to the cash receipts and disbursements method, if permissible, or some other permissible method as provided in paragraph (d)(2) of this section. Example 4. *Impermissible method* —(i) *Facts.* The facts are the same as in *Example 1* except that X Corporation is prohibited under section 448 from using the cash receipts and disbursements method after the date of the section 381(a) transaction.

(ii)*Conclusion.* Because X Corporation is not permitted under section 448 to use the cash receipts and disbursements method, X Corporation must request permission to change to a permissible method as provided in paragraph (d)(2) of this section. Example 5. *Principal method is the acquiring corporation's carryover method with a special accounting method* —(i) *Facts.* X Corporation and T Corporation publish magazines. X Corporation acquires the assets of T Corporation in a transaction to which section 381(a) applies. Both X Corporation and T Corporation use an overall accrual method. X Corporation has elected to defer income from its subscription sales under section 455. T Corporation has not elected to defer income from its subscription sales under section 455 and instead has recognized the income from these sales in accordance with section 451. The adjusted bases of X Corporation's assets immediately prior to the section 381(a) transaction exceed the adjusted bases of T Corporation's assets and X Corporation's gross receipts for the representative period are more than T Corporation's gross receipts for the period. The publication businesses are not operated as separate and distinct trades or businesses after the date of the distribution or transfer.

(ii)*Conclusion.* Because the adjusted bases of the assets and the gross receipts of X Corporation exceed the adjusted bases of the assets and the gross receipts of T Corporation, the accounting method used by X Corporation immediately prior to the date of the section 381(a) transaction is the principal method. After the section 381(a) transaction, X Corporation will continue to use its overall accrual method and the section 455 deferral method. X Corporation need not secure the Commissioner's consent to continue to use its overall accrual method and the section 455 deferral method. However, under paragraph (d)(1) of this section X Corporation must change its accounting method for the magazine business acquired from T Corporation to the section 455 deferral method using a cut-off basis. Example 6. *Principal method is the acquiring corporation's carryover method with a special accounting method* —(i) *Facts.* The facts are the same as in *Example 5* except that T Corporation's gross receipts for the representative period exceed X Corporation's gross receipts for the period.

(d)*Procedures for changing accounting methods* —(1) *Change made to principal method* —(i) *Section 481(a) adjustment* —(A) *In general.* The acquiring corporation does not need to secure the Commissioner's consent to use a principal method. To the extent use of a principal method constitutes a change in an accounting method, the change in accounting method is treated as a change initiated by the acquiring corporation for purposes of section 481(a)(2). Any change to a principal method under paragraph (c)(1) of this section, whether the change relates to the trade or business of the acquiring corporation or the trade or business of the distributor or transferor corporation, must be reflected on the acquiring corporation's federal income tax return for the taxable year that includes the date of distribution or transfer. The amount of the section 481(a) adjustment and the adjustment period, if any, necessary to implement this accounting method change are determined under § 1.446-1(e) and the applicable administrative procedures that govern voluntary changes in accounting methods under section 446(e). The appropriate section 481(a) adjustment as determined above is included in the taxable income of the acquiring corporation for the taxable year that includes the date of distribution or transfer and subsequent taxable year(s), as necessary. Thus, if the administrative procedures require that an accounting method change be implemented on a cut-off basis, the acquiring corporation must implement the change, on a cut-off basis as of the date of distribution or transfer, on its federal income tax return for the taxable year that includes the date of distribution or transfer. If the administrative procedures require a section 481(a) adjustment, the acquiring corporation must determine the section 481(a) adjustment and include the appropriate amount of the section 481(a) adjustment on its federal income tax return for the taxable year that includes the date of distribution or transfer and subsequent taxable year(s), as necessary. This adjustment is determined by the acquiring corporation as of the beginning of the day that is immediately after the day on which the section 381(a) transaction occurs.

(B)*Example.* The following example illustrates the rules of this paragraph (d)(1)(i): Example. X Corporation uses the overall cash receipts and disbursements accounting method while T Corporation uses an overall accrual method. X Corporation acquires the assets of T Corporation in a transaction to which section 381(a) applies. X Corporation determines that under the rules of paragraph (c)(1) of this section, X Corporation must change the accounting method for the business acquired from T Corporation to the cash receipts and disbursements method. X Corporation will determine the section 481(a) adjustment pertaining to the change to the cash receipts and disbursements method by consolidating the adjustments (whether the amounts thereof represent increases or decreases in items of income or deductions) arising with respect to balances in the various accounts, such as accounts receivable, as of the beginning of the day that immediately follows the day on which X Corporation acquires the assets of T Corporation. This adjustment, or an appropriate part thereof, will be reflected on the federal income tax return filed by X Corporation for the taxable year that includes this section 381(a) transaction.

(ii)*Audit protection.* Notwithstanding any other provision in any other regulation or administrative procedure, no audit protection is provided for any change in accounting method under paragraph (d)(1)(i) of this section.

(iii)*Other terms and conditions.* Except as otherwise provided in this section, other terms and conditions provided in § 1.446-1(e) and the applicable administrative procedures that govern voluntary accounting method changes under section 446(e) apply to a change in accounting method under this section. Thus, for example, if the administrative procedures that govern a particular accounting method change have a term and condition that provides for the acceleration of the section 481(a) adjustment period, this term and condition applies to changes made under this paragraph (d)(1). Similarly, if the administrative procedures provide as a term and condition that an identical accounting method change is barred for a period of years, this term and condition applies to changes made under this paragraph (d)(1) to bar future changes of that accounting method, if identical, for the same period, but not changes to the principal method under this section.

(2)*Change made to an accounting method other than the principal method or a carryover method.* A party to a section 381(a) transaction that desires to change to an accounting method other than the principal method as determined under paragraph

(c)of this section, or a carryover method within the meaning of paragraph (a)(2)(i) of this section, must follow the provisions of § 1.446-(1)(e) that govern the accounting method change, except that for an accounting method change requiring advance consent—

(i)Under the authority of § 1.446-1(e)(3)(ii), the application for accounting method change (for example, Form 3115) must be filed with the IRS on or before the later of—

(A)The due date for filing a Form 3115 as specified in § 1.446-1(e), for example, the last day of the taxable year in which the distribution or transfer occurred, or

(B)The earlier of— ( *1* ) The day that is 180 days after the date of the distribution or transfer, or ( *2* ) The day on which the acquiring corporation files its federal income tax return for the taxable year in which the distribution or transfer occurred; and ( *3* ) An application on Form 3115 filed with the IRS should be labeled “Filed under section 381(c)(4)” at the top.

(e)*Rules and procedures* —(1) *No accounting method.* If a party to a section 381(a) transaction is not using an accounting method, does not have an accounting method for a particular item, or came into existence as a result of the transaction, the party will not be treated as having an accounting method different from that used by the other parties to the section 381(a) transaction.

(2)*Elections and adoptions allowed.* An acquiring corporation is not precluded by section 381(c)(4) or these regulations from making any election for the taxable year that includes the date of distribution or transfer that does not require the Commissioner's consent and that is otherwise permissible. Similarly, an acquiring corporation may adopt any accounting method in that year that is otherwise permissible.

(3)*Elections continue after section 381(a) transaction* —(i) *General rule.* The acquiring corporation is not required to renew any election previously made by it or by a distributor or transferor corporation with respect to a carryover method or principal method if the acquiring corporation uses the method after a section 381(a) transaction. Furthermore, an election previously made by an acquiring corporation or by a distributor or transferor corporation with respect to a method that is in effect immediately prior to the date of distribution or transfer continues to the same extent as though the distribution or transfer had not occurred.

(ii)*Examples.* The following examples illustrate the rules of this paragraph (e)(3): Example 1. *Election continues.* The acquiring corporation, X Corporation, has previously elected to treat animals purchased for dairy purposes as property used in its trade or business subject to depreciation after maturity while otherwise using the unit-livestock-price method. X Corporation's accounting method continues after its merger with T Corporation in a transaction to which section 381(a) applies. X Corporation is not required to renew its election, and is bound by it, after the section 381(a) transaction. Example 2. *Election continues.* The acquiring corporation, X Corporation, has previously elected under section 171 to amortize bond premium with respect to taxable bonds. X Corporation's method for bond premium continues after T Corporation merges with X Corporation in a transaction to which section 381(a) applies. X Corporation is not required to renew its election, and is bound by it, after the section 381(a) transaction.

(4)A *ppropriate times for determining the method used and trade or business character* —(i) *Determining the accounting method.* The accounting method existing at the time of a section 381(a) transaction is the method used immediately prior to the distribution or transfer by the parties to the transaction.

(ii)*Determining whether there are separate trades or businesses after a section 381(a) transaction.* Whether an acquiring corporation will operate the trades or businesses of the parties to a section 381(a) transaction as separate and distinct trades or businesses after the distribution or transfer will be determined as of the time of the transaction based upon the facts and circumstances. Intent to combine books and records of the trades or businesses may be demonstrated by contemporaneous records and documents or by other objective evidence that reflects the acquiring corporation's ultimate plan of operation, even though the actual combination of the books and records may extend beyond the end of the taxable year in which the section 381(a) transaction occurs.

(5)*Representative period for accumulating gross receipts.* If a party to the section 381(a) transaction was not in existence for the 12 consecutive months immediately prior to the date of distribution or transfer, then all parties to the section 381(a) transaction will compare their gross receipts for the period that the party was in existence. For example, if the acquiring corporation was formed in August and the section 381(a) transaction occurred in December of the same year, the gross receipts for those five months will be compared with the gross receipts of the other parties to the section 381(a) transaction for the same period.

(6)*Establishing an accounting method.* Notwithstanding any other provision in any other regulation or administrative procedure, an accounting method used by the distributor or transferor corporation immediately prior to the date of distribution or transfer that continues to be used by the acquiring corporation in the taxable year that includes the date of distribution or transfer is an established method of accounting for purposes of section 446(e).

(7)*Other applicable provisions.* Section 381(c)(4) and these regulations do not preempt any other section of the Code or regulations that is applicable to the acquiring corporation's circumstances. For example, income, deductions, credits, allowances, and exclusions may be allocated among the parties to a section 381(a) transaction and other taxpayers under sections 269 and 482, if appropriate. Similarly, transfers of contracts accounted for using a long-term contract accounting method are governed by the rules provided in § 1.460-4(k). Further, if other paragraphs of section 381(c) apply for purposes of determining accounting methods that carryover in a section 381(a) transaction, section 381(c)(4) and this § 1.381(c)(4)-1 will not apply to the tax treatment of the items. For example, section 381(c)(4) and these regulations do not apply to inventories that an acquiring corporation obtains in a transaction to which section 381(a) applies. Instead, the rules of section 381(c)(5) and § 1.381(c)(5)-1 govern the inventory method to be used by the acquiring corporation after the distribution or transfer. Similarly, if the acquiring corporation assumes an obligation of the distributor or transferor corporation that gives rise to a liability, within the meaning of § 1.381(c)(16)-1(a)(4), the deductibility of the item is determined under section 381(c)(4) and these regulations only after the rules of section 381(c)(16) and its regulations are applied.

(8)*Character of items of income and deduction.* Items of income and deduction have the same character in the hands of the acquiring corporation as they would have had in the hands of the distributor or transferor corporation if no distribution or transfer had occurred.

(9)*Accounting method selected by project or job.* If other sections of the Code or regulations permit an acquiring corporation to elect an accounting method on a project-by-project, job-by-job, or other similar basis, the method elected with respect to each project or job is the established method only for that project or job. For example, the election under section 460 to classify a “hybrid contract,” that is, a contract to perform both manufacturing and construction activities, as a long-term construction contract if at least 95 percent of the estimated total allocable contract costs are reasonably allocated to the construction activities is made on a contract-by-contract basis. Accordingly, the accounting method previously elected for a project or job generally continues after the section 381(a) transaction. However, if the trades or businesses of the parties to a section 381(a) transaction are not operated as separate and distinct trades or businesses after the date of distribution or transfer, and two or more of the parties to the section 381(a) transaction previously worked on the same project or job and used different accounting methods for the project or job immediately before the distribution or transfer, then the acquiring corporation must determine the method to use after the section 381(a) transaction as provided in paragraph

(c)of this section.

(10)*Prohibited accounting methods.* An acquiring corporation may not use the accounting method determined under paragraph (a)(2) of this section if the method fails to reflect clearly the acquiring corporation's income within the meaning of section 446(b). Thus, section 381(c)(4) and these regulations do not limit, restrict, or otherwise prevent the Commissioner from requiring the use of another accounting method.

(f)*Effective/applicability date.* The rules of this section apply to corporate reorganizations and tax-free liquidations described in section 381(a) that occur on or after the date of publication of the Treasury decision adopting these rules as final regulations in the **Federal Register** . **Par. 4.** Section 1.381(c)(5)-1 is revised to read as follows: § 1.381(c)(5)-1 Inventory method.

(a)*Introduction* —(1) *Purpose.* This section provides guidance regarding the inventory accounting method an acquiring corporation must use following a distribution or transfer to which sections 381(a) and (c)(5) apply and how to implement any associated accounting method changes. See § 1.381(c)(4)-1 for guidance regarding the accounting method or combination of methods (other than inventory and depreciation accounting methods) an acquiring corporation must use following a distribution or transfer to which sections 381(a) and (c)(4) apply. See § 1.381(c)(6)-1 for guidance regarding the depreciation accounting methods an acquiring corporation must use following a distribution or transfer to which sections 381(a) and (c)(6) apply.

(2)*Carryover requirement* —(i) *In general.* In a transaction to which section 381(a) applies, if the acquiring corporation operates the trades or businesses of the parties to the section 381(a) transaction as separate and distinct trades or businesses after the date of the distribution or transfer, then the acquiring corporation generally must use the same accounting method(s) for inventory used by the distributor or transferor corporation(s) on the date of the section 381(a) transaction (carryover method). If the acquiring corporation does not operate the trades or businesses of the parties to the section 381(a) transaction as separate and distinct trades or businesses after the date of distribution or transfer, then the acquiring corporation must use a principal method as determined under paragraph

(ii)*Carryover method or principal method not permissible.* In general, if a carryover method or principal method is an impermissible accounting method, the acquiring corporation must secure the Commissioner's consent to change to a different accounting method as provided in paragraph (d)(2) of this section. If, however, a carryover method is impermissible solely because only a single inventory method with respect to a particular type of goods may be used by the acquiring corporation after the date of the section 381(a) transaction regardless of the number of separate and distinct trades or businesses operated on that date, the acquiring corporation must use a principal method as determined under paragraph

(c)of this section.

(iii)*Voluntary change.* All parties to a section 381(a) transaction may request permission under section 446(e) to change an inventory accounting method for the taxable year in which the transaction occurs or is expected to occur. For trades or businesses that will not operate as separate trades or businesses after the section 381(a) transaction, an accounting method change will be granted only if the requested change is the method that the acquiring corporation must use after the date of the distribution or transfer in the taxable year that includes the section 381(a) transaction. The time and manner of obtaining the Commissioner's consent to change to a different inventory accounting method is described in paragraph (d)(2) of this section.

(iv)*Examples.* The following examples illustrate the rules of this paragraph (a): Example 1. *Separate and distinct trades or businesses after the date of the distribution or transfer* —(i) *Facts.* X Corporation manufactures radios and television sets. X Corporation uses the first-in, first-out

(FIFO)inventory method to identify its inventory goods, values the goods at cost, and capitalizes costs under section 263A. T Corporation manufactures washing machines and dryers. T Corporation uses the last-in, first-out

(LIFO)inventory method to identify its inventory goods, values the goods at cost, and capitalizes costs under section 263A using methods other than those used by X Corporation. X Corporation acquires the inventory of T Corporation in a transaction to which section 381(a) applies. X Corporation operates the two manufacturing operations as separate and distinct trades or businesses after the date of the section 381(a) transaction.

(ii)*Conclusion.* After the section 381(a) transaction, for the business of manufacturing radios and television sets X Corporation will use the same FIFO inventory method to identify its inventory goods, value the goods at cost, and capitalize costs under section 263A using the methods it had previously used. For the business of manufacturing washing machines and dryers X Corporation will use the same LIFO inventory method to identify its inventory goods, value the goods at cost, and capitalize costs under section 263A using the methods previously used by T Corporation. X Corporation need not secure the Commissioner's consent to continue the inventory methods. Example 2. *Impermissible method* —(i) *Facts.* X Corporation manufactures food and beverages. X Corporation uses the FIFO inventory method to identify its inventory goods, values the goods at cost, and capitalizes costs under section 263A. T Corporation sells sporting equipment. T Corporation uses the FIFO inventory method to identify its inventory goods, and values the goods at cost. T Corporation did not capitalize costs under section 263A because it met the small reseller exception under section 263A. X Corporation acquires the inventory of T Corporation in a transaction to which section 381(a) applies. X Corporation operates the food and beverage business and the sporting goods business as separate trades or businesses after the date of the section 381(a) transaction. After the section 381(a) transaction, X Corporation does not qualify for the small reseller exception under section 263A for its sporting equipment business.

(ii)*Conclusion.* After the section 381(a) transaction, X Corporation will continue to identify its food and beverage inventory goods by using the FIFO inventory method, value the inventory at cost, and use its previously selected cost capitalization methods under section 263A as provided in paragraph (a)(2)(i) of this section. X Corporation will continue to identify its sporting equipment inventory goods by using the FIFO inventory method and value the inventory at cost in the same manner as T Corporation did prior to the section 381(a) transaction. X Corporation need not secure the Commissioner's consent to continue these inventory methods. Because X Corporation does not qualify for the small reseller exception under section 263A for its sporting equipment business, X Corporation must secure the Commissioner's consent to change to a permissible cost capitalization method under section 263A for the sporting equipment business. X Corporation must request this consent by filing a Form 3115, Application for Change in Accounting Method, using the procedures in paragraph (d)(2) of this section. Example 3. *Voluntary change* —(i) *Facts.* The facts are the same as in *Example 1* except that X Corporation wants to cease valuing the radios and television sets at cost and change to the cost or market, whichever is lower, method.

(ii)*Conclusion.* X Corporation must secure the Commissioner's consent to use the cost or market, whichever is lower, method and must do so by filing a Form 3115 as described in paragraph (d)(2) of this section.

(b)*Definitions* —(1) *Inventory method* is a method used to account for merchandise on hand (including finished goods, work in process, and raw materials) at the beginning of a year for purposes of computing taxable income for that year. The term includes not only the method for identifying inventory, for example, the FIFO inventory method or the LIFO inventory method, but also all other methods necessary to account for merchandise.

(2)*Principal method* is an accounting method that is determined under paragraph

(c)of this section.

(3)*Adopting an accounting method* has the same meaning as provided in § 1.446-1(e)(1).

(4)*Changing an accounting method* has the same meaning as provided in § 1.446-1(e)(2).

(5)*Acquiring corporation* has the same meaning as provided in § 1.381(a)-1(b)(2).

(6)*Distributor corporation* means the corporation, foreign or domestic, that distributes its assets to another corporation described in section 332(b) in a distribution to which section 332 (relating to liquidations of subsidiaries) applies.

(7)*Transferor corporation* means the corporation, foreign or domestic, that transfers its assets to another corporation in a transfer to which section 361 (relating to nonrecognition of gain or loss to corporations) applies, but only if—

(i)The transfer is in connection with a reorganization described in section 368(a)(1)(A), (C), or (F), or

(ii)The transfer is in connection with a reorganization described in section 368(a)(1)(D) or (G), provided the requirements of section 354(b) are met.

(8)*Parties to the section 381(a) transaction* means the acquiring corporation and the distributor or transferor corporation(s) involved in the transaction to which section 381(a) applies.

(9)*Date of distribution or transfer* has the same meaning as provided in section 381(b)(2) and § 1.381(b)-1(b).

(10)*Separate and distinct trades or businesses* has the same meaning as provided in § 1.446-1(d).

(11)*Audit protection* means that the IRS will not require the corporation required to change its accounting method under this section to change its method for the same item for a taxable year prior to the taxable year of the section 381(a) transaction requiring the change in accounting method.

(12)*Section 481(a) adjustment* means an adjustment that must be taken into account as required under section 481(a) to prevent amounts from being duplicated or omitted when the taxable income of a taxpayer is computed under an accounting method different from the method used to compute taxable income for the preceding taxable year.

(13)*Cut-off basis* means an accounting method change made without a section 481(a) adjustment and under which only the goods arising on or after the date the accounting method change is made are accounted for under the new accounting method.

(14)*Adjustment period* means the number of taxable years for taking into account the section 481(a) adjustment required as a result of an accounting method change.

(c)*Principal method* —(1) *In general.* The principal method for a particular type of goods generally is the method used by the acquiring corporation for that type of goods immediately prior to the date of the section 381(a) transaction (acquiring corporation's carryover method). If, however, the acquiring corporation does not have an inventory accounting method for a particular type of goods or if the distributor or transferor corporation holds more inventory of that type of goods, the principal method for that type of goods is the method used by the distributor or transferor corporation for that type of goods immediately prior to the date of the transaction (distributor or transferor corporation's carryover method). The distributor or transferor corporation holds more inventory if, for a particular type of goods, the fair market value of the goods held by the distributor or transferor corporation exceeds the fair market value of the goods held by the acquiring corporation immediately prior to the date of distribution or transfer. Alternatively, as a simplifying convention, the acquiring corporation may elect to apply the preceding sentence to the value of the entire inventories of the distributor or transferor corporation and the acquiring corporation rather than to each particular type of goods.

(2)*Examples.* The following examples illustrate the rules of this paragraph (c): Example 1. *Principal method is the acquiring corporation's carryover method* —(i) *Facts.* X Corporation and T Corporation are manufacturers of tennis equipment. Both X Corporation and T Corporation value their inventories at cost but use different methods to capitalize costs under section 263A. X Corporation uses the simplified production method without the historic absorption ratio election provided in § 1.263A-2(b)(3). T Corporation uses the simplified production method with the historic absorption ratio election provided in § 1.263A-2(b)(4). Furthermore, X Corporation identifies its inventory using the FIFO inventory method, while T Corporation identifies its inventory using the LIFO inventory method. X Corporation acquires the inventory of T Corporation in a transaction to which section 381(a) applies. The manufacturing businesses are not operated as separate and distinct trades or businesses after the date of the distribution or transfer. Immediately prior to the acquisition, the fair market value of each particular type of goods in X Corporation's inventory exceeds the fair market value of each particular type of goods in T Corporation's inventory.

(ii)*Conclusion.* After the section 381(a) transaction, X Corporation will identify its inventory using the LIFO inventory method used by T Corporation, value its inventories at cost, and use the simplified production method with the historic absorption ratio election, because the LIFO inventory method used by T Corporation is the principal method for identifying inventory, cost is the principal method for valuing inventories, and the simplified production method with the historic absorption ratio election is the principal method for allocating costs to ending inventory under section 263A. X Corporation need not secure the consent of the Commissioner to use these methods. However, with respect to the inventory manufactured by X Corporation prior to the section 381(a) transaction, X Corporation will change its methods as needed by using the procedures of paragraph (d)(1) of this section. Specifically, X Corporation will change its method of identifying inventory to the LIFO inventory method using a cut-off basis and change its cost capitalization method to the simplified production method with the historic absorption ratio election by taking into account the applicable section 481(a) adjustment. If X Corporation chooses, it may request the Commissioner's consent to change to another permissible method as provided in paragraph (d)(2) of this section. Example 3. *Principal method is the acquiring corporation's carryover method* —(i) *Facts.* The facts are the same as in *Example 1* except that the fair market values of the inventories of X Corporation and T Corporation are identical.

(ii)*Conclusion.* After the section 381(a) transaction, X Corporation will continue to identify its inventory using the FIFO inventory method, value its inventory at cost, and use the simplified production method without the historic absorption ratio election because the FIFO inventory method is the principal method for identifying inventory, cost is the principal method for valuing inventories, and the simplified production method without the historic absorption ratio election is the principal method for allocating costs to ending inventory under section 263A. X Corporation need not secure the Commissioner's consent to use these methods. However, with respect to the inventory acquired from T Corporation, X Corporation will change the method of identifying inventory to the FIFO inventory method, use the simplified production method without the historic absorption ratio election, and take into account the applicable section 481(a) adjustment as provided in paragraph (d)(1) of this section. If X Corporation chooses, it may request the Commissioner's consent to change to another permissible method as provided in paragraph (d)(2) of this section. Example 4. *Inventory convention elected* —(i) *Facts.* X Corporation manufactures planes and T Corporation manufactures planes and pool tables. X Corporation identifies its inventory using the FIFO inventory method and values it at cost or market, whichever is lower, while T Corporation identifies its inventory using the LIFO inventory method and values it at cost. Both X Corporation and T Corporation use the same method to capitalize costs under section 263A. X Corporation acquires the inventory of T Corporation in a transaction to which section 381(a) applies. The manufacturing businesses are not operated as separate and distinct trades or businesses after the date of the distribution or transfer. In lieu of determining the fair market value of each particular type of goods held on the date of distribution or transfer, X Corporation elects to value the entire inventories held by itself and T Corporation. Immediately prior to the acquisition, the fair market value of T Corporation's inventory exceeds the fair market value of X Corporation's inventory.

(ii)*Conclusion.* After the section 381(a) transaction, X Corporation will identify its inventory using the LIFO inventory method used by T Corporation and value this inventory at cost because the LIFO inventory method used by T Corporation is the principal method for identifying inventory and cost is the principal method for valuing inventories. X Corporation need not secure the consent of the Commissioner to use these methods. However, with respect to the inventory manufactured by X Corporation prior to the section 381(a) transaction, X Corporation will change the method of identifying inventory to the LIFO inventory method on a cut-off basis as provided in paragraph (d)(1) of this section. The method used prior to the section 381(a) transaction to capitalize costs under section 263A continues after the transaction. If X Corporation chooses, it may request the Commissioner's consent to change to another permissible method as provided in paragraph (d)(2) of this section.

(c)of this section, whether the change relates to the trade or business of the acquiring corporation or the trade or business of the distributor or transferor corporation, must be reflected on the acquiring corporation's federal income tax return for the taxable year that includes the date of distribution or transfer. The amount of the section 481(a) adjustment and the adjustment period, if any, necessary to implement this accounting method change are determined under § 1.446-1(e) and the applicable administrative procedures that govern voluntary changes in accounting methods under section 446(e). The appropriate section 481(a) adjustment as determined above is included in the taxable income of the acquiring corporation for the taxable year that includes the date of distribution or transfer and subsequent taxable year(s), as necessary. Thus, if the administrative procedures require that an accounting method change be implemented on a cut-off basis, the acquiring corporation must implement the change, on a cut-off basis as of the date of distribution or transfer, on its federal income tax return for the taxable year that includes the date of distribution or transfer. If the administrative procedures require a section 481(a) adjustment, the acquiring corporation must determine the section 481(a) adjustment and include the appropriate amount of the section 481(a) adjustment on its federal income tax return for the taxable year that includes the section 381(a) transaction and subsequent taxable year(s), as necessary. This adjustment is determined by the acquiring corporation as of the beginning of the day that is immediately after the day on which the section 381(a) transaction occurs.

(B)*Example.* The following example illustrates the rules of this paragraph (d)(1)(i): Example. X Corporation uses the FIFO inventory method while T Corporation uses the LIFO inventory method. X Corporation acquires the assets of T Corporation in a transaction to which section 381(a) applies on July 15th. X Corporation determines that under the rules of paragraph (c)(1) of this section, X Corporation must change the inventory method for the business acquired from T Corporation to the FIFO inventory method. X Corporation will determine the section 481(a) adjustment pertaining to the change to the FIFO inventory method (whether the amounts thereof represent increases or decreases in income) as of the beginning of July 16th. This adjustment, or an appropriate part thereof, will be included in X Corporation's federal income tax return for the taxable year that includes July 15th.

(iii)*Other terms and conditions.* Except as otherwise provided in this section, other terms and conditions provided in § 1.446-1(e) and the applicable administrative procedures that govern voluntary changes in accounting methods under section 446(e) apply to a change in accounting method under this section. Thus, for example, if the administrative procedures that govern a particular accounting method change have a term and condition that provides for the acceleration of the section 481(a) adjustment period, this term and condition applies to changes made under this paragraph (d)(1). Similarly, if the administrative procedures provide as a term and condition that an identical accounting method change is barred for a period of years, this term and condition applies to changes made under this paragraph (d)(1) to bar future changes of that accounting method, if identical, for the same period, but not changes to the principal method under this section.

(i)Under the authority of § 1.446-1(e)(3)(ii), the application for accounting method change (for example, Form 3115) must be filed with the IRS on or before the later of—

(A)The due date for filing a Form 3115 as specified in § 1.446-1(e), for example, the last day of the taxable year in which the distribution or transfer occurred, or

(ii)An application on Form 3115 filed with the IRS should be labeled “Filed under section 381(c)(5)” at the top.

(e)*Rules and procedures* —(1) *Inventory method selected for a particular type of goods.* If other sections of the Code or Income Tax Regulations allow a taxpayer to elect an inventory method for a particular type of goods, the method elected with respect to those goods is the established inventory method only for those goods. For example, an election to use the LIFO inventory method to identify specified goods in inventory, such as certain products in finished goods, is the inventory method only for those products.

(2)*No accounting method.* If a party to a section 381(a) transaction is not using an inventory method, does not have a particular type of goods immediately prior to the date of distribution or transfer, or came into existence as a result of the transaction, the party will not be treated as having an inventory accounting method different from that used by the other parties to the section 381(a) transaction.

(3)*Elections and adoptions allowed.* An acquiring corporation is not precluded by section 381(c)(5) or these regulations from making any election for the taxable year that includes the date of distribution or transfer that does not require the Commissioner's consent and that is otherwise permissible. Similarly, an acquiring corporation may adopt any accounting method in that year that is otherwise permissible. For example, an acquiring corporation may elect to identify its inventory using the LIFO inventory method in the year of the distribution or transfer.

(4)*Elections continue after section 381(a) transaction.* The acquiring corporation is not required to renew any election previously made by it or by a distributor or transferor corporation with respect to a carryover method or principal method if the acquiring corporation uses the method after a section 381(a) transaction. Furthermore, an election previously made by an acquiring corporation or by a distributor or transferor corporation with respect to a method that is in effect immediately prior to the date of distribution or transfer continues to the same extent as though the distribution or transfer had not occurred. For example, when the acquiring corporation has elected to use the LIFO inventory method under section 472 prior to the date of the section 381(a) transaction and the method continues after the transaction, the acquiring corporation need not renew this inventory election and is bound by it after the date of the transaction.

(5)*Adopting the LIFO inventory method.* A party to a section 381(a) transaction will be deemed to be using the LIFO inventory method with respect to a particular type of goods on the date of distribution or transfer if such party elects under section 472 to adopt that inventory method with respect to those goods for its taxable year within which the date of distribution or transfer occurs. See section 472 for the requirements to adopt the LIFO inventory method.

(6)*Inventory layers treatment* —(i) *Adjustments required after a section 381(a) transaction.* An acquiring corporation that determines the principal method of taking an inventory after a section 381(a) transaction under paragraph

(c)of this section may need to integrate inventories and make appropriate adjustments as provided in paragraphs (e)(6)(ii) and

(iii)of this section.

(ii)*LIFO inventory method used after the section 381(a) transaction* —(A) *LIFO inventory method used by the distributor or transferor corporation* —(1) *Dollar-value method.* If an acquiring corporation is required to use the LIFO dollar-value method of pricing inventories (dollar-value method) for a particular type of goods for its taxable year that includes the date of the section 381(a) transaction, and immediately prior to the distribution or transfer the distributor or transferor corporation used the specific goods method of pricing inventories for that particular type of goods, the inventory of the distributor or transferor corporation shall be placed on the dollar-value method as provided in § 1.472-8(f), and then the inventory shall be integrated with the inventory of the acquiring corporation. If pools of each corporation are required to be combined, the pools shall be combined as provided in § 1.472-8(g)(2). For purposes of combining pools, all base-year inventories or layers of increment that occur in taxable years including the same December 31 shall be combined. A base-year inventory or layer of increment occurring in any short taxable year not including a December 31, or in the final taxable year of a distributor or transferor corporation, shall be merged with and considered a layer of increment of its immediately preceding taxable year.

(2)*Specific goods method.* If an acquiring corporation is required to use the specific goods method of pricing inventories for a particular type of goods for its taxable year that includes the date of the section 381(a) transaction, and immediately prior to the distribution or transfer the distributor or transferor corporation used the LIFO inventory method for that particular type of goods, the inventory shall be treated by the acquiring corporation as having the acquisition dates and costs of the distributor or transferor corporation.

(B)*LIFO inventory method not used by the distributor or transferor corporation.* If an acquiring corporation is required to use the LIFO inventory method for a particular type of goods for its taxable year that includes the date of the section 381(a) transaction, and immediately prior to the distribution or transfer the distributor or transferor corporation did not use the LIFO inventory method for that particular type of goods, the inventory shall be treated by the acquiring corporation as having been acquired at average unit cost in a single transaction on the date of the distribution or transfer. Thus, if an inventory of a particular type of goods is combined in an existing dollar-value pool, the goods shall be treated as if they were purchased by the acquiring corporation at the average unit cost on the date of the distribution or transfer with respect to such pool. Alternatively, if the goods are not combined in an existing pool, the goods will be treated as if they were purchased by the acquiring corporation at the average unit cost on the date of the distribution or transfer with respect to a new pool, with the base year being the year of the section 381(a) transaction. Adjustments resulting from a restoration to cost of any write-down to market value of the inventories of a distributor or transferor corporation shall be taken into account by the distributor or transferor corporation in its final taxable year ending on the date of the distribution or transfer. See section 472(d).

(iii)*FIFO inventory method used after the section 381(a) transaction* —(A) *FIFO inventory method used by the distributor or transferor corporation* . If an acquiring corporation is required to use the FIFO inventory method for a particular type of goods for its taxable year that includes the date of the section 381(a) transaction, and immediately prior to the distribution or transfer the distributor or transferor corporation used the FIFO inventory method for that particular type of goods, the inventory of that type of goods shall be treated by the acquiring corporation as having the same acquisition dates and costs as the distributor or transferor corporation. However, if the acquiring corporation values its inventories at cost or market, whichever is lower, the acquiring corporation shall treat the inventories of the distributor or transferor corporation as having been acquired at cost or market, whichever is lower.

(B)*FIFO inventory method not used by the distributor or transferor corporation* . If an acquiring corporation is required to use the FIFO inventory method for a particular type of goods for its taxable year that includes the date of the section 381(a) transaction, and immediately prior to the distribution or transfer the distributor or transferor corporation did not use the FIFO inventory method for that particular type of goods, the inventory of the distributor or transferor corporation shall be treated by the acquiring corporation as having the same acquisition dates and costs that the inventory would have had if the distributor or transferor corporation had been using the FIFO inventory method for its taxable year ending on the date of distribution or transfer. However, if the acquiring corporation values its inventories at cost or market, whichever is lower, the acquiring corporation shall treat the acquired inventories as having been acquired at cost or market, whichever is lower.

(7)*Appropriate times for determining the method used and trade or business character* —(i) *Determining the accounting method* . The accounting method existing at the time of a section 381(a) transaction is the method used immediately prior to the date of distribution or transfer by the parties to the transaction.

(ii)*Determining whether there are separate trades or businesses after a section 381(a) transaction* . Whether an acquiring corporation will operate the trades or businesses of the parties to a section 381(a) transaction as separate and distinct trades or businesses after the distribution or transfer will be determined at the time of the transaction based upon the facts and circumstances. Intent to combine books and records of the trades or businesses may be demonstrated by contemporaneous records and documents or by other objective evidence that reflects the acquiring corporation's ultimate plan of operation, even though the actual combination of the books and records may extend beyond the end of the taxable year in which the section 381(a) transaction occurs.

(8)*Establishing an accounting method for taking an inventory* . Notwithstanding any other provision in any other regulation or administrative procedure, an accounting method used by the distributor or transferor corporation immediately prior to the date of distribution or transfer that continues to be used by the acquiring corporation in the taxable year that includes the date of distribution or transfer is an established method of accounting for purposes of section 446(e).

(9)*Other applicable provisions* . Section 381(c)(5) and these regulations do not preempt any other section of the Code or regulations that is applicable to the acquiring corporation's circumstances. Section 381(c)(5) and this § 1.381(c)(5)-1 determine only the inventory method to be used after a section 381(a) transaction. Specifically, section 381(c)(5) and this § 1.381(c)(5)-1 do not apply to assets other than inventory that an acquiring corporation obtains in a transaction to which section 381(a) applies.

(10)*Use of the cash receipts and disbursements method* . If a party to a section 381(a) transaction uses the cash receipts and disbursements method within the meaning of section 446(c)(1) and § 1.446-1(c)(1)(i), or is not required to use inventory accounting methods for its goods, immediately prior to the date of distribution or transfer, section 381(c)(5) and § 1.381(c)(5)-1 do not apply. Section 381(c)(4) and § 1.381(c)(4)-1 must be applied to determine the accounting methods that continue after the transaction.

(11)*Character of items of income and deduction* . Items of income and deduction have the same character in the hands of the acquiring corporation as they would have had in the hands of the distributor or transferor corporation if no distribution or transfer had occurred.

(12)*Prohibited methods* . An acquiring corporation may not use the accounting method determined under paragraph (a)(2) of this section if the method fails to reflect clearly the acquiring corporation's income within the meaning of section 446(b). Thus, section 381(c)(5) and these regulations do not limit, restrict, or otherwise prevent the Commissioner from requiring the use of another accounting method.

(f)*Effective/applicability date* . The rules of this section apply to corporate reorganizations and tax-free liquidations described in section 381(a) that occur on or after the date of publication of the Treasury decision adopting these rules as final regulations in the **Federal Register** . **Par. 5.** Section 1.446-1 is amended by: 1. Revising the first sentence in paragraph (e)(3)(i) and adding a new second sentence. 2. Revising the first sentence in paragraph (e)(4)(i). 3. Adding paragraph (e)(4)(iii). The revisions and addition read as follows: § 1.446-1 General rule for methods of accounting.

(e)* * *

(3)* * *

(i)Except as otherwise provided under the authority of paragraph (e)(3)(ii) of this section, to secure the Commissioner's consent to a taxpayer's change in method of accounting, the taxpayer generally must file an application on Form 3115 with the Commissioner during the taxable year in which the taxpayer desires to make the change in method of accounting. See §§ 1.381(c)(4)-1(d)(2) and 1.381(c)(5)-1(d)(2) for rules allowing additional time, in some circumstances, for the filing of an application on Form 3115 with respect to a transaction to which section 381(a) applies.

(4)* * *

(i)*In general* . Except as provided in paragraphs (e)(3)(iii), (e)(4)(ii) and (e)(4)(iii) of this section, paragraph

(e)of this section applies on or after December 30, 2003.

(iii)*Effective/applicability date for paragraph (e)(3)(i)* . The rules of paragraph (e)(3)(i) of this section apply to corporate reorganizations and tax-free liquidations described in section 381(a) that occur on or after the date of publication of the Treasury decision adopting these rules as final regulations in the **Federal Register** . Linda E. Stiff, Deputy Commissioner for Services and Enforcement. [FR Doc. E7-22411 Filed 11-15-07; 8:45 am] BILLING CODE 4830-01-P NATIONAL ARCHIVES AND RECORDS ADMINISTRATION 36 CFR Parts 1250, 1251, and 1256 [NARA-07-0006] RIN 3095-AB32 Testimony by NARA Employees Relating to Agency Information and Production of Records in Legal Proceedings AGENCY: National Archives and Records Administration. ACTION: Proposed rule. SUMMARY: The National Archives and Records Administration

(NARA)is proposing to revise its regulations relating to demands for records or testimony in legal proceedings. The rule is intended to facilitate access to records in NARA's custody, centralize agency decisionmaking in response to demands for records or testimony, minimize the disruption of official duties in complying with demands, maintain agency control over the release of agency information, and protect the interests of the United States. The proposed rule affects parties to lawsuits and their counsel. DATES: Comments must be received by January 15, 2008. ADDRESSES: NARA invites interested persons to submit comments on this proposed rule. Comments may be submitted by any of the following methods: • *Federal eRulemaking Portal* : *http://www.regulations.gov* . Follow the instructions for submitting comments. • *Fax* : Submit comments by facsimile transmission to 301-837-0319. • *Mail* : Send comments to Regulations Comments Desk (NPOL), Room 4100, Policy and Planning Staff, National Archives and Records Administration, 8601 Adelphi Road, College Park, MD 20740-6001. • *Hand Delivery or Courier* : Deliver comments to 8601 Adelphi Road, College Park, MD. FOR FURTHER INFORMATION CONTACT: Laura McCarthy at

(301)837-3023 or via fax number 301-837-0319. SUPPLEMENTARY INFORMATION: NARA regularly receives subpoenas and other demands for information, including requests for documents and for NARA employees to provide testimony in legal proceedings in which the United States may or may not be a party. This rule contains NARA's policy and procedures in response to demands for testimony or records in legal proceedings. In addition, this rule consolidates existing regulations and applies to demands in legal proceedings where the United States is a party and to demands in legal proceedings where the United States is not a party. Many agencies have issued regulations concerning agency responses to demands where the United States is not a party. The courts recognize the authority of Federal agencies to limit compliance with demands in such circumstances; see for example, *United States ex rel. Touhy* v. *Ragen* , 340 U.S. 462 (1951). NARA's proposed rule applies whether or not the United States is a party to the legal proceeding. NARA believes that this is appropriate because our receipt of a demand in a legal proceeding whether or not the United States is a party to the proceeding raises many of the same concerns. Consolidating our existing regulations also assists third parties in easily locating NARA's policy and procedures concerning demands in legal proceedings. NARA has in its possession the following type of records: • Permanently-valuable Federal records, Presidential records, donated and deposited historical materials in the National Archives of the United States; • Records belonging to Federal agencies other than NARA that are in NARA's temporary physical custody; • Records of defunct agencies that have no successor in function; and • NARA's own operational records. NARA's responsibility to manage, preserve, arrange, describe, or provide access to those records places the agency in a unique position in the Federal government regarding demands for records and testimony. Requests for records that are not classified as demands are treated as requests for records under one of the following authorities: the Freedom of Information Act (5 U.S.C. 552); the Privacy Act (5 U.S.C. 552a); the Federal Records Act and its implementing regulations (44 U.S.C. chs. 21, 29, 31, 33; 36 CFR parts 1250-1256); the Presidential Records Act and its implementing regulations (44 U.S.C. ch. 22; 36 CFR part 1270); or the Presidential Recordings and Materials Preservation Act and its implementing regulations (44 U.S.C. 2111 note; 36 CFR part 1275). This rule does not restrict access to records under those authorities. This rule applies certain restrictions to testimony by NARA employees in legal proceedings. These restrictions apply whether or not the United States is a party to the proceeding. Authorization for employees to provide such testimony is based upon the following: • The applicability of the Federal Rules of Civil Procedure; • A determination by NARA's General Counsel that NARA has a significant interest in the legal proceeding and that the outcome may affect the implementation of present policies (NARA's Inspector General makes the determination as to whether an employee of NARA's Office of the Inspector General may provide such testimony); or • Other circumstances or conditions make it necessary to provide the testimony in the public interest. These restrictions are necessary to minimize the disruption of NARA's official business, and to protect the agency's human and financial resources. NARA employees are not authorized to testify about the content of records in NARA's physical custody when the legal title of such records belongs to another Federal agency. However, NARA can provide a copy of such records and certify that the copy is a true and accurate copy of the records in NARA's physical or legal custody. Such copies have the same legal status as the original record, and when produced under seal, must be judicially noted by all Federal, state, and local courts. See 44 U.S.C. 2116. This rule does not apply in instances where an employee is requested to appear in adjudicative, legislative, or administrative proceedings that are unrelated to information concerning Federal activities or the employee's duties at NARA. Also, this rule does not apply to subpoenas or requests for information submitted by either House of Congress or by a Congressional committee or subcommittee with jurisdiction over the matter that the testimony or information is requested. Paperwork Reduction Act This proposed rule contains information collection activities that are subject to review and approval by OMB under the Paperwork Reduction Act of 1995. The reporting burden for this collection is estimated to be approximately 1.5 hours per response for providing to NARA the information specified in proposed § 1251.10, including the time for gathering and maintaining the data needed and completing and reviewing the collection of information. A requestor who produces a demand to a NARA employee to produce documents or testimony would be required to submit the demand in writing to an appropriate party as specified in § 1251.6; a demand issued by, or under color of a state or local court must be signed by a judge. The information would be collected on a one-time basis, at least 45 days before the date the records or testimony is required. Comments are invited on

(a)whether the proposed collection of information is necessary for the proper performance of NARA's functions, including whether the information would have practical utility;

(b)the accuracy of NARA's estimate of the burden of the proposed collection of information;

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

(d)ways to minimize the burden of the collection of information on respondents, including the use of automated collection techniques of other forms of information technology. This rule is not a significant regulatory action for the purposes of Executive Order 12866 and has not been reviewed by the Office of Management and Budget (OMB). As required by the Regulatory Flexibility Act, it is hereby certified that this proposed rule will not have a significant impact on small entities because NARA receives fewer than 25 demands per year for testimony from individuals and small entities. List of Subjects 36 CFR Part 1250 Confidential business information, Freedom of information. 36 CFR Part 1251 Administrative practice and procedure. 36 CFR Part 1256 Archives and records, Copyright, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, NARA proposes to amend Subchapter C of 36 CFR Ch. XII as follows: PART 1250—PUBLIC AVAILABILITY AND USE OF FEDERAL RECORDS 1. The authority citation for part 1250 continues to read as follows: Authority: 44 U.S.C. 2104(a), 2204; 5 U.S.C. 552; E.O. 12600, 52 FR 23781, 3 CFR, 1987 Comp., p. 235. § 1250.84 [Removed] 2. Remove § 1250.84. 3. Add a new Part 1251 to read as follows: PART 1251—TESTIMONY BY NARA EMPLOYEES RELATING TO AGENCY INFORMATION AND PRODUCTION OF RECORDS IN LEGAL PROCEEDINGS Sec. 1251.1 What is the purpose of this part? 1251.2 To what demands does this part apply? 1251.3 What definitions apply to this part? 1251.4 May employees provide records or give testimony in response to a demand without authorization? 1251.6 How does the General Counsel determine whether to comply with a demand for records or testimony? 1251.8 Who is authorized to accept service of a subpoena demanding the production of records or testimony? 1251.10 What are the filing requirements for a demand for documents or testimony? 1251.12 How does NARA process your demand? 1251.14 Who makes the final determination on compliance with demands for records or testimony? 1251.16 Are there any restrictions that apply to testimony? 1251.18 Are there any restrictions that apply to the production of records? 1251.20 Are there any fees associated with producing records or providing testimony? 1251.22 Are there penalties for providing records or testimony in violation of this part? Authority: 44 U.S.C. 2104; 44 U.S.C. 2108; 44 U.S.C. 2109; 44 U.S.C. 2111 note; 44 U.S.C. 2112; 44 U.S.C. 2116; 44 U.S.C. ch. 22; 44 U.S.C. 3102. § 1251.1 What is the purpose of this part?

(a)This part provides the policies and procedures to follow when submitting a demand to an employee of the National Archives and Records Administration

(NARA)to produce records or provide testimony relating to agency information in connection with a legal proceeding. You must comply with these requirements when you request the release or disclosure of records or agency information.

(b)The National Archives and Records Administration intends these provisions to:

(1)Promote economy and efficiency in its programs and operations;

(2)Minimize NARA's role in controversial issues not related to its mission;

(3)Maintain NARA's impartiality among private litigants when NARA is not a named party; and

(4)Protect sensitive, confidential information and the deliberative processes of NARA.

(c)In providing for these requirements, NARA does not waive the sovereign immunity of the United States.

(d)This part provides guidance for the internal operations of NARA. It does not create any right or benefit, substantive or procedural, that a party may rely upon in any legal proceeding against the United States. § 1251.2 To what demands does this part apply? This part applies to demands to NARA employees for factual or expert testimony relating to agency information, or for production of records, in legal proceedings whether or not NARA is a named party. However, it does not apply to:

(a)Demands upon or requests for a NARA employee to testify as to facts or events that are unrelated to his or her official duties or that are unrelated to the functions of NARA;

(b)Demands upon or requests for a former NARA employee to testify as to matters in which the former employee was not directly or materially involved while at NARA;

(c)Requests for the release of, or access to, records under the Freedom of Information Act, 5 U.S.C. 552, as amended; the Privacy Act, 5 U.S.C. 552a; the Federal Records Act, 44 U.S.C. chs. 21, 29, 31, 33; the Presidential Records Act, 44 U.S.C. ch. 22; or the Presidential Recordings and Materials Preservation Act, 44 U.S.C. 2111 note;

(d)Demands for records or testimony in matters before the Equal Employment Opportunity Commission or the Merit Systems Protection Board; and

(e)Congressional demands and requests for testimony or records. § 1251.3 What definitions apply to this part? The following definitions apply to this part: *Demand* means a subpoena, or an order or other command of a court or other competent authority, for the production, disclosure, or release of records in a legal proceeding, or for the appearance and testimony of a NARA employee in a legal proceeding. *General Counsel* means the General Counsel of NARA or a person to whom the General Counsel has delegated authority under this part. General Counsel also means the Inspector General of NARA (or a person to whom the Inspector General has delegated authority under this part) when a demand is made for records of NARA's Office of the Inspector General, or for the testimony of an employee of NARA's Office of the Inspector General. *Legal proceeding* means any matter before a court of law, administrative board or tribunal, commission, administrative law judge, hearing officer, or other body that conducts a legal or administrative proceeding. Legal proceeding includes all phases of litigation. *NARA* means the National Archives and Records Administration. *NARA employee or employee means:*

(1)Any current or former officer or employee of NARA, except that this definition does not include former NARA employees who are retained or hired as expert witnesses or who agree to testify about general matters, matters available to the public, or matters with which they had no specific involvement or responsibility during their employment with NARA;

(2)Any other individual hired through contractual agreement by or on behalf of NARA or who has performed or is performing services under such an agreement for NARA; and

(3)Any individual who served or is serving in any consulting or advisory capacity to NARA, whether formal or informal. *Records or agency information means:*

(1)All documents and materials which are NARA agency records under the Freedom of Information Act, 5 U.S.C. 552, as amended;

(2)Presidential records as defined in 44 U.S.C. 2201; historical materials as defined in 44 U.S.C. 2101; records as defined in 44 U.S.C. 2107 and 44 U.S.C. 3301.

(3)All other documents and materials contained in NARA files; and

(4)All other information or materials acquired by a NARA employee in the performance of his or her official duties or because of his or her official status. *Testimony* means any written or oral statements, including depositions, answers to interrogatories, affidavits, declarations, interviews, and statements made by an individual in connection with a legal proceeding. § 1251.4 May employees provide records or give testimony in response to a demand without authorization? No, except as otherwise permitted by this part, no employee may produce records and information or provide any testimony relating to agency information in response to a demand without the prior, written approval of the General Counsel. § 1251.6 How does the General Counsel determine whether to comply with a demand for records or testimony? The General Counsel may consider the following factors in determining whether or not to grant an employee permission to testify on matters relating to agency information, or produce records in response to a demand:

(a)NARA's compliance with the demand is required by federal law, regulation or rule, or is otherwise permitted by this part;

(b)The purposes of this part are met;

(c)Allowing such testimony or production of records would be necessary to prevent a miscarriage of justice;

(d)NARA has an interest in the decision that may be rendered in the legal proceeding;

(e)Allowing such testimony or production of records would assist or hinder NARA in performing its statutory duties;

(f)Allowing such testimony or production of records would involve a substantial use of NARA resources;

(g)Responding to the demand would interfere with the ability of NARA employees to do their work;

(h)Allowing such testimony or production of records would be in the best interest of NARA or the United States;

(i)The records or testimony can be obtained from the publicly available records of NARA or from other sources;

(j)The demand is unduly burdensome or otherwise inappropriate under the applicable rules of discovery or the rules of procedure governing the case or matter in which the demand arose;

(k)Disclosure would violate a statute, Executive Order or regulation;

(l)Disclosure would reveal confidential, sensitive, or privileged information, trade secrets or similar, confidential commercial or financial information, otherwise protected information, or information which would otherwise be inappropriate for release;

(m)Disclosure would impede or interfere with an ongoing law enforcement investigation or proceeding, or compromise constitutional rights;

(n)Disclosure would result in NARA appearing to favor one litigant over another;

(o)Disclosure relates to documents that were produced by another agency;

(p)A substantial Government interest is implicated;

(q)The demand is within the authority of the party making it; and

(r)The demand is sufficiently specific to be answered. § 1251.8 Who is authorized to accept service of a subpoena demanding the production of records or testimony?

(a)Demands for testimony, except those involving an employee of NARA's Office of the Inspector General, must be addressed to, and served on, the General Counsel, National Archives and Records Administration, Suite 3110, 8601 Adelphi Road, College Park, MD 20740-6001. Demands for the testimony of an employee of NARA's Office of the Inspector General must be addressed to, and served on, the Inspector General, National Archives and Records Administration, Suite 1300, 8601 Adelphi Road, College Park, MD 20740-6001.

(b)Demands for the production of NARA operational records, except those of the Office of the Inspector General, must be addressed to, and served on, the General Counsel. Demands for records of the Inspector General must be addressed to, and served on, the Inspector General. Please note that in accordance with section (b)(11) of the Privacy Act, 5 U.S.C. § 552a, demands for operational records kept in a Privacy Act system of records require the signature of a court of competent jurisdiction. See *Doe* v. *Digenova* , 779 F.2d 74 (D.C. Cir. 1985); *Stiles* v. *Atlanta Gas Light Company* , 453 F. Supp. 798 (N.D. Ga. 1978). This generally means that the demand must be signed by a judge or some other competent entity, not an attorney or court clerk.

(c)Demands for the production of records stored in a Federal Records Center

(FRC)must be addressed to, and served on, the director of the FRC where the records are stored. NARA honors the demand to the extent required by law, if the agency having legal title to the records has not imposed any restrictions. If the agency has imposed restrictions, NARA notifies the authority issuing the demand that NARA abides by the agency-imposed restrictions and refers the authority to the agency for further action. See § 1251.8(b) for demands for NARA operational records kept in a Privacy Act system of records.

(d)Demands for the production of materials designated as Federal archival records, Presidential records or donated historical materials administered by NARA must be addressed to, and served on, the appropriate Assistant Archivist, Director of Archival Operations, or Presidential Library Director. An information copy of the demand must be sent to the General Counsel.

(e)For matters where the United States is a party, the Department of Justice should contact the General Counsel instead of submitting a demand for records or testimony.

(f)Contact information for each NARA facility may be found at 36 CFR part 1253. § 1251.10 What are the filing requirements for a demand for documents or testimony? You must comply with the following requirements, as appropriate, whenever you issue a demand to a NARA employee for records, agency information or testimony:

(a)Your demand must be in writing and must be served on the appropriate party as identified in § 1251.6. A demand issued by, or under color of, a state or local court must be signed by a judge.

(b)Your written demand (other than a demand pursuant to rule 45 of the Federal Rules of Civil Procedure, in which case you must comply with the requirements of that rule) must contain the following information:

(1)The caption of the legal proceeding, docket number, and name and address of the court or other authority involved;

(2)A copy of the complaint or equivalent document setting forth the assertions in the case and any other pleading or document necessary to show relevance;

(3)A list of categories of records sought, a detailed description of how the information sought is relevant to the issues in the legal proceeding, and a specific description of the substance of the testimony or records sought;

(4)A statement as to how the need for the information outweighs the need to maintain any confidentiality of the information and outweighs the burden on NARA to produce the records or provide testimony;

(5)A statement indicating that the information sought is not available from another source, from other persons or entities, or from the testimony of someone other than a NARA employee, such as a retained expert;

(6)If testimony is requested, the intended use of the testimony, a general summary of the desired testimony, and a showing that no document could be provided and used instead of testimony;

(7)A description of all previous decisions, orders, or pending motions in the case that bear upon the relevance of the requested records or testimony;

(8)The name, address, and telephone number of counsel to each party in the case; and

(9)An estimate of the amount of time that the requester and other parties may require with each NARA employee for time spent by the employee to prepare for testimony, in travel, and for attendance in the legal proceeding.

(c)The National Archives and Records Administration reserves the right to require additional information to comply with your demand.

(d)Your demand should be submitted at least 45 days before the date that records or testimony is required. Demands submitted in less than 45 days before records or testimony is required must be accompanied by a written explanation stating the reasons for the late request and the reasons for expedited processing.

(e)Failure to cooperate in good faith to enable the General Counsel to make an informed decision may serve as the basis for a determination not to comply with your demand.

(f)The information collection contained in this section has been approved by the Office of Management and Budget under the Paperwork Reduction Act as by OMB under the control number 3095-0038 with a current expiration date of May 31, 2008. § 1251.12 How does NARA process your demand?

(a)After service of a demand for production of records or for testimony, an appropriate NARA official reviews the demand and, in accordance with the provisions of this subpart, determines whether, or under what conditions, to produce records or authorize the employee to testify on matters relating to agency information.

(b)The National Archives and Records Administration processes demands in the order in which we receive them. Absent exigent or unusual circumstances, NARA responds within 45 days from the date of receipt. The time for response depends upon the scope of the demand.

(c)The General Counsel may grant a waiver of any procedure described by this subpart where a waiver is considered necessary to promote a significant interest of NARA or the United States or for other good cause. § 1251.14 Who makes the final determination on compliance with demands for records or testimony? The General Counsel makes the final determination on demands to employees for testimony. The appropriate NARA official, as described in § 1251.8, makes the final determination on demands for the production of records. The NARA official notifies the requester and the court or other authority of the final determination and any conditions that may be imposed on the release of records or information, or on the testimony of a NARA employee. If the NARA official deems it appropriate not to comply with the demand, the official communicates the reasons for the noncompliance as appropriate. § 1251.16 Are there any restrictions that apply to testimony?

(a)The General Counsel may impose conditions or restrictions on the testimony of NARA employees including, for example, limiting the areas of testimony or requiring the requester and other parties to the legal proceeding to agree that the transcript of the testimony will be kept under seal or will only be used or made available in the particular legal proceeding for which testimony was requested. The General Counsel may also require a copy of the transcript of testimony at the requester's expense.

(b)NARA may offer the employee's written declaration instead of testimony.

(c)If authorized to testify pursuant to this part, an employee may testify as to facts within his or her personal knowledge, but, unless specifically authorized to do so by the General Counsel, the employee must not:

(1)Disclose confidential or privileged information; or

(2)For a current NARA employee, testify as an expert or opinion witness with regard to any matter arising out of the employee's official duties or the functions of NARA unless testimony is being given on behalf of the United States. § 1251.18 Are there any restrictions that apply to the production of records?

(a)The General Counsel may impose conditions or restrictions on the release of records and agency information, including the requirement that parties to the proceeding obtain a protective order or execute a confidentiality agreement to limit access and any further disclosure. The terms of the protective order or of a confidentiality agreement must be acceptable to the General Counsel. In cases where protective orders or confidentiality agreements have already been executed, NARA may condition the release of records and agency information on an amendment to the existing protective order or confidentiality agreement.

(b)If the General Counsel so determines, original NARA records may be presented for examination in response to a demand, but they are not to be presented as evidence or otherwise used in a manner by which they could lose their identity as official NARA records, nor are they to be marked or altered. Instead of the original records, NARA provides certified copies for evidentiary purposes (see 28 U.S.C. 1733; 44 U.S.C. 2116). Such copies must be given judicial notice and must be admitted into evidence equally with the originals from which they were made (see 44 U.S.C. 2116). § 1251.20 Are there any fees associated with producing records or providing testimony?

(a)*Generally* . The General Counsel may condition the production of records or appearance for testimony upon advance payment of a reasonable estimate of the costs to NARA.

(b)*Fees for records* . Fees for producing records include fees for searching, reviewing, and duplicating records, costs of attorney time spent in reviewing the demand or request, and expenses generated by materials and equipment used to search for, produce, and copy the responsive information. Costs for employee time are calculated on the basis of the hourly pay of the employee (including all pay, allowance, and benefits). Fees for duplication are the same as those charged by NARA in part 1258 of this title.

(c)*Witness fees* . Fees for attendance by a witness include fees, expenses, and allowances prescribed by the court's rules. If no such fees are prescribed, witness fees are determined based upon the rule of the Federal district court closest to the location where the witness appears. Such fees include cost of time spent by the witness to prepare for testimony, in travel, and for attendance in the legal proceeding.

(d)*Payment of fees* . You must submit pay for fees by submitting to the General Counsel a check or money order for the appropriate amount made payable to the following:

(1)witness fees for current NARA employees are made payable to the Treasury of the United States;

(2)applicable fees paid to former NARA employees providing testimony must be paid directly in accordance with 28 U.S.C. 1821 or other applicable statutes; and

(3)fees for the production of records, including records certification fees, are made payable to the National Archives Trust Fund (NATF).

(e)*Certification (authentication) of copies of records* . The National Archives and Records Administration may certify that records are true copies in order to facilitate their use as evidence. Request certified copies from NARA at least 45 days before the date they are needed. We charge a certification fee for each document certified.

(f)*Waiver or reduction of fees* . The General Counsel, in his or her sole discretion, may, upon a showing of reasonable cause, waive or reduce any fees in connection with the testimony, production, or certification of records.

(g)*De minimis fees* . Fees are not assessed if the total charge is $10.00 or less, or as otherwise stated in NARA policy. § 1251.22 Are there any penalties for providing records or testimony in violation of this part?

(a)An employee who discloses official records or information or gives testimony relating to official information, except as expressly authorized by NARA or as ordered by a Federal court after NARA has had the opportunity to be heard, may face the penalties provided in 18 U.S.C. 641 and other applicable laws. Additionally, former NARA employees are subject to the restrictions and penalties of 18 U.S.C. 207 and 216.

(b)A current NARA employee who testifies or produces official records and information in violation of this part is subject to disciplinary action. PART 1256—PUBLIC AVAILABILITY AND USE OF FEDERAL RECORDS 4. The authority citation for part 1256 continues to read as follows: Authority: 44 U.S.C. 2101-2118; 22 U.S.C. 1461(b); 5 U.S.C. 552; E.O. 12958 (60 FR 19825, 3 CFR, 1995 Comp., p. 333; E.O. 13292, 68 FR 15315, 3 CFR, 2003 Comp., p. 196; E.O. 13233, 66 FR 56023, 3 CFR, 2001 Comp., p. 815. § 1256.4 [Removed] 5. Remove § 1256.4. Dated: November 9, 2007. Allen Weinstein, Archivist of the United States. [FR Doc. E7-22494 Filed 11-15-07; 8:45 am] BILLING CODE 7515-01-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 55 [OAR-2004-0091; FRL-8496-1] Outer Continental Shelf Air Regulations Consistency Update for California AGENCY: Environmental Protection Agency (“EPA”). ACTION: Proposed rule—Consistency Update. SUMMARY: EPA is proposing to update a portion of the Outer Continental Shelf (“OCS”) Air Regulations. Requirements applying to OCS sources located within 25 miles of States' seaward boundaries must be updated periodically to remain consistent with the requirements of the corresponding onshore area (“COA”), as mandated by section 328(a)(1) of the Clean Air Act, as amended in 1990 (“the Act”). The portions of the OCS air regulations that are being updated pertain to the requirements for OCS sources by the Santa Barbara County Air Pollution Control District (Santa Barbara County APCD), South Coast Air Quality Management District (South Coast AQMD), and Ventura County Air Pollution Control District (Ventura County APCD). The intended effect of approving the OCS requirements for the Santa Barbara County APCD, South Coast AQMD, and Ventura County APCD is to regulate emissions from OCS sources in accordance with the requirements onshore. The change to the existing requirements discussed below is proposed to be incorporated by reference into the Code of Federal Regulations and is listed in the appendix to the OCS air regulations. DATES: Any comments must arrive by December 17, 2007. ADDRESSES: Submit comments, identified by docket number OAR-2004-0091, by one of the following methods: 1. *Federal eRulemaking Portal:* *http://www.regulations.gov.* Follow the on-line instructions. 2. *E-mail: steckel.andrew@epa.gov.* 3. *Mail or deliver:* Andrew Steckel (Air-4), U.S. Environmental Protection Agency Region IX, 75 Hawthorne Street, San Francisco, CA 94105-3901. *Instructions:* All comments will be included in the public docket without change and may be made available online at *http://www.regulations.gov,* including any personal information provided, unless the comment includes Confidential Business Information

(CBI)or other information whose disclosure is restricted by statute. Information that you consider CBI or otherwise protected should be clearly identified as such and should not be submitted through *http://www.regulations.gov* or e-mail. *http://www.regulations.gov* is an “anonymous access” system, and EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send e-mail directly to EPA, your e-mail address will be automatically captured and included as part of the public comment. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. *Docket:* The index to the docket for this action is available electronically at *http://www.regulations.gov* and in hard copy at EPA Region IX, 75 Hawthorne Street, San Francisco, California. While all documents in the docket are listed in the index, some information may be publicly available only at the hard copy location (e.g., copyrighted material), and some may not be publicly available in either location (e.g., CBI). To inspect the hard copy materials, please schedule an appointment during normal business hours with the contact listed in the FOR FURTHER INFORMATION CONTACT section. FOR FURTHER INFORMATION CONTACT: Cynthia Allen, Air Division (Air-4), U.S. EPA Region 9, 75 Hawthorne Street, San Francisco, CA 94105,

(415)947-4120, *allen.cynthia@epa.gov.* SUPPLEMENTARY INFORMATION: Table of Contents I. Background Information Why is EPA taking this action? II. EPA's Evaluation A. What criteria were used to evaluate rules submitted to update 40 CFR part 55? B. What requirements were submitted to update 40 CFR part 55? III. Administrative Requirements A. Executive Order 12866: Regulatory Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act D. Unfunded Mandates Reform Act E. Executive Order 13132: Federalism F. Executive Order 13175: Coordination With Indian Tribal Government G. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks H. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use I. National Technology Transfer and Advancement Act I. Background Information Why is EPA taking this action? On September 4, 1992, EPA promulgated 40 CFR part 55, 1 which established requirements to control air pollution from OCS sources in order to attain and maintain federal and state ambient air quality standards and to comply with the provisions of part C of title I of the Act. Part 55 applies to all OCS sources offshore of the States except those located in the Gulf of Mexico west of 87.5 degrees longitude. Section 328 of the Act requires that for such sources located within 25 miles of a State's seaward boundary, the requirements shall be the same as would be applicable if the sources were located in the COA. Because the OCS requirements are based on onshore requirements, and onshore requirements may change, section 328(a)(1) requires that EPA update the OCS requirements as necessary to maintain consistency with onshore requirements. 1 The reader may refer to the Notice of Proposed Rulemaking, December 5, 1991 (56 FR 63774), and the preamble to the final rule promulgated September 4, 1992 (57 FR 40792) for further background and information on the OCS regulations. Pursuant to § 55.12 of the OCS rule, consistency reviews will occur

(1)at least annually;

(2)upon receipt of a Notice of Intent under § 55.4; or

(3)when a state or local agency submits a rule to EPA to be considered for incorporation by reference in part 55. This proposed action is being taken in response to the submittal of requirements submitted by the Santa Barbara County APCD, South Coast AQMD and Ventura County APCD. Public comments received in writing within 30 days of publication of this document will be considered by EPA before publishing a final rule. Section 328(a) of the Act requires that EPA establish requirements to control air pollution from OCS sources located within 25 miles of States' seaward boundaries that are the same as onshore requirements. To comply with this statutory mandate, EPA must incorporate applicable onshore rules into part 55 as they exist onshore. This limits EPA's flexibility in deciding which requirements will be incorporated into part 55 and prevents EPA from making substantive changes to the requirements it incorporates. As a result, EPA may be incorporating rules into part 55 that do not conform to all of EPA's state implementation plan

(SIP)guidance or certain requirements of the Act. Consistency updates may result in the inclusion of state or local rules or regulations into part 55, even though the same rules may ultimately be disapproved for inclusion as part of the SIP. Inclusion in the OCS rule does not imply that a rule meets the requirements of the Act for SIP approval, nor does it imply that the rule will be approved by EPA for inclusion in the SIP. II. EPA's Evaluation A. What criteria were used to evaluate rules submitted to update 40 CFR part 55? In updating 40 CFR part 55, EPA reviewed the rules submitted for inclusion in part 55 to ensure that they are rationally related to the attainment or maintenance of federal or state ambient air quality standards or part C of title I of the Act, that they are not designed expressly to prevent exploration and development of the OCS and that they are applicable to OCS sources. 40 CFR 55.1. EPA has also evaluated the rules to ensure they are not arbitrary or capricious. 40 CFR 55.12 (e). In addition, EPA has excluded administrative or procedural rules, 2 and requirements that regulate toxics which are not related to the attainment and maintenance of federal and state ambient air quality standards. 2 Each COA which has been delegated the authority to implement and enforce part 55, will use its administrative and procedural rules as onshore. However, in those instances where EPA has not delegated authority to implement and enforce part 55, EPA will use its own administrative and procedural requirements to implement the substantive requirements. 40 CFR 55.14 (c)(4). B. What requirements were submitted to update 40 CFR part 55? 1. After review of the requirements submitted by the Santa Barbara County APCD against the criteria set forth above and in 40 CFR part 55, EPA is proposing to make the following District requirements applicable to OCS sources: Rule No. Name Repealed date 106 Notice To Comply for Minor Violations 09/12/06 2. After review of the requirements submitted by the South Coast AQMD against the criteria set forth above and in 40 CFR part 55, EPA is proposing to make the following District requirements applicable to OCS sources: Rule No. Name Adoption or amended date 219 Equipment Not Requiring a Written Permit Pursuant to Regulation II 6/1/07 301 Permitting and Associated Fees 5/7/07 304 Equipment, Materials, and Ambient Air Analyses 5/7/07 304.1 Analyses Fees 5/7/07 305 Fees for Acid Deposition Research (Rescinded) 6/9/06 306 Plan Fees 5/4/07 309 Fees for Regulation XVI 5/7/07 Reg. IX New Source Performance Standards 4/6/07 1107 Coating of Metal Parts and Products 1/6/06 1113 Architectural Coatings 6/9/06 1132 Further Control of VOC Emissions From High-Emitting Spray Booth Facilities 5/5/06 1146.2 Emission of Oxides of Nitrogen From Large Water Heaters and Small Boilers 5/5/06 1162 Polyester Resin Operations 7/8/05 1171 Solvent Cleaning Operations 7/14/06 1173 Control of Volatile Organic Compound Leaks and Releases From Components at Petroleum Facilities and Chemical Plants 6/1/07 1178 Further Reductions of VOC Emissions From Storage Tanks at Petroleum Facilities 4/7/06 1403 Asbestos Emissions From Demolition/Renovation Activities 11/6/06 1470 Requirements for Stationary Diesel-Fueled Internal Combustion and Other Compression Ignition Engines 6/1/07 2004 Requirements 4/6/07 2007 Trading Requirements 4/6/07 2010 Administrative Remedies and Sanctions 4/6/07 3. After review of the requirements submitted by the Ventura County APCD against the criteria set forth above and in 40 CFR part 55, EPA is proposing to make the following District requirements applicable to OCS sources: Rule No. Name Adoption or amended date 42 Permit Fees 4/10/07 III. Administrative Requirements A. Executive Order 12866: Regulatory Planning and Review Under Executive Order 12866 (58 FR 51735 (October 4, 1993)), the Agency must determine whether the regulatory action is “significant” and therefore subject to Office of Management and Budget (“OMB”) review and the requirements of the Executive Order. The Order defines “significant regulatory action” as one that is likely to result in a rule that may:

(1)Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities;

(2)Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3)Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4)Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. This action is not a “significant regulatory action” under the terms of Executive Order 12866 and is therefore not subject to OMB Review. These rules implement requirements specifically and explicitly set forth by the Congress in section 328 of the Clean Air Act, without the exercise of any policy discretion by EPA. These OCS rules already apply in the COA, and EPA has no evidence to suggest that these OCS rules have created an adverse material effect. As required by section 328 of the Clean Air Act, this action simply updates the existing OCS requirements to make them consistent with rules in the COA. B. Paperwork Reduction Act The OMB has approved the information collection requirements contained in 40 CFR part 55, and by extension this update to the rules, under the provisions of the *Paperwork Reduction Act* , 44 U.S.C. 3501 *et seq.* and has assigned OMB control number 2060-0249. Notice of OMB's approval of EPA Information Collection Request (“ICR”) No. 1601.06 was published in the **Federal Register** on March 1, 2006 (71 FR 10499-10500). The approval expires January 31, 2009. As EPA previously indicated (70 FR 65897-65898 (November 1, 2005)), the annual public reporting and recordkeeping burden for collection of information under 40 CFR part 55 is estimated to average 549 hours per response. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9 and are identified on the form and/or instrument, if applicable. In addition, EPA is amending the table in 40 CFR part 9 of currently approved OMB control numbers for various regulations to list the regulatory citations for the information requirements contained in this final rule. C. Regulatory Flexibility Act The Regulatory Flexibility Act

(RFA)generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions. These rules will not have a significant economic impact on a substantial number of small entities. These rules implement requirements specifically and explicitly set forth by the Congress in section 328 of the Clean Air Act, without the exercise of any policy discretion by EPA. These OCS rules already apply in the COA, and EPA has no evidence to suggest that these OCS rules have had a significant economic impact on a substantial number of small entities. As required by section 328 of the Clean Air Act, this action simply updates the existing OCS requirements to make them consistent with rules in the COA. Therefore, I certify that this action will not have a significant economic impact on a substantial number of small entities. D. Unfunded Mandates Reform Act Title II of the Unfunded Mandates Reform Act of 1995 (“UMRA”), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, EPA generally must prepare written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million of more in any one year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements. Today's proposed rules contain no Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local, or tribal governments or the private sector that may result in expenditures of $100 million or more for State, local, or tribal governments, in the aggregate, or to the private sector in any one year. These rules implement requirements specifically and explicitly set forth by the Congress in section 328 of the Clean Air Act without the exercise of any policy discretion by EPA. These OCS rules already apply in the COA, and EPA has no evidence to suggest that these OCS rules have created an adverse material effect. As required by section 328 of the Clean Air Act, this action simply updates the existing OCS requirements to make them consistent with rules in the COA. E. Executive Order 13132, Federalism Executive Orders 13132, entitled “Federalism” (64 FR 43255 (August 10, 1999)), requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This proposed rule does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. These rules implement requirements specifically and explicitly set forth by the Congress in section 328 of the Clean Air Act, without the exercise of any policy discretion by EPA. As required by section 328 of the Clean Air Act, this rule simply updates the existing OCS rules to make them consistent with current COA requirements. These rules do not amend the existing provisions within 40 CFR part 55 enabling delegation of OCS regulations to a COA, and this rule does not require the COA to implement the OCS rules. Thus, Executive Order 13132 does not apply to this rule. In the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between EPA and state and local governments, EPA specifically solicits comments on this proposed rule from State and local officials. F. Executive Order 13175, Coordination With Indian Tribal Governments Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” This rule does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes or on the distribution of power and responsibilities between the Federal Government and Indian tribes and thus does not have “tribal implications,” within the meaning of Executive Order 13175. This rule implements requirements specifically and explicitly set forth by the Congress in section 328 of the Clean Air Act, without the exercise of any policy discretion by EPA. As required by section 328 of the Clean Air Act, this rule simply updates the existing OCS rules to make them consistent with current COA requirements. In addition, this rule does not impose substantial direct compliance costs tribal governments, nor preempt tribal law. Consultation with Indian tribes is therefore not required under Executive Order 13175. Nonetheless, in the spirit of Executive Order 13175 and consistent with EPA policy to promote communications between EPA and tribes, EPA specifically solicits comments on this proposed rule from tribal officials. G. Executive Order 13045, Protection of Children From Environmental Health Risks and Safety Risks Executive Order 13045: “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885 (April 23, 1997)), applies to any rule that:

(1)Is determined to be “economically significant” as defined under Executive Order 12866, and

(2)concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency. This proposed rule is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866. In addition, the Agency does not have reason to believe the environmental health or safety risks addressed by this action present a disproportional risk to children. H. Executive Order 13211, Actions That Significantly Affect Energy Supply, Distribution, or Use This proposed rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) because it is not a significant regulatory action under Executive Order 12866. I. National Technology Transfer and Advancement Act Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable laws or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decided not to use available and applicable voluntary consensus standards. As discussed above, these rules implement requirements specifically and explicitly set forth by the Congress in section 328 of the Clean Air Act, without the exercise of any policy discretion by EPA. As required by section 328 of the Clean Air Act, this rule simply updates the existing OCS rules to make them consistent with current COA requirements. In the absence of a prior existing requirement for the state to use voluntary consensus standards and in light of the fact that EPA is required to make the OCS rules consistent with current COA requirements, it would be inconsistent with applicable law for EPA to use voluntary consensus standards in this action. Therefore, EPA is not considering the use of any voluntary consensus standards. EPA welcomes comments on this aspect of the proposed rulemaking and, specifically, invites the public to identify potentially-applicable voluntary consensus standards and to explain why such standards should be used in this regulation. List of Subjects in 40 CFR Part 55 Environmental protection, Administrative practice and procedures, Air pollution control, Hydrocarbons, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Nitrogen oxides, Outer Continental Shelf, Ozone, Particulate matter, Permits, Reporting and recordkeeping requirements, Sulfur oxides. Dated: November 2, 2007. Laura Yoshii, Acting Regional Administrator, Region IX. Title 40 of the Code of Federal Regulations, part 55, is proposed to be amended as follows: PART 55—[AMENDED] 1. The authority citation for part 55 continues to read as follows: Authority: Section 328 of the Clean Air Act (42 U.S.C. 7401 *et seq.* ) as amended by Public Law 101-549. 2. Section 55.14 is amended by revising paragraphs (e)(3)(ii)(F), (G), and

(H)to read as follows: § 55.14 Requirements that apply to OCS sources located within 25 miles of States' seaward boundaries, by State.

(e)* * *

(3)* * *

(ii)* * *

(F)*Santa Barbara County Air Pollution Control District Requirements Applicable to OCS Sources.*

(G)*South Coast Air Quality Management District Requirements Applicable to OCS Sources (Part I, II and Part III).*

(H)*Ventura County Air Pollution Control District Requirements Applicable to OCS Sources* . 3. Appendix A to CFR part 55 is amended by revising paragraphs (b)(6), (7), and

(8)under the heading “California” to read as follows: Appendix A to Part 55—Listing of State and Local Requirements Incorporated by Reference Into Part 55, by State California

(b)* * *

(6)The following requirements are contained in *Santa Barbara County Air Pollution Control District Requirements Applicable to OCS Sources:* Rule 102 Definitions (Adopted 01/20/05) Rule 103 Severability (Adopted 10/23/78) Rule 106 Notice to Comply for Minor Violations (Repealed 01/01/2001) Rule 107 Emergencies (Adopted 04/19/01) Rule 201 Permits Required (Adopted 04/17/97) Rule 202 Exemptions to Rule 201 (Adopted 03/17/05) Rule 203 Transfer (Adopted 04/17/97) Rule 204 Applications (Adopted 04/17/97) Rule 205 Standards for Granting Permits (Adopted 04/17/97) Rule 206 Conditional Approval of Authority to Construct or Permit to Operate (Adopted 10/15/91) Rule 207 Denial of Application (Adopted 10/23/78) Rule 210 Fees (Adopted 03/17/05) Rule 212 Emission Statements (Adopted 10/20/92) Rule 219 Equipment Not Requiring a Written Permit Pursuant to Regulation II (Adopted 6/1/07) Rule 301 Circumvention (Adopted 10/23/78) Rule 302 Visible Emissions (Adopted 10/23/78) Rule 304 Particulate Matter—Northern Zone (Adopted 10/23/78) Rule 305 Particulate Matter Concentration—Southern Zone (Adopted 10/23/78) Rule 306 Dust and Fumes—Northern Zone (Adopted 10/23/78) Rule 307 Particulate Matter Emission Weight Rate—Southern Zone (Adopted 10/23/78) Rule 308 Incinerator Burning (Adopted 10/23/78) Rule 309 Specific Contaminants (Adopted 10/23/78) Rule 310 Odorous Organic Sulfides (Adopted 10/23/78) Rule 311 Sulfur Content of Fuels (Adopted 10/23/78) Rule 312 Open Fires (Adopted 10/02/90) Rule 316 Storage and Transfer of Gasoline (Adopted 04/17/97) Rule 317 Organic Solvents (Adopted 10/23/78) Rule 318 Vacuum Producing Devices or Systems—Southern Zone (Adopted 10/23/78) Rule 321 Solvent Cleaning Operations (Adopted 09/18/97) Rule 322 Metal Surface Coating Thinner and Reducer (Adopted 10/23/78) Rule 323 Architectural Coatings (Adopted 11/15/01) Rule 324 Disposal and Evaporation of Solvents (Adopted 10/23/78) Rule 325 Crude Oil Production and Separation (Adopted 07/19/01) Rule 326 Storage of Reactive Organic Compound Liquids (Adopted 01/18/01) Rule 327 Organic Liquid Cargo Tank Vessel Loading (Adopted 12/16/85) Rule 328 Continuous Emission Monitoring (Adopted 10/23/78) Rule 330 Surface Coating of Metal Parts and Products (Adopted 01/20/00) Rule 331 Fugitive Emissions Inspection and Maintenance (Adopted 12/10/91) Rule 332 Petroleum Refinery Vacuum Producing Systems, Wastewater Separators and Process Turnarounds (Adopted 06/11/79) Rule 333 Control of Emissions from Reciprocating Internal Combustion Engines (Adopted 04/17/97) Rule 342 Control of Oxides of Nitrogen (NO X ) from Boilers, Steam Generators and Process Heaters (Adopted 04/17/97) Rule 343 Petroleum Storage Tank Degassing (Adopted 12/14/93) Rule 344 Petroleum Sumps, Pits, and Well Cellars (Adopted 11/10/94) Rule 346 Loading of Organic Liquid Cargo Vessels (Adopted 01/18/01) Rule 352 Natural Gas-Fired Fan-Type Central Furnaces and Residential Water Heaters (Adopted 09/16/99) Rule 353 Adhesives and Sealants (Adopted 08/19/99) Rule 359 Flares and Thermal Oxidizers (Adopted 06/28/94) Rule 360 Emissions of Oxides of Nitrogen from Large Water Heaters and Small Boilers (Adopted 10/17/02) Rule 370 Potential to Emit—Limitations for Part 70 Sources (Adopted 06/15/95) Rule 505 Breakdown Conditions Sections A., B.1,. and D. only (Adopted 10/23/78) Rule 603 Emergency Episode Plans (Adopted 06/15/81) Rule 702 General Conformity (Adopted 10/20/94) Rule 801 New Source Review (Adopted 04/17/97) Rule 802 Nonattainment Review (Adopted 04/17/97) Rule 803 Prevention of Significant Deterioration (Adopted 04/17/97) Rule 804 Emission Offsets (Adopted 04/17/97) Rule 805 Air Quality Impact Analysis and Modeling (Adopted 04/17/97) Rule 808 New Source Review for Major Sources of Hazardous Air Pollutants (Adopted 05/20/99) Rule 1301 Part 70 Operating Permits—General Information (Adopted 06/19/03) Rule 1302 Part 70 Operating Permits—Permit Application (Adopted 11/09/93) Rule 1303 Part 70 Operating Permits—Permits (Adopted 11/09/93) Rule 1304 Part 70 Operating Permits—Issuance, Renewal, Modification and Reopening (Adopted 11/09/93) Rule 1305 Part 70 Operating Permits—Enforcement (Adopted 11/09/93)

(7)The following requirements are contained in *South Coast Air Quality Management District Requirements Applicable to OCS Sources* (Part I, II and III): Rule 102 Definition of Terms (Adopted 12/3/04) Rule 103 Definition of Geographical Areas (Adopted 01/9/76) Rule 104 Reporting of Source Test Data and Analyses (Adopted 01/9/76) Rule 108 Alternative Emission Control Plans (Adopted 04/6/90) Rule 109 Recordkeeping for Volatile Organic Compound Emissions (Adopted 08/18/00) Rule 112 Definition of Minor Violation and Guidelines for Issuance of Notice to Comply (Adopted 11/13/98) Rule 118 Emergencies (Adopted 12/07/95) Rule 201 Permit to Construct (Adopted 12/03/04) Rule 201.1 Permit Conditions in Federally Issued Permits to Construct (Adopted 12/03/04) Rule 202 Temporary Permit to Operate (Adopted 12/03/04) Rule 203 Permit to Operate (Adopted 12/03/04) Rule 204 Permit Conditions (Adopted 03/6/92) Rule 205 Expiration of Permits to Construct (Adopted 01/05/90) Rule 206 Posting of Permit to Operate (Adopted 01/05/90) Rule 207 Altering or Falsifying of Permit (Adopted 01/09/76) Rule 208 Permit and Burn Authorization for Open Burning (Adopted 12/21/01) Rule 209 Transfer and Voiding of Permits (Adopted 01/05/90) Rule 210 Applications (Adopted 01/05/90) Rule 212 Standards for Approving Permits (Adopted 12/07/95) except (c)(3) and

(e)Rule 214 Denial of Permits (Adopted 01/05/90) Rule 217 Provisions for Sampling and Testing Facilities (Adopted 01/05/90) Rule 218 Continuous Emission Monitoring (Adopted 05/14/99) Rule 218.1 Continuous Emission Monitoring Performance Specifications (Adopted 05/14/99) Rule 218.1 Attachment A—Supplemental and Alternative CEMS Performance Requirements (Adopted 05/14/99) Rule 219 Equipment Not Requiring a Written Permit Pursuant to Regulation II (Adopted 5/5/06) Rule 220 Exemption—Net Increase in Emissions (Adopted 08/07/81) Rule 221 Plans (Adopted 01/04/85) Rule 301 Permitting and Associated Fees (Adopted 5/7/07) except (e)(7) and Table IV Rule 304 Equipment, Materials, and Ambient Air Analyses (Adopted 5/7/07) Rule 304.1 Analyses Fees (Adopted 5/7/07) Rule 305 Fees for Acid Deposition (Rescinded 6/9/06) Rule 306 Plan Fees (Adopted 5/4/07) Rule 309 Fees for Regulation XVI (Adopted 5/7/07) Rule 401 Visible Emissions (Adopted 11/09/01) Rule 403 Fugitive Dust (Adopted 06/03/05) Rule 404 Particulate Matter—Concentration (Adopted 02/07/86) Rule 405 Solid Particulate Matter—Weight (Adopted 02/07/86) Rule 407 Liquid and Gaseous Air Contaminants (Adopted 04/02/82) Rule 408 Circumvention (Adopted 05/07/76) Rule 409 Combustion Contaminants (Adopted 08/07/81) Rule 429 Start-Up and Shutdown Exemption Provisions for Oxides of Nitrogen (Adopted 12/21/90) Rule 430 Breakdown Provisions,

(a)and

(b)only (Adopted 07/12/96) Rule 431.1 Sulfur Content of Gaseous Fuels (Adopted 06/12/98) Rule 431.2 Sulfur Content of Liquid Fuels (Adopted 09/15/00) Rule 431.3 Sulfur Content of Fossil Fuels (Adopted 05/7/76) Rule 441 Research Operations (Adopted 05/7/76) Rule 442 Usage of Solvents (Adopted 12/15/00) Rule 444 Open Burning (Adopted 12/21/01) Rule 463 Organic Liquid Storage (Adopted 05/06/05) Rule 465 Refinery Vacuum-Producing Devices or Systems (Adopted 08/13/99) Rule 468 Sulfur Recovery Units (Adopted 10/08/76) Rule 473 Disposal of Solid and Liquid Wastes (Adopted 05/07/76) Rule 474 Fuel Burning Equipment-Oxides of Nitrogen (Adopted 12/04/81) Rule 475 Electric Power Generating Equipment (Adopted 08/07/78) Rule 476 Steam Generating Equipment (Adopted 10/08/76) Rule 480 Natural Gas Fired Control Devices (Adopted 10/07/77) Addendum to Regulation IV (Effective 1977) Rule 518 Variance Procedures for Title V Facilities (Adopted 08/11/95) Rule 518.1 Permit Appeal Procedures for Title V Facilities (Adopted 08/11/95) Rule 518.2 Federal Alternative Operating Conditions (Adopted 12/21/01) Rule 701 Air Pollution Emergency Contingency Actions (Adopted 06/13/97) Rule 702 Definitions (Adopted 07/11/80) Rule 708 Plans (Rescinded 09/08/95) Regulation IX Standard of Performance For New Stationary Sources (Adopted 4/6/07) Reg. X National Emission Standards for Hazardous Air Pollutants (NESHAPS) (Adopted 12/2/05) Rule 1105.1 Reduction of PM 10 And Ammonia Emissions From Fluid Catalytic Cracking Units (Adopted 11/07/03) Rule 1106 Marine Coating Operations (Adopted 01/13/95) Rule 1107 Coating of Metal Parts and Products (Adopted 1/6/06) Rule 1109 Emissions of Oxides of Nitrogen for Boilers and Process Heaters in Petroleum Refineries (Adopted 08/05/88) Rule 1110 Emissions from Stationary Internal Combustion Engines (Demonstration) (Repealed 11/14/97) Rule 1110.1 Emissions from Stationary Internal Combustion Engines (Rescinded 06/03/05) Rule 1110.2 Emissions from Gaseous and Liquid Fueled Engines (Adopted 06/03/05) Rule 1113 Architectural Coatings (Adopted 06/09/06) Rule 1116.1 Lightering Vessel Operations—Sulfur Content of Bunker Fuel (Adopted 10/20/78) Rule 1121 Control of Nitrogen Oxides from Residential-Type Natural Gas-Fired Water Heaters (Adopted 09/03/04) Rule 1122 Solvent Degreasers (Adopted 10/01/04) Rule 1123 Refinery Process Turnarounds (Adopted 12/07/90) Rule 1125 Metal Container, Closure, and Coil Coating Operations (Adopted 01/13/95) Rule 1129 Aerosol Coatings (Adopted 03/08/96) Rule 1132 Further Control of VOC Emissions from High-Emitting Spray Booth Facilities (Adopted 05/05/06) Rule 1134 Emissions of Oxides of Nitrogen from Stationary Gas Turbines (Adopted 08/08/97) Rule 1136 Wood Products Coatings (Adopted 06/14/96) Rule 1137 PM10 Emission Reductions from Woodworking Operations (Adopted 02/01/02) Rule 1140 Abrasive Blasting (Adopted 08/02/85) Rule 1142 Marine Tank Vessel Operations (Adopted 07/19/91) Rule 1146 Emissions of Oxides of Nitrogen from Industrial, Institutional, and Commercial Boilers, Steam Generators, and Process Heaters (Adopted 11/17/00) Rule 1146.1 Emission of Oxides of Nitrogen from Small Industrial, Institutional, and Commercial Boilers, Steam Generators, and Process Heaters (Adopted 05/13/94) Rule 1146.2 Emissions of Oxides of Nitrogen from Large Water Heaters and Small Boilers (Adopted 05/05/06) Rule 1148 Thermally Enhanced Oil Recovery Wells (Adopted 11/05/82) Rule 1149 Storage Tank Cleaning And Degassing (Adopted 07/14/95) Rule 1162 Polyester Resin Operations (Adopted 07/08/05) Rule 1168 Adhesive and Sealant Applications (Adopted 01/07/05) Rule 1171 Solvent Cleaning Operations (Adopted 07/14/06) Rule 1173 Control of Volatile Organic Compounds Leaks and Releases From Components At Petroleum Facilities and Chemical Plants (Adopted 06/01/07) Rule 1176 VOC Emissions from Wastewater Systems (Adopted 09/13/96) Rule 1178 Further Reductions of VOC Emissions from Storage Tanks at Petroleum Facilities (Adopted 04/07/06) Rule 1301 General (Adopted 12/07/95) Rule 1302 Definitions (Adopted 12/06/02) Rule 1303 Requirements (Adopted 12/06/02) Rule 1304 Exemptions (Adopted 06/14/96) Rule 1306 Emission Calculations (Adopted 12/06/02) Rule 1313 Permits to Operate (Adopted 12/07/95) Rule 1403 Asbestos Emissions from Demolition/Renovation Activities (Adopted 11/06/06) Rule 1470 Requirements for Stationary Diesel-Fueled Internal Combustion and Other Compression Ignition Engines (Adopted 06/01/07) Rule 1605 Credits for the Voluntary Repair of On-Road Motor Vehicles Identified Through Remote Sensing Devices (Adopted 10/11/96) Rule 1610 Old-Vehicle Scrapping (Adopted 02/12/99) Rule 1612 Credits for Clean On-Road Vehicles (Adopted 07/10/98) Rule 1612.1 Mobile Source Credit Generation Pilot Program (Adopted 03/16/01) Rule 1620 Credits for Clean Off-Road Mobile Equipment (Adopted 07/10/98) Rule 1701 General (Adopted 08/13/99) Rule 1702 Definitions (Adopted 08/13/99) Rule 1703 PSD Analysis (Adopted 10/07/88) Rule 1704 Exemptions (Adopted 08/13/99) Rule 1706 Emission Calculations (Adopted 08/13/99) Rule 1713 Source Obligation (Adopted 10/07/88) Regulation XVII Appendix (effective 1977) Rule 1901 General Conformity (Adopted 09/09/94) Regulation XX Regional Clean Air Incentives Market (Reclaim) Rule 2000 General (Adopted 05/06/05) Rule 2001 Applicability (Adopted 05/06/05) Rule 2002 Allocations for Oxides of Nitrogen (NO X ) and Oxides of Sulfur

(SOx)(Adopted 01/07/05) Rule 2004 Requirements (Adopted 04/06/07) except

(l)Rule 2005 New Source Review for RECLAIM (Adopted 05/06/05) except

(i)Rule 2006 Permits (Adopted 05/11/01) Rule 2007 Trading Requirements (Adopted 04/06/07) Rule 2008 Mobile Source Credits (Adopted 10/15/93) Rule 2009 Compliance Plan for Power Producing Facilities (Adopted 01/07/05) Rule 2010 Administrative Remedies and Sanctions (Adopted 04/06/07) Rule 2011 Requirements for Monitoring, Reporting, and Recordkeeping for Oxides of Sulfur

(SOx)Emissions (Adopted 05/06/05) Appendix A Volume IV—(Protocol for oxides of sulfur) (Adopted 05/06/05) Rule 2012 Requirements for Monitoring, Reporting, and Recordkeeping for Oxides of Nitrogen (NO X ) Emissions (Adopted 05/06/05) Appendix A Volume V—(Protocol for oxides of nitrogen) (Adopted 05/06/05) Rule 2015 Backstop Provisions (Adopted 06/04/04) except (b)(1)(G) and (b)(3)(B) Rule 2020 RECLAIM Reserve (Adopted 05/11/01) Rule 2100 Registration of Portable Equipment (Adopted 07/11/97) Rule 2506 Area Source Credits for NO X and SOx (Adopted 12/10/99) XXX Title V Permits Rule 3000 General (Adopted 11/14/97) Rule 3001 Applicability (Adopted 11/14/97) Rule 3002 Requirements (Adopted 11/14/97) Rule 3003 Applications (Adopted 03/16/01) Rule 3004 Permit Types and Content (Adopted 12/12/97) Rule 3005 Permit Revisions (Adopted 03/16/01) Rule 3006 Public Participation (Adopted 11/14/97) Rule 3007 Effect of Permit (Adopted 10/08/93) Rule 3008 Potential To Emit Limitations (Adopted 03/16/01) XXXI Acid Rain Permit Program (Adopted 02/10/95)

(8)The following requirements are contained in *Ventura County Air Pollution Control District Requirements Applicable to OCS Sources:* Rule 2 Definitions (Adopted 04/13/04) Rule 5 Effective Date (Adopted 04/13/04) Rule 6 Severability (Adopted 11/21/78) Rule 7 Zone Boundaries (Adopted 06/14/77) Rule 10 Permits Required (Adopted 04/13/04) Rule 11 Definition for Regulation II (Adopted 03/14/06) Rule 12 Applications for Permits (Adopted 06/13/95) Rule 13 Action on Applications for an Authority to Construct (Adopted 06/13/95) Rule 14 Action on Applications for a Permit to Operate (Adopted 06/13/95) Rule 15.1 Sampling and Testing Facilities (Adopted 10/12/93) Rule 16 BACT Certification (Adopted 06/13/95) Rule 19 Posting of Permits (Adopted 05/23/72) Rule 20 Transfer of Permit (Adopted 05/23/72) Rule 23 Exemptions from Permits (Adopted 09/12/06) Rule 24 Source Recordkeeping, Reporting, and Emission Statements (Adopted 09/15/92) Rule 26 New Source Review—General (Adopted 03/14/06) Rule 26.1 New Source Review—Definitions (Adopted 11/14/06) Rule 26.2 New Source Review—Requirements (Adopted 05/14/02) Rule 26.3 New Source Review—Exemptions (Adopted 03/14/06) Rule 26.6 New Source Review—Calculations (Adopted 03/14/06) Rule 26.8 New Source Review—Permit To Operate (Adopted 10/22/91) Rule 26.10 New Source Review—PSD (Adopted 01/13/98) Rule 26.11 New Source Review—ERC Evaluation At Time of Use (Adopted 05/14/02) Rule 26.12 Federal Major Modifications (Adopted 06/27/06) Rule 28 Revocation of Permits (Adopted 07/18/72) Rule 29 Conditions on Permits (Adopted 03/14/06) Rule 30 Permit Renewal (Adopted 04/13/04) Rule 32 Breakdown Conditions: Emergency Variances, A., B.1., and D. only. (Adopted 02/20/79) Rule 33 Part 70 Permits—General (Adopted 09/12/06) Rule 33.1 Part 70 Permits—Definitions (Adopted 09/12/06) Rule 33.2 Part 70 Permits—Application Contents (Adopted 04/10/01) Rule 33.3 Part 70 Permits—Permit Content (Adopted 09/12/06) Rule 33.4 Part 70 Permits—Operational Flexibility (Adopted 04/10/01) Rule 33.5 Part 70 Permits—Time frames for Applications, Review and Issuance (Adopted 10/12/93) Rule 33.6 Part 70 Permits—Permit Term and Permit Reissuance (Adopted 10/12/93) Rule 33.7 Part 70 Permits—Notification (Adopted 04/10/01) Rule 33.8 Part 70 Permits—Reopening of Permits (Adopted 10/12/93) Rule 33.9 Part 70 Permits—Compliance Provisions (Adopted 04/10/01) Rule 33.10 Part 70 Permits—General Part 70 Permits (Adopted 10/12/93) Rule 34 Acid Deposition Control (Adopted 03/14/95) Rule 35 Elective Emission Limits (Adopted 11/12/96) Rule 36 New Source Review—Hazardous Air Pollutants (Adopted 10/06/98) Rule 42 Permit Fees (Adopted 04/10/07) Rule 44 Exemption Evaluation Fee (Adopted 09/10/96) Rule 45 Plan Fees (Adopted 06/19/90) Rule 45.2 Asbestos Removal Fees (Adopted 08/04/92) Rule 47 Source Test, Emission Monitor, and Call-Back Fees (Adopted 06/22/99) Rule 50 Opacity (Adopted 04/13/04) Rule 52 Particulate Matter-Concentration (Grain Loading) (Adopted 04/13/04) Rule 53 Particulate Matter-Process Weight (Adopted 04/13/04) Rule 54 Sulfur Compounds (Adopted 06/14/94) Rule 56 Open Burning (Adopted 11/11/03) Rule 57 Incinerators (Adopted 01/11/05) Rule 57.1 Particulate Matter Emissions from Fuel Burning Equipment (Adopted 01/11/05) Rule 62.7 Asbestos—Demolition and Renovation (Adopted 09/01/92) Rule 63 Separation and Combination of Emissions (Adopted 11/21/78) Rule 64 Sulfur Content of Fuels (Adopted 04/13/99) Rule 67 Vacuum Producing Devices (Adopted 07/05/83) Rule 68 Carbon Monoxide (Adopted 04/13/04) Rule 71 Crude Oil and Reactive Organic Compound Liquids (Adopted 12/13/94) Rule 71.1 Crude Oil Production and Separation (Adopted 06/16/92) Rule 71.2 Storage of Reactive Organic Compound Liquids (Adopted 09/26/89) Rule 71.3 Transfer of Reactive Organic Compound Liquids (Adopted 06/16/92) Rule 71.4 Petroleum Sumps, Pits, Ponds, and Well Cellars (Adopted 06/08/93) Rule 71.5 Glycol Dehydrators (Adopted 12/13/94) Rule 72 New Source Performance Standards

(NSPS)(Adopted 09/13/05) Rule 73 National Emission Standards for Hazardous Air Pollutants (NESHAPS) (Adopted 09/13/05) Rule 74 Specific Source Standards (Adopted 07/06/76) Rule 74.1 Abrasive Blasting (Adopted 11/12/91) Rule 74.2 Architectural Coatings (Adopted 11/13/01) Rule 74.6 Surface Cleaning and Degreasing (Adopted 11/11/03—effective 07/01/04) Rule 74.6.1 Batch Loaded Vapor Degreasers (Adopted 11/11/03—effective 07/01/04) Rule 74.7 Fugitive Emissions of Reactive Organic Compounds at Petroleum Refineries and Chemical Plants (Adopted 10/10/95) Rule 74.8 Refinery Vacuum Producing Systems, Wastewater Separators and Process Turnarounds (Adopted 07/05/83) Rule 74.9 Stationary Internal Combustion Engines (Adopted 11/08/05) Rule 74.10 Components at Crude Oil Production Facilities and Natural Gas Production and Processing Facilities (Adopted 03/10/98) Rule 74.11 Natural Gas-Fired Residential Water Heaters—Control of NO X (Adopted 04/09/85) Rule 74.11.1 Large Water Heaters and Small Boilers (Adopted 09/14/99) Rule 74.12 Surface Coating of Metal Parts and Products (Adopted 11/11/03) Rule 74.15 Boilers, Steam Generators and Process Heaters (Adopted 11/08/94) Rule 74.15.1 Boilers, Steam Generators and Process Heaters (Adopted 06/13/00) Rule 74.16 Oil Field Drilling Operations (Adopted 01/08/91) Rule 74.20 Adhesives and Sealants (Adopted 01/11/05) Rule 74.23 Stationary Gas Turbines (Adopted 1/08/02) Rule 74.24 Marine Coating Operations (Adopted 11/11/03) Rule 74.24.1 Pleasure Craft Coating and Commercial Boatyard Operations (Adopted 01/08/02) Rule 74.26 Crude Oil Storage Tank Degassing Operations (Adopted 11/08/94) Rule 74.27 Gasoline and ROC Liquid Storage Tank Degassing Operations (Adopted 11/08/94) Rule 74.28 Asphalt Roofing Operations (Adopted 05/10/94) Rule 74.30 Wood Products Coatings (Adopted 06/27/06) Rule 75 Circumvention (Adopted 11/27/78) Rule 101 Sampling and Testing Facilities (Adopted 05/23/72) Rule 102 Source Tests (Adopted 04/13/04) Rule 103 Continuous Monitoring Systems (Adopted 02/09/99) Rule 154 Stage 1 Episode Actions (Adopted 09/17/91) Rule 155 Stage 2 Episode Actions (Adopted 09/17/91) Rule 156 Stage 3 Episode Actions (Adopted 09/17/91) Rule 158 Source Abatement Plans (Adopted 09/17/91) Rule 159 Traffic Abatement Procedures (Adopted 09/17/91) Rule 220 General Conformity (Adopted 05/09/95) Rule 230 Notice to Comply (Adopted 11/09/99) [FR Doc. E7-22457 Filed 11-15-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 87 [EPA-HQ-OAR-2007-0294; FRL-8495-4] Petition Requesting Rulemaking To Limit Lead Emissions from General Aviation Aircraft; Request for Comments AGENCY: Environmental Protection Agency (EPA). ACTION: Notice of petition for rulemaking. SUMMARY: Friends of the Earth has filed a petition with EPA, requesting that EPA find pursuant to section 231 of the Clean Air Act that lead emissions from general aviation aircraft cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare and that EPA propose emissions standards for lead from general aviation aircraft. Alternatively, Friends of the Earth requests that EPA commence a study and investigation of the health and environmental impacts of lead emissions from general aviation aircraft, if EPA believes that insufficient information exists to make such a finding. The petition submitted by Friends of the Earth explains their view that lead emissions from general aviation aircraft endanger the public health and welfare, creating a duty for the EPA to propose emission standards. EPA invites information and comments from all interested parties on the issues raised by this petition. DATES: Comments must be received on or before March 17, 2008. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2007-0294, by one of the following methods: • *www.regulations.gov* : Follow the on-line instructions for submitting comments. • Email: *a-and-r-docket@epa.gov* , Attention Docket ID No. OAR-2007-0294. • Fax:

(202)566-9744 • Mail. Send your comments to: Air and Radiation Docket, Environmental Protection Agency, Mailcode: 6102T, 1200 Pennsylvania Ave., NW., Washington, DC 20460, Attention: Docket ID No. OAR-2007-0294. • Hand Delivery. Deliver your comments to: Air and Radiation Docket in the EPA Docket Center, (EPA/DC) EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, DC, Attention: Docket ID No. OAR-2007-0294. Such deliveries are only accepted during the Docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information. *Instructions:* Direct your comments to Docket ID No. EPA-HQ-OAR-2007-0294. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at *www.regulations.gov* , including any personal information provided, unless the comment includes information claimed to be Confidential Business Information

(CBI)or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through *www.regulations.gov* . The *www.regulations.gov* website is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through *www.regulations.gov* your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. For additional information about EPA's public docket visit the EPA Docket Center homepage at *http://www.epa.gov/epahome/dockets.htm* . *Docket:* All documents in the docket are listed in the *www.regulations.gov* index. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in *www.regulations.gov* or in hard copy at the Air and Radiation Docket in the EPA Docket Center, (EPA/DC) EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, DC, Docket ID No. OAR-2007-0294. This docket is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is

(202)566-1744, and the telephone number for the Air and Radiation Docket is

(202)566-1742. FOR FURTHER INFORMATION CONTACT: Bryan Manning, Assessment and Standards Division, Office of Transportation and Air Quality, 2000 Traverwood Drive, Ann Arbor, MI 48105; *telephone number:* 734-214-4832; *fax number:* 734-214-4816; *e-mail address:* *manning.bryan@epa.gov,* Assessment and Standards Division Hotline; telephone number:

(734)214-4636; e-mail address: *asdinfo@epa.gov.* SUPPLEMENTARY INFORMATION: I. General Information A. What Should I Consider as I Prepare My Comments for EPA? 1. *Submitting CBI.* Do not submit this information to EPA through www.regulations.gov or e-mail. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI). In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. 2. *Tips for Preparing Your Comments.* When submitting comments, remember to: • Identify the appropriate docket identification number in the subject line on the first page of your response. It would also be helpful if you provided the name, date, and **Federal Register** citation related to your comments. • Explain your views as clearly as possible. • Describe any assumptions and provide any technical information and/or data that you used. • If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced. • Provide specific examples to illustrate your concerns, and suggest alternatives. • Make sure to submit your comments by the comment period deadline identified. II. The Friends of the Earth Petition This notice is seeking comment on and information related to a petition for an EPA finding and rulemaking and collateral relief from the Friends of the Earth. This petition is seeking the regulation of lead emissions from piston-powered general aviation aircraft under section 231 of the Clean Air Act. The complete petition of Friends of the Earth is available from their Web site, the docket, from the EPA Web site at: *www.epa.gov/otaq/aviation.htm,* or from the individual listed under FOR FURTHER INFORMATION CONTACT above. Friends of the Earth is an environmental advocacy organization headquartered in Washington, DC. The petition they submitted concerns the use of leaded aviation gasoline in piston-powered general aviation aircraft in the U.S. Friends of the Earth believes that “EPA action regarding lead in general aviation aircraft is long overdue. Studies increasingly show that lead in any quantity threatens the public welfare. Lead emissions from general aviation aircraft constitute a substantial proportion of all current lead air emissions. As a result of the use of leaded aviation gasoline, humans and ecological receptors at or near general aviation airports may be exposed to elevated levels of lead.” Friends of the Earth contends that “safe unleaded alternatives to aviation gasoline do exist. Since 1999, the research and development process has produced unleaded fuels that have received approval from the FAA for current use. Tens of thousands of low-performance aircraft have received supplemental type certificates allowing them to run on unleaded automobile gasoline (commonly referred to as mogas in the aviation community). Additionally, a mogas alternative, 82UL, has been developed for use by some low-performance planes. The combination of these two fuels can be utilized by nearly seventy percent of all piston-driven aircraft. Additionally, the FAA allows a select number of planes to run on an ethanol based aviation fuel (AGE85); the remaining thirty percent of general aviation planes can potentially use this unleaded gasoline.” The Friends of the Earth petition was addressed to EPA. Both EPA and the FAA have specific statutorily defined roles regarding aviation. EPA through section 231 of the Clean Air Act can make findings regarding air pollution emissions from aircraft and set standards regulating such emissions and FAA has the statutory authority to regulate the fuel used in aircraft (49 U.S.C. 44714). By this Notice, EPA is soliciting comment on the petition, specifically on the points discussed in the section “Request for Comments” presented below. EPA will use this information in its statutory assessment of whether lead emissions from piston-powered general aviation cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. III. Background Regarding Lead in Aviation Fuel In a variety of chemical forms and exposure pathways, lead has long been recognized as causing serious adverse health effects. In 1978 EPA established a National Ambient Air Quality Standard for lead of 1.5 micrograms per cubic meter, as a maximum quarterly average. Research completed since that time, discussed in EPA's *Air Quality Criteria Document for Lead*

(2006)indicates that health effects of lead occur at blood lead levels lower than those previously reported and include concerns not previously studied (available at *www.epa.gov/ncea* ). The adverse effects of lead include neurotoxic effects (e.g., IQ loss in children), effects on the immune system, red blood cell production, cardiovascular system, kidney, bones, teeth and reproductive and developmental systems. EPA is currently conducting a review of the NAAQS which has included the assessment of health and welfare effects of lead documented in the *Air Quality Criteria Document for Lead* (2006). Integral to the NAAQS review are decisions regarding the adequacy of the current standard for lead and whether the Agency should retain or revise it. Consistent with the court order regarding this review, the review and regulatory development process will be completed by September 1, 2008. Additional information about the review is available at: *http://www.epa.gov/ttn/naaqs/standards/pb/s_pb_index.html.* Thirty-five years ago, cars and trucks were the major contributors of lead emissions to the air. In the 1970s, EPA set national regulations to gradually reduce the lead content in gasoline. In 1974, unleaded gasoline was introduced for motor vehicles equipped with catalytic converters. EPA banned the use of leaded gasoline in highway vehicles after December 1995. As a result of EPA's regulatory efforts to remove lead from gasoline, emissions of lead from the transportation sector have dramatically declined (96 percent between 1980 and 2005). The large reductions in lead emissions from motor vehicles have changed the nature of the air quality lead problem in the United States. Industrial processes, particularly primary and secondary lead smelters, utility boilers, and battery manufacturers taken together, are now responsible for most lead emissions into the atmosphere. Currently, tetraethyl lead

(TEL)is added to gasoline used in most piston-engine powered aircraft. The 2002 National Emissions Inventory

(NEI)estimates that lead emissions from the use of leaded aviation gasoline (commonly referred to as avgas) are 491 tons; this accounts for 29 percent of the air pollution emissions inventory for lead, and is overall, the largest source category. This estimate is based on the Department of Energy estimate of about 281 million gallons of avgas supplied in the U.S. in 2002 (data available at *http://www.tonto.eia.doe.gov/dnav/pet/hist/mgaupus1A.htm* ). In 2006 the volume of avgas supplied in the U.S. was about 280 million gallons. The majority of avgas contains up to 0.56 grams of lead per liter (2.12 grams of lead/gallon). This is referred to as 100 Low Lead (100LL). There is another grade of 100 octane avgas that contains 1.12 grams of lead per liter, but this product is not widely available. According to the Federal Aviation Administration

(FAA)General Aviation and Air Taxi Activity and Avionics (GAATAA) survey (2005), there were over 190,000 piston-engine powered aircraft engaged in flight operations in the U.S. in 2005; these aircraft comprised approximately 90 percent of the aircraft in the general aviation fleet. In 2005, approximately 29 million landing and take-off events (58 million total operations) were conducted by piston-engine powered aircraft. Among the total hours flown by general aviation aircraft, about 68 percent occurred in a piston-engine powered aircraft. According to the General Aviation Manufacturers Association (GAMA), there were approximately 2,750 new piston-engine powered aircraft manufactured in 2006. This is the largest production volume over the past ten years and reflects an average annual increase in sales that ranged from eight to 43 percent during the preceding 10-year period except for 2001 and 2002. GAMA estimates that the average piston-engine powered aircraft is 35-40 years old. Avgas and automotive unleaded gasoline are both derived and blended from the refining of petroleum. However, due to the different nature of engine designs and operating environments these two types of gasoline are different in their chemical composition. Avgas is refined and blended to meet ASTM specification D910 while automotive unleaded gasoline (commonly referred to as mogas) meets ASTM specification D4814. Generally, avgas is transported independent of other fuel to avoid cross-contamination and to maintain the tight specifications of avgas required for proper engine operation in general aviation applications. TEL is added to avgas to increase octane, prevent knock, 1 and prevent valve seat recession and subsequent loss of compression for engines without hardened valves. Lead and other additives are added downstream of the refinery; most avgas is distributed by truck directly from the refinery to the bulk gasoline terminals or bulk plants or to the storage tanks and refueling equipment at airports. 1 Knocking is the sound produced when some of the unburned fuel in the cylinder ignites spontaneously resulting in rapid burning and a precipitous rise in cylinder pressure that creates the characteristic knocking or pinging sound (Chevron 2005 available at: *http://www.chevronglobalaviation.com/docs/aviation_tech_review.pdf* ). Most piston engines used in general aviation are type certified by FAA for the use of leaded avgas (mostly 100LL). The FAA has issued supplemental type certificates

(STCs)qualifying piston engines used in general aviation to use unleaded avgas. There are two types of unleaded gasoline reflected in these STCs. The first type of unleaded gasoline which can be used under STCs is ethanol-free unleaded automotive gasoline (mogas). Most aircraft using this mogas have low-compression engines which were originally certified to run on leaded 80/87 avgas and require only 87 antiknock index gasoline. The second type is known as 82UL avgas, which is unleaded fuel similar to automobile gasoline but without additives. It may be used in aircraft that have an STC for the use of automobile gasoline with an aviation lean octane rating of 82 or less or an antiknock index of 87 or less. ASTM specification D6227 has been established for 82UL but this fuel has not yet been produced for general distribution. 2 About 97 percent of gasoline used in piston-engine powered aircraft is leaded avgas, mostly 100LL. The remaining three percent is ethanol-free unleaded automotive gasoline (mogas). 2 82UL has not yet been produced for general distribution due to limited demand. It would be a fraction of the 100LL market. It is an aviation grade product, and thus, refiners can not simply alter mogas to make 82UL. The Experimental Aircraft Association and Petersen Aviation estimate that ethanol-free unleaded gasoline can be used in approximately 40 percent of the piston-engine powered aircraft fleet (e.g., those aircraft with low-compression engines). 3 In contrast, in order to prevent knock or detonation during the combustion process, high-compression piston engines require higher octane than typical unleaded gasoline provides. These aircraft also typically have higher utilization rates and fuel consumption rates than their low-compression counterparts. The AOPA estimates that high-compression piston-engine powered aircraft currently consume approximately 70 percent of the leaded avgas supplied nationally, and that the remaining 30 percent of the leaded avgas is used in aircraft that could also use ethanol-free unleaded automotive gasoline. 3 The Experimental Aircraft Association and Petersen Aviation data are available at *www.aviationfuel.org* and *www.autofuelstc.com/autofuelstc/pa/PetersenAviation.html.* Efforts to explore reduced lead emissions from piston-engine powered aircraft have primarily focused on fuels to replace 100LL avgas, with less attention given to potential engine modifications. The FAA conducts research exploring replacement fuels for use in piston-engine powered aircraft at its William J. Hughes Technical Center. Publications from this research can be found at *http://www.actlibrary.tc.faa.gov/* by searching for `unleaded avgas'. The Coordinating Research Council has organized the Unleaded Aviation Gasoline Development Group which brings together FAA, AOPA, GAMA, the Experimental Aircraft Association, airframe manufacturers, engine manufacturers, fuel producers and other interested parties. The objective of the group is to facilitate development of a high-octane unleaded aviation gasoline as an environmentally compatible, cost-effective replacement for the current 100LL avgas. Documents regarding the CRC Unleaded Aviation Gasoline Development Group can be found in the docket for this notice. At the 23rd World Assembly of the International AOPA, Lennart Persson of Hjelmco Oil in Sweden suggested that a 91/96 octane unleaded avgas could be a transparent switchover for 70 percent of the U.S. general aviation fleet. He indicated that this fuel would provide similar performance to 100LL avgas and has done so successfully in Sweden for 15 years. It is now offered for sale at 70 locations in Sweden. For more information see *http://www.iaopa.org/info/assembly23/ppts/persson.pdf* IV. Request for Comments EPA is soliciting public comment on any and all aspects of the petition from Friends of the Earth regarding issues related to the use of lead in general aviation gasoline. To assist us in developing our response to the petition EPA specifically requests information and comment on the following. 1. EPA requests information related to human and environmental lead exposures and effects around airports. Specifically, we request information on concentrations of lead in the air, soil, surface water or other environmental media at or near airports where leaded avgas is used. Information regarding sources of lead in addition to leaded avgas in these areas is also requested. 2. We request information on levels of lead in indoor dust in homes in the vicinity of airports where leaded avgas is used and information regarding the presence of leaded paint in those homes. 3. We request information on blood lead levels in children and adults residing or attending school in the vicinity of an airport where leaded avgas is used. 4. We request information on the characteristics of the populations residing in the vicinity of an airport where leaded avgas is used, specifically, information regarding the number of children six years and younger, the number of schools, daycare facilities, retirement homes, and the socioeconomic status of the population. 5. EPA request information on the volume of leaded avgas and unleaded aviation gasoline (mogas) supplied at individual airports nationwide. 6. EPA requests comment on locations where unleaded aviation gasoline is available and the reason for its apparent lack of widespread availability. We request the submission of information related to supplying unleaded aviation gasoline at airports and how potential fuel distribution issues could be addressed. 7. EPA requests information on the characteristics of piston engine general aviation operation, including annual LTOs by airport, LTO characteristics per airport and aircraft/engine type including mode, time-in-mode, and fuel flow rate in mode. Related to this, EPA requests information on the frequency and duration of local area flights (including touch/go operations) and flight durations within the mixing layer. 8. EPA requests information on the disposal of leaded avgas after a pilot checks the fuel before starting the aircraft. Specifically, we request information on how this fuel is discarded (i.e., is it deposited on the tarmac) or otherwise handled? 9. Leaded avgas contains ethylene dibromide which acts as a scavenger for lead by converting lead oxide to lead bromide compounds which are volatile and easily exhausted from the engine. This prevents lead oxide depositing on the valves and spark plugs where it could damage the engine. EPA requests information on the variation in lead emission rates at various operating modes and power settings and the quantity of lead retained in the engine and engine oil as a fraction of the lead in the fuel combusted. 10. EPA is requesting comments on the potential use of replacement fuels for use in piston-engine powered aircraft. Approximately 40 percent of the piston-engine powered aircraft fleet is certified with an STC allowing the use of ethanol-free unleaded gasoline (82UL or “mogas”), but these fuels are not widely available at airports. Information available to EPA suggests that 30 percent of the 100LL avgas consumed could be replaced by unleaded gasoline. These aircraft are equipped with low-compression engines that may also run on leaded aviation fuel when mogas or 82UL is not available. 11. We request analysis of the prospects for developing an unleaded fuel for the general aviation fleet that will meet the needs of high-compression engines, including additional research needed. 12. EPA is requesting comment on the viability of a high-octane unleaded aviation gasoline in a high-compression engine to provide equivalent performance and safety to 100LL avgas. 13. In this context, EPA requests comment on the viability of the use of ethyl tertiary-butyl ether

(ETBE)or other octane enhancing compounds for unleaded fuel. 14. We also request information on what modifications would need to be made to the existing fleet of high-compression engines as well as new engines, with appropriate lead time, for them to operate on high-octane unleaded fuel with an equivalent margin of safety. In particular, we solicit comment on electronic ignition systems (full authority digital engine control) and knock (detonation) sensors, including comments on further research on these technologies. One example for consideration is the Teledyne Continental Motors/Aerosance Powerlink FADEC system. 15. EPA also requests information on the ability of current engines to operate on avgas with a decreased lead content relative to 100LL, and identification of the minimum lead content needed to maintain safe engine operation. 16. EPA requests comment on the storage of avgas, specifically, issues related to above ground storage capacity compared to below-ground storage capacity. 17. EPA requests comment on the availability of additives less toxic than lead to enhance aviation gasoline octane. 18. We request comment on the long-term availability of TEL as an avgas additive. 19. We request information related to the feasibility and costs of any potential options for limiting lead emissions from existing aircraft. 20. We request comment on the STCs which have been approved to allow for the use of unleaded gasoline in general aviation, the percent and characteristics of the current fleet covered by STCs, and obstacles to wider acceptance and application of the STCs. 21. EPA is requesting comment on additional research on alcohol-based fuels of which we should be aware. The FAA has approved a very limited number of STCs for use of ethanol-based AGE-85 fuel (85% ethanol in 15% unleaded gasoline) under a preliminary fuel specification. Subsequent approvals allowing more widespread use of AGE-85 are pending the development of a final, aviation-grade fuel specification to ensure potential safety concerns with the fuel are fully vetted by the FAA and the aviation industry. 22. EPA is requesting comment on additional research or information regarding the use of diesel engines in general aviation, particularly regarding equipment changes and the related costs. The FAA has approved Type Certificates and STCs for diesel-cycle engines that use widely-available, unleaded jet fuel. Before the end of the comment period, please send all comments and related information to the address indicated in the ADDRESSES section at the beginning of this notice. Dated: November 9, 2007. Stephen L. Johnson, Administrator. [FR Doc. E7-22456 Filed 11-15-07; 8:45 am] BILLING CODE 6560-50-P 72 221 Friday, November 16, 2007 Notices DEPARTMENT OF AGRICULTURE Office of the Chief Economist; Federal Advisory Committee for the Expert Review of Synthesis and Assessment Product 4.3 AGENCY: Office of the Chief Economist, U.S. Department of Agriculture. ACTION: Notice of Teleconference. SUMMARY: The Federal Advisory Committee for the Expert Review of Synthesis and Assessment Product 4.3 (CERSAP) will hold a teleconference on Friday, December 7, 2007. The U.S. Department of Agriculture

(USDA)is the lead agency for Climate Change Science Program Synthesis and Assessment Product 4.3 (SAP 4.3) titled, *The Effects of Climate Change on Agriculture, Land Resources, Water Resources, and Biodiversity* . CERSAP will provide advice to the Secretary of Agriculture on the conduct of this study. DATES: CERSAP will convene at 11 a.m. Eastern time on Friday, December 7. The teleconference is expected to last no more than 90 minutes. To receive call-in and password information, please contact Dr. Margaret Walsh at 202-720-9978 or *mwalsh@oce.usda.gov* no later than 5 p.m. Eastern time on Friday, November 30, 2007. Individuals who wish to attend in person must inform Dr. Walsh no later than 5 p.m. Eastern time on Friday, November 30, 2007. A conference room at the U.S. Department of Agriculture, 1400 Independence Avenue, Washington, DC 20250 will be made available for those who wish to attend in person. Upon entry, please have Security call 202-720-8651 for mandatory escort to the teleconference location. ADDRESSES: The teleconference will be held by telephone, and those interested in participating can do so by obtaining call-in information or using the conference room provided at USDA. Please contact Dr. Margaret Walsh at 202-720-9978 or *mwalsh@oce.usda.gov* for call-in information and password. Written materials for CERSAP's consideration prior to the meeting must be received by Dr. Margaret Walsh no later than Friday, November 30, 2007. Written materials may be sent to Dr. Margaret Walsh at *mwalsh@oce.usda.gov* . Individuals who wish to attend in person must inform Dr. Walsh no later than 5 p.m. Eastern time on Friday, November 30, 2007. A conference room at the U.S. Department of Agriculture, 1400 Independence Avenue, Washington, DC 20250 will be made available for those who wish to attend in person. Upon entry, please have Security call 202-720-8651 for mandatory escort to the teleconference location. FOR FURTHER INFORMATION CONTACT: Dr. Margaret Walsh, Global Change Program Office, U.S. Department of Agriculture, 202-720-9978 or *mwalsh@oce.usda.gov* . SUPPLEMENTARY INFORMATION: This is a public meeting. In order to ensure a sufficient number of call-in lines, individuals who would like to participate in this teleconference must RSVP to Dr. Margaret Walsh before Friday, November 30, 2007 for access information. Written materials for CERSAP's consideration prior to the meeting must be received by Dr. Margaret Walsh no later than Friday, November 30, 2007. Individuals may make oral presentations. Those making oral presentations must inform Dr. Walsh when receiving the teleconference information that they plan to do so. More information on CERSAP and on SAP 4.3 may be found online at *http://www.usda.gov/oce/global_change/index.htm, http://www.climatescience.gov/Library/sap/sap4-3/default.php* , and *http://www.sap43.ucar.edu/* . Draft Meeting Agenda Friday, December 7, 2007 A. Welcome and Introductions. B. Update on SAP 4.3. C. Discussion of Process and Schedule. D. Public Comment (if applicable). Time will be reserved for public comment. Individual presentations will be limited to five minutes. Updates to the meeting agenda can be found online at the URLs listed above. For information on facilities or services for individuals with disabilities, or to request special assistance, please contact Dr. Margaret Walsh. USDA prohibits discrimination on the basis of race, color, national origin, gender, religion, age, sexual orientation, or disability. Additionally, discrimination on the basis of political beliefs and marital or family status is also prohibited by statues enforced by USDA (not all prohibited bases apply to all programs). Persons with disabilities who require alternate means for communication of program information (Braille, large print, audio tape, etc.) should contact the USDA's Target Center at

(202)720-2000 (voice and TDD). USDA is an equal opportunity provider and employer. Keith Collins, Chief Economist. [FR Doc. 07-5689 Filed 11-15-07; 8:45 am]

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