Proposed Rules. Temporary rule; emergency action; extension of effective period; request for comments
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BILLING CODE 3510-22-P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 648 [Docket No.050613158-5262-03] RIN 0648-AT48 Magnuson-Stevens Fishery Conservation and Management Act Provisions; Fisheries of the Northeastern United States; Extension of Emergency Fishery Closure Due to the Presence of the Toxin that Causes Paralytic Shellfish Poisoning AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
ACTION: Temporary rule; emergency action; extension of effective period; request for comments. SUMMARY: This action extends a temporary final rule initially published on October 18, 2005. The regulations contained in the temporary rule, emergency action, published on October 18, 2005, and subsequently extended several times at the request of the U.S. Food and Drug Administration (FDA), will expire on January 1, 2008. This temporary rule extends a closure of Federal waters through December 31, 2008.
The FDA has determined that current oceanographic conditions and alga sampling data suggest that the northern section of the Temporary Paralytic Shellfish Poison
(PSP)Closure Area remain closed to the harvest of bivalve molluscan shellfish and that the southern area remain closed to the harvest of whole or roe-on scallops. NMFS is publishing the regulatory text associated with this closure in this temporary emergency rule in order to ensure that current regulations accurately reflect the codified text that has been modified and extended numerous times, so that the public is aware of the regulations being extended through December 31, 2008. DATES: The amendments to § 648.14 are effective from January 1, 2008, through December 31, 2008. The expiration date of the temporary emergency action published on July 27, 2007 (72 FR 35200), is extended through December 31, 2008. Comments must be received by January 30, 2008. ADDRESSES: Copies of the Small Entity Compliance Guide, the emergency rule, the Environmental Assessment, and the Regulatory Impact Review prepared for the October 18, 2005, reinstatement of the September 9, 2005, emergency action and subsequent extensions of the emergency action, are available from Patricia A. Kurkul, Regional Administrator, National Marine Fisheries Service, One Blackburn Drive, Gloucester, MA 01930. These documents are also available via the internet at *http://www.nero.noaa.gov/nero/hotnews/redtide/index.html* . You may submit comments, identified by RIN 0648-AT48, by any one of the following methods: • Mail: Patricia A. Kurkul, Regional Administrator, Northeast Region, NMFS, One Blackburn Drive, Gloucester, MA 01930-2298. Mark on the outside of the envelope, “Comments on PSP Closure.” • Fax:
(978)281-9135. • Electronic Submissions: Submit all electronic public comments via the Federal Rulemaking Portal *http://www.regulations.gov* . Instructions: All comments received are a part of the public record and will generally be posted to *http://www.regulations.go* v without change. All Personal Identifying Information (for example, name, address, etc.) voluntarily submitted by the commenter may be publicly accessible. Do not submit Confidential Business Information or otherwise sensitive or protected information. NMFS will accept anonymous comments. Attachments to electronic comments will be accepted in Microsoft Word, Excel, WordPerfect, or Adobe PDF file formats only. FOR FURTHER INFORMATION CONTACT: Brian Hooker, Fishery Policy Analyst, phone:
(978)281-9220, fax:
(978)281-9135. SUPPLEMENTARY INFORMATION: Background This emergency closure is being implemented at the request of the FDA after samples of shellfish from the inshore and offshore waters off of the coasts of New Hampshire and Massachusetts tested positive for the toxins (saxotoxins) that cause PSP. These toxins are produced by the alga *Alexandrium fundyense* , which can form blooms commonly referred to as red tides. Current oceanographic conditions and alga sampling data suggest that the northern section of the Temporary PSP Closure Area remain closed to the harvest of bivalve molluscan shellfish and that the southern area remain closed to the harvest of whole or roe-on scallops. Red tide blooms, also known as harmful algal blooms (HABs), can produce toxins that accumulate in filter-feeding shellfish. Shellfish contaminated with the toxin, if eaten in large enough quantity, can cause illness or death from PSP. On June 10, 2005, the FDA requested that NMFS close an area of Federal waters off the coasts of New Hampshire and Massachusetts to fishing for bivalve shellfish intended for human consumption. On June 16, 2005, NMFS published an emergency rule (70 FR 35047) closing the area recommended by the FDA, i.e., the Temporary PSP Closure Area, through September 30, 2005. On July 7, 2005 (70 FR 39192), the emergency rule was modified to facilitate the testing of shellfish for the toxin that causes PSP by the FDA and/or FDA-approved laboratories through the issuance of a Letter of Authorization
(LOA)from the NMFS Regional Administrator. On September 9, 2005 (70 FR 53580), the emergency regulation was once again modified by the division of the Temporary PSP Closure Area into northern and southern components. The northern area remained closed to the harvest of all bivalve molluscan shellfish, while the southern component was reopened to the harvest of Atlantic surfclams and ocean quahogs, but remained closed to the harvest of whole or roe-on scallops. The rule was extended as published on September 9, 2005, on October 3, 2005 (70 FR 57517); reinstated on October 18, 2005, (70 FR 60450) to correct a technical error; extended on December 28, 2005 (70 FR 76713); and subsequently on June 30, 2006 (71 FR 37505); January 4, 2007 (72 FR 291); and again on June 27, 2007 (72 FR 35200), through December 31, 2007. On May 18, 2007, the FDA indicated that it could not support the re-opening of the Temporary PSP Closure Area due to insufficient analytical data from the area, and recommended the area remain closed indefinitely. The boundaries of the northern component of the Temporary PSP Closure Area comprise Federal waters bound by the following coordinates in the order stated:
(1)43°00′ N. lat., 71°00′ W. long.;
(2)43° 00′ N. lat., 69° 00′ W. long.;
(3)41°39′ N. lat., 69° 00′ W. long.;
(4)41° 39′ N. lat., 71° 00′ W. long., and then ending at the first point. Under this emergency rule, this area remains closed to the harvest of Atlantic surfclams, ocean quahogs, and whole or roe-on scallops. The boundaries of the southern component of the Temporary PSP Closure Area comprise Federal waters bound by the following coordinates in the order stated:
(1)41° 39′ N. lat., 71° 00′ W. long.;
(2)41° 39′ N. lat., 69° 00′ W. long.;
(3)40° 00′ N. lat., 69° 00′ W. long.;
(4)40° 00′ N. lat., 71° 00′ W. long., and then ending at the first point. Under this emergency rule, this southern component of the area remains closed only to the harvest of whole or roe-on scallops. Classification This action is issued pursuant to section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), 16 U.S.C. 1855(c). Pursuant to section 5 U.S.C. 553(b)(B) of the Administrative Procedure Act, the Assistant Administrator for Fisheries finds there is good cause to waive prior notice and an opportunity for public comment on this action as notice and comment would be impracticable and contrary to the public interest due to a public health emergency, and public comment has been solicited concurrently with each of the extensions of this actions, as detailed and responded to below. In addition, under section 553(d)(3) there is good cause to waive the 30-day delay in effectiveness due to a public health emergency. Consultation with the FDA concerning the extension of this action beyond the January 1, 2008, expiration date continued through December 2007, making it impossible to first publish this action as a proposed rule and provide for a 30-day delay of effectiveness. The original emergency closure was in response to a public health emergency. Toxic algal blooms are responsible for the marine toxin that causes PSP in persons consuming affected shellfish. People have become seriously ill and some have died from consuming affected shellfish under similar circumstances. Pursuant to section 305(c)(3)(C) of the Magnuson-Stevens Act, the closure to the harvest of shellfish, as modified on September 9, 2005, and re-instated on October 18, 2005, may remain in effect until the circumstances that created the emergency no longer exist, provided the public has had an opportunity to comment after the regulation was published, and, in the case of a public health emergency, the Secretary of Health and Human Services concurs with the Commerce Secretary's action. During the initial comment period, June 16, 2005, through August 1, 2005, no comments were received. One comment was received after the re-opening of the southern component of the Temporary PSP Closure Area on September 9, 2005. The commenter expressed reluctance to re-opening a portion of the closure area without seeing the results of the FDA tests. Data used to make determinations regarding closing and opening of areas to certain types of fishing activity are collected from Federal, state, and private laboratories. NOAA maintains a Red Tide Information Center ( *http://www.cop.noaa.gov/news/fs/ne_hab_200605.html* ), which can be accessed directly or through the website listed in the ADDRESSES section. Information on test results, modeling of algal bloom movement, and general background on red tide can be accessed through this information center. While NMFS is the agency with the authority to promulgate the emergency regulations, it modified the regulations on September 9, 2005, at the request of the FDA, after the FDA has determined that the results of its tests warranted such action. If necessary, the regulations may be terminated at an earlier date, pursuant to section 305(c)(3)(D) of the Magnuson-Stevens Act, by publication in the **Federal Register** of a notice of termination, or extended further to ensure the safety of human health. This emergency/interim rule is exempt from the procedures of the Regulatory Flexibility Act because the rule is issued without opportunity for prior notice and opportunity for public comment. The rule, as last published on October 18, 2005, was determined to be not significant for the purposes of Executive Order 12866. List of Subjects in 50 CFR Part 648 Fisheries, Fishing, Reporting and recordkeeping requirements. Dated: December 20, 2007. Samuel D. Rauch III, Deputy Assistant Administrator For Regulatory Programs, National Marine Fisheries Service. For the reasons set out in the preamble, 50 CFR part 648 continues to read as follows: PART 648—FISHERIES OF THE NORTHEASTERN UNITED STATES 1. The authority citation for part 648 continues to read as follows: Authority: 16 U.S.C. 1801 *et seq.* 2. In § 648.14, paragraphs (a)(170) and (a)(171) are added to read as follows: § 648.14 Prohibitions.
(a)* * *
(170)Fish for, harvest, catch, possess or attempt to fish for, harvest, catch, or possess any bivalve shellfish, including Atlantic surfclams, ocean quahogs, and mussels with the exception of sea scallops harvested only for adductor muscles and shucked at sea, or a vessel issued and possessing on board a Letter of Authorization
(LOA)from the Regional Administrator authorizing the collection of shellfish for biological sampling and operating under the terms and conditions of said LOA, in the are of the U.S. Exclusive Economic Zone bound by the following coordinates in the order stated:
(i)43° 00′ N. lat., 71° 00′ W. long.;
(ii)43° 00′ N. lat., 69° 00′ W. long.;
(iii)41° 39′ N. lat., 69° 00′ W. long;
(iv)41° 39′ N. lat., 71° 00′W. long.; and then ending at the first point.
(171)Fish for, harvest, catch, possess, or attempt to fish for, harvest, catch, or possess any sea scallops except for sea scallops harvested only for adductor muscles and shucked at sea, or a vessel issued and possessing on board a Letter of Authorization
(LOA)from the Regional Administrator authorizing collection of shellfish for biological sampling and operating under the terms and conditions of said LOA, in the area of the U.S. Exclusive Economic Zone bound by the following coordinates in the order stated:
(i)41° 39′N. lat., 71° 00′ W. long.;
(ii)41° 39′ N. lat., 69° 00′ W. long.;
(iii)40° 00′ N. lat., 6° 00′ W. long.;
(iv)40° 00′ N. lat., 71° 00′ W. long.; and then ending at the first point. [FR Doc. E7-25255 Filed 12-28-07; 8:45 am] BILLING CODE 3510-22-S 72 249 Monday, December 31, 2007 Proposed Rules NUCLEAR REGULATORY COMMISSION 10 CFR Part 72 RIN 3150-AI24 List of Approved Spent Fuel Storage Casks: HI-STORM 100 Revision 5 AGENCY: Nuclear Regulatory Commission. ACTION: Proposed rule. SUMMARY: The Nuclear Regulatory Commission
(NRC)is proposing to amend its spent fuel storage cask regulations by revising the Holtec International HI-STORM 100 cask system listing within the “List of Approved Spent Fuel Storage Casks” to include Amendment No. 5 to Certificate of Compliance
(CoC)Number 1014. Amendment No. 5 would include deletion of the requirement to perform thermal validation tests on thermal systems; an increase in the design basis maximum decay heat loads, namely, to 34 kilowatts
(kW)for uniform loading and 36.9 kW for regionalized loading, and introduction of a new decay heat regionalized scheme; an increase in the maximum fuel assembly weight for boiling water reactor fuel in the Multi-Purpose Canister (MPC)-68 from 700 to 730 pounds; an increase in the maximum fuel assembly weight of up to 1,720 pounds for assemblies not requiring spacers, otherwise 1,680 pounds; changes to the assembly characteristics of 16x16 pressurized water reactor fuel assemblies to be qualified for storage in the HI-STORM 100 cask system; a change in the fuel storage locations in the MPC-32 for fuel with axial power shaping rod assemblies and in the fuel storage locations in the MPC-24, MPC-24E, and the MPC-32 for fuel with control rod assemblies, rod cluster control assemblies, and control element assemblies; elimination of the restriction that fuel debris can only be loaded into the MPC-24EF, MPC-32F, MPC-68F, and MPC-68FF canisters; introduction of a requirement that all MPC confinement boundary components and any MPC components exposed to spent fuel pool water or the ambient environment be made of stainless steel or, for MPC internals, neutron absorber or aluminum; the addition of a threshold heat load below which operation of the Supplemental Cooling System would not be required and modification of the design criteria to simplify the system; minor editorial changes to include clarification of the description of anchored casks, correction of typographical/editorial errors, clarification of the definitions of loading operations, storage operations, transport operations, unloading operations, cask loading facility, and transfer cask in various locations throughout the CoC and Final Safety Analysis Report; and modification of the definition of non-fuel hardware to include the individual parts of the items defined as non-fuel hardware. DATES: Comments on the proposed rule must be received on or before January 30, 2008. ADDRESSES: You may submit comments by any one of the following methods. Please include the following number (RIN 3150-AI24) in the subject line of your comments. Comments on rulemakings submitted in writing or in electronic form will be made available for public inspection. Personal information, such as your name, address, telephone number, e-mail address, etc., will not be removed from your submission. Mail comments to: Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, ATTN: Rulemakings and Adjudications Staff. E-mail comments to: *SECY@nrc.gov.* If you do not receive a reply e-mail confirming that we have received your comments, contact us directly at
(301)415-1966. Comments can also be submitted via the Federal eRulemaking Portal *http://www.regulations.gov.* Hand deliver comments to: 11555 Rockville Pike, Rockville, Maryland 20852, between 7:30 a.m. and 4:15 p.m. Federal workdays [telephone
(301)415-1966]. Fax comments to: Secretary, U.S. Nuclear Regulatory Commission at
(301)415-1101. Publicly available documents related to this rulemaking may be viewed electronically on the public computers at the NRC's Public Document Room (PDR), O-1F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland. Publicly available documents created or received at the NRC after November 1, 1999, are available electronically at the NRC's Electronic Reading Room at *http://www.nrc.gov/NRC/ADAMS/index.html.* From this site, the public can gain entry into the NRC's Agencywide Document Access and Management System (ADAMS), which provides text and image files of NRC's public documents. If you do not have access to ADAMS or if there are problems in accessing the documents located in ADAMS, contact the NRC PDR Reference staff at 1-800-397-4209, 301-415-4737, or by e-mail to *pdr@nrc.gov.* An electronic copy of the proposed CoC No. 1014, the proposed Technical Specifications (TS), and the preliminary safety evaluation report
(SER)for Amendment No. 5 can be found in a package under ADAMS Accession No. ML072540157. The proposed CoC No. 1014, the proposed TS, the preliminary SER for Amendment No. 5, and the environmental assessment, are available for inspection at the NRC PDR, 11555 Rockville Pike, Rockville MD. Single copies of these documents may be obtained from Jayne M. McCausland, Office of Federal and State Materials and Environmental Management Programs, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone
(301)415-6219, e-mail *jmm2@nrc.gov.* FOR FURTHER INFORMATION CONTACT: Jayne M. McCausland, Office of Federal and State Materials and Environmental Management Programs, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone
(301)415-6219, e-mail *jmm2@nrc.gov.* SUPPLEMENTARY INFORMATION: For additional supplementary information, see the direct final rule published in the Rules and Regulations section of this **Federal Register** . Procedural Background This rule is limited to the changes contained in Amendment No. 5 to CoC No. 1014 and does not include other aspects of the HI-STORM 100 design. Because NRC considers this action noncontroversial and routine, the NRC is publishing this proposed rule concurrently as a direct final rule in the Rules and Regulations section of this **Federal Register** . Adequate protection of public health and safety continues to be ensured. The direct final rule will become effective on March 17, 2008. However, if the NRC receives significant adverse comments on the direct final rule by January 30, 2008, then the NRC will publish a document that withdraws the direct final rule. If the direct final rule is withdrawn, the NRC will address the comments received in response to the proposed revisions in a subsequent final rule. Absent significant modifications to the proposed revisions requiring republication, the NRC will not initiate a second comment period on this action in the event the direct final rule is withdrawn. A significant adverse comment is a comment where the commenter explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. A comment is adverse and significant if:
(1)The comment opposes the rule and provides a reason sufficient to require a substantive response in a notice-and-comment process. For example, a substantive response is required when:
(a)The comment causes the NRC staff to reevaluate (or reconsider) its position or conduct additional analysis;
(b)The comment raises an issue serious enough to warrant a substantive response to clarify or complete the record; or
(c)The comment raises a relevant issue that was not previously addressed or considered by the NRC staff.
(2)The comment proposes a change or an addition to the rule, and it is apparent that the rule would be ineffective or unacceptable without incorporation of the change or addition.
(3)The comment causes the NRC staff to make a change (other than editorial) to the rule, CoC, or TS. For additional procedural information and the regulatory analysis, see the direct final rule published in the Rules and Regulations section of this **Federal Register** . List of Subjects In 10 CFR Part 72 Administrative practice and procedure, Criminal penalties, Manpower training programs, Nuclear materials, Occupational safety and health, Penalties, Radiation protection, Reporting and recordkeeping requirements, Security measures, Spent fuel, Whistleblowing. For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended; the Energy Reorganization Act of 1974, as amended; the Nuclear Waste Policy Act of 1982, as amended; and 5 U.S.C. 553; the NRC is proposing to adopt the following amendments to 10 CFR part 72. PART 72—LICENSING REQUIREMENTS FOR THE INDEPENDENT STORAGE OF SPENT NUCLEAR FUEL, HIGH-LEVEL RADIOACTIVE WASTE, AND REACTOR-RELATED GREATER THAN CLASS C WASTE 1. The authority citation for part 72 continues to read as follows: Authority: Secs. 51, 53, 57, 62, 63, 65, 69, 81, 161, 182, 183, 184, 186, 187, 189, 68 Stat. 929, 930, 932, 933, 934, 935, 948, 953, 954, 955, as amended; sec. 234, 83 Stat. 444, as amended (42 U.S.C. 2071, 2073, 2077, 2092, 2093, 2095, 2099, 2111, 2201, 2232, 2233, 2234, 2236, 2237, 2238, 2282); sec. 274, Pub. L. 86-373, 73 Stat. 688, as amended (42 U.S.C. 2021); sec. 201, as amended, 202, 206, 88 Stat. 1242; as amended, 1244, 1246 (42 U.S.C. 5841, 5842, 5846); Pub. L. 95-601, sec. 10, 92 Stat. 2951, as amended by Pub. L. 102-486, sec. 7902, 106 Stat. 3123 (42 U.S.C. 5851); sec. 102, Pub. L. 91-190, 83 Stat. 853 (42 U.S.C. 4332); secs. 131, 132, 133, 135, 137, 141, Pub. L. 97-425, 96 Stat. 2229, 2230, 2232, 2241; sec. 148, Pub. L. 100-203, 101 Stat. 1330-235 (42 U.S.C. 10151, 10152, 10153, 10155, 10157, 10161, 10168); sec. 1704, 112 Stat. 2750 (44 U.S.C. 3504 note); sec. 651(e), Pub. L. 109-58, 119 Stat. 806-10 (42 U.S.C. 2014, 2021, 2021b, 2111). Section 72.44(g) also issued under secs. 142(b) and 148(c), (d), Pub. L. 100-203, 101 Stat. 1330-232, 1330-236 (42 U.S.C. 10162(b), 10168(c),(d)). Section 72.46 also issued under sec. 189, 68 Stat. 955 (42 U.S.C. 2239); sec. 134, Pub. L. 97-425, 96 Stat. 2230 (42 U.S.C. 10154). Section 72.96(d) also issued under sec. 145(g), Pub. L. 100-203, 101 Stat. 1330-235 (42 U.S.C. 10165(g)). Subpart J also issued under secs. 2(2), 2(15), 2(19), 117(a), 141(h), Pub. L. 97-425, 96 Stat. 2202, 2203, 2204, 2222, 2244 (42 U.S.C. 10101, 10137(a), 10161(h)). Subparts K and L are also issued under sec. 133, 98 Stat. 2230 (42 U.S.C. 10153) and sec. 218(a), 96 Stat. 2252 (42 U.S.C. 10198). 2. In § 72.214, Certificate of Compliance 1014 is revised to read as follows: § 72.214 List of approved spent fuel storage casks. Certificate Number: 1014. Initial Certificate Effective Date: May 31, 2000. Amendment Number 1 Effective Date: July 15, 2002. Amendment Number 2 Effective Date: June 7, 2005. Amendment Number 3 Effective Date: May 29, 2007. Amendment Number 4 Effective Date: January 8, 2008. Amendment Number 5 Effective Date: March 17, 2008. SAR Submitted by: Holtec International. SAR Title: Final Safety Analysis Report for the HI-STORM 100 Cask System. Docket Number: 72-1014. Certificate Expiration Date: June 1, 2020. Model Number: HI-STORM 100. Dated at Rockville, Maryland, this 11th day of December, 2007. For the Nuclear Regulatory Commission. Luis A. Reyes, Executive Director for Operations. [FR Doc. E7-25414 Filed 12-28-07; 8:45 am] BILLING CODE 7590-01-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-0373; Directorate Identifier 2006-SW-14-AD] RIN 2120-AA64 Airworthiness Directives; Erickson Air-Crane Incorporated Model S-64E and S-64F Helicopters AGENCY: Federal Aviation Administration, DOT. ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: This document proposes adopting a new airworthiness directive
(AD)for the specified Erickson Air-Crane Incorporated (Erickson) model helicopters. The AD would require determining whether each specified tail rotor blade assembly (blade assembly) has an affected serial number or part marking. If a blade assembly has a certain serial number or part marking, the AD would also require initially and repetitively inspecting the tail rotor blade for a crack in the strap and pocket areas. If a crack is found, this AD would also require, before further flight, replacing the blade assembly with an airworthy blade assembly that does not have an affected serial number or part marking. This proposal is prompted by several reports of cracking in the strap and pocket areas of the tail rotor blade. The actions specified by the proposed AD are intended to prevent failure of the tail rotor blade and subsequent loss of control of the helicopter. DATES: Comments must be received on or before February 29, 2008. ADDRESSES: Use one of the following addresses to submit comments on this proposed AD: • *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. You may get the service information identified in this proposed AD from Erickson Air-Crane Incorporated, P. O. Box 3247, Central Point, OR 97502, telephone 541-664-5544, fax 541-664-2312, or at *http://www.ericksonaircrane.com.* You may examine the comments to this proposed AD in the AD docket on the Internet at *http://www.regulations.gov.* FOR FURTHER INFORMATION CONTACT: Michael Kohner, Aviation Safety Engineer, FAA, Rotorcraft Directorate, Rotorcraft Certification Office, Fort Worth, Texas 76193-0170, telephone
(817)222-5447, fax
(817)222-5783. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to submit any written data, views, or arguments regarding this proposed AD. Send your comments to the address listed under the caption ADDRESSES . Include the docket number “FAA-2007-0373, Directorate Identifier 2006-SW-14-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments. We will post all comments we receive, without change, to *http://www.regulations.gov* , including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed rulemaking. Using the search function of our docket web site, you can find and read the comments to any of our dockets, including the name of the individual who sent or signed the comment. You may review the DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78) or you may visit *http://dms.dot.gov.* Examining the Docket You may examine the docket that contains the proposed AD, any comments, and other information in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Operations office (telephone
(800)647-5527) is located in Room W12-140 on the ground floor of the West Building at the street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. Discussion This document proposes adopting a new AD for the specified Erickson model helicopters. The AD would require determining whether certain tail rotor blade assemblies have an affected serial number or part marking. If a blade assembly has a certain serial number or part marking, the AD would also require initially and repetitively inspecting the tail rotor blade for a crack in the strap and pocket areas. If a crack is found, this AD would also require, before further flight, replacing the blade assembly with an airworthy blade assembly that does not have an affected serial number or part marking. This proposal is prompted by several reports of cracking in the strap or pocket areas of the tail rotor blade. This condition, if not corrected, could result in failure of the tail rotor blade and subsequent loss of control of the helicopter. We have reviewed Erickson Alert Service Bulletin 64B15-9, Revision B, dated October 6, 2006 (ASB), which describes procedures for determining and inspecting certain marked or serial numbered tail rotor blades. The ASB specifies repetitive inspections not to exceed 6 flight hours for the S-64F model and not to exceed 15 flight hours for the S-64E model. Alternate inspection schedules are also included for “ferry flights” used for delivering the helicopter from one area of operation to another. The “ferry flight” time would be the flight time beginning at the end of the last operation in one area to the beginning of the first operation in another area. If a crack is found in the strap or pocket, the ASB specifies removing and replacing the blade. We propose to depart from the language of the ASB and propose to use the terms hours time-in-service
(TIS)instead of maximum ground-air-ground
(GAG)cycles. We propose to define a “ferry flight” as a helicopter flight used for delivering the helicopter from one area of operation to another. During the “ferry flight” the helicopter would not drop off an external load or pick up an external load. A GAG cycle as defined in the ASB for the purposes of these inspections is any maneuver that results in a climb-out similar to one following takeoff. The proposed inspection intervals for the ferry flights were also modified to accommodate a new range of values based on specifications supplied by Erickson. The proposed inspection intervals were determined by multiplying the maximum GAG cycles in the ASB for the given takeoff weight by the flight endurance of 2.5 hours TIS for the Model S-64E and 2.2 hours TIS for the Model S-64F helicopters and rounding the result to a near whole number as deemed appropriate. This unsafe condition is likely to exist or develop on other helicopters of these same type designs. Therefore, the proposed AD would require for each blade assembly, part number (P/N) 65161-00001-042 or -043, the following actions: • Within 25 hours TIS, unless done previously, determine if the blade assembly has a serial number listed in the ASB. Also, determine if the blade assembly is marked with an “RS503” near the part number. • If the blade assembly serial number is not listed in the ASB and does not have “RS503” marked near the part number, no further action would be required by this AD. • If a blade assembly has either an affected serial number or part marking, before further flight, using a 10-power or higher magnifying glass, inspect both sides of the blade assembly for a crack in the strap and pocket areas paying particular attention to the circled area as depicted in Figure 1 of the ASB. • If no crack is found, inspect the blade assembly at intervals not to exceed those TIS intervals specified in Table 1 of the AD. • If a crack is found, before further flight, replace the unairworthy blade assembly with an airworthy FAA approved blade assembly that does not have a serial number listed in the ASB and does not have “RS503” marked near the part number. The actions would be required to be done by following the specified portions of the ASB described previously. We estimate that this proposed AD would: • Affect 20 helicopters of U.S. registry; 13 Model S-64E and 7 Model S-64F; • Require about 1 work hour to determine whether an affected blade is installed; • Require about 1 work hour to inspect the blade assembly, assuming about 40 inspections a year for each Model S-64E (total 520) and about 100 inspections a year for each Model S-64F (total 700); • Require about 4 work hours to replace each tail rotor blade, assuming 10 tail rotor blade assemblies are replaced; • Cost about $80 per work hour; and • Cost about $60,000 per blade assembly. Based on these figures, the estimated total cost impact of the proposed AD on U.S. operators would be $702,400, based on the stated assumptions. Regulatory Findings We have determined that this proposed AD would not have federalism implications under Executive Order 13132. Additionally, this proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that the proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a draft economic evaluation of the estimated costs to comply with this proposed AD. See the DMS to examine the draft economic evaluation. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, pursuant to the authority delegated to me by the Administrator, the Federal Aviation Administration proposes to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. Section 39.13 is amended by adding a new airworthiness directive to read as follows: **Erickson Air-Crane Incorporated:** Docket No. FAA-2007-0373; Directorate Identifier 2006-SW-14-AD. Applicability Model S-64E and S-64F helicopters, with tail rotor blade assembly (blade assembly), part number (P/N) 65161-00001-042 or -043, installed, certificated in any category. Compliance Required as indicated. To prevent failure of the tail rotor blade and subsequent loss of control of the helicopter, do the following:
(a)Within 25 hours time-in-service (TIS), unless accomplished previously:
(1)Determine if the blade assembly has a serial number listed in the Accomplishment Instructions, paragraph 2.A., of Erickson Air-Crane Incorporated Alert Service Bulletin No. 64B15-9, Revision B, dated October 6, 2006 (ASB). Also, determine if the blade assembly has “RS503” marked near the P/N.
(2)If the blade assembly serial number is not listed in the ASB and does not have “RS503” marked near the P/N, no further action is required by this AD.
(3)If a blade assembly has either a serial number listed in paragraph 2.A of the ASB or has “RS503” marked near the part number, before further flight, using a 10-power or higher magnifying glass, inspect both sides of the blade assembly for a crack in the strap and pocket areas paying particular attention to the circled area as depicted in Figure 1 of the ASB.
(i)If no crack is found, inspect the blade assembly as specified in paragraph (a)(3) of this AD at intervals not to exceed those shown in the following table: Table 1 Mission type Gross takeoff weight
(lbs)Maximum time between inspections (hours TIS) Model S-64E Tail Rotor Blade Strap Inspection Intervals Ferry Only Above 35,000 30 Ferry Only Above 30,000 and less than or equal to 35,000 35 Ferry Only Below or equal to 30,000 40 All Others All 15 Model S-64F Tail Rotor Blade Strap Inspection Intervals Ferry Only Above 35,000 8 Ferry Only Above 30,000 and less than or equal to 35,000 15 Ferry Only Below or equal to 30,000 17 All Others All 6 Note: For the purposes of this AD, a ferry flight is defined as a helicopter flight used for delivering the helicopter from one area of operation to another. During the ferry flight, the helicopter would not drop off an external load or pick up an external load.
(ii)If a crack is found, before further flight, replace the unairworthy blade assembly with an airworthy FAA approved blade assembly that does not have a serial number listed in paragraph 2.A of the ASB and does not have “RS503” marked near the P/N.
(b)Installing an airworthy blade assembly that does not have a serial number listed in paragraph 2.A of the ASB and does not have “RS503” marked near the P/N is terminating action for the requirements of this AD.
(c)To request a different method of compliance or a different compliance time for this AD, follow the procedures in 14 CFR 39.19. Contact the Manager, Rotorcraft Directorate, Rotorcraft Certification Office, FAA, ATTN: Michael Kohner, Aviation Safety Engineer, Fort Worth, Texas 76193-0170, telephone
(817)222-5447, fax
(817)222-5783. Issued in Fort Worth, Texas, on November 28, 2007. Mark R. Schilling, Acting Manager, Rotorcraft Directorate, Aircraft Certification Service. [FR Doc. E7-25411 Filed 12-28-07; 8:45 am] BILLING CODE 4910-13-P COMMODITY FUTURES TRADING COMMISSION 17 CFR Part 150 RIN 3038-AC51 Revision of Federal Speculative Position Limits AGENCY: Commodity Futures Trading Commission. ACTION: Reopening of comment period. SUMMARY: The Commodity Futures Trading Commission is reopening the period for public comment to provide interested persons additional time to comment on certain proposed amendments pertaining to the Federal speculative position limits for agricultural commodities. DATES: Comments must be received by January 21, 2008. ADDRESS: Comments should be submitted to David A. Stawick, Secretary, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581. Comments may be sent by facsimile to 202.418.5521, or by e-mail to *secretary@cftc.gov.* Reference should be made to the “Proposed Revision of Federal Speculative Position Limits.” Comments may also be submitted through the Federal eRulemaking Portal at *http://www.regulations.gov.* FOR FURTHER INFORMATION CONTACT: Don Heitman, Attorney, Division of Market Oversight, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581, telephone
(202)418-5041, facsimile number
(202)418-5507, electronic mail *dheitman@cftc.gov* ; or Martin Murray, Economist, Division of Market Oversight, telephone
(202)418-5276, facsimile number
(202)418-5507, electronic mail *mmurray@cftc.gov.* SUPPLEMENTARY INFORMATION: The Commission is reopening the period for public comment on proposed amendments to regulation 150.2. 1 The amendments were proposed on November 21, 2007 and the comment period initially closed on December 21, 2007. 2 The amendments, if adopted by the Commission, would increase the Federal speculative position limits enumerated in regulation 150.2 for all single-month and all-months-combined positions in all commodities except oats, pursuant to parameters specified in Commission regulation 150.5(c). The amendments would also aggregate positions in all designated contract market products that share substantially identical terms with the contracts enumerated in regulation 150.2 for the purposes of ascertaining compliance with the Federal speculative position limits. 1 17 CFR 150.2. 2 72 FR 65783 (November 21, 2007). By letter dated December 7, 2007, the National Grain and Feed Association, an association representing companies that utilize exchange traded agricultural contracts to manage price and inventory risks, 3 and by letter dated December 14, 2007, the American Bakers Association, an association representing the interests of the wholesale baking industry, 4 requested an extension of the comment period to better develop a response to Commission's proposed amendments. While the Commission has received commentary on the proposed amendments, 5 it believes that it would be appropriate to reopen the comment period to ensure that an adequate opportunity is provided for the submission of additional meaningful and substantive comments. Accordingly, the Commission has determined to reopen the comment period for the proposed amendments to regulation 150.2 to January 21, 2008. The Commission notes that it will give full consideration to any comment received in the interval between the closing and reopening of the comment period for the proposed amendments. 3 Letter from Rod Clark, Chair, Risk Management Committee, National Grain and Feed Association, to David A. Stawick, Secretary of the Commission (December 7, 2007) (on file with the Commission). 4 Letter from Lee Sanders, Senior Vice President, Government Relations & Public Affairs, Corporate Secretary, American Bakers Association, to David A. Stawick, Secretary of the Commission (December 14, 2007) (on file with the Commission). 5 Comment File: 07-014, *available at http://www.cftc.gov/lawandregulation/federalregister/federalregistercomments/2007/07-014.html.* Issued in Washington, DC, on December 21, 2007 by the Commission. David A. Stawick, Secretary of the Commission. [FR Doc. E7-25344 Filed 12-28-07; 8:45 am] BILLING CODE 6351-01-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG-147290-05] RIN 1545-BF08 Nuclear Decommissioning Funds AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Notice of proposed rulemaking by cross reference to temporary regulations. SUMMARY: In the Rules and Regulations section of this issue of the **Federal Register** , the IRS is issuing temporary regulations under section 468A of the Internal Revenue Code relating to deductions for contributions to trusts maintained for decommissioning nuclear power plants. The temporary regulations reflect changes to the law made by the Energy Policy Act of 2005, and affect most taxpayers that own an interest in a nuclear power plant. The text of the temporary regulations also serves as the text of these proposed regulations. DATES: Written or electronic comments and requests for a public hearing must be received by March 31, 2008. ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-147290-05), room 5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-147290-05), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC, or sent electronically, via the Federal eRulemaking Portal at *http://www.regulations.gov/* ( *IRS REG-147290-05* ). FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Patrick S. Kirwan,
(202)622-3110; concerning submissions and to request a hearing, Kelly Banks,
(202)622-7180 (not toll-free numbers). SUPPLEMENTARY INFORMATION: Paperwork Reduction Act The collection of information contained in this notice of proposed rulemaking has been submitted to the Office of Management and Budget for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). OMB has approved, on a temporary basis, the information collections contained in the cross-referenced temporary rule under control number 1545-2091. Comments on the collection of information should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, Washington, DC 20224. Comments on the collection of information should be received by February 29, 2008. Comments are specifically requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the IRS, including whether the information will have practical utility; The accuracy of the estimated burden associated with the proposed collection of information; How the quality, utility, and clarity of the information to be collected may be enhanced; How the burden of complying with the proposed collection of information may be minimized, including through the application of automated collection techniques or other forms of information technology; and Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of service to provide information. The collection of information in this proposed regulation is in §§ 1.468A-3T(h), 1.468A-4T, 1.468A-7T, and 1.468A-8T(d). The information collected under § 1.468A-3T(h) is required to evaluate whether the taxpayer has properly determined the schedule of ruling amounts. The information collected under § 1.468A-7T pertains to the initial election to maintain a qualified nuclear decommissioning trust fund. The information collected under § 1.468A-8T(d) is required to evaluate whether the taxpayer has properly determined the schedule of deduction amounts. The collection of information is mandatory. The likely recordkeepers are owners of nuclear power plants. *Estimated total annual recordkeeping burden:* 2,500 hours. The estimated annual burden per recordkeeper varies depending on individual circumstances, with an estimated average of 25 hours. *Estimated number of recordkeepers:* 100. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Background The temporary regulations in the Rules and Regulations section of this issue of the **Federal Register** contain amendments to 26 CFR part 1 providing regulations under section 468A of the Internal Revenue Code of 1986 (Code). Section 468A was amended by section 1310 of the Energy Policy Act of 2005, Public Law 109-58 (119 Stat. 594). Explanation of Provisions The temporary regulations in the Rules and Regulations section of this issue of the **Federal Register** amend the Income Tax Regulations (26 CFR part 1) under section 468A of the Internal Revenue Code of 1986 (Code). The text of the temporary regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains these proposed regulations. 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 also has been determined that section 553(b) and
(d)of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. It is hereby certified that this regulation will not have a significant economic impact on a substantial number of small entities. The proposed regulations do not impose a collection of information on small entities. Accordingly, a regulatory flexibility analysis is not required. We request comment on the accuracy of this certification. Pursuant to section 7805(f) of the Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Comments and Requests for a Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight
(8)copies) or electronically generated comments that are submitted timely to the IRS. The IRS and Treasury Department generally request comments on the clarity of the proposed rule and how it may be made easier to understand. All comments will be available for public inspection and copying. A public hearing may be scheduled if requested in writing by a person who timely submits comments. If a public hearing is scheduled, notice of the date, time, and place for the hearing will be published in the **Federal Register** . Drafting Information The principal author of these regulations is Patrick S. Kirwan, Office of Associate Chief Counsel (Passthroughs and Special Industries). However, other personnel from the IRS and Treasury Department participated in their development. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Proposed Amendments to the Regulations Accordingly, 26 CFR part 1 is proposed to be amended as follows: PART 1—INCOME TAXES **Paragraph 1.** The authority citation for part 1 continues to read in part as follows: Authority: 26 U.S.C. 7805 * * * Section 1.468A-5 also issued under 26 U.S.C. 468A(e)(5). * * * **Par. 2.** Sections 1.468A-0 through 1.468A-9 are added to read as follows: § 1.468A-0 Table of contents. [The text of this proposed section is the same as the text of § 1.468A-0T published elsewhere in this issue of the **Federal Register** .] § 1.468A-1 Nuclear decommissioning costs; general rules. [The text of this proposed section is the same as the text of § 1.468A-1T published elsewhere in this issue of the **Federal Register** .] § 1.468A-2 Treatment of electing taxpayer. [The text of this proposed section is the same as the text of § 1.468A-2T published elsewhere in this issue of the **Federal Register** .] § 1.468A-3 Ruling amount. [The text of this proposed section is the same as the text of § 1.468A-3T published elsewhere in this issue of the **Federal Register** .] § 1.468A-4 Treatment of nuclear decommissioning fund. [The text of this proposed section is the same as the text of § 1.468A-4T published elsewhere in this issue of the **Federal Register** .] § 1.468A-5 Nuclear decommissioning fund—miscellaneous provisions. [The text of this proposed section is the same as the text of § 1.468A-5T published elsewhere in this issue of the **Federal Register** .] § 1.468A-6 Disposition of an interest in a nuclear power plant. [The text of this proposed section is the same as the text of § 1.468A-6T published elsewhere in this issue of the **Federal Register** .] § 1.468A-7 Manner of and time for making election. [The text of this proposed section is the same as the text of § 1.468A-7T published elsewhere in this issue of the **Federal Register** .] § 1.468A-8 Special transfers to qualified funds pursuant to section 468A(f). [The text of this proposed section is the same as the text of § 1.468A-8T published elsewhere in this issue of the **Federal Register** .] § 1.468A-9 Effective/applicability date and transitional rules. [The text of this proposed section is the same as the text of § 1.468A-9T(a) and
(b)published elsewhere in this issue of the **Federal Register** .] Kevin M. Brown, Deputy Commissioner for Services and Enforcement. [FR Doc. E7-25222 Filed 12-28-07; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG-139236-07] RIN 1545-BH07 Measurement of Assets and Liabilities for Pension Funding Purposes AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Notice of proposed rulemaking. SUMMARY: This document contains proposed regulations providing guidance on the determination of plan assets and benefit liabilities for purposes of the funding requirements that apply to single employer defined benefit plans. These regulations affect sponsors, administrators, participants, and beneficiaries of single employer defined benefit plans. DATES: Written or electronic comments and requests for a public hearing must be received by March 31, 2008. ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-139236-07), room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-139236-07), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC, or sent electronically via the Federal eRulemaking Portal at *www.regulations.gov* (IRS-REG-139236-07). FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Lauson C. Green or Linda S. F. Marshall at
(202)622-6090; concerning submissions and requests for a public hearing, Richard A. Hurst at *Richard.A.Hurst@ irscounsel.treas.gov* or at
(202)622-7180 (not toll-free numbers). SUPPLEMENTARY INFORMATION: Paperwork Reduction Act The collections of information contained in this notice of proposed rulemaking have been submitted to the Office of Management and Budget for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). Comments on the collections of information should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, Washington, DC 20224. Comments on the collection of information should be received by February 29, 2008. Comments are specifically requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Internal Revenue Service, including whether the information will have practical utility; The accuracy of the estimated burden associated with the proposed collection of information; How the quality, utility, and clarity of the information to be collected may be enhanced; How the burden of complying with the proposed collections of information may be minimized, including through the application of automated collection techniques or other forms of information technology; and Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of service to provide information. The collection of information in this proposed regulation is in § 1.430(h)(2)-1(e). This information is required in order for a plan sponsor to make an election to use an alternative interest rate for purposes of determining a plan's funding obligations under § 1.430(h)(2)-1. This information is required to obtain or retain benefits. The likely respondents are qualified retirement plan sponsors. *Estimated total annual reporting burden:* 54,000 hours. *Estimated average annual burden hours per respondent:* 0.75 hours. *Estimated number of respondents:* 72,000. *Estimated annual frequency of responses:* Occasional. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Background This document contains proposed Income Tax Regulations (26 CFR part 1) under sections 430(d), 430(g), 430(h)(2), and 430(i), as added to the Internal Revenue Code
(Code)by the Pension Protection Act of 2006 (PPA '06), Public Law 109-280 (120 Stat. 780). Section 412 provides minimum funding requirements that generally apply for pension plans (including both defined benefit pension plans and money purchase pension plans). PPA '06 makes extensive changes to those minimum funding requirements that generally apply for plan years beginning on or after January 1, 2008. Section 430, which was added by PPA '06, specifies the minimum funding requirements that apply to single employer defined benefit pension plans (including multiple employer plans) pursuant to section 412. 1 1 1 Section 302 of the Employee Retirement Income Security Act of 1974, as amended (ERISA), sets forth funding rules that are parallel to those in section 412 of the Internal Revenue Code (Code), and section 303 of ERISA sets forth additional funding rules for single employer plans that are parallel to those in section 430 of the Code. Under section 101 of Reorganization Plan No. 4 of 1978 (43 FR 47713) and section 302 of ERISA, the Secretary of the Treasury has interpretive jurisdiction over the subject matter addressed in these proposed regulations for purposes of ERISA, as well as the Code. Thus, these proposed Treasury regulations issued under section 430 of the Code apply as well for purposes of section 303 of ERISA. Section 430(a) defines the minimum required contribution for a single employer plan as the sum of the plan's target normal cost and the shortfall and waiver amortization charges for the plan year. Under section 430(b), a plan's target normal cost for a plan year is the present value of all benefits expected to accrue or be earned under the plan during the plan year. For this purpose, section 430(b) provides that an increase in any benefit attributable to services performed in a preceding plan year by reason of a compensation increase during the current plan year is treated as having accrued during the current plan year. One of the amortization charges used in determining the minimum required contribution, the shortfall amortization charge, is determined based on the difference between the plan's funding target and the value of plan assets. Under section 430(d), except as provided in section 430(i)(1) (regarding plans in at-risk status), a plan's “funding target” for a plan year is the present value of all benefits accrued or earned under the plan as of the beginning of the plan year. Section 430(g)(1) provides that all determinations made with respect to minimum required contributions for a plan year (such as the value of plan assets and liabilities) must be made as of the plan's valuation date. Section 430(g)(2) provides that, other than for plans with 100 or fewer participants (determined as provided in section 430(g)(2)(B) and (C)), the valuation date for a plan year must be the first day of the plan year. Under section 430(g)(3), the value of plan assets is generally the fair market value of those assets. However, the value of plan assets may be determined on the basis of the averaging of fair market values, but only if the averaging method is permitted under regulations and satisfies certain other requirements. Under section 430(g)(4), if a required contribution for a preceding plan year is made after the valuation date for the current plan year, the contribution is taken into account in determining the value of plan assets for the current plan year. For 2009 and future plan years, only the present value (determined as of the valuation date for the current plan year, using the plan's effective interest rate for the preceding plan year) of the contributions made for the preceding plan year is taken into account. If any contributions for the current plan year are made before the valuation date (which could only occur for a small plan with a valuation date that is not the first day of the plan year), plan assets as of the valuation date must exclude
(1)those contributions, and
(2)interest on those contributions (determined at the plan's effective interest rate for the plan year) for the period between the date of the contribution and the valuation date. Under section 430(h)(2)(A), a plan's effective interest rate for a plan year is defined as the single interest rate that, if used to determine the present value of the benefits taken into account in determining the plan's funding target for the plan year, would result in an amount equal to the plan's funding target determined for the plan year under section 430(d). Under section 430(h)(1), the determination of any present value or other computation under section 430 is to be made on the basis of actuarial assumptions and methods each of which is reasonable (taking into account the experience of the plan and reasonable expectations) and which, in combination, offer the actuary's best estimate of anticipated experience under the plan. Section 430(h)(2) specifies the interest rates that must be used in determining a plan's target normal cost and funding target. Under the provision, present value is determined using three interest rates (segment rates), each of which applies to benefit payments expected to be paid during a certain period. The first segment rate applies to benefits reasonably determined to be payable during the 5-year period beginning on the first day of the plan year. The second segment rate applies to benefits reasonably determined to be payable during the 15-year period following the initial 5-year period. The third segment rate applies to benefits reasonably determined to be payable after the end of that 15-year period. Each segment rate is a single interest rate determined monthly by the Treasury Department on the basis of a corporate bond yield curve. The corporate bond yield curve used for this purpose is to be prescribed monthly by the Treasury Department and is to reflect the average, for the 24-month period ending with the preceding month, of yields on investment grade corporate bonds with varying maturities that are in the top three quality levels available. Under section 430(h)(2)(F), the Secretary of the Treasury is directed to publish each month the corporate bond yield curve and each of the segment rates for the month. In addition, the Secretary is directed to publish a description of the methodology used to determine the yield curve and segment rates to enable plans to make reasonable projections regarding the yield curve and segment rates for future months, based on a plan's projection of future interest rates. Section 430(h)(2)(G) provides a transition rule for plan years beginning in 2008 and 2009 (other than for plans where the first plan year begins on or after January 1, 2008). Under this transition rule, the interest rates to be used in the valuation are based on a blend of the segment rates and the long-term corporate bond rates used for plan years prior to the effective date of PPA '06. Under section 430(h)(2)(G)(iv), a plan sponsor may elect to have this transition rule not apply. In addition, solely for purposes of determining minimum required contributions under section 430, in lieu of using the segment rates, an employer may elect under section 430(h)(2)(D)(ii) to use interest rates on a yield curve based on the yields on investment grade corporate bonds within the top three quality levels without regard to the 24-month averaging described above. Section 430(i) requires the application of special assumptions in determining the funding target and target normal cost of a plan in at-risk status. Under section 430(i)(4), a plan is in at-risk status for a year if, for the preceding year:
(1)The plan's funding target attainment percentage, determined without regard to the at-risk assumptions, was less than 80 percent (with a transition rule discussed below), and
(2)the plan's funding target attainment percentage, determined using the at-risk assumptions (without regard to whether the plan was in at-risk status for the preceding year), was less than 70 percent. Under a transition rule applicable for plan years beginning in 2008, 2009, and 2010, the following percentages apply instead of 80 percent in the first part of the test for determining at-risk status: 65 percent for 2008, 70 percent for 2009, and 75 percent for 2010. In the case of plan years beginning in 2008, the plan's funding target attainment percentage for the preceding plan year is to be determined under rules provided by the Treasury Department. Under section 430(i)(6), the at-risk rules do not apply if a plan had 500 or fewer participants on each day during the preceding plan year. For this purpose, all defined benefit pension plans (other than multiemployer plans) maintained by the same employer (or a predecessor employer), or by any member of the employer's controlled group, are treated as a single plan. If a plan is in at-risk status, the plan's funding target and normal cost are determined (under section 430(i)(1) and (2)) using special actuarial assumptions. Under these assumptions, all employees who are not otherwise assumed to retire as of the valuation date, but who will be eligible to elect to commence benefits in the current and 10 succeeding plan years, are assumed to retire at the earliest retirement date under the plan, but not before the end of the current plan year. All employees are assumed to elect the form of retirement benefit available under the plan at that assumed retirement age that results in the highest present value. The funding target of a plan in at-risk status for a plan year is generally the sum of:
(1)The present value of all benefits accrued or earned as of the beginning of the plan year, and
(2)in the case of a plan that has been in at-risk status for at least 2 of the 4 preceding plan years, a loading factor. That loading factor is equal to the sum of:
(1)$700 multiplied by the number of participants in the plan, plus
(2)4% of the funding target determined without regard to the loading factor. The target normal cost of a plan in at-risk status for a plan year is generally the sum of:
(1)The present value of benefits expected to accrue or be earned under the plan during the plan year, determined using the special assumptions described above, and
(2)in the case of a plan that has been in at-risk status for at least 2 of the 4 preceding plans years, a loading factor of 4% of the target normal cost determined without regard to the loading factor. If a plan has been in at-risk status for fewer than 5 consecutive plan years, a phase-in rule applies to the determination of the “funding target” and “target normal cost” under section 430(i)(5). Explanation of Provisions I. Overview These proposed regulations are the third in a series of proposed regulations under new section 430. 2 These proposed regulations would provide guidance on the determination of assets and liabilities for purposes of applying the new funding rules of section 430. The Treasury Department and the IRS intend to issue additional proposed regulations relating to other portions of the rules under section 430 (including sections 430(a), (c), and (j)) in the first part of 2008. It is expected that those regulations will be effective for plan years beginning on or after January 1, 2009. 2 Proposed regulation §§ 1.430(h)(3)-1 and 1.430(h)(3)-2, relating to the mortality tables used to determine liabilities under section 430(h)(3), were issued May 29, 2007 (REG-143601-06, 72 FR 29456), and proposed regulation § 1.430(f)-1, relating to prefunding and funding standard carryover balances under section 430(f), was issued August 31, 2007 (REG-113891-07, 72 FR 50544). II. Section 1.430(d)-1 Determination of Funding Target and Target Normal Cost Section 1.430(d)-1 would provide rules for determining the funding target and the target normal cost of a plan that is not in at-risk status (within the meaning of section 430(i)). The proposed regulations would provide that the funding target is the present value of all benefits that have been accrued or earned under the plan as of the first day of the plan year, and that the target normal cost for the plan year is the present value of all benefits that accrue or are earned (or that are expected to accrue or to be earned) under the plan during the plan year. Thus, if the actuarial valuation date for the plan year is not the first day of the plan year, the target normal cost will include the benefits actually earned during the year through the valuation date for the plan year plus a projection of benefits that will be earned through the rest of the plan year. In order to determine the funding target and target normal cost, the future benefits to be paid from the plan must be allocated among prior plan years (in which case they will be taken into account in determining the funding target for the current year), the current plan year (in which case they will be taken into account in determining the target normal cost of the plan for the plan year), and future years. If the amount of a benefit that is expected to be paid is a function of the accrued benefit at the time the benefit is expected to be paid, then the amount taken into account in the funding target is determined by applying that function to the accrued benefit as of the beginning of the plan year and the amount of the benefit taken into account in the target normal cost is determined by applying that function to the increase in the accrued benefit for the plan year. If the amount of a benefit that is expected to be paid is not a function of the accrued benefit at the time the benefit is expected to be paid (for example, certain ancillary benefits), but is a function of the participant's service at that time, then the amount taken into account for purposes of determining the funding target for a plan year is based on a participant's service as of the first day of the plan year and the amount of the benefit that is taken into account in the target normal cost is the increase in that benefit for the plan year based on the additional year of service. If the amount of a benefit that is expected to be paid is neither a function of the accrued benefit at the time the benefit is expected to be paid nor a function of the participant's service at that time, then the portion of the benefit taken into account for purposes of determining the funding target for a plan year is based on the proportion of a participant's service as of the first day of the plan year relative to the service the participant will have when the participant meets the age and service eligibility requirement for the benefit, and the portion of the benefit that is taken into account in the target normal cost is the increase in the proportional benefit for the plan year. The proposed regulations would provide that the determination of the funding target and the target normal cost for a plan year is not permitted to take into account any limitations or anticipated limitations under section 436. Also, the proposed regulations would provide that plan administrative expenses paid (or expected to be paid) from plan assets for a plan year are not taken into account in determining a plan's target normal cost and funding target for that plan year. With respect to benefits provided by insurance, the proposed regulations would provide that, in general, a plan must reflect the liability for benefits that are funded through insurance contracts held by the plan in the plan's funding target and target normal cost, and must include the value of the corresponding insurance contracts in plan assets. However, an alternative rule is provided in the case of benefits that are funded through certain insurance contracts purchased from an insurance company licensed under the laws of a State. Under this rule, a plan is permitted to exclude benefits provided under such contracts from the plan's funding target and target normal cost and to exclude the corresponding insurance contracts from plan assets, but only to the extent that a participant's or beneficiary's right to receive those benefits is an irrevocable contractual right based on premiums paid to the insurance company prior to the valuation date under the insurance contracts. The proposed regulations would provide that, except as provided in section 412(d)(2), the funding target and target normal cost are determined based on the plan terms that are adopted no later than the valuation date for the plan year and become effective during that plan year. Thus, the rules of Revenue Ruling 77-2 (1977-1 CB 120) would no longer apply. See § 601.601(d)(2) of this chapter. For example, if an amendment that increases plan liabilities is adopted on or before the plan's valuation date and is effective during the plan year that includes the valuation date, the full increase in liability with respect to the amendment is taken into account as of that year's valuation date. However, with respect to the pre-PPA counterpart to section 412(d)(2) (section 412(c)(8) as in effect prior to amendments made by PPA '06), Rev. Rul. 79-325 (1979-2 CB 190) provides that section 412(c)(8) applies to plan amendments made during the plan year (as well as to plan amendments made within 21/2 months after the end of the plan year), and this same rule applies under the identical statutory provisions of section 412(d)(2). See § 601.601(d)(2) of this chapter. Thus, if an amendment that increases plan liabilities is adopted after the valuation date for a plan year but the amendment is effective during that plan year, the full increase in liability will be taken into account as of the valuation date for that plan year if a section 412(d)(2) election is made, and none of the increase in liability will be taken into account as of the valuation date for that plan year if no section 412(d)(2) election is made. Regardless of whether a section 412(d)(2) election is made, the rules of section 436(c) must be applied in determining whether the amendment is permitted to take effect during the plan year. Section 430 does not contain a corresponding provision to former section 412(c)(12) under which the provisions of a collective bargaining agreement are taken into account for funding purposes before the corresponding plan amendments have been made. The proposed regulations would require all currently employed plan participants, formerly employed plan participants (including retirees and terminated vested participants), and other individuals currently entitled to benefits under the plan to be included in the valuation. Unlike § 1.412(c)(3)-1(c)(3)(ii), the proposed regulations would not permit exclusion from the valuation of those plan participants who could have been excluded from participation in the plan under the rules of section 410(a). However, the proposed regulations would continue to apply the rules of § 1.412(c)(3)-1(c)(3)(iii) (relating to the exclusion of terminated employees who do not have a vested benefit under the plan but whose service might be taken into account in future years upon rehire) and the rules of § 1.412(c)(3)-1(d)(2) (under which the future participation in the plan of current employees who are not yet participants is permitted to be anticipated). Section 1.430(d)-1 of the proposed regulations would cross-reference other regulations for the details of the statutorily specified interest rates, mortality tables, and actuarial assumptions that apply to plans in at-risk status. With respect to the actuarial assumptions that are not specified by statute or regulations, the proposed regulations would require that the actuarial assumptions used to determine present value satisfy the section 430(h)(1) requirements to be individually reasonable (taking into account the experience of the plan and reasonable expectations) and, in combination, offer the plan's enrolled actuary's best estimate of anticipated experience under the plan. The proposed regulations would provide that, once the actuarial assumptions for a plan year are established, they are not permitted to be changed for that plan year (unless the Commissioner determines that the assumptions are unreasonable). Similarly, the proposed regulations would provide that, once the funding method for a plan year is established, it is not permitted to be changed for that plan year (unless the Commissioner determines that the use of the funding method for the plan year is impermissible). In general, the actuarial assumptions and funding method used by a plan for a plan year are required to be established not later than the due date (with extensions) for the filing of Form 5500, “Annual Return/Report of Employee Benefit Plan,” for that plan year (or not later than the last day of the seventh month after the end of the plan year in the case of a plan not required to file Form 5500). The proposed regulations would provide that the filing of the first actuarial report (Schedule SB) under section 6059 for a plan year that reflects the use of actuarial assumptions and a funding method is treated as the establishment of those assumptions and the funding method for that plan year. In accordance with section 430(h)(4), the proposed regulations would provide that the plan's actuarial valuation must take into account the probability that future benefits will be paid in optional forms of benefit under the plan, including single sum distributions, determined on the basis of the plan's experience and other relevant assumptions. In addition, the plan's enrolled actuary must take into account any difference in the present value of those future benefit payments that results from the use of actuarial assumptions in determining benefit payments in any such optional forms of benefit that are different from those prescribed by section 430(h). In the case of a distribution that is subject to section 417(e)(3) and that is determined using the applicable interest rate and applicable mortality table under section 417(e)(3), the proposed regulations would provide that the computation of the present value of that distribution will be treated as having taken into account any difference in present value that results from the use of actuarial assumptions that are different from those prescribed by section 430(h) only if the present value of the distribution is determined by valuing the annuity that corresponds to the distribution using special actuarial assumptions. Under these special assumptions, for the period beginning with the annuity starting date, the current applicable mortality table under section 417(e)(3) is substituted for the mortality table under section 430(h)(3) that would otherwise apply. In addition, under these special actuarial assumptions, the valuation interest rates under section 430(h)(2) are used for all periods (as opposed to the interest rates under section 417(e)(3) which the plan uses to determine the amount of the benefit). The proposed regulations provide two elective adjustments to this methodology for valuing distributions subject to section 417(e)(3). First, in determining the present value of such a distribution, if a plan uses the generational mortality tables under § 1.430(h)(3)-1(a)(4) or under § 1.430(h)(3)-2, the plan would be permitted to use a 50-50 male-female blend of the annuitant mortality rates under the § 1.430(h)(3)-1(a)(4) generational mortality tables in lieu of the applicable mortality table under section 417(e)(3) that would apply to a distribution with an annuity starting date occurring on the valuation date. Second, a plan would be permitted to make adjustments to reflect differences between the phase-in of the section 430(h)(2) segment rates under section 430(h)(2)(G) and the adjustments to the segment rates under section 417(e)(3)(D)(iii). In the case of a distribution that is subject to section 417(e)(3) but that is determined as the greater of the benefit determined using the applicable interest rate and the applicable mortality table under section 417(e)(3) and the benefit determined using some basis other than the section 417(e)(3) assumptions, the proposed regulations would provide that the computation of present value must take into account the extent to which the present value of the distribution is greater than the present value determined using the applicable interest rate and applicable mortality table. In the case of an applicable defined benefit plan described in section 411(a)(13)(C) (such as a cash balance plan), the proposed regulations would provide that, if the distribution is determined under the rules of section 411(a)(13)(A), the amount of the future distribution must be determined by projecting the future interest credits or equivalent amounts under the plan's interest crediting rules to the expected date of payment using reasonable actuarial assumptions. Thus, the present value of a future distribution is not necessarily the current amount of a participant's hypothetical account balance. The proposed regulations would provide that any reasonable technique can be used to determine the present value of the benefits expected to be paid during a plan year, based on the interest rates and mortality assumptions applicable for the plan year. For example, the present value of a monthly retirement annuity payable at the beginning of each month can be determined using the standard actuarial approximation that reflects 13/24ths of the discounted expected payments for the year as of the beginning of the year and 11/24ths of the discounted expected payments for the year as of the end of the year, or by assuming that the payment is made in the middle of the year. The proposed regulations would also reflect the provisions of section 430(h)(5), requiring approval of the Commissioner for large changes in actuarial assumptions. In general, this rule applies where the application of the changes in actuarial assumptions results in a decrease in the plan's funding shortfall for the current plan year (disregarding the effect on the plan's funding shortfall resulting from changes in interest and mortality assumptions) that exceeds $50,000,000, or that exceeds $5,000,000 and that is 5 percent or more of the funding target of the plan before the change. Thus, for example, if a plan leaves at-risk status and consequently makes changes to its actuarial assumptions (including a return to previously used assumptions) that result in a reduction in the funding shortfall that exceeds $50,000,000, that change in actuarial assumptions would require approval of the Commissioner. In determining whether aggregate unfunded vested benefits exceed $50,000,000, the proposed regulations would provide that multiemployer plans and plans with no unfunded vested benefits are disregarded. In addition, the proposed regulations would provide that the aggregate unfunded vested benefits used to determine premiums for the current plan year (as determined under section 4006(a)(3)(E)(iii) of ERISA) are used for purposes of calculating whether unfunded vested benefits exceed $50,000,000. III. Section 1.430(g)-1 Valuation Date and Value of Plan Assets Section 1.430(g)-1 would provide rules for a plan's valuation date and the value of plan assets. 3 Under the proposed regulations, except in the case of a small plan, a plan's valuation date is the first day of the plan year. For this purpose, a small plan is defined as a plan sponsored by an employer that had 100 or fewer participants in defined benefit plans (other than multiemployer plans as defined in section 414(f)) sponsored by the employer or members of the employer's controlled group, including active and inactive participants and all other individuals entitled to future benefits. A small plan is permitted to have a valuation date other than the first day of a plan year. The selection of a valuation date by a small plan is part of the plan's funding method and, thus, is permitted to be changed only with the Commissioner's consent. If a plan that was using a valuation date that was not the first day of the plan year is no longer eligible to use that date because the plan is no longer a small plan, the required change of the valuation date to the first day of the plan year is treated as automatically approved and no prior approval of the Commissioner is necessary. 3 The value of plan assets under these proposed regulations is referred to in Schedule SB of Form 5500 as “actuarial assets.” The proposed regulations would provide that plan assets must be valued either at their fair market value on the valuation date or at the “average” value of assets on the valuation date. Under this average value, the value of plan assets is set equal to the average of the fair market value of assets on the valuation date and the adjusted fair market value of assets determined for one or more earlier determination dates. The proposed regulations would provide that the period of time between the valuation date and each of the earlier determination dates must be equal (with a period that is not more than 12 months), and the earliest of these determination dates cannot be earlier than the last day of the 25th month before the valuation date of the plan year. In a typical situation, the earlier determination dates will be the two immediately preceding valuation dates. The proposed regulations would provide that this average of fair market values is increased for contributions included in the plan's asset balance on the current valuation date that were not included in the plan's asset balance on an earlier determination date, and reduced for benefits and administrative expenses paid from plan assets during the same period. 4 After these adjustments, as well as the adjustments described in the following two paragraphs, the resulting average value must be constrained so that it falls between 90 and 110 percent of the fair market value of plan assets. 4 Note that this average of fair market values is different from the calculation of average value under § 1.412(c)(2)-1(b)(7). For example, the adjusted value described in the proposed regulations does not include interest and dividends on plan assets attributable to the period between the earlier determination date and the valuation date in determining the adjusted fair market value of assets. The proposed regulations would implement the rules of section 430(g)(4) relating to the treatment of contributions for a prior plan year that are made after the valuation date for the current plan year. These rules work in conjunction with the rules of section 430(j)(2) in order to keep employers and plans neutral regarding the timing of contributions that are paid after the end of the plan year. Under section 430(j)(2), the amount of the contribution must be adjusted for interest at the effective interest rate under section 430(h)(2) in order to take into account the delay in contributions (including the period after the end of the year). For this purpose, section 430(g)(4) requires that only the present value of a prior year contribution paid after the valuation date be included in plan assets, so that the value of plan assets for the next plan year is not inflated by reflecting a delayed contribution at full value. This effectively means that the present value of the contribution is the same from the perspective of the employer and the plan, regardless of when it is made. Because the requirement to adjust contributions for delayed payment after the end of the plan year is first effective for plan years beginning in 2008 (except for certain plans with a delayed effective date), the corresponding requirement to include only the present value of a prior year contribution paid after the valuation date is not effective until the second plan year for which section 430 applies to the plan. Thus, this corresponding requirement will become effective in plan years beginning in 2009, except with respect to plans for which the effective date of section 430 is delayed. The proposed regulations would specify the treatment of current year contributions that are made before the valuation date (which could only occur for small plans with valuation dates other than the first day of the plan year). These contributions, adjusted for interest at the effective interest rate under section 430(h)(2) for the plan year, must be subtracted from plan assets in determining the actuarial value of plan assets. This is similar to the pre-PPA '06 requirement to subtract these contributions from plan assets after adjustment using the plan's valuation interest rate. The proposed regulations would incorporate the provisions of section 430(l) (involving qualified transfers to health benefit accounts under section 420). IV. Section 1.430(h)(2)-1 Interest Rates Section 1.430(h)(2)-1 would specify the interest rates that are to be used to determine present value and to make other calculations under section 430. These rates are generally based on the 24-month moving averages of 3 separate segment rates for the month that includes the valuation date (the applicable month). The first segment rate, which is based on the portion of the corporate bond yield curve over the period from 0 to 5 years, applies for purposes of discounting benefits that are expected to be paid during the 5-year period beginning on the valuation date for a plan year. The second segment rate, which is based on the portion of the corporate bond yield curve over the period between 5 and 20 years, applies for purposes of discounting benefit payments that are expected to be paid at least 5 years after the valuation date, but before 20 years. The third segment rate applies to benefit payments that are expected to be paid at least 20 years after the valuation date. Thus, for example, if a series of monthly payments is assumed to be made beginning on the valuation date, the second segment rate will apply to the 61st such payment and the third segment rate will apply beginning with the 241st such payment. 5 Except in the case of a new plan, a transition rule applies for 2008 and 2009 under which these segment rates are blended with the long-term corporate bond rate that applies under pre-PPA law. 5 The same interest rate timing rules apply for purposes of determining present values for purposes of section 417(e)(3). The monthly corporate bond yield curve is, with respect to any month, a yield curve that is prescribed by the Commissioner for that month based on yields for that month on investment grade corporate bonds with varying maturities that are in the top three quality levels available. Notice 2007-81 (2007-44 IRB 899) provides guidance on the monthly corporate bond yield curve and related interest rates used to make certain computations related to the funding requirements that apply to single employer defined benefit plans under section 430(h)(2), including a description of the methodology for determining the monthly corporate bond yield curve. See § 601.601(d)(2) of this chapter. The proposed regulations would reflect the special interest rate for determining a plan's funding target in the case of airlines that make the 10-year amortization election described in section 402(a)(2) of PPA '06, in accordance with section 6615 of the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, Public Law 110-28 (121 Stat. 112). The special interest rate does not apply for other purposes such as the determination of the plan's target normal cost. The proposed regulations describe several elections a plan sponsor is permitted to make in order to use an alternative interest rate rather than the segment rates. These elections are made by providing written notification of the election to the plan's enrolled actuary. Such an election is part of the plan's funding method and, accordingly, may only be adopted or changed with the consent of the Commissioner. Under one such election, a plan sponsor that is using segment rates may elect the use of an alternative month as the applicable month, provided that the alternative month is one of the 4 months that precede the month that includes the valuation date for the plan year. Under another such election, the plan sponsor may elect not to apply the transition rule under which the segment rates are blended with the 30-year Treasury rate for 2008 and 2009. Under the third such election, for purposes of determining the minimum required contribution under section 430 (including the determination of shortfall amortization installments, waiver amortization installments, and the present value of those installments), the plan sponsor may elect to use interest rates under the monthly corporate bond yield curve—which is a set of spot rates for the month preceding the valuation date rather than a 24-month moving average for that month or an alternative applicable month—in lieu of the segment rates. The amount of the funding target calculated in accordance with any of these elections applies for all purposes, including determining the adjusted funding target attainment percentage under section 436 and the applicable limitations under section 404. In the case of the first plan year to which section 430 applies to a plan (the first plan year beginning in 2008 other than for a plan with a delayed section 430 effective date), any of these elections are treated as having been approved by the Commissioner and do not require the Commissioner's specific prior approval. In the case of a plan sponsor that has elected to use interest rates under the monthly corporate bond yield curve, if with respect to a decrement the benefit is only expected to be paid for one-half of a year (because the decrement was assumed to occur in the middle of the year), the proposed regulations would provide that the interest rate for that year can be determined as if the benefit were being paid for the entire year. Under the proposed regulations, the effective interest rate determined under section 430(h)(2)(A) is the single interest rate that, if used to determine the present value of the benefits taken into account in determining the plan's funding target for a plan year, would result in an amount equal to the plan's funding target determined for the plan year under section 430(d) as described in § 1.430(d)-1(b)(2) (without regard to calculations for plans in at-risk status under section 430(i)). The effective interest rate is used to adjust plan contributions made on a date other than the valuation date. Under the proposed regulations, the interest rates used to determine the amount of shortfall amortization installments and waiver amortization installments are determined based on the dates those installments are assumed to be paid, using the same timing rules that apply for purposes of determining the target normal cost. Thus, for a plan that uses the segment rates, the first segment rate applies to the five shortfall amortization installments assumed to be paid during the first five years beginning on the valuation date for the plan year, and the second segment rate applies to the two shortfall amortization installments that are assumed to be paid after that period. V. Section 1.430(i)-1 Plans in At-Risk Status The proposed regulations would provide rules and assumptions for determining the funding target and making other computations for certain defined benefit plans that are referred to as plans in “at-risk” status due to their significantly underfunded status. These rules apply to single employer defined benefit plans (including multiple employer plans) but do not apply to multiemployer plans. The at-risk rules do not apply to small plans. For this purpose, a small plan is defined as a plan sponsored by an employer that had 500 or fewer participants (including both active and inactive participants) in defined benefit plans (other than multiemployer plans) sponsored by the employer or any member of the employer's controlled group on each day during the preceding plan year. In general, the proposed regulations would provide that a plan is in at-risk status for a plan year if the funding target attainment percentage
(FTAP)for the preceding plan year is less than 80% (65%, 70%, and 75%, for plan years beginning in 2008, 2009, and 2010, respectively), 6 and the at-risk FTAP for the preceding plan year is less than 70 percent. For this purpose, the proposed regulations would provide that a plan's FTAP for a plan year is a fraction (expressed as a percentage) determined as:
(i)The value of plan assets for the plan year after subtraction of the prefunding balance and the funding standard carryover balance under section 430(f)(4)(B)), divided by
(ii)the funding target of the plan for the plan year (determined without regard to section 430(i) and these proposed regulations). The proposed regulations would provide that the at-risk FTAP of a plan for a plan year is determined similarly except that the denominator is the at-risk funding target of the plan for the plan year (but determined without regard to the loading factor discussed in the following paragraph). The proposed regulations would provide that, in the case of a newly established plan, this FTAP and at-risk FTAP determination are assumed to be 100% for years before the plan exists. 6 This phase-in of the 80% rule applies solely for plan years beginning in 2008 through 2010 and is not adjusted for plans described in § 1.430(i)-1(f)(2) for which the effective date of section 430 is delayed. In general, in accordance with section 430(i)(1), the proposed regulations would provide that the at-risk funding target and the at-risk target normal cost of the plan for the plan year are generally determined in the same manner as for plans not in at-risk status but using special actuarial assumptions. In addition, the at-risk funding target and the at-risk target normal cost are increased to take into account a loading factor. In any case, the at-risk funding target and the at-risk target normal cost of a plan for a plan year cannot be less than the plan's funding target and target normal cost determined without regard to the at-risk rules. This minimum value is determined on a plan-wide (rather than a participant-by-participant) basis. The actuarial assumptions used to determine a plan's at-risk funding target for a plan year are the actuarial assumptions that are applied under section 430, with certain modifications as set forth in the proposed regulations. Under these special actuarial assumptions, if an employee would be eligible to commence an immediate distribution upon termination of employment by the end of the plan year that begins 10 years after the end of the current plan year (that is, the end of the 11th plan year beginning with the current plan year), that employee is assumed to terminate and commence an immediate distribution at the earliest retirement date under the plan, or, if later, at the end of the current plan year. (However, the proposed regulations would provide that this special assumption does not apply to the extent the employee is otherwise assumed to retire during the current plan year. Thus, for example, if generally applicable retirement assumptions would provide for a 25% probability that an employee will retire during the current plan year, the special retirement age assumption would require the plan to assume a 75% probability that the employee will retire at the end of the plan year.) For this purpose, the proposed regulations would define the earliest retirement age under the plan as the earliest age at which a participant could terminate employment and receive an immediate distribution. In addition, the special actuarial assumptions in the proposed regulations would provide that all employees are assumed to elect the optional form of benefit available under the plan at the assumed retirement age that would result in the highest present value of benefits. If a plan that is in at-risk status for the plan year has been in at-risk status for a consecutive period of fewer than 5 plan years, the plan's funding target for the plan year is determined as a blend of the funding target determined as if the plan were not in at-risk status and the funding target determined as if the plan had been in at-risk status for each of the previous 5 plan years. For this purpose, the funding target determined as if the plan had been in at-risk status for each of the previous 5 plan years is determined without applying the loading factor if the plan has not been in at-risk status for two of the last four plan years. The increase in the funding target to reflect the at-risk rules is phased in over 5 years at 20% per year. The proposed regulations provide similar rules for determining the at-risk target normal cost of a plan that has been in at-risk status for fewer than 5 consecutive plan years. For purposes of applying the rules under section 430(i), the proposed regulations set forth rules for making certain calculations with respect to the first plan year to which section 430 applies to the plan. These rules are generally the same as the rules that apply for that plan year for purposes of section 436. There is no special rule for determining the at-risk funding target for the plan year preceding the plan year section 430 first applies to the plan. This is because, for a plan to which section 430 applies beginning in 2008, if the plan's FTAP for the preceding plan year was less than the 65% needed to be in at-risk status (pursuant to the transition rule described in section 430(i)(4)(B)), then the at-risk FTAP would necessarily be below the 70% needed for the plan to be in at-risk status (because the at-risk funding target cannot be less than the funding target for a plan that is not in at-risk status). However, plans for which the effective date of section 430 is delayed will have to determine the at-risk funding target for the plan year that precedes the plan year for which section 430 is first effective with respect to the plan. Effective/Applicability Dates Section 430 generally applies to plan years beginning on or after January 1, 2008. These regulations are proposed to apply to plan years beginning on or after January 1, 2009. However, in the case of a plan for which the effective date of section 430 is delayed in accordance with sections 104 through 106 of the Pension Protection Act of 2006, Public Law 109-280 (120 Stat. 780), the regulations are proposed to apply to plan years beginning on or after the date section 430 applies with respect to the plan. For plan years beginning in 2008, plans are permitted to rely on the provisions set forth in these proposed regulations for purposes of satisfying the requirements of section 430. Under the proposed regulations, any change in a plan's funding method that is made for the first plan year section 430 applies to the plan and that is not inconsistent with the requirements of section 430 would be treated as having been approved by the Commissioner and would not require the Commissioner's specific prior approval. In addition, the Commissioner's specific prior approval is not required with respect to any actuarial assumptions that are adopted for the first plan year for which section 430 applies to the plan and that are not inconsistent with the requirements of section 430. Future guidance will cover procedures for obtaining the Commissioner's approval for changes in funding method and may provide for additional circumstances in which automatic approval is granted. Special Analyses It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. It is hereby certified that the collection of information imposed by these proposed regulations will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required. The estimated burden imposed by the collection of information contained in these proposed regulations is 0.75 hours per respondent. Moreover, this burden is attributable to the flexibility given under the applicable statutory requirements under which a plan sponsor may make any of several elections related to the interest rate used for minimum funding purposes. The written elections under these proposed regulations are made by the plan sponsor upon occasion and will require minimal time to prepare. Pursuant to section 7805(f) of the Code, these regulations have been 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 eight
(8)copies) or electronic comments that are submitted timely to the IRS. The IRS and the Treasury Department specifically request comments on the clarity of the proposed regulations and how they may be made easier to understand. All comments will be available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the **Federal Register** . Drafting Information The principal authors of these regulations are Lauson C. Green and Linda S. F. Marshall, Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and the Treasury Department participated in the development of these regulations. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Proposed Amendments to the Regulations Accordingly, 26 CFR part 1 is proposed to be amended as follows: PART 1—INCOME TAXES **Paragraph 1.** The authority citation for part 1 continues to read, in part, as follows: Authority: 26 U.S.C. 7805 * * * **Par. 2.** Section 1.430(d)-1 is added to read as follows: § 1.430(d)-1 Determination of target normal cost and funding target.
(a)*In general* —(1) *Overview.* This section sets forth rules for determining a plan's target normal cost and funding target under sections 430(b) and 430(d), including guidance relating to the application of actuarial assumptions described in sections 430(h)(1) and 430(h)(4). Section 430 and this section apply to single employer defined benefit plans (including multiple employer plans as defined in section 413(c)) that are subject to section 412 but do not apply to multiemployer plans (as defined in section 414(f)). For further guidance on actuarial assumptions, see § 1.430(h)(2)-1 (relating to interest rates) and §§ 1.430(h)(3)-1 and 1.430(h)(3)-2 (relating to mortality tables). See also § 1.430(i)-1 for the determination of the funding target and target normal cost for a plan that is in at-risk status.
(2)*Organization of regulation.* Paragraph
(b)of this section sets forth definitions of target normal cost and funding target. Paragraph
(c)of this section provides rules regarding which benefits are taken into account in determining a plan's target normal cost and funding target. Paragraph
(d)of this section sets forth the rules regarding the plan provisions that are taken into account in making these determinations, and paragraph
(e)of this section provides rules on which plan participants are taken into account for this purpose. Paragraph
(f)of this section provides rules relating to the actuarial assumptions and the plan's funding method that are used to determine present values. Paragraph
(g)of this section contains effective/applicability dates and transition rules.
(3)*Special rules for multiple employer plans.* In the case of a multiple employer plan to which section 413(c)(4)(A) applies, the rules of section 430 and this section are applied separately for each employer under the plan, as if each employer maintained a separate plan. Thus, the plan's funding target and target normal cost are computed separately for each employer under such a multiple employer plan. In the case of a multiple employer plan to which section 413(c)(4)(A) does not apply (that is, a plan described in section 413(c)(4)(B) that has not made the election for section 413(c)(4)(A) to apply), the rules of section 430 and this section are applied as if all participants in the plan were employed by a single employer.
(b)*Definition of target normal cost, funding target, and funding target attainment percentage* —(1) *Target normal cost* —(i) *In general.* For a plan that is not in at-risk status under section 430(i) for the plan year, the target normal cost of the plan for the plan year is the present value of all benefits that have accrued or have been earned (or that are expected to accrue or to be earned) under the plan during the plan year. See § 1.430(i)-1(d) and (e)(2) for the determination of target normal cost for a plan that is in at-risk status.
(ii)*Benefits accruing for a plan year.* The benefits that have been accrued or have been earned (or that are expected to accrue or to be earned) under a plan during a plan year include any increase in benefits during the plan year that is a result of any actual or projected increase in compensation during the current plan year, even if that increase in benefits is with respect to benefits attributable to services performed in a preceding plan year.
(2)*Funding target.* For a plan that is not in at-risk status under section 430(i) for the plan year, the funding target of the plan for the plan year is the present value of all benefits that have been accrued or earned under the plan as of the first day of the plan year. See § 1.430(i)-1(c) and (e)(1) for the determination of the funding target for a plan that is in at-risk status.
(3)*Funding target attainment percentage.* See § 1.430(i)-1(b)(3) and § 1.436-1(j)(2) for rules relating to the determination of the funding target attainment percentage under section 430(d)(2).
(c)*Benefits taken into account* —(1) *In general* —(i) *Basic rule.* The benefits taken into account in determining the funding target and target normal cost under paragraph
(b)of this section are all benefits earned or accrued under the plan, including retirement-type and ancillary benefits.
(ii)*Allocation of benefits* —(A) *Benefits that are based on accrued benefits.* If the amount of a benefit that is expected to be paid is a function of the accrued benefit at the time the benefit is expected to be paid, then the amount of the benefit that is taken into account in the funding target is determined by applying that function to the accrued benefit as of the beginning of the plan year and the amount of the benefit that is taken into account in the target normal cost is determined by applying that function to the increase in the accrued benefit for the plan year. For example, a benefit that is assumed to be payable at a particular early retirement age in the amount of 90% of the accrued benefit is taken into account in the funding target in the amount of 90% of the accrued benefit as of the beginning of the plan year, and that benefit is taken into account in the target normal cost in the amount of 90% of the increase in the accrued benefit for the plan year.
(B)*Benefits that are based on service.* If the amount of a benefit that is expected to be paid is not a function of the accrued benefit at the time the benefit is expected to be paid, but is a function of the participant's service at that time, then the portion of the benefit taken into account for purposes of determining the funding target for a plan year is determined by applying that function to the participant's service as of the first day of the plan year and the amount of the benefit that is taken into account in the target normal cost is the increase in that benefit for the plan year based on the additional year of service. For example, if a plan provides a post-retirement death benefit of $500 per year of service, then the funding target is determined based on a death benefit of $500 multiplied by a participant's service at the beginning of the year and the target normal cost is based on the additional $500 in death benefits earned for one more year of service.
(C)*Other benefits.* If the amount of a benefit that is expected to be paid is neither a function of the accrued benefit at the time the benefit is expected to be paid as described in paragraph (c)(1)(ii)(A) of this section nor a function of the participant's service at that time as described in paragraph (c)(1)(ii)(B) of this section, then the portion of the benefit taken into account for purposes of determining the funding target for a plan year is based on the proportion of a participant's service as of the first day of the plan year relative to the service the participant will have when the participant meets the age and service eligibility requirements for the benefit, and the portion of the benefit that is taken into account in the target normal cost is the increase in the proportional benefit for the plan year. For example, if a plan provides a Social Security supplement for a participant who retires after 30 years of service that is equal to a participant's Social Security benefit, the funding target is determined based on the participant's Social Security benefit as of the beginning of the plan year multiplied by a fraction, the numerator of which is the participant's service as of the first day of the plan year and the denominator of which is 30 years. In such a case, the target normal cost is based on the increase in the proportional benefit taking into account one additional year of service and any changes in the participant's Social Security benefit.
(iii)*Application of section 436 limitations to funding target and target normal cost determination.* The determination of the funding target and target normal cost of a plan for a plan year is not permitted to take into account any limitations or anticipated limitations under section 436.
(2)*Payment of expenses from plan assets.* Plan administrative expenses paid (or expected to be paid) from plan assets for a plan year are not taken into account in the determination of a plan's target normal cost and funding target for that plan year.
(3)*Benefits provided by insurance.* A plan generally is required to reflect in the plan's funding target and target normal cost the liability for benefits that are funded through insurance contracts held by the plan, and to include in plan assets the value of the corresponding insurance contracts. Alternatively, in the case of benefits that are funded through insurance contracts purchased from an insurance company licensed under the laws of a State, the plan is permitted to exclude benefits provided under such contracts from the plan's funding target and target normal cost and to exclude the corresponding insurance contracts from plan assets, but only to the extent that a participant's or beneficiary's right to receive those benefits is an irrevocable contractual right, based on premiums paid to the insurance company prior to the valuation date under the insurance contracts. Thus, for example, in the case of a retired participant receiving benefits from an annuity contract in pay status under which no premiums are required on or after the valuation date, a plan is permitted to exclude the benefits provided by the contract from the plan's funding target and target normal cost, provided that the value of the contract is also excluded from plan assets. Similarly, in the case of an active or deferred vested participant whose benefits are funded by a life insurance or annuity contract under which further premiums are required on or after the valuation date, a plan is permitted to exclude the benefits, if any, that would be paid from the contract if no further premiums were to be paid (for example, if the contract were to go on reduced paid-up status) from the plan's funding target and target normal cost, provided that the value of the contract is excluded from plan assets. A plan's treatment of benefits funded through insurance contracts pursuant to this paragraph (c)(3) is part of the plan's funding method. Accordingly, that treatment can be changed only with the consent of the Commissioner.
(d)*Plan provisions taken into account.* Except as provided in section 412(d)(2), the determination of a plan's funding target and target normal cost for a plan year is based on plan provisions that are adopted no later than the valuation date for the plan year and that become effective during that plan year. Section 412(d)(2) applies for purposes of determining whether a plan amendment is treated as having been adopted on the first day of the plan year (including a plan amendment adopted within 2 1/2 months after the close of the plan year).
(e)*Plan population taken into account—*
(1)*In general.* In making any determination of the funding target or target normal cost under paragraph
(b)of this section, the plan population is determined as of the valuation date. The plan population must include three classes of individuals—
(i)Participants currently employed in the service of the employer;
(ii)Participants who are retired under the plan or who are otherwise no longer employed in the service of the employer; and
(iii)All other individuals currently entitled to benefits under the plan.
(2)*Special exclusion for “rule of parity” cases.* Certain individuals may be excluded from the class of individuals described in paragraph (e)(1)(ii) of this section. The excludable individuals are those former participants who, prior to the valuation date for the plan year, have terminated service with the employer without vested benefits and whose service might be taken into account in future years because the ‘rule of parity' of section 411(a)(6)(D) does not permit that service to be disregarded. However, if the plan's experience as to separated employees returning to service has been such that the exclusion described in this paragraph (e)(2) would be unreasonable, the exclusion would no longer apply.
(3)*Anticipated future participants.* In making any determination of the funding target or target normal cost under paragraph
(b)of this section, the actuarial assumptions and funding method used for the plan must not anticipate the affiliation with the plan of future participants not employed in the service of the employer on the plan valuation date. However, any such determination may anticipate the affiliation with the plan of current employees who have not yet satisfied the participation (age and service) requirements of the plan as of the valuation date.
(f)*Actuarial assumptions and funding method used in determination of present value—*
(1)*Establishment of actuarial assumptions and funding method—*
(i)*General rules—*
(A)*Assumptions and method cannot be changed for a plan year once established.* The determination of any present value or other computation under section 430 must be made on the basis of actuarial assumptions and a funding method. Actuarial assumptions established for a plan year in accordance with paragraph (f)(1)(ii) of this section cannot subsequently be changed for that plan year unless the Commissioner determines that the assumptions that were used are unreasonable. Similarly, a funding method established for a plan year in accordance with paragraph (f)(1)(ii) of this section cannot subsequently be changed for that plan year unless the Commissioner determines that the use of that funding method for that plan year is impermissible.
(B)*Scope of funding method.* A plan's funding method includes not only the overall funding method used by the plan but also each specific method of computation used in applying the overall method. However, the choice of which actuarial assumptions are appropriate to the overall method or to the specific method of computation is not a part of the funding method.
(ii)*Timing rule for establishing actuarial assumptions and funding method.* The actuarial assumptions and the funding method used by a plan for a plan year must be established not later than the due date (with extensions) for the filing of Form 5500, “Annual Return/Report of Employee Benefit Plan,” for that plan year (or the last day of the 7th month after the end of the plan year in the case of a plan not required to file Form 5500). The filing of the first actuarial report (Schedule SB) for a plan year under section 6059 that reflects the use of actuarial assumptions and a funding method is treated as the establishment of those assumptions and the funding method for that plan year.
(2)*Interest and mortality rates.* Section 430(h)(2) and § 1.430(h)(2)-1 set forth the interest rates, and section 430(h)(3) and §§ 1.430(h)(3)-1 and 1.430(h)(3)-2 set forth the mortality tables, that must be used for purposes of determining any present value under this section.
(3)*Other assumptions.* In the case of actuarial assumptions other than those specified in sections 430(h)(2), 430(h)(3), and 430(i), each of those actuarial assumptions must be reasonable (taking into account the experience of the plan and reasonable expectations), and the actuarial assumptions, in combination, must offer the plan's enrolled actuary's best estimate of anticipated experience under the plan. See paragraph (f)(4)(iii) of this section for special rules for determining the present value of a single sum and similar distributions.
(4)*Probability of benefit payments in single sum or other optional forms—*
(i)*In general.* This paragraph (f)(4) provides rules relating to the probability that benefit payments will be paid as single sums or other optional forms under a plan and the impact of that probability on the determination of the present value of those benefit payments under section 430.
(ii)*General rules of application.* Any determination of present value or any other computation under this section must take into account—
(A)The probability that future benefit payments under the plan will be made in the form of optional forms of benefits provided under the plan (including single sum distributions), determined on the basis of the plan's experience and other related assumptions; and
(B)Any difference in the present value of future benefit payments that results from the use of actuarial assumptions in determining benefit payments in any such optional form of benefits that are different from those prescribed by section 430(h).
(iii)*Single sum and similar distributions—*
(A)*Distributions using section 417(e) assumptions.* In the case of a distribution that is subject to section 417(e)(3) and that is determined using the applicable interest rate and applicable mortality table under section 417(e)(3), for purposes of applying paragraph (f)(4)(ii) of this section, the computation of the present value of that distribution will be treated as having taken into account any difference in present value that results from the use of actuarial assumptions that are different from those prescribed by section 430(h) (as required under paragraph (f)(4)(ii)(B) of this section) if the present value of the distribution is determined in accordance with paragraph (f)(4)(iii)(B) of this section.
(B)*Substitution of annuity form—*
(1)*In general.* Except as otherwise provided in this paragraph (f)(4)(iii)(B), the present value of a distribution is determined in accordance with this paragraph (f)(4)(iii)(B) if it is determined by valuing the annuity that corresponds to the distribution using special actuarial assumptions. Under these special assumptions, for the period beginning with the annuity starting date, the current applicable mortality table under section 417(e)(3) that would apply to a distribution with an annuity starting date occurring on the valuation date is substituted for the mortality table under section 430(h)(3) that would otherwise be used. In addition, under these special assumptions, the valuation interest rates under section 430(h)(2) are used for this purpose for all periods (as opposed to the interest rates under section 417(e)(3) which the plan uses to determine the amount of the benefit). ( *2* ) *Optional application of generational mortality.* In determining the present value of a distribution under this paragraph (f)(4)(iii)(B), if a plan uses the generational mortality tables under § 1.430(h)(3)-1(a)(4) or § 1.430(h)(3)-2, the plan is permitted to use a 50-50 male-female blend of the annuitant mortality rates under the § 1.430(h)(3)-1(a)(4) generational mortality tables in lieu of the applicable mortality table under section 417(e)(3) that would apply to a distribution with an annuity starting date occurring on the valuation date.
(3)*Optional phase-in of section 417(e)(3) segment interest rates.* In determining the present value of a distribution under this paragraph (f)(4)(iii)(B), a plan is permitted to make adjustments to reflect differences between the phase-in of the section 430(h)(2) segment rates under section 430(h)(2)(G) and the adjustments to the segment rates under section 417(e)(3)(D)(iii).
(C)*Distributions subject to section 417(e)(3) using other assumptions.* In the case of a distribution that is subject to section 417(e)(3) but that is determined as the greater of the benefit determined using the applicable interest rate and the applicable mortality table under section 417(e)(3) and the benefit determined using some basis other than the section 417(e)(3) assumptions, for purposes of applying paragraph (f)(4)(ii)(B) of this section, the computation of present value must take into account the extent to which the present value of the distribution is greater than the present value determined using the rules of paragraph (f)(4)(iii)(B) of this section.
(D)*Distributions subject to section 411(a)(13).* In the case of an applicable defined benefit plan described in section 411(a)(13)(C), if the distribution is determined under the rules of section 411(a)(13)(A), the amount of the future distribution must be determined by projecting the future interest credits or equivalent amounts under the plan's interest crediting rules to the expected date of payment using reasonable actuarial assumptions.
(5)*Reasonable techniques permitted.* Any reasonable technique can be used to determine the present value of the benefits expected to be paid during a plan year, based on the interest rates and mortality assumptions applicable for the plan year. For example, the present value of a monthly retirement annuity payable at the beginning of each month can be determined—
(i)Using the standard actuarial approximation that reflects 13/24ths of the discounted expected payments for the year as of the beginning of the year and 11/24ths of the discounted expected payments for the year as of the end of the year; or
(ii)By assuming that the payment is made in the middle of the year.
(6)*Approval of significant changes in actuarial assumptions for large plans—*
(i)*In general.* A large plan as described in paragraph (f)(6)(ii) of this section cannot change any actuarial assumption used to determine the plan's funding target for a plan year without the approval of the Commissioner if the change in assumptions results in a decrease in the plan's funding shortfall (within the meaning of section 430(c)(4)) for the current plan year (disregarding the effect on the plan's funding shortfall resulting from changes in interest and mortality assumptions) that exceeds $50,000,000, or that exceeds $5,000,000 and is 5 percent or more of the funding target of the plan before such change.
(ii)*Affected plans.* A plan is a large plan as described in this paragraph (f)(6)(ii) if—
(A)The plan is a defined benefit plan (other than a multiemployer plan) to which Title IV of the Employee Retirement Income Security Act of 1974 (ERISA) applies; and
(B)The aggregate unfunded vested benefits used to determine premiums for the plan year (as determined under section 4006(a)(3)(E)(iii) of ERISA) of the plan and all other plans maintained by the contributing sponsors (as defined in section 4001(a)(13) of ERISA) and members of such sponsors' controlled groups (as defined in section 4001(a)(14) of ERISA) which are covered by Title IV (disregarding multiemployer plans and disregarding plans with no unfunded vested benefits) exceed $50,000,000.
(7)*Examples.* The following examples illustrate the rules of this section. Unless otherwise indicated, these examples are based on the following assumptions: the normal retirement age is 65, the plan is subject to section 430 starting in 2008, the plan year is the calendar year, and the valuation date is January 1. The examples read as follows: Example 1.
(i)Plan P provides an accrued benefit equal to 1.0% of a participant's highest 3-year average compensation for each year of service. Plan P provides that an early retirement benefit can be received at age 60 equal to the participant's accrued benefit reduced by 0.5% per month for early commencement. On January 1, 2008, Participant A is age 60 and has 12 years of past service. Participant A's compensation for the years 2005 through 2007 was $47,000, $50,000, and $52,000, respectively. Participant A's rate of compensation at December 31, 2007, is $54,000 and A's rate of compensation for 2008 is assumed not to increase at any point during 2008.
(ii)Participant A's annual accrued benefit as of January 1, 2008, is $5,960 [0.01 × 12 × ($47,000 + $50,000 + $52,000)/3]. Participant A's expected benefit accrual for 2008 is $800 [0.01 × 13 × ($50,000 + $52,000 + $54,000)/3−$5,960].
(iii)The early retirement benefit, with respect to the decrement at age 60, that is taken into account when determining the 2008 funding target is $4,172 [$5,960 accrued benefit × (1-0.005 × 60 months)]. The annual accrual of the early retirement benefit, with respect to the decrement at age 60, that is taken into account when determining the 2008 target normal cost is $560 [$800 annual accrual × (1-0.005 × 60 months)].
(iv)The early retirement benefit, with respect to the decrement at age 61, that is taken into account when determining the 2008 funding target is $4,529.60 [$5,960 accrued benefit × (1-0.005 × 48 months)]. The annual accrual of the early retirement benefit, with respect to the decrement at age 61, that is taken into account when determining the 2008 target normal cost is $608 [$800 annual accrual × (1-0.005 × 48 months)]. Example 2.
(i)The facts are the same as in *Example 1.* In addition, the plan offers a $500 temporary monthly supplement to participants who complete 15 years of service and retire from active employment after attaining age 60. The temporary supplement is available for retirements occurring at ages 60 and 61, and is payable until the participant turns age 62. In addition, the supplement is limited so that it does not exceed the participant's social security benefit payable at age 62. On January 1, 2008, Participant B is age 55 and has 20 years of past service, and Participant C is age 60 and has 14 years of past service. For Participants B and C, the projected social security benefit is greater than $500 per month.
(ii)For Participant B, the allocable portion of the annual temporary supplement that is taken into account when determining the funding target for 2008 is $4,800, which applies for the decrement at age 60 until age 62 [($500 × 12 months) × 20 years of past service / 25 years of service at eligibility for the supplement]. This same dollar amount will apply for the assumed decrement at age 60 or age 61, but the period of time the amount will be paid is different for those two decrements.
(iii)For Participant C, the allocable portion of the annual temporary supplement that is taken into account when determining the funding target for 2008 is $5,600, which is payable for the decrement at age 61 until age 62 [($500 × 12 months) × 14 years of past service / 15 years of service at eligibility for the supplement]. Example 3.
(i)The facts are the same as in *Example 1.* In addition, the plan provides a disability benefit to participants who become disabled after completing 15 years of service. The disability benefit is payable at normal retirement age. For purposes of calculating the disability benefit, service continues to accrue until normal retirement age (unless recovery or retirement occurs earlier). Further, compensation is deemed to continue to normal retirement age at the same rate as when the disability began.
(ii)Participant A will be eligible for the disability benefit at age 63 when he will have 15 years of service. Participant A's projected annual disability benefit at normal retirement age is $9,180 (that is, 1% of highest 3-year average compensation of $54,000 multiplied by 17 years of deemed service at normal retirement age).
(iii)The allocable portion of the disability benefit that is taken into account when determining the 2008 funding target with respect to the disability decrements occurring at age 63 and later is $7,344 [$9,180 × (12 years of past service / 15 years of service at eligibility for disability benefits)].
(iv)The disability benefit accrual that is taken into account when determining the 2008 target normal cost with respect to the disability decrements occurring at age 63 and later is $612 [$9,180 × (1 year of deemed service / 15 years of service at eligibility for disability benefits)]. Example 4.
(i)Retiree D, a participant in Plan P, is a male age 72 and is receiving a $100 monthly straight life annuity. The 2008 actuarial valuation is performed using the segment rates applicable for September 2007 (determined without regard to the transitional rule of section 430(h)(2)(G)), and the 2008 annuitant and nonannuitant (male and female) mortality tables (published in § 1.430(h)(3)-1).
(ii)The present value of Retiree D's straight life annuity on the valuation date is $10,624. This is equal to the sum of: $5,005, which is the present value of payments expected to be made during the first 5 years, using the first segment interest rate of 5.26%; $5,431, which is the present value of payments expected to be made during the next 15 years, using the second segment interest rate of 5.82%; and $188, which is the present value of payments expected to be made after 20 years, using the third segment interest rate of 6.38%. Example 5.
(i)The facts are the same as in *Example 4* , except Plan P does not provide for early retirement benefits or single sum distributions. The actuary assumes that no participants terminate employment prior to age 50 (other than by death), there is a 5% probability of withdrawal at age 50, and that those participants who do withdraw receive a deferred annuity starting at age 65. Participant E is a male age 46 on January 1, 2008, and has an annual accrued benefit of $23,000 beginning at age 65.
(ii)After taking into account the 5% probability of withdrawal, the funding target associated with Participant E's assumed age 50 withdrawal benefit in the 2008 actuarial valuation is $3,573.69. This is equal to the sum of: $363.55, which is the present value of payments expected to be made during the year the participant turns age 65 (the 20th year after the valuation date), using the second segment interest rate of 5.82%; and $3,210.14, which is the present value of payments expected to be made after the 20th year, using the third segment interest rate of 6.38%. Example 6.
(i)The facts are the same as in *Example 5* , except the plan offers a single sum distribution payable at normal retirement age (age 65) determined based on the applicable interest rate and the applicable mortality table under section 417(e)(3). The actuary assumes that 70% of the participants will elect a single sum upon retirement and the remaining 30% will elect a straight life annuity.
(ii)After taking into account the 5% probability of withdrawal, the portion of the 2008 funding target that is attributable to Participant E's assumed single sum payment, deferred to age 65, is $2,564.86. This is calculated in the same manner as the present value of annuity payments, except that the 2008 applicable mortality rates are substituted for the 2008 male annuitant mortality rates. This portion of the 2008 funding target is equal to the sum of: $254.63, which is the present value of annuity payments expected to be made between age 65 and 66 (during the 20th year after the valuation date), using the second segment interest rate of 5.82%; and $2,310.23, which is the present value of annuity payments expected to be made after the 20th year following the valuation date, using the third segment interest rate of 6.38%. These present value amounts reflect the 2008 male nonannuitant mortality rates prior to the assumed commencement of benefits at age 65, the 100% probability of retiring at age 65, and the 70% probability that E will elect a single sum distribution.
(iii)After taking into account the 5% probability of withdrawal, the portion of the 2008 funding target that is attributable to Participant E's assumed straight life annuity, deferred to age 65, is equal to 30% of the result obtained in *Example 5.* Example 7.
(i)The facts are the same as in *Example 6* , except the plan offers an immediate single sum upon withdrawal at age 50 determined based on the applicable interest rate and the applicable mortality table under section 417(e)(3). The actuary assumes that 70% of the participants will elect to receive a single sum distribution upon withdrawal.
(ii)After taking into account the 5% probability of withdrawal, the portion of the 2008 funding target that is attributable to Participant E's assumed single sum payment is $2,523.03. This is calculated in the same manner as the present value of annuity payments, except that the 2008 applicable mortality rates are substituted for the 2008 male annuitant and nonannuitant mortality rates after the annuity starting date. This portion of the 2008 funding target is equal to the sum of: $250.48, which is the present value of annuity payments expected to be made between age 65 and 66 (during the 20th year after the valuation date), using the second segment interest rate at an interest rate of 5.82%; and $2,272.55, which is the present value of annuity payments expected to be made after the 20th year following the valuation date, using the third segment interest rate of 6.38%. These present value amounts reflect the 2008 male nonannuitant mortality rates prior to the assumed single sum distribution age of 50, and the 70% probability that E will elect a single sum distribution. Example 8.
(i)The facts are the same as in *Example 5* , except that the plan sponsor elects under section 430(h)(2)(D)(ii) to use the monthly corporate bond yield curve instead of segment rates. The enrolled actuary assumes payments are made monthly throughout the year and uses the interest rate from the middle of the monthly corporate bond yield curve because this mid-year yield rate most closely matches the average timing of benefits paid. Solely for purposes of this example, assume that the monthly yield curve derived from the August 2007 data is applicable (even though the plan would actually have to use the yield curve derived from the December 2007 data).
(ii)After taking into account the 5% probability of withdrawal, the funding target associated with Participant E's assumed age 50 withdrawal benefit in the 2008 actuarial valuation is $3,359.69. This reflects the sum of each year's expected payments, discounted at the yield rates described in paragraph
(i)of this *Example 8* , as shown below: Age Discount period Yield rate (percent) Present value 65 19.5 6.47 $322.75 66 20.5 6.49 298.51 67 21.5 6.51 275.62 68 and over Varies Varies 2,462.81 Total 3,359.69 Example 9.
(i)Plan F is a cash balance plan that permits an immediate payment of a single sum equal to the participant's hypothetical account balance upon termination of employment. Plan terms provide that the hypothetical account is credited with interest at the 3rd segment rate. In the 2008 actuarial valuation, the enrolled actuary assumes that the hypothetical account balances will increase with annual interest credits of 5.0% until the participant commences receiving his or her benefit, that all participants will retire on the first day of the plan year in which they attain age 65 (that is, no participant will terminate employment prior to age 65 other than by death), and that 100% of participants will elect a single sum upon retirement. The 2008 actuarial valuation is performed using the 24-month average segment rates applicable for September 2007 (determined without regard to the transitional rule of section 430(h)(2)(G)), and the separate annuitant and non-annuitant mortality tables under § 1.430(h)(3)-1 for 2008 for periods prior to commencement of benefits (however, the annuitant mortality table is never used because the only assumed payment is a single sum). No mortality table is required for the period after commencement of benefits because the single sum payment is equal to the account balance. Participant F is a male age 61 on January 1, 2008, and has a hypothetical account balance equal to $150,000 on that date.
(ii)Participant F's hypothetical account balance projected to January 1, 2012 (the plan year in which F attains age 65) is $182,326 based on the assumed annual interest crediting rate of 5%. The 2008 funding target attributable to Participant F's benefit at age 65 is $145,905, which is calculated by discounting the projected hypothetical account balance of $182,326 using the first segment rate of 5.26% and the male non-annuitant mortality rates.
(iii)In contrast, if the enrolled actuary assumes that the hypothetical account balances increase with annual interest credits of 6.0%, the 2008 funding target attributable to Participant F's benefit at age 65 is $151,544 calculated by discounting the projected hypothetical account balance of $189,372 using the first segment rate of 5.26% and the male non-annuitant mortality rates.
(g)*Effective/applicability dates and transition rules* —(1) *In general.* Section 430 generally applies to plan years beginning on or after January 1, 2008. In general, this section applies to plan years beginning on or after January 1, 2009. For plan years beginning in 2008, plans are permitted to rely on the provisions set forth in this section for purposes of satisfying the requirements of section 430.
(2)*Plans with delayed effective date.* In the case of a plan for which the effective date of section 430 is delayed in accordance with sections 104 through 106 of the Pension Protection Act of 2006, Public Law 109-280 (120 Stat. 780), this section applies to plan years beginning on or after the date section 430 applies with respect to the plan.
(3)*Approval for changes in funding method.* Any change in a plan's funding method that is made for the first plan year for which section 430 applies to the plan and that is not inconsistent with the requirements of section 430 is treated as having been approved by the Commissioner and does not require the Commissioner's specific prior approval.
(4)*Approval for changes in actuarial assumptions.* The Commissioner's specific prior approval is not required with respect to any actuarial assumptions that are adopted for the first plan year for which section 430 applies to the plan and that are not inconsistent with the requirements of section 430. **Par. 3** Section 1.430(g)-1 is added to read as follows: § 1.430(g)-1 Valuation date and valuation of plan assets.
(a)*In general* —(1) *Overview.* This section provides rules relating to a plan's valuation date and the valuation of a plan's assets for a plan year under section 430(g). Section 430 and this section apply to single employer defined benefit plans (including multiple employer plans as defined in section 413(c)) that are subject to the rules of section 412, but do not apply to multiemployer plans (as defined in section 414(f)). Paragraph
(b)of this section describes valuation date rules. Paragraph
(c)of this section describes rules regarding the determination of the asset value for purposes of a plan's actuarial valuation. Paragraph
(d)of this section contains rules for taking employer contributions into account in the determination of the value of plan assets. Paragraph
(e)of this section contains an example. Paragraph
(f)of this section sets forth effective/applicability dates and transition rules.
(2)*Special rules for multiple employer plans.* In the case of a multiple employer plan to which section 413(c)(4)(A) applies, the rules of section 430 and this section are applied separately for each employer under the plan as if each employer maintained a separate plan. Thus, in such a case, the value of plan assets is determined separately for each employer under the plan. In the case of a multiple employer plan to which section 413(c)(4)(A) does not apply (that is, a plan described in section 413(c)(4)(B) that has not made the election for section 413(c)(4)(A) to apply), the rules of section 430 and this section are applied as if all participants in the plan were employed by a single employer.
(b)*Valuation date* —(1) *In general.* The determination of the funding target, target normal cost, and asset value of a plan for a plan year is made as of the valuation date of the plan for that plan year. Except as provided in paragraph (b)(2) of this section, the valuation date of a plan for any plan year is the first day of the plan year.
(2)*Exception for small plans* —(i) *In general.* If, on each day during the preceding plan year, a plan had 100 or fewer participants (including active and inactive participants and all other individuals entitled to future benefits), the plan may designate any day during the plan year as its valuation date for that plan year and succeeding plan years. For purposes of this paragraph (b)(2)(i), all defined benefit plans (other than multiemployer plans as defined in section 414(f)) maintained by an employer are treated as one plan, but only participants with respect to that employer or that employer's controlled group members are taken into account.
(ii)*Employer determination.* For purposes of this paragraph (b)(2), the employer includes all members of the employer's controlled group determined pursuant to sections 414(b), (c), (m), and (o).
(iii)*Application of exception in first plan year.* In the case of the first plan year of any plan, the exception for small plans under paragraph (b)(2)(i) of this section is applied by taking into account the number of participants that the plan is reasonably expected to have on each day during the first plan year.
(iv)*Valuation date is part of funding method.* The selection of a plan's valuation date is part of the plan's funding method and, accordingly, may only be changed with the consent of the Commissioner. The change of a plan's valuation date that is required by section 430 is treated as having been approved by the Commissioner and does not require the Commissioner's prior specific approval.
(c)*Determination of asset value* —(1) *In general* —(i) *General use of fair market value.* Except as provided in this paragraph (c), the value of plan assets for purposes of section 430 is equal to the fair market value of plan assets on the valuation date. Prior year contributions made after the valuation date and current year contributions made before the valuation date are taken into account to the extent provided in paragraph
(d)of this section.
(ii)*Fair market value.* The fair market value of an asset is determined as the price at which the asset would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts. The Commissioner may, in guidance of general applicability, issue guidance on the valuation of insurance contracts. See § 601.601(d)(2) of this chapter.
(2)*Averaging of fair market values* —(i) *In general.* Subject to the plan asset corridor rules of paragraph (c)(2)(iii) of this section, a plan is permitted to determine the value of plan assets on the valuation date as the average of the fair market value of assets on the valuation date and the adjusted fair market value of assets determined for one or more earlier determination dates using the method described in this paragraph (c)(2). The period of time between the valuation date and each of the earlier determination dates must be equal and that period of time cannot exceed 12 months. In addition, the earliest such determination date cannot be earlier than the last day of the 25th month before the valuation date of the plan year. In a typical situation, the earlier determination dates will be the two immediately preceding valuation dates. The method of determining the value of assets is part of the plan's funding method and, accordingly, may only be changed with the consent of the Commissioner.
(ii)*Adjusted fair market value.* The adjusted fair market value of plan assets for a prior determination date is the fair market value of plan assets on that date, increased for contributions included in the plan's asset balance on the current valuation date that were not included in the plan's asset balance on the earlier determination date, and reduced for benefits and administrative expenses paid from plan assets during the same period.
(iii)*Restriction to 90-110 percent corridor* —(A) *Asset value less than 90 percent of fair market value.* If the value of plan assets determined under paragraph (c)(2)(i) of this section is less than 90 percent of the fair market value of plan assets on the valuation date, then the value of plan assets under this paragraph (c)(2) is equal to 90 percent of the fair market value of plan assets.
(B)*Asset value greater than 110 percent of fair market value.* If the value of plan assets determined under paragraph (c)(2)(i) of this section is greater than 110 percent of the fair market value of plan assets on the valuation date, then the value of plan assets under this paragraph (c)(2) is equal to 110 percent of the fair market value of plan assets.
(3)*Qualified transfers to health benefit accounts.* In the case of a qualified transfer (as defined in section 420), any assets so transferred are not treated as plan assets for purposes of section 430 and this section.
(d)*Accounting for contribution receipts* —(1) *Prior year contributions* —(i) *In general.* For purposes of determining the value of plan assets under paragraph
(c)of this section, if an employer makes a contribution to the plan after the valuation date for the plan year, and the contribution is for a preceding plan year, then the present value of the contribution determined as of that valuation date is taken into account as an asset of the plan as of the valuation date. For this purpose, the present value is determined using the effective interest rate under section 430(h)(2)(A) for the preceding plan year.
(ii)*Special rule for plan years beginning before plan's first effective plan year.* Notwithstanding paragraph (d)(1)(i) of this section, in the case of a plan's first effective plan year, if the plan sponsor makes a contribution to the plan after the valuation date for the first effective plan year and that contribution is for a preceding plan year, then the contribution is taken into account as a plan asset under paragraph (d)(1)(i) of this section without applying any present value discount.
(2)*Current year contributions made before valuation date.* For purposes of determining the value of plan assets under paragraph
(c)of this section, if an employer makes a contribution for a plan year before that year's valuation date, that contribution (and any interest on the contribution for the period between the contribution date and the valuation date, determined using the effective interest rate under section 430(h)(2)(A) for the plan year) must be subtracted from plan assets in determining the value of plan assets as of the valuation date.
(e)*Example.* The following example illustrates the application of this section: Example.
(i)*Facts.* All assets of Plan F are invested in a trust fund, the plan year is the calendar year, and the valuation date is January 1. The actuarial value is determined by averaging fair market value over the valuation date and the preceding two valuation dates. For each plan year, all contributions for the plan year are made during that plan year. An actuarial valuation is performed as of January 1, 2019. The fair market value of assets, the plan contributions, the benefit payments, and other relevant items for 2017 through 2019 are as follows: 2017 2018 2019 Fair market value: Jan. 1 $196,500 $238,000 $228,000 Contributions 62,000 66,000 Benefit payments (24,000) (25,000) Expenses (7,000) (7,500) Interest and dividends 7,500 7,000 Net realized gains (losses) 6,000 (8,500) Balancing item (3,000) (42,000) Fair market value: Dec. 31 238,000 228,000
(ii)*Computation of average value.* The average value as of January 1, 2019, is computed as follows: Adjusted values 2017 2018 2019 Fair market value: January 1 $196,500 $238,000 $228,000 Net adjustments: Contributions 128,000 66,000 Benefits Paid (49,000) (25,000) Expenses Paid (14,500) (7,500) Total 261,000 271,500 228,000 Average value as of January 1, 2019 equals: $261,000 + $271,500 + $228,000 ÷ 3 = $253,500.
(iii)*Conclusion.* Having determined an average value as of January 1, 2019 equal to $253,500, Plan F must confirm that this value satisfies the 90-110 percent corridor rules under paragraph (c)(2)(iii) of this section. Because 110% of $228,000 equals $250,800, the value of Plan F's assets under paragraph (c)(2) of this section must be limited to $250,800 (rather than $253,500) for this purpose. This valuation method meets the requirements of this section.
(f)*Effective/applicability dates and transition rules* —(1) *In general.* Section 430 generally applies to plan years beginning on or after January 1, 2008. In general, this section applies to plan years beginning on or after January 1, 2009. For plan years beginning in 2008, plans are permitted to rely on the provisions set forth in this section for purposes of satisfying the requirements of section 430.
(2)*Plans with delayed effective date.* In the case of a plan for which the effective date of section 430 is delayed in accordance with sections 104 through 106 of the Pension Protection Act of 2006, Public Law 109-280 (120 Stat. 780), this section applies to plan years beginning on or after the date section 430 applies with respect to the plan.
(3)*First effective plan year.* For purposes of this section, the first effective plan year for a plan is the first plan year to which section 430 applies to the plan.
(4)*Approval for changes in the valuation date and valuation method for first effective plan year.* Any change in a plan's valuation date or asset valuation method that is made for the first effective plan year and that is not inconsistent with the requirements of section 430 is treated as having been approved by the Commissioner and does not require the Commissioner's specific prior approval. **Par. 4.** Section 1.430(h)(2)-1 is added to read as follows: § 1.430(h)(2)-1 Interest rates used to determine present value.
(a)*In general* —(1) *Overview.* This section provides rules relating to the interest rates to be applied for a plan year under section 430(h)(2). Section 430(h)(2) and this section apply to single employer defined benefit plans (including multiple employer plans as defined in section 413(c)) that are subject to section 412 but do not apply to multiemployer plans (as defined in section 414(f)). Paragraph
(b)of this section describes how the segment interest rates are used for a plan year. Paragraph
(c)of this section describes those segment rates. Paragraph
(d)of this section describes the monthly corporate bond yield curve that is used to develop the segment rates. Paragraph
(e)of this section describes certain elections that are permitted to be made under this section. Paragraph
(f)of this section describes other rules related to interest rates. Paragraph
(g)contains effective/applicability dates and transition rules.
(2)*Special rules for multiple employer plans.* In the case of a multiple employer plan to which section 413(c)(4)(A) applies, the rules of section 430 and this section are applied separately for each employer under the plan as if each employer maintained a separate plan. Thus, each employer under such a multiple employer plan may make elections with respect to the interest rate rules under this section that are independent of the elections of other employers under the plan. In the case of a multiple employer plan to which section 413(c)(4)(A) does not apply (that is, a plan described in section 413(c)(4)(B) that has not made the election for section 413(c)(4)(A) to apply), the rules of section 430 and this section are applied as if all participants in the plan were employed by a single employer.
(b)*Interest rates for determining plan liabilities* —(1) *In general.* For purposes of determining the target normal cost and the funding target for any plan year, the interest rates used in determining the present value of the benefits that are included in the target normal cost and the funding target for the plan are determined as set forth in this paragraph (b).
(2)*Benefits payable within 5 years.* In the case of benefits expected to be payable during the 5-year period beginning on the valuation date for the plan year, the interest rate used in determining the present value of the benefits that are included in the target normal cost and the funding target for the plan is the first segment rate with respect to the applicable month, as described in paragraph (c)(2)(i) of this section.
(3)*Benefits payable after 5 years and within 20 years.* In the case of benefits expected to be payable during the 15-year period beginning after the end of the period described in paragraph (b)(2) of this section, the interest rate used in determining the present value of the benefits that are included in the target normal cost and the funding target for the plan is the second segment rate with respect to the applicable month, as described in paragraph (c)(2)(ii) of this section.
(4)*Benefits payable after 20 years.* In the case of benefits expected to be payable after the period described in paragraph (b)(3) of this section, the interest rate used in determining the present value of the benefits that are included in the target normal cost and the funding target for the plan is the third segment rate with respect to the applicable month, as described in paragraph (c)(2)(iii) of this section.
(5)*Applicable month.* Except as provided in paragraph
(e)of this section, the term “applicable month” for purposes of this paragraph
(b)means the month that includes the valuation date of the plan for the plan year.
(6)*Special rule for certain airlines* —(i) *In general.* Pursuant to section 6615 of the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, Public Law 110-28 (121 Stat. 112), for a plan sponsor that makes the election described in section 402(a)(2) of the Pension Protection Act of 2006 (PPA '06), Public Law 109-280 (120 Stat. 780), the interest rate required to be used to determine the plan's funding target for each of the 10 years under that election is 8.25 percent (rather than the segment rates otherwise described in this paragraph (b)).
(ii)*Special interest rate not applicable for other purposes.* The special interest rate described in paragraph (b)(6)(i) of this section does not apply for other purposes such as the determination of the plan's target normal cost.
(c)*Segment rates* —(1) *Overview.* This paragraph
(c)sets forth rules for determining the first, second, and third segment rates for purposes of paragraph
(b)of this section. The first, second, and third segment rates are set forth in revenue rulings, notices, or other guidance published in the Internal Revenue Bulletin. See § 601.601(d)(2) of this chapter. See paragraph (g)(3) of this section for a transition rule under which the definition of the segment rates is modified for plan years beginning in 2008 and 2009.
(2)*Definition of segment rates* —(i) *First segment rate.* For purposes of this section, except as provided under the transition rule of paragraph (g)(3) of this section, the “first segment rate” is, with respect to any month, the single rate of interest determined by the Commissioner on the basis of the average of the monthly corporate bond yield curves (described in paragraph
(d)of this section) for the 24-month period ending with the month preceding that month, taking into account only the first 5 years of each of those yield curves.
(ii)*Second segment rate.* For purposes of this section, except as provided under the transition rule of paragraph (g)(3) of this section, the “second segment rate” is, with respect to any month, the single rate of interest determined by the Commissioner on the basis of the average of the monthly corporate bond yield curves (described in paragraph
(d)of this section) for the 24-month period ending with the month preceding that month, taking into account only the portion of each of those yield curves corresponding to the 15-year period that follows the end of the 5-year period described in paragraph (c)(2)(i) of this section.
(iii)*Third segment rate.* For purposes of this section, except as provided under the transition rule of paragraph (g)(3) of this section, the “third segment rate” is, with respect to any month, the single rate of interest determined by the Commissioner on the basis of the average of the monthly corporate bond yield curves (described in paragraph
(d)of this section) for the 24-month period ending with the month preceding that month, taking into account only the portion of each of those yield curves corresponding to the 40-year period that follows the end of the 15-year period described in paragraph (c)(2)(ii) of this section.
(d)*Monthly corporate bond yield curve* —(1) *In general.* For purposes of this section, the “monthly corporate bond yield curve” is, with respect to any month, a yield curve that is prescribed by the Commissioner for that month based on yields for that month on investment grade corporate bonds with varying maturities that are in the top three quality levels available.
(2)*Determination and publication of yield curve.* A description of the methodology for determining the monthly corporate bond yield curve is provided in guidance issued by the Commissioner that is published in the Internal Revenue Bulletin. The yield curve for a month will be set forth in revenue rulings, notices, or other guidance published in the Internal Revenue Bulletin. See § 601.601(d)(2) of this chapter.
(e)*Elections* —(1) *In general.* This paragraph
(e)describes elections that a plan sponsor can make to use alternative interest rates under this section. Any election under this section must be made by providing written notification of the election to the plan's enrolled actuary. Any election in this paragraph
(e)is part of the plan's funding method and, accordingly, may only be adopted or changed with the consent of the Commissioner.
(2)*Elections for alternative date.* A plan sponsor that is using segment rates as provided under paragraph
(b)of this section may elect the use of an alternative month as the applicable month for purposes of paragraph (b)(5) of this section, provided that the alternative month is one of the 4 months that precede the month that includes the valuation date of the plan for the plan year.
(3)*Election not to apply transition rule.* The plan sponsor may elect not to apply the transition rule in paragraph (g)(3) of this section.
(4)*Election to use full yield curve* —(i) *In general.* For purposes of determining the minimum required contribution under section 430, the plan sponsor may elect to use interest rates under the monthly corporate bond yield curve described in paragraph
(d)of this section for the month preceding the month that includes the valuation date in lieu of the segment rates determined under paragraph
(c)of this section. These purposes include determining the installments and present values described in paragraph (f)(2) of this section. In order to address the timing of benefit payments during a year, reasonable approximations are permitted to be used to value benefit payments that are expected to be made during a plan year.
(ii)*Reasonable techniques permitted.* In the case of a plan sponsor using the monthly corporate bond yield curve under this paragraph (e)(4), if with respect to a decrement the benefit is only expected to be paid for one-half of a year (because the decrement was assumed to occur in the middle of the year), the interest rate for that year can be determined as if the benefit were being paid for the entire year. See § 1.430(d)-1(f)(5) for additional reasonable techniques that can be used in determining present value.
(5)*Plan sponsor.* For purposes of the elections described in this section, any reference to the plan sponsor generally means the employer or employers responsible for making contributions to or under the plan. In the case of plans that are multiple employer plans to which section 413(c)(4)(A) does not apply, any reference to the plan sponsor means the plan administrator within the meaning of section 414(g).
(f)*Interest rates used for other purposes* —(1) *Effective interest rate.* The effective interest rate determined under section 430(h)(2)(A) is the single interest rate that, if used to determine the present value of the benefits that are taken into account in determining the plan's funding target for a plan year, would result in an amount equal to the plan's funding target determined for the plan year under section 430(d) as described in § 1.430(d)-1(b)(2) (without regard to calculations for plans in at-risk status under section 430(i)).
(2)*Interest rates used for determining shortfall amortization installments and waiver amortization installments.* The interest rates used to determine the amount of shortfall amortization installments and waiver amortization installments and the present value of those installments are determined based on the dates those installments are assumed to be paid, using the same timing rules that apply in determining target normal cost as described in paragraph
(b)of this section. Thus, for a plan that uses the segment rates described in paragraph
(c)of this section, the first segment rate applies to installments assumed to be paid during the first five plan years beginning on the valuation date for the plan year, and the second segment rate applies to installments assumed to be paid during the subsequent 15-year period. For purposes of this paragraph (f)(2), the shortfall amortization installments for a plan year are assumed to be paid on the valuation date for that plan year. Thus, for example, for a plan that uses the segment rates described in paragraph
(c)of this section, the shortfall amortization installment for the fifth plan year following the current plan year (the sixth installment) is assumed to be paid on the valuation date for that year so that such shortfall amortization installment will be determined using the second segment rate.
(g)*Effective/applicability dates and transition rules* —(1) *In general.* Section 430 generally applies to plan years beginning on or after January 1, 2008. In general, this section applies to plan years beginning on or after January 1, 2009. For plan years beginning in 2008, plans are permitted to rely on the provisions set forth in this section for purposes of satisfying the requirements of section 430.
(2)*Plans with delayed effective date.* In the case of a plan for which the effective date of section 430 is delayed in accordance with sections 104 through 106 of PPA '06, this section applies to plan years beginning on or after the date section 430 applies with respect to the plan.
(3)*Transition rule* —(i) *In general.* Notwithstanding the general rules for determination of segment rates under paragraph (c)(2) of this section, for plan years beginning in 2008 or 2009, the first, second, or third segment rate for a plan with respect to any month is equal to the sum of—
(A)The product of that rate for that month determined without regard to this paragraph (g)(3), multiplied by the applicable percentage; and
(B)The product of the weighted average interest rate determined under the rules of section 412(b)(5)(B)(ii)(II) (as that provision was in effect for plan years beginning in 2007), multiplied by a percentage equal to 100 percent minus the applicable percentage.
(ii)*Applicable percentage.* For purposes of this paragraph (g)(3), the applicable percentage is 33- 1/3 percent for plan years beginning in 2008 and 66- 2/3 percent for plan years beginning in 2009.
(iii)*New plans ineligible.* The transition rule of this paragraph (g)(3) does not apply to a plan if the first plan year of the plan begins on or after January 1, 2008.
(4)*Approval to make elections in first effective plan year.* In the case of the first plan year to which section 430 applies to a plan, the plan sponsor's elections described in paragraph
(e)of this section are treated as having been approved by the Commissioner and do not require the Commissioner's specific prior approval. **Par. 5** Section 1.430(i)-1 is added to read as follows: § 1.430(i)-1 Special rules for plans in at-risk status.
(a)*In general* —(1) *Overview.* This section provides special rules related to determining the funding target and making other computations for certain defined benefit plans that are in at-risk status for the plan year. Section 430(i) and this section apply to single employer defined benefit plans (including multiple employer plans) but do not apply to multiemployer plans (as defined in section 414(f)). Paragraph
(b)of this section describes rules for determining whether a plan is in at-risk status for a plan year, including the determination of a plan's funding target attainment percentage and at-risk funding target attainment percentage. Paragraph
(c)of this section describes the funding target for a plan in at-risk status. Paragraph
(d)of this section describes the target normal cost for a plan in at-risk status. Paragraph
(e)of this section describes rules regarding how the funding target and target normal cost are determined for a plan that has been in at-risk status for fewer than 5 consecutive years. Paragraph
(f)of this section sets forth effective/applicability dates and transition rules.
(2)*Special rules for multiple employer plans.* In the case of a multiple employer plan to which section 413(c)(4)(A) applies, the rules of section 430 and this section are applied separately for each employer under the plan, as if each employer maintained a separate plan. Thus, for example, at-risk status is determined separately for each employer under such a multiple employer plan. In the case of a multiple employer plan to which section 413(c)(4)(A) does not apply (that is, a plan described in section 413(c)(4)(B) that has not made the election for section 413(c)(4)(A) to apply), the rules of section 430 and this section are applied as if all participants in the plan were employed by a single employer.
(b)*Determination of at-risk status of a plan* —(1) *General rule.* Except as otherwise provided in this section, a plan is in at-risk status for a plan year if—
(i)The funding target attainment percentage for the preceding plan year (determined under paragraph (b)(3) of this section) is less than 80 percent; and
(ii)The at-risk funding target attainment percentage for the preceding plan year (determined under paragraph (b)(4) of this section) is less than 70 percent.
(2)*Small plan exception.* If, on each day during the preceding plan year, a plan had 500 or fewer participants (including both active and inactive participants), the plan is not treated as in at-risk status for the plan year. For purposes of this paragraph (b)(2), all defined benefit plans (other than multiemployer plans as defined in section 414(f)) maintained by an employer (or any member of the employer's controlled group) are treated as one plan, but only participants with respect to that employer or member are taken into account. For this purpose, the rules of section 412(d)(3) and § 1.430(g)-1(b)(2)(ii) apply.
(3)*Funding target attainment percentage.* The funding target attainment percentage of a plan for a plan year is a fraction (expressed as a percentage)—
(i)The numerator of which is the value of plan assets for the plan year after subtraction of the prefunding balance and the funding standard carryover balance under section 430(f)(4)(B)); and
(ii)The denominator of which is the funding target of the plan for the plan year (determined without regard to section 430(i) and this section).
(4)*At-risk funding target attainment percentage.* The at-risk funding target attainment percentage of a plan for a plan year is a fraction (expressed as a percentage)—
(i)The numerator of which is the value of plan assets for the plan year after subtraction of the prefunding balance and the funding standard carryover balance under section 430(f)(4)(B); and
(ii)The denominator of which is the at-risk funding target of the plan for the plan year (determined under paragraph
(c)of this section, but without regard to the loading factor imposed under paragraph (c)(2)(ii) of this section).
(5)*Special rules* —(i) *Special rule for new plans.* In the case of a newly established plan, the funding target attainment percentage under paragraph (b)(3) of this section and the at-risk funding target attainment percentage under paragraph (b)(4) of this section are assumed to be 100 percent for years before the plan exists. Except as otherwise provided in paragraph (b)(5)(ii) of this section, a plan that has a predecessor plan in accordance with section 414(a) or § 1.415(f)-1(c) is not a newly established plan under this rule.
(ii)*Special rules for mergers, acquisitions, and spinoffs.* [Reserved]
(6)*Special rule for determining at-risk status of plans of specified automobile manufacturers.* See section 430(i)(4)(C) for special rules for determining the at-risk status of plans of specified automobile and automobile parts manufacturers.
(c)*Funding target for plans in at-risk status* —(1) *In general.* If the plan has been in at-risk status for 5 consecutive years, including the current plan year, then the funding target for the plan is the at-risk funding target determined under paragraph (c)(2) of this section. See paragraph
(e)of this section for the determination of the funding target where the plan is in at-risk status for the plan year but was not in at-risk status for one or more of the 4 preceding plan years.
(2)*At risk funding target* —(i) *Use of modified actuarial assumptions.* Except as provided in this paragraph (c)(2), the at-risk funding target of the plan for the plan year is equal to the present value of all benefits accrued or earned under the plan as of the beginning of the plan year, as determined in accordance with § 1.430(d)-1 but using the additional actuarial assumptions described in paragraph (c)(3) of this section.
(ii)*Funding target includes load.* The at-risk funding target is increased by the sum of—
(A)$700 multiplied by the number of participants in the plan (including active participants, inactive participants, and beneficiaries); plus
(B)Four percent of the funding target (determined under § 1.430(d)-1(b)(2) as if the plan was not in at-risk status) of the plan for the plan year.
(iii)*Minimum amount.* Notwithstanding any otherwise applicable provisions of this section, the at-risk funding target of a plan for a plan year is not less than the plan's funding target for the plan year determined without regard to this section.
(3)*Additional actuarial assumptions* —(i) *In general.* The actuarial assumptions used to determine a plan's at-risk funding target for a plan year are the actuarial assumptions that are applied under section 430, with the modifications described in this paragraph (c)(3).
(ii)*Special retirement age assumption* —(A) *Employees eligible to retire and collect benefits within 11 years.* Subject to paragraph (c)(3)(ii)(B) of this section, if an employee would be eligible to commence an immediate distribution by the end of the plan year that begins 10 years after the end of the current plan year (that is, the end of the 11th plan year beginning with the current plan year), that employee is assumed to commence an immediate distribution at the earliest retirement date under the plan, or, if later, at the end of the current plan year. The rule of this paragraph (c)(3)(ii)(A) does not affect the application of plan assumptions regarding an employee's termination of employment prior to the employee's earliest retirement date.
(B)*Employees otherwise assumed to retire immediately.* The special retirement age assumption of paragraph (c)(3)(ii)(A) of this section does not apply to an employee to the extent the employee is otherwise assumed to retire during the current plan year. Thus, for example, if generally applicable retirement assumptions would provide for a 25% probability that an employee will retire during the current plan year, the special retirement age assumption of paragraph (c)(3)(ii)(A) of this section will require the plan to assume a 75% probability that the employee will retire at the end of the plan year.
(C)*Definition of earliest retirement date.* For purposes of paragraph (c)(3)(ii) of this section, a plan's earliest retirement date is the earliest date on which a participant can commence receiving an immediate distribution. See § 1.401(a)-20, Q&A-17(b).
(iii)*Requirement to assume most valuable benefit.* An employee who is assumed to retire at a date determined under paragraph (c)(3)(ii) of this section is assumed to elect the optional form of benefit available under the plan at that date that would result in the highest present value of benefits. The plan's actuary is permitted to use reasonable assumptions in determining the optional form of benefit under the plan that would result in the highest present value of benefits for this purpose.
(d)*Target normal cost of plans in at-risk status* —(1) *General rule.* If the plan has been in at-risk status for 5 consecutive years, including the current plan year, then the target normal cost for the plan is the at-risk target normal cost determined under paragraph (d)(2) of this section. See paragraph
(e)of this section for the determination of the target normal cost where the plan is in at-risk status for the plan year but was not in at-risk status for one or more of the 4 preceding plan years.
(2)*At-risk target normal cost* —(i) *Use of modified actuarial assumptions.* Except as provided in this paragraph (d)(2), the at-risk target normal cost of a plan for the plan year is equal to the present value of all benefits expected to be accrued or earned under the plan during the plan year, as determined in accordance with § 1.430(d)-1 but using the additional actuarial assumptions described in paragraph (c)(3) of this section.
(ii)*Loading factor.* The at-risk target normal cost is increased by a loading factor equal to 4 percent of the target normal cost determined without regard to section 430(i) and this section.
(iii)*Minimum amount.* The at-risk target normal cost of a plan for a plan year is not less than the plan's target normal cost determined without regard to section 430(i) and this section.
(e)*Transition between applicable funding targets and applicable target normal costs* —(1) *Funding target.* If a plan that is in at-risk status for the plan year has been in at-risk status for a consecutive period of fewer than 5 plan years, the plan's funding target for the plan year is determined as the sum of—
(i)The funding target determined without regard to this section; plus
(ii)The phase-in percentage for the plan year multiplied by the excess of—
(A)The at-risk funding target determined under paragraph (c)(2) of this section (determined taking into account paragraph (e)(4) of this section); over
(B)The funding target determined without regard to this section.
(2)*Target normal cost.* If a plan that is in at-risk status for the plan year has been in at-risk status for a consecutive period of fewer than 5 plan years, the plan's target normal cost for the plan year is determined as the sum of—
(i)The target normal cost determined without regard to section 430(i) and this section; plus—
(ii)The phase-in percentage for the plan year multiplied by the excess of—
(A)The at-risk target normal cost determined under paragraph (d)(2) of this section (determined taking into account paragraph (e)(4) of this section); over
(B)The target normal cost determined without regard to section 430(i) and this section.
(3)*Phase-in percentage.* For purposes of this paragraph (e), the phase-in percentage is 20 percent multiplied by the number of consecutive plan years that the plan has been in at-risk status (including the current plan year).
(4)*Transition funding target and target normal cost determined without load.* Notwithstanding paragraph (c)(2)(ii) of this section, if a plan has not been in at-risk status for 2 of the last 4 plan years, the plan's at-risk funding target that is used for purposes of paragraph (e)(1)(ii)(A) (to calculate the plan's funding target where the plan has been in at-risk status for fewer than 5 plan years) is determined without regard to the load set forth in paragraph (c)(2)(ii) of this section. Similarly, if a plan has not been in at-risk status for 2 of the last 4 plan years, the plan's at-risk target normal cost that is used for purposes of paragraph (e)(2)(ii)(A) (to calculate the plan's target normal cost where the plan has been in at-risk status for fewer than 5 plan years) is determined without regard to the load set forth in paragraph (d)(2)(ii) of this section.
(f)*Effective/applicability dates and transition rules* —(1) In general. Section 430 generally applies to plan years beginning on or after January 1, 2008. In general, this section applies to plan years beginning on or after January 1, 2009. For plan years beginning in 2008, plans are permitted to rely on the provisions set forth in this section for purposes of satisfying the requirements of section 430.
(2)*Plans with delayed effective date.* In the case of a plan for which the effective date of section 430 is delayed in accordance with sections 104 through 106 of the Pension Protection Act of 2006, Public Law 109-280 (120 Stat. 780), this section applies to plan years beginning on or after the date section 430 applies with respect to the plan.
(3)*First effective plan year.* For purposes of this section, the first effective plan year for a plan is the first plan year to which section 430 applies.
(4)*Pre-effective plan year.* For purposes of this section, the pre-effective plan year for a plan is the last plan year beginning before the first day of the first effective plan year. Thus, except for plans with a delayed effective date under paragraph (f)(2) of this section, the pre-effective plan year for a plan is the last plan year beginning before January 1, 2008.
(5)*Transition rule for determining funding target attainment percentage for the plan's pre-effective date plan year* —(i) *In general.* In the case of the plan's first effective plan year, the funding target attainment percentage for the plan's pre-effective plan year is determined as the fraction (expressed as a percentage), the numerator of which is the plan assets determined under paragraph (f)(5)(ii) of this section, and the denominator of which is the plan's current liability determined pursuant to section 412(l)(7) on the valuation date for the plan's pre-effective plan year.
(ii)*General determination of value of net plan assets* —(A) *In general.* The value of net plan assets for purposes of this paragraph (f)(5)(ii) is determined under section 412(c)(2) as in effect for the plan's pre-effective plan year, except that the value of plan assets prior to subtracting the plan's funding standard account credit balance described in paragraph (f)(5)(ii)(B) of this section can neither be less than 90 percent of the fair market value of plan assets nor greater than 110 percent of the fair market value of plan assets on the valuation date for that plan year. If the value of plan assets determined under this paragraph (f)(5)(ii) is less than 90 percent of the fair market value of plan assets on the valuation date, then the value of plan assets under this paragraph (f)(5)(ii) is equal to 90 percent of the fair market value of plan assets. If the value of plan assets determined under this paragraph (f)(5)(ii) is greater than 110 percent of the fair market value of plan assets on the valuation date, then the value of plan assets under this paragraph (f)(5)(ii) is equal to 110 percent of the fair market value of plan assets.
(B)*Subtraction of credit balance.* If a plan has a funding standard account credit balance as of the valuation date for the plan's pre-effective plan year, that balance is subtracted from the net asset value described in paragraph (f)(5)(ii)(A) of this section as of that valuation date.
(C)*Effect of funding standard carryover balance reduction for first effective plan year.* Notwithstanding paragraph (f)(5)(ii)(B) of this section, if, for the first effective plan year, the employer has made an election to reduce some or all of the funding standard carryover balance as of the first day of that year in accordance with § 1.430(f)-1(e), then the present value (determined as of the valuation date for the pre-effective plan year using the valuation interest rate for that pre-effective plan year) of the amount so reduced is not treated as part of the funding standard account credit balance when that balance is subtracted from the asset value under paragraph (f)(5)(ii)(B) of this section.
(6)*Transition rule for determining at-risk status.* In the case of plan years beginning in 2008, 2009, and 2010, paragraph (b)(1)(i) of this section is applied by substituting the following percentages for “80 percent”—
(i)65 percent in the case of 2008;
(ii)70 percent in the case of 2009; and
(iii)75 percent in the case of 2010. Linda E. Stiff, Deputy Commissioner for Services and Enforcement. [FR Doc. E7-25125 Filed 12-28-07; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 31 [REG-111583-07] RIN 1545-BG50 Employment Tax Adjustments AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Notice of proposed rulemaking and notice of public hearing. SUMMARY: This document contains proposed amendments to regulations relating to employment tax adjustments and employment tax refund claims. These proposed amendments modify the process for making interest-free adjustments for both underpayments and overpayments of Federal Insurance Contributions Act
(FICA)and Railroad Retirement Tax Act
(RRTA)taxes and Federal income tax withholding
(ITW)under sections 6205(a) and 6413(a), respectively, of the Internal Revenue Code (Code). These proposed amendments also modify the process for filing claims for refund of overpayments of employment taxes under sections 6402 and 6414. These amendments are proposed in connection with the IRS's development of new forms to report adjustments to employment taxes which will replace the existing process of reporting adjustments of employment taxes on regularly filed employment tax returns. These proposed amendments affect taxpayers that file Form 941, “Employer's QUARTERLY Federal Tax Return,” Form 943, “Employer's Annual Tax Return for Agricultural Employees,” Form 944, “Employer's ANNUAL Federal Tax Return,” Form 945, “Annual Return of Withheld Federal Income Tax,” and Form CT-1, “Employer's Annual Railroad Retirement Tax Return,” and any related Spanish-language returns or returns for U.S. possessions. This document contains proposed amendments to regulations relating to the return requirements under section 6011 to reflect the changes to the adjustment and refund processes, and to reflect additional statutory and process updates. This document also contains proposed amendments to the regulations under section 6302 to clarify deposit obligations with respect to interest-free adjustments of underpayments and the effect of adjustments and refunds on the deposit schedule of a Form 943 filer. This document also provides notice of a public hearing on these proposed amendments to the regulations. DATES: Written or electronic comments must be received by March 27, 2008. Requests to speak (with outlines of topics to be discussed) at the public hearing scheduled for April 17, 2008, must be received by March 27, 2008. *Applicability Dates:* See the Proposed Dates of Applicability section of the SUPPLEMENTARY INFORMATION . *Effective Date:* See the Proposed Effective Date section of the SUPPLEMENTARY INFORMATION . ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-111583-07), 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-111583-07), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC, or sent electronically, via the Federal eRulemaking Portal at *www.regulations.gov* (IRS-REG-111583-07). The public hearing will be held in the Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW., Washington, DC. FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, please contact Ligeia M. Donis of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities),
(202)622-0047; concerning submission of comments, the hearing, and/or to be placed on the building access list to attend the hearing, please contact Richard Hurst at *Richard.A.Hurst@irscounsel.treas.gov* or
(202)622-7180 (not toll-free numbers). SUPPLEMENTARY INFORMATION: Paperwork Reduction Act The collection of information contained in this notice of proposed rulemaking has been submitted to the Office of Management and Budget for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). Comments on the collection of information should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, Washington, DC 20224. Comments on the collection of information should be received by February 29, 2008. Comments are specifically requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the IRS, including whether the information will have practical utility; The accuracy of the estimated burden associated with the proposed collection of information; and Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. The collection of information in these proposed regulations is in §§ 31.6011(a)-1, 31.6011(a)-4, 31.6011(a)-5, 31.6205-1, 31.6402(a)-2, 31.6413(a)-1, 31.6413(a)-2, and 31.6414-1. This information is required by the IRS to verify compliance with return requirements under section 6011, employment tax adjustments under sections 6205 and 6413, and claims for refund of overpayments of employment taxes under sections 6402 and 6414. This information will be used to determine whether the amount of tax has been reported and calculated correctly. The likely respondents are employers. *Estimated total annual reporting and/or recordkeeping burden:* 15,000,000 hours. *Estimated average annual burden per respondent:* 10 hours. *Estimated number of respondents:* 1,500,000. *Estimated annual frequency of responses:* on occasion. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Background These proposed regulations are part of the IRS's effort to reduce taxpayer burden by permitting employers to make employment tax adjustments on a separately filed form as soon as an error is ascertained, rather than as a line adjustment on the employer's regularly filed employment tax return. These proposed regulations amend the Employment Tax Regulations (26 CFR part 31) under section 6011 relating to the requirement to file a return, under sections 6205(a) and 6413(a) relating to the process for making adjustments of underpayments and overpayments, respectively, of employment taxes, under section 6302 relating to deposit obligations, and under sections 6402 and 6414 relating to the process of filing a claim for refund for an overpayment of employment taxes. For purposes of these proposed amendments to the regulations, the term *employment taxes* means the Federal Insurance Contributions Act
(FICA)tax (both the Social Security and Medicare portions) imposed on both the employer and the employee, the Railroad Retirement Tax Act
(RRTA)tax imposed on both the employer and employee, and federal income tax withholding (ITW). To the extent that other types of withholding are treated as ITW under section 3402(a) (that is, gambling withholding, pension withholding, and backup withholding as set forth in sections 3402(q)(7), 3405(f), and 3406(h)(10), respectively), these other types of withholding are included in the term “employment taxes”. Interest-Free Adjustments Generally, the Internal Revenue Code
(Code)requires that interest be paid to the IRS on any underpayment of tax and that interest be allowed and paid to the taxpayer on any overpayment of tax. See sections 6601(a) and 6611(a), respectively. An exception to the general rule, however, applies uniquely to employment taxes. Where an amount other than the correct amount of tax imposed by sections 3101 (employee FICA tax), 3111 (employer FICA tax), 3201 (employee RRTA tax), 3221 (employer RRTA tax), or 3402
(ITW)is reported to the IRS with respect to any payment of wages or compensation, sections 6205(a) and 6413(a) permit employers to make interest-free adjustments for underpayments and overpayments, respectively. Where the correct amount of tax has been reported but not paid, no adjustment to the amount is necessary; accordingly, the interest-free adjustment rules do not apply. The legislative history of the predecessors to sections 6205 and 6413 indicates that the interest-free adjustment process was envisioned as a way to fix errors made in prior return periods as soon as they were discovered, without the need to go through more burdensome procedures. The adjustment process was designed to permit the employer to adjust, without interest, overpayments and underpayments of tax without the necessity in the former case of requiring the filing of a claim for refund and in the latter case of a notice and demand by the IRS for additional tax. Thus, the legislative history shows that Congress envisioned a process whereby the employer would correct prior errors, separate from the refund and notice and demand processes. Moreover, the legislative history indicates that Congress assumed that an overpayment adjustment would be accepted by the IRS only after the employer had returned to the employee any amount of previously overwithheld tax. The existing regulations under section 6205(a) set forth the procedures for making interest-free adjustments for underpayments of employment taxes. They provide that if a return is filed and less than the correct amount of employee or employer portions of FICA or RRTA tax is reported and paid, the employer shall adjust the underpayment
(a)by reporting the additional amount due as an adjustment on a current return, or
(b)by reporting such additional amount on a supplemental return. The IRS has not issued guidance or procedures for filing a supplemental return, other than indicating that the forms used to accept an assessment of employment taxes after an examination (that is, Form 2504, “Agreement and Collection of Additional Tax and Acceptance of Overassessment (Excise or Employment Tax)”, and Form 2504-WC, “Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment in Worker Classification Cases (Employment Tax)”) constitute supplemental returns for purposes of permitting the assessment to be made without interest. See Rev. Rul. 75-464 (1975-2 CB 474). Accordingly, outside of the examination context, interest-free adjustments of employment tax are made on a current return. (See § 601.601(d)(2)(ii)(b)). The reporting of an underpayment of FICA tax or RRTA tax constitutes an interest-free adjustment when the underpayment is reported on a current return only if the current return is filed on or before the last day on which the return is required to be filed for the return period in which the error is ascertained. An error is ascertained when the employer has sufficient knowledge of the error to be able to correct it. If the amount of the underpayment is paid to the IRS by the due date for reporting the adjustment, it is paid without interest. However, if the underpayment is reported but the amount is not paid when due, interest begins to accrue from the due date for reporting the adjustment. The rules are the same for adjusting underpayments of ITW when less than the correct amount has been withheld, except that adjustments on the current return can only be made on a return for a return period in the same calendar year in which the wages or compensation is paid. Although the regulations do not address it, the relevant forms and instructions permit employers to adjust administrative errors involving ITW, that is, errors involving the inaccurate reporting of the amount withheld, and errors discovered as part of an examination for previous calendar years. The existing regulations provide that an interest-free adjustment for an underpayment may not be made after a taxpayer has received notice and demand from the IRS for payment of the amount based on an assessment or after a taxpayer has received a Notice of Determination of Worker Classification. An underpayment adjustment may only be made within the period of limitations for assessment under section 6501(a) (generally 3 years from the date the original return is filed). Section 6501(b)(2) provides that, for purposes of section 6501, employment tax returns reporting FICA tax or ITW for any return period ending with or within a calendar year filed before April 15 of the succeeding calendar year will be deemed filed on April 15 of such succeeding calendar year. The regulations also provide that where an employer fails to collect the correct amount of employee tax (either the employee share of FICA tax, the employee share of RRTA tax) or ITW with respect to wages or compensation paid during a given return period and discovers that error before it files the return for such return period, the employer is still required to report and pay the correct amount on a timely basis. If the employer fails to report and pay the correct amount, any subsequent correction of that error will not qualify as an interest-free adjustment. However, if the employer files a FICA tax return and should have filed a RRTA tax return, or vice versa, and reports and pays less than the correct amount of tax, an interest-free adjustment may be made by filing the correct type of return for each return period and reporting the additional amount of tax. The existing regulations under section 6413(a) set forth the procedures for making interest-free adjustments for overpayments of employment taxes. They provide that, if an employer ascertains an overpayment error within the applicable period of limitations on credit or refund, the employer is required to repay or reimburse its employees the amount of overcollected employee FICA tax or employee RRTA tax prior to the due date of the return for the return period after the return period in which the error was ascertained and prior to the expiration of the applicable period of limitations. An error is ascertained when the employer has sufficient knowledge of the error to be able to correct it. An employer “reimburses” an employee by applying the overwithheld amount against taxes to be withheld on future wages. The employer must retain appropriate records to reflect that the employee has been repaid or reimbursed and that the employee has not filed a claim for refund of such tax or that any filed claim has been rejected. The applicable period of limitations is set forth in section 6511 and is generally 3 years from the date the original return was filed or 2 years from the date the tax was paid, whichever is later. Section 6513(c)(1) provides that, for purposes of section 6511, employment tax returns reporting FICA tax or ITW for any return period ending with or within a calendar year filed before April 15 of the succeeding calendar year will be deemed filed on April 15 of such succeeding calendar year. Section 6513(c)(2) provides that if FICA tax or ITW with respect to remuneration or other amount paid during any return period ending with or within a calendar year is paid before April 15 of the succeeding calendar, for purposes of section 6511 such tax will be deemed paid on April 15 of such succeeding calendar year. Once an employer repays or reimburses an employee, the employer may report both the employee and employer portions of FICA or RRTA tax as an overpayment on a current return. The reporting of the overpayment constitutes an interest-free adjustment if the overpayment is reported on a current return filed on or before the last day on which the return is required to be filed for the return period following the return period in which the error was ascertained. Because of the requirement to repay or reimburse employees, employers are given an extra return period in which to repay or reimburse their employees and make the adjustment. Similar rules apply for making interest-free adjustments for overpayments of ITW, except that an interest-free adjustment may only be made if the employer ascertains the error and repays or reimburses its employees within the same calendar year that the wages were paid and reports the adjustment on a return for such calendar year. For example, if an employer who is a Form 941 filer discovers an overpayment of ITW on December 15, 2009 for wages paid in June 2009, the employer must repay or reimburse its employees by December 31, 2009 and must report the adjustment on the fourth quarter 2009 Form 941. An overpayment adjustment under section 6413(a) must be made within the period of limitations for credit or refund of the overpayment, as set forth in section 6511 and described above. The adjustment may be limited in amount under section 6511(b)(2) as described above. An interest-free adjustment for an overpayment may not be made once a claim for refund has been filed. Currently, an interest-free adjustment, whether for an underpayment or an overpayment, is made by entering the amount as a line adjustment on a current return and including the amount in calculating the current return period's liability on the return. The current return period adjustment can be made on Form 941, “Employer's QUARTERLY Federal Tax Return,” Form 943, “Employer's Annual Tax Return for Agricultural Employees,” Form 944, “Employer's ANNUAL Federal Tax Return,” Form 945, “Annual Return of Withheld Federal Income Tax,” or Form CT-1, “Employer's Annual Railroad Retirement Tax Return,” and on any related Spanish-language returns or returns for U.S. possessions. The return on which the underpayment or overpayment adjustment is entered must include an attached statement explaining the adjustment, designating the return period in which the error occurred, and setting forth such other information as is required by the regulations and by the instructions relating to the return. Form 941c, “Supporting Statement to Correct Information,” qualifies as such attached statement and includes the necessary certifications to establish that the employer has satisfied the requirements to repay or reimburse its employee for overpayment adjustments and to obtain statements that the employee has not filed a claim for refund or that the claim has been rejected. Claims for Refund For overpayments of employment taxes, section 6413(b) permits the filing of a claim for refund when an interest-free adjustment cannot be made. The existing regulations under section 6413(a) provide that an adjustment cannot be made after a claim for refund is filed. Under the regulatory authority in section 6413(b), the IRS has permitted taxpayers to choose between filing a claim for refund pursuant to section 6402(a) and making an interest-free adjustment pursuant to section 6413(a) to correct an overpayment of employment taxes. The preamble to Treasury decision 6472 (1960-2 CB 351), which promulgated the existing regulations, indicated an intent to make the overpayment adjustment process permissive. An extensive evaluation of these regulations in the late 1970's confirmed the optional nature of the overpayment adjustment process, and is reflected in Rev. Rul. 81-310 (1981-2 CB 241). (See § 601.601(d)(2)(ii)( *b* )). Under section 6402(a), the IRS, within the applicable period of limitations on credit or refund, may credit the amount of an overpayment, including any interest, against any tax liability of the person who made the overpayment and shall, subject to certain offsets, refund any balance to such person. A claim for refund under section 6402(a) must be filed within the period of limitations on credit or refund as set forth in section 6511. Such refund may be limited in amount pursuant to section 6513(c)(2). Claims for refund are not granted automatically and the IRS is not required to act on the refund claim. Section 6532(a) provides that a taxpayer cannot file a suit for refund before the expiration of 6 months from the date of filing a claim for refund unless the IRS renders a decision on the claim within that time. The taxpayer must file suit within 2 years of the date the claim was disallowed. The existing regulations under section 6402(a) set out the procedures for filing a claim for refund of overpaid FICA and RRTA taxes. The regulations permit an employer to file a claim for refund for an overpayment of FICA or RRTA tax, but require the employer to include a statement that the employer has repaid the employee's share of FICA or RRTA tax to the employee or has secured the written consent of the employee to allowance of the refund or credit. The employer must retain appropriate records reflecting that it has repaid its employee or obtained the employee's consent and that the employee has not filed a claim for refund of such tax or that any filed claim has been rejected. Section 6414 permits refunds of ITW only to the extent the amount of the ITW overpayment was not actually deducted and withheld from an employee. The existing regulations under section 6414 set out the procedures for filing a claim for refund of overpaid ITW and are similar to the procedures for filing a claim for refund of overpaid FICA or RRTA tax, except that an employer may not file a claim for an overpayment of ITW for an amount the employer deducted or withheld from an employee. An employer makes a claim for refund by filing Form 843, “Claim for Refund and Request for Abatement”, with a Form 941c attached (or an equivalent statement). Form 941c includes the amounts to be refunded and the necessary certifications to establish that the employer has repaid the employee or obtained the employee's consent to filing the claim for refund, and has obtained a statement that the employee has not filed a claim for refund or that the claim has been rejected. Reason for Amendments The current process for adjusting underpayments or overpayments of employment taxes raises a number of issues both for employers and the IRS, primarily because the current process requires employers to make adjustments to past return periods in connection with the filing of their current returns. The IRS believes it will reduce the burden for taxpayers, as well as improve tax administration, if the adjustment process for employment tax returns is revised by creating a separate “adjusted return” to make adjustments to past return periods that can be filed independently of a return for any other return period. Explanation of Provisions Adjusted Return Replaces Current Return Process The proposed amendments change the process by which employers can make interest-free adjustments to correct underpayments or overpayments of employment tax. The proposed amendments to the regulations eliminate the existing process that uses the current return to make adjustments and replace it with a new process which will use a separately filed adjusted return to make adjustments. Unlike Form 941c, the new adjusted return will not be filed as an attachment to a current return and will not affect the liability reported on the current return. The proposed amendments to the regulations also eliminate any reference to the use of supplemental returns to make adjustments. The proposed amendments provide that Forms 2504 and 2504-WC will be treated as adjusted returns under the same rationale and criteria that they have been treated as supplemental returns under Rev. Rul. 75-464. Thus, corrections reported on these forms following an examination will continue to be eligible for interest-free adjustment treatment. See § 601.601(d)(2)(ii)( *b* ). The proposed amendments to the regulations do not affect the existing rules on correcting undercollections of employee tax (either the employee share of FICA or RRTA tax), or ITW when an employer discovers the error during the return period in which the undercollection occurred. In such case, the employer must report and pay the correct amount on a timely basis as if the correct amount of tax had been collected. If the employer fails to report and pay the correct amount, any subsequent correction of that error will not be an interest-free adjustment. Time for Filing Adjusted Return An employer may file an adjusted return correcting an underpayment or an overpayment as soon as the employer ascertains the underpayment or overpayment error, rather than waiting to report the adjustment with the regularly filed employment tax return. The adjusted return for an underpayment may only be filed within the applicable period of limitations for assessing the underpayment, and the adjusted return for an overpayment may only be filed before the 90th day prior to the expiration of the applicable period of limitations on credit or refund. If the original return reporting FICA tax or ITW for the return period in which the wages were paid was timely filed and the taxes were timely paid, the limitations period for both assessment and credit or refund begins to run on April 15 of the year following the year in which the wages were paid and ends three years after that. Thus, for example, if wages are paid on June 6, 2009, and an original employment tax return reporting those wages is filed July 31, 2009 and the reported taxes are timely paid, the period of limitations for assessment or for credit or refund would expire April 15, 2013. An adjusted return reporting an underpayment must be filed by April 15, 2013. An adjusted return reporting an overpayment must be filed by January 15, 2013, the date which is 90 days before the expiration of the period of limitations on credit or refund. A claim for refund for the same overpayment will be timely if filed by April 15, 2013. The proposed amendments to the regulations provide that an adjustment will be interest-free only if it is reported on an adjusted return within a certain amount of time after it is discovered. Specifically, the adjusted return reporting an underpayment must be filed by the due date of the return for the return period in which the error is ascertained; the amount of the underpayment must be paid by the time the adjusted return is filed, or interest will begin to accrue from the date the adjusted return is filed. In addition, subject to limited exceptions, for underpayments of ITW where the incorrect amount was withheld, an adjusted return may be filed only for errors ascertained during the calendar year in which the wages were paid and must be filed by the due date of the return for the return period in which the error is ascertained. In addition, for overpayments of ITW where the incorrect amount was withheld, the adjusted return may be filed only for errors ascertained during the calendar year in which the wages were paid, the employer must repay or reimburse the employees within the same calendar year that the wages were paid, and the adjusted return must be filed by the due date of the return for the return period following the return period in which the error is ascertained. Treatment as Interest-Free Adjustment Where Original Return Never Filed The proposed amendments to the regulations also provide that interest-free adjustments for underpayments of FICA tax, RRTA tax, and ITW are available under certain circumstances where the underpayment arises because the employer failed to file an original return. As in the existing regulations, an interest-free adjustment is available if an employer filed a FICA tax return when a RRTA tax return should have been filed, or vice versa. In addition, interest-free adjustment treatment is generally available if an employer failed to file a return for a return period solely because the employer failed to treat any individuals as employees. The latter interest-free adjustment provision was originally proposed in 1992 (EE-12-92, 57 FR 58423) and is being re-proposed as part of these proposed amendments to the regulations. The proposed regulations in EE-12-92 will be withdrawn once these proposed amendments to the regulations are finalized. To constitute an interest-free adjustment in these circumstances, the employer must file an original return of the correct type for each return period for which the employer failed to file the correct return and report on the return the additional amount of tax. Generally, such reporting will constitute an interest-free adjustment if the return is filed by the due date of the return for the return period in which the error is ascertained. The amount reported must be paid by the time the original return is filed or interest will accrue from that date. Repayment or Reimbursement of Employees Required for Interest-Free Adjustments of Overpayments When an overpayment error is ascertained, the proposed amendments to the regulations retain the rule that the employer must repay or reimburse the employee's share of FICA or RRTA tax before making the overpayment adjustment of both the employees' and employer's taxes. Such repayment or reimbursement must occur by the due date of the return for the return period following the return period in which the error is ascertained and within the applicable period of limitations on credit or refund. However, the requirement to repay or reimburse does not apply to the extent that taxes were not withheld from the employee or if, after reasonable efforts, the employer cannot locate the employee; in such case, the employer may make an adjustment for only the employer share of FICA or RRTA tax. The adjusted return reporting the overpayment may only be filed once the employer has repaid or reimbursed its employees to the extent required. The employer must certify on the adjusted return that it has repaid or reimbursed its employees to the extent required. Because repayment or reimbursement of overwithheld ITW must be made within the same calendar year, and annual Forms 943, 944, and 945 are normally filed after the close of the calendar year, there can be no repayment or reimbursement of ITW after filing such annual returns. Thus, no overpayment adjustments of ITW can generally be made for such returns, except for administrative errors, that is, errors involving the inaccurate reporting of the amount actually withheld. Note that in the case of backup withholding reported on Form 945, repayment of erroneous withholding is not required and is permitted only in certain circumstances. See § 31.6413(a)-3. Deposits, Payments, and Credits The proposed amendments to the regulations under section 6302 provide that an employer making an interest-free adjustment must pay the amount of the adjustment by the time it files an adjusted return; such timely payment will satisfy the employer's deposit obligations with respect to the adjustment. In addition, the proposed amendments to the regulations governing agricultural employers (Form 943 filers) provide that for purposes of determining the amount of accumulated taxes in the employer's lookback period (which determines the employer's deposit schedule), adjustments to tax liability made pursuant to the filing of adjusted returns or claims for refund will not be taken into account. This rule is consistent with the rule already in effect with respect to Form 941 and Form 944 filers that adjustments to prior return periods are not taken into account in determining the employment tax liability for such prior return period. See § 31.6302-1T(b)(4). For interest-free adjustments of underpayments, the amount must be paid when the adjusted return is filed. If the amount is not paid when the adjusted return is filed, interest will begin to accrue as of the date the adjusted return is filed. Consistent with the legislative history of section 6413, the adjusted overpayment amount will be applied as a credit toward payment of the employer's liability for the calendar quarter (or calendar year for annual returns being adjusted) in which the adjusted return is filed, unless the IRS notifies the employer that the credit will be applied to a different return period or that the employer is not entitled to the adjustment under applicable laws or procedures. Refunds for Overpayments As in the existing regulations, in lieu of making an interest-free adjustment for an overpayment, employers may file a claim for refund pursuant to section 6402 or 6414 for the amount of the overpayment. Furthermore, if an employer cannot make an interest-free adjustment with respect to an overpayment because the period of limitations for claiming a credit or refund for such overpayment will expire within 90 days or because the IRS has otherwise notified the employer that it is not entitled to the adjustment, the employer may recover the overpayment only by filing a claim for refund. The proposed amendments to the regulations under section 6414 continue to provide that an employer can only file a claim for refund for ITW that was not withheld from the employee. Prior to filing a claim for refund under section 6402 for FICA or RRTA tax, employers must either repay or reimburse the employees or obtain the employees' consents to the allowance of the refund, except to the extent that the overpayment does not include taxes withheld from the employee or, after reasonable efforts, the employer cannot locate the employee or the employee will not provide the requested consent. The employer must certify that it has either repaid or reimbursed the employee or obtained the employee's consent to the extent required. Under the proposed amendments to the regulations, employers will file the prescribed form to claim a refund. However, Form 941c will no longer be used as an attachment to a claim for refund. Tax Returns or Statements This notice of proposed rulemaking also proposes amendments to the regulations for reporting employment taxes under section 6011 to reflect the changes to the adjustment and refund processes. In particular, the proposed amendments remove references to Form 941c from the regulations under section 6011 because Form 941c will no longer be used. The proposed amendments also remove references to other obsolete tax returns, add references to current tax returns in use, and make minor stylistic changes to the text of the regulations. The proposed amendments also update the section 6011 regulations to conform to current law due to the enactment of section 3510, added to the Code by section 2(b)(1) of the Social Security Domestic Employment Reform Act of 1994 (Public Law 103-387), which mandates annual returns for domestic service employment taxes, and to reflect current procedures. Schedule H (Form 1040), rather than Form 942, is the prescribed form for reporting wages for domestic service in a private home paid in calendar years beginning after December 31, 1994. If an employer is required to file Form 941, Form 943, or Form 944, the employer may choose to report wages with respect to domestic workers on Form 941, Form 943, or Form 944, instead of reporting such wages on Schedule H (Form 1040). Proposed Effective Date The amendments to the regulations as proposed will be effective on the date they are published as final regulations in the **Federal Register** . Proposed Dates of Applicability With respect to the regulations under Code sections 6205, 6302, 6402, 6413, and 6414, the regulations, as proposed, apply to any error ascertained on or after January 1, 2009. Special Analyses It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. Because the regulations under section 6302 do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. The proposed amendments to the regulations under section 6011, 6205, 6402, 6413, and 6414 affect all taxpayers that file employment tax returns. Therefore, the IRS has determined that these proposed amendments will have an impact on a substantial number of small entities. The IRS has determined, however, that the impact on entities affected by the proposed amendments to the regulations will not be significant. The proposed amendments to the regulations require taxpayers who file employment tax returns and who make interest-free adjustments to their employment taxes for either underpayments or overpayments or who file claims for refund for an overpayment of employment tax to provide an explanation setting forth the basis for the correction or the claim in detail, designating the return period in which the error was ascertained and the return period being corrected, and setting forth such other information as may be required by the instructions to the form. In addition, for adjustments of overpayments and for claims for refund, taxpayers must also obtain and retain the written receipt of the employee showing the date and amount of the repayment, or the written consent of the employee. For purposes of overpayment adjustments and claims for refund of employee FICA and RRTA tax overcollected in an earlier year, the employer must also obtain and retain the written statement from the employee providing that the employee has not claimed refund or credit of the amount of the overcollection, or if so, such claim has been rejected, and that the employee will not claim refund or credit of the amount. This collection of information is not new to the proposed regulations and has been in existence since the 1960s, when the existing regulations were promulgated. In addition, the proposed amendments to the regulations are being made in conjunction with a project of the Office of Taxpayer Burden Reduction which seeks to revise the process for making corrections to employment tax returns to make it less burdensome to taxpayers. The filing of a claim for refund and the making of an interest-free adjustment pursuant to both the existing and proposed regulations are voluntary on the part of taxpayers. Based on these facts, the IRS hereby certifies that the collection of information contained in these regulations will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required. Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Comments and Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed original and eight
(8)copies) or electronic comments that are submitted timely to the IRS. The Treasury Department and the IRS request comments on the clarity of the proposed rules and how they can be made easier to understand. All comments will be available for public inspection and copying. A public hearing has been scheduled for April 17, 2008, at 10 a.m., in the Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW., Washington, DC. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 30 minutes before the hearing starts. For information about having your name placed on the building access list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section of this preamble. The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments at the hearing must submit comments and an outline of the topics to be discussed and the time to be devoted to each topic by March 27, 2008. A period of 10 minutes will be allotted to each person for making comments. An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing. Drafting Information The principal author of these proposed regulations is Ligeia M. Donis of the Office of the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and Treasury Department participated in their development. List of Subjects in 26 CFR Part 31 Employment taxes, Income taxes, Penalties, Pensions, Railroad retirement, Reporting and recordkeeping requirements, Social security, Unemployment compensation. Proposed Amendments to the Regulations Accordingly, 26 CFR part 31 is proposed to be amended as follows: PART 31—EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT THE SOURCE **Paragraph 1.** The authority citation for part 31 continues to read, in part, as follows: Authority: 26 U.S.C. 7805 * * * **Par. 2.** Section 31.6011(a)-1 is amended by revising paragraphs (a)(2), (a)(3), (a)(4) and
(c)to read as follows: § 31.6011(a)-1 Returns under Federal Insurance Contributions Act.
(a)* * *
(2)*Employers of agricultural workers.* Every employer who pays wages for agricultural labor with respect to taxes imposed by the Federal Insurance Contributions Act must make a return for the first calendar year in which the employer pays such wages and for each subsequent calendar year (whether or not wages are paid) until the employer has filed a final return in accordance with § 31.6011(a)-6. Form 943, “Employer's Annual Federal Tax Return for Agricultural Employees,” is the form prescribed for making the annual return required by this section, except that, if the employer's principal place of business is in Puerto Rico, or if the employer has employees who are subject to income tax withholding for Puerto Rico, the return must be made on Form 943-PR, “Planilla para la Declaración ANUAL de la Contribución Federal del Patrono de Empleados Agrícolas.”
(3)*Employers of domestic workers.* Schedule H (Form 1040), “Household Employment Taxes,” is the form prescribed for use by every employer in making a return as required under paragraph (a)(1) of this section in respect of wages, as defined in the Federal Insurance Contributions Act, paid by the employer in any calendar year for domestic service as defined in section 3510. Schedule H (Form 1040) is generally filed as an attachment to an income tax return, however, if the employer does not otherwise have an obligation to file an income tax return, Schedule H (Form 1040) may be filed as a separate return. If, however, the employer is required under paragraph (a)(1) of this section to make a return on Form 941, “Employer's QUARTERLY Federal Tax Return,” or under paragraph (a)(2) of this section to make a return on Form 943, “Employer's Annual Federal Tax Return For Agricultural Employees,” or under paragraph (a)(5) of this section to make a return on Form 944, “Employer's ANNUAL Federal Tax Return,” the employer may choose instead to report wages with respect to domestic workers on such Form 941, Form 943 or Form 944. If such wages are included on Form 941, Form 943 or Form 944, the employer must also include Federal unemployment tax for the employee(s) on Form 940, “Employer's Annual Federal Unemployment
(FUTA)Tax Return,” under the provisions of § 31.6011(a)-3.
(4)*Employers in Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands.* Form 941-PR, “Planilla para la Declaración Federal TRIMESTRAL del Patrono,” (or Form 944-PR, “Planilla para la Declaración Federal ANUAL del Patrono,” if the IRS notified the employer that the Form 944-PR must be filed in lieu of Form 941-PR) is the form prescribed for use in making the return required under paragraph (a)(1) (or (a)(5)) of this section in the case of every employer whose principal place of business is in Puerto Rico, or if the employer has employees who are subject to income tax withholding for Puerto Rico. Form 941-SS, “Employer's QUARTERLY Federal Tax Return (American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands),” (or Form 944-SS, “Employer's ANNUAL Federal Tax Return (American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands),” if the IRS notified the employer that Form 944-SS must be filed in lieu of Form 941-SS) is the form prescribed for use in making the return required under paragraph (a)(1) (or (a)(5)) of this section in the case of every employer whose principal place of business is in the U.S. Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands, or if the employer has employees who are subject to income tax withholding for these U.S. possessions. However, Form 941 (or Form 944 if the IRS notified the employer that Form 944 must be filed in lieu of Form 941) is the form prescribed for making such return in the case of every such employer who is required pursuant to § 31.6011(a)-4 to make a return of income tax withheld from wages.
(c)*Adjustments and refunds.* For rules applicable to adjustments and refunds of employment taxes, see sections 6205, 6402, 6413, and 6414, and the applicable regulations. **Par. 3.** Section 31.6011(a)-4 is amended by revising paragraph (a)(2) to read as follows: § 31.6011(a)-4 Returns of income tax withheld.
(a)* * *
(2)*Wages paid for domestic service.* Schedule H (Form 1040), “Household Employment Taxes,” is the form prescribed for making the return required under paragraph (a)(1) of this section with respect to income tax withheld, pursuant to an agreement under section 3402(p), from wages paid for domestic service in a private home of the employer. Schedule H (Form 1040) is generally filed as an attachment to an income tax return; however, if the employer does not otherwise have an obligation to file an income tax return, Schedule H (Form 1040) may be filed as a separate return. The preceding sentence shall not apply in the case of an employer who has chosen under § 31.6011(a)-1(a)(3) to use Form 941, “Employer's QUARTERLY Federal Tax Return,” Form 943, “Employer's Annual Tax Return for Agricultural Employees,” or Form 944, “Employer's ANNUAL Federal Tax Return,” as the return with respect to such payments for purposes of the Federal Insurance Contributions Act. For the requirements relating for Schedule H (Form 1040) with respect to qualified State individual income taxes, see § 301.6361-1(d)(3)(iv) of this chapter. **Par. 4.** Section 31.6011(a)-5 is amended by revising paragraph
(a)to read as follows: § 31.6011(a)-5 Monthly returns.
(a)*In general* —(1) *Requirement.* The provisions of this section are applicable in respect of the taxes reportable on returns required pursuant to § 31.6011(a)-1 or § 31.6011(a)-4. An employer (or other person) who is required by § 31.6011(a)-1 or § 31.6011(a)-4 to make quarterly or annual returns on any such form shall, in lieu of making such quarterly or annual returns, make returns of such taxes in accordance with the provisions of this section if the employer is so notified in writing by the IRS. Every employer (or other person) notified by the IRS shall make a return for the calendar month in which the notice is received, for each of the prior calendar months in the return period, and for each calendar month afterwards (whether or not wages are paid in any such month) until the employer has filed a final return or is required to make quarterly or annual returns pursuant to notification as provided in paragraph (a)(2) of this section. Each return required under this section shall be made on the form prescribed for making the return which would otherwise be required of the employer (or other person) under the provisions of § 31.6011(a)-1 or § 31.6011(a)-4, except that, if some other form is furnished by the IRS for use in lieu of such prescribed form, the return shall be made on such other prescribed form. The IRS may notify any employer (or other person)—
(i)Who by reason of notification as provided in § 301.7512-1 of this chapter (Regulations on Procedure and Administration), is required to comply with the provisions of such § 301.7512-1; or
(ii)Who failed to—
(A)Make any return required pursuant to § 31.6011(a)-1 or § 31.6011(a)-4;
(B)Pay tax reportable on any such form; or
(C)Deposit any such tax as required under the provisions of § 31.6302(c)-1.
(2)*Termination of requirement.* The IRS, in its discretion, may notify the employer in writing that the employer shall discontinue the filing of monthly returns under this section. If the employer is so notified, the IRS will provide the employer with instructions for filing the final monthly return. Afterwards, the employer shall make quarterly or annual returns in accordance with the provisions of § 31.6011(a)-1 or § 31.6011(a)-4. **Par. 5.** Section 31.6205-1 is amended to read as follows: § 31.6205-1 Adjustments of underpayments.
(a)*In general* .
(1)An employer who has undercollected or underpaid employee Federal Insurance Contributions Act
(FICA)tax under section 3101 or employer FICA tax under section 3111, employee Railroad Retirement Tax Act
(RRTA)tax under section 3201 or employer RRTA tax under section 3221, or income tax required under section 3402 to be withheld, with respect to any payment of wages or compensation, shall correct such error as provided in this section. Such correction may constitute an interest-free adjustment as provided in paragraph
(b)or
(c)of this section.
(2)No correction will be eligible for interest-free adjustment treatment if the failure to report relates to an issue that was raised in an examination of a prior return period or if the employer knowingly underreported its employment tax liability.
(3)Every correction under this section of an underpayment of tax with respect to a payment of wages or compensation shall be made on the prescribed form that corresponds to the return being corrected. The form, filed in accordance with this section and the instructions, will constitute an adjusted return for the return period being corrected.
(4)Every adjusted return on which an underpayment is corrected pursuant to this section shall designate the return period in which the error was ascertained and the return period being corrected, explain in detail the grounds and facts relied upon to support the correction, and set forth such other information as may be required by the regulations in this section and by the instructions relating to the form.
(5)For purposes of this section, an error is ascertained when the employer has sufficient knowledge of the error to be able to correct it.
(6)No correction will be eligible for interest-free adjustment treatment pursuant to this section after the earlier of the following:
(i)Receipt from the IRS of notice and demand for payment thereof based upon an assessment.
(ii)Receipt from the IRS of a Notice of Determination of Worker Classification (Notice of Determination) in connection with such underpayment. Prior to receipt of a Notice of Determination, the taxpayer may, in lieu of making a payment, make a cash bond deposit that would have the effect of stopping the accrual of any interest, but would not deprive the taxpayer of its right to receive a Notice of Determination and to petition the Tax Court under section 7436.
(7)Subject to the exceptions specified in paragraphs (a)(2) and (a)(6) of this section, Form 2504, “Agreement and Collection of Additional Tax and Acceptance of Overassessment (Excise or Employment Tax),” and Form 2504-WC, “Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment in Worker Classification Cases (Employment Tax),” constitute adjusted returns for purposes of this section.
(8)For provisions related to furnishing employee statements and corrected employee statements reporting wages and withheld taxes, see sections 6041 and 6051 and §§ 1.6041-2 and 31.6051-1 of this chapter. For provisions relating to filing information returns and corrected information returns reporting wages and withheld taxes, see sections 6041 and 6051 and §§ 1.6041-2 and 31.6051-2 of this chapter.
(b)*Federal Insurance Contributions Act and Railroad Retirement Tax Act* —(1) *Undercollection ascertained before return is filed.* If an employer collects less than the correct amount of employee FICA or RRTA tax from an employee with respect to a payment of wages or compensation, and if the employer ascertains the error before filing the return on which the employee tax with respect to such wages or compensation is required to be reported, the employer shall nevertheless report on the return and pay to the IRS the correct amount of employee tax. If the employer does not report and pay the correct amount of tax on a timely basis in these circumstances, the employer may not later correct the error through an interest-free adjustment.
(2)*Error ascertained after return is filed.*
(i)If an employer files a return on which FICA tax or RRTA tax is required to be reported, and reports on the return less than the correct amount of employee or employer FICA or RRTA tax with respect to a payment of wages or compensation, and if the employer ascertains the error after filing the return, the employer shall correct the error through an interest-free adjustment as provided in this section. The employer shall adjust the underpayment of tax by reporting the additional amount due on an adjusted return for the return period in which the wages or compensation was paid, accompanied by a detailed explanation of the amount being reported on the adjusted return and any other information as may be required by this section and by the instructions relating to the form. The reporting of the underpayment on an adjusted return constitutes an adjustment within the meaning of this section only if the adjusted return is filed within the period of limitations for assessment for the return period being corrected, and by the due date for filing the return for the return period in which the error is ascertained. For purposes of the preceding sentence, the due date for filing the adjusted return is determined by reference to the return being corrected. The amount of the underpayment adjusted in accordance with this section must be paid to the IRS by the time the adjusted return is filed. If an adjustment is reported pursuant to this section, but the amount of the adjustment is not paid when due, interest accrues from that date (see section 6601).
(ii)If an employer files a return reporting FICA tax for a return period although the employer was required to file a return reporting RRTA tax, or vice versa, and reports on the return less than the correct amount that should have been reported on the return required to be filed, and if the employer ascertains the error after filing the return, the employer shall correct the error through an interest-free adjustment as provided in this section. The employer shall adjust the underpayment of tax by reporting the additional amount due on an original return for the correct tax for the return period for which the incorrect return was filed, accompanied by a detailed explanation of the amount being reported on the original return and any other information as may be required by the regulations in this section and by the instructions relating to the form. The reporting of the additional amount for the period constitutes an adjustment within the meaning of this section only if the return is filed by the due date of the return for reporting the correct tax for the return period in which the error is ascertained. The amount of the underpayment adjusted in accordance with this section must be paid to the IRS by the time the return is filed. If an adjustment is reported pursuant to this section, but the amount of the adjustment is not paid when due, interest accrues from that date (see section 6601).
(3)*Return not filed because of failure to treat individual as employee.* If an employer fails to file a return for a return period solely because the employer failed to treat any individuals properly as employees for the return period (and, therefore, failed to withhold and pay any employer or employee FICA or RRTA tax with respect to wages or compensation paid to the employees), and if the employer ascertains the error after the due date of the return, the employer shall correct the error through an interest-free adjustment as provided in this section. The employer shall adjust the underpayment of tax by reporting the amount due on an original return for the return period for which the employer failed to file a return, accompanied by a detailed explanation of the amount being reported on the original return and any other information as may be required by this section and by the instructions relating to the form. The reporting of the correct amount of tax for the return period constitutes an adjustment within the meaning of this section only if the return is filed by the due date of the return for reporting such tax for the return period in which the error is ascertained. The amount of the underpayment adjusted in accordance with this section must be paid to the IRS by the time the return is filed. If an adjustment is reported pursuant to this section, but the amount of the adjustment is not paid when due, interest accrues from that date (see section 6601).
(c)*Income tax required to be withheld from wages* —(1) *Undercollection ascertained before return is filed.* If an employer collects less than the correct amount of income tax required to be withheld from wages under section 3402, and if the employer ascertains the error before filing the return on which the withheld tax is required to be reported, the employer shall nevertheless report on the return and pay to the IRS the correct amount of tax required to be withheld. If the employer does not report and pay the correct amount of tax on a timely basis in these circumstances, the employer may not correct the error through an interest-free adjustment.
(2)*Error ascertained after return is filed.* If an employer files a return on which income tax required to be withheld from wages is required to be reported and reports on the return less than the correct amount of income tax required to be withheld, and if the employer ascertains the error after filing the return, the employer shall correct the error through an interest-free adjustment as provided in this section. The employer shall adjust the underpayment of tax by reporting the additional amount due on an adjusted return for the return period in which the wages were paid, accompanied by a detailed explanation of the amount being reported on the adjusted return and any other information as may be required by this section and by the instructions relating to the form. The reporting of the underpayment on an adjusted return constitutes an adjustment within the meaning of this section only if the adjusted return is filed by the due date for filing the return for the return period in which the error is ascertained. For purposes of the preceding sentence, the due date for filing the adjusted return is determined by reference to the return being corrected. However, an adjustment may only be reported pursuant to this section if the error is ascertained within the same calendar year that the wages to the employee were paid, unless the underpayment is attributable to an administrative error, that is, an error involving the inaccurate reporting of the amount actually withheld, or the adjustment is reported on a Form 2504 or Form 2504-WC. The amount of the underpayment adjusted in accordance with this section must be paid to the IRS by the time the adjusted return is filed. If an adjustment is reported pursuant to this section, but the amount of the adjustment is not paid when due, interest accrues from that date (see section 6601).
(3)*Return not filed because of failure to treat individual as employee.* If an employer fails to file a return for a return period solely because the employer failed to treat any individuals properly as employees for the return period (and, therefore, failed to withhold and pay any income tax required to be withheld from wages), the employer shall correct the error through an interest-free adjustment as provided in this section. The employer shall adjust the underpayment of tax by reporting the correct amount on an original return for the return period for which the employer failed to file a return and pay the tax to the IRS. The reporting of the correct amount of tax for the return period constitutes an adjustment within the meaning of this section only if the return is filed by the due date of the return for reporting such tax for the return period in which the error is ascertained. However, an adjustment may only be reported pursuant to this section if the error is ascertained within the same calendar year that the wages to the employee were paid or section 3509 applies to determine the amount of the underpayment. The amount of the underpayment adjusted in accordance with this section must be paid to the IRS by the time the adjusted return is filed. If an adjustment is reported pursuant to this section, but the amount of the adjustment is not paid when due, interest accrues from that date (see section 6601).
(d)*Deductions from employee* —(1) *Federal Insurance Contributions Tax Act and Railroad Retirement Tax Act.* If an employer collects less than the correct amount of employee FICA or RRTA tax from an employee with respect to a payment of wages or compensation, the employer must collect the amount of the undercollection by deducting the amount from remuneration of the employee, if any, paid after the employer ascertains the error. Such deductions may be made even though the remuneration, for any reason, does not constitute wages or compensation. The correct amount of an undercollection of employee tax from an employee must be reported and paid, as provided in paragraph
(b)of this section, whether or not the undercollection is corrected by a deduction made as prescribed in this paragraph (d)(1), and even if the deduction is made after the return on which the employee tax must be reported is due. If such a deduction is not made, the obligation of the employee to the employer with respect to the undercollection is a matter for settlement between the employee and the employer. If an employer makes an erroneous collection of employee tax from two or more of its employees, a separate settlement must be made with respect to each employee. An overcollection of employee tax from one employee may not be used to offset an undercollection of such tax from another employee. For provisions relating to the employer's liability for the tax, whether or not it collects the tax from the employee, see § 31.3102-1(d). This paragraph (d)(1) does not apply if section 3509 applies to determine the employer's liability.
(2)*Income tax required to be withheld from wages.* If an employer collects less than the correct amount of income tax required to be withheld from wages during a calendar year, the employer must collect the amount of the undercollection on or before the last day of the year by deducting the amount from remuneration of the employee, if any, paid after the employer ascertains the error. Such deductions may be made even though the remuneration, for any reason, does not constitute wages. The correct amount of an undercollection of income tax from an employee must be reported and paid, as provided in paragraph
(c)of this section, whether or not the undercollection is corrected by a deduction made as prescribed in this paragraph (d)(2), and even if the deduction is made after the return on which the tax must be reported is due. If such a deduction is not made, the obligation of the employee to the employer with respect to the undercollection is a matter for settlement between the employee and the employer within the calendar year. If an employer makes an erroneous collection of income tax from two or more of its employees, a separate settlement must be made with respect to each employee. An overcollection of income tax from one employee may not be used to offset an undercollection of such tax from another employee. For provisions relating to the employer's liability for the tax, whether or not it collects the tax from the employee, see § 31.3403-1. For provisions relating to the employer's liability for an underpayment of tax unless the employer can show that the income tax against which the tax under section 3402 may be credited has been paid, see § 31.3402(d)-1. This paragraph (d)(2) does not apply if section 3509 applies to determine the employer's liability. **Par. 6.** Section 31.6302-0 is amended by adding a new entry for § 31.6302-1(c)(7) to read as follows: § 31.6302-0 Table of contents. § 31.6302-1 Federal tax deposit rules for withheld income taxes and taxes under the Federal Insurance Contributions Act
(FICA)attributable to payments made after December 31, 1992.
(c)* * *
(7)*Exception to the monthly and semi-weekly deposit rules for employers making interest-free adjustments.* **Par. 7.** Section 31.6302-1 is amended by adding paragraph (c)(7) and revising paragraph (g)(4) to read as follows: § 31.6302-1 Federal tax deposit rules for withheld income taxes and taxes under the Federal Insurance Contributions Act
(FICA)attributable to payments made after December 31, 1992.
(c)* * *
(7)*Exception to the monthly and semi-weekly deposit rules for employers making interest-free adjustments.* An employer filing an adjusted return under § 31.6205-1 to report taxes that were accumulated in a prior return period shall pay the amount of the adjustment by the time it files the adjusted return, and the amount timely paid will be deemed to have been timely deposited by the employer. The payment may accompany the adjusted return, be made by electronic funds transfer, or be made by other methods of payment as provided by the instructions relating to the adjusted return.
(g)* * *
(4)*Lookback period.* The tax liability shown on the original return for the return period is the amount taken into account in determining whether the accumulated taxes for the lookback period exceed $50,000. The employer does not take into account any adjustments to tax liability made pursuant to the filing of adjusted returns or claims for refund pursuant to sections 6205, 6402, 6413 and 6414 filed after the due date of the original return when determining accumulated taxes for the lookback period. **Par. 8.** Section 31.6402(a)-1 is amended by revising paragraph
(a)to read as follows: § 31.6402(a)-1 Credits or refunds.
(a)*In general.* For regulations under section 6402 of special application to credits or refunds of employment taxes, see §§ 31.6402(a)-2, 31.6402(a)-3, and 31.6414-1. For regulations under section 6402 of general application to credits or refunds, see §§ 301.6402-1 and 301.6402-2 of this chapter (Regulations on Procedure and Administration). For provisions relating to adjustments without interest of overpayments of taxes under the Federal Insurance Contributions Act or the Railroad Retirement Tax Act or income tax withholding, see §§ 31.6413(a)-1 and 31.6413(a)-2. **Par. 9.** Section 31.6402(a)-2 is amended by revising paragraph
(a)and removing paragraph
(c)to read as follows: § 31.6402(a)-2 Credit or refund of tax under Federal Insurance Contributions Act or Railroad Retirement Tax Act.
(a)*Claim by person who paid tax to IRS* —(1) *In general* .
(i)Any person may file a claim for credit or refund for an overpayment (except to the extent that the overpayment must be credited pursuant to § 31.3503-1) if the person paid to the IRS more than the correct amount of employee tax under section 3101 or employer tax under section 3111 of the Federal Insurance Contributions Act (FICA), employee tax under section 3201, employee representative tax under section 3211, or employer tax under section 3221 of the Railroad Retirement Tax Act (RRTA), or interest, addition to the tax, additional amount, or penalty with respect to any such tax.
(ii)The claim for credit or refund must be made in the manner and subject to the conditions stated in this section. The claim for credit or refund must designate the return period to which the claim relates, explain in detail the grounds and facts relied upon to support the claim, and set forth such other information as may be required by this section and by the instructions relating to the form used to make such claim. No refund or credit pursuant to this section for employer tax will be allowed unless the employer has first repaid or reimbursed its employee or has secured the employee's consent to the allowance of the claim for refund and includes a claim for the refund of such employee tax. However, this requirement does not apply to the extent that the taxes were not withheld from the employee or, after the employer makes reasonable efforts to repay or reimburse the employee or secure the employee's consent, the employer cannot locate the employee or the employee will not provide consent. No refund or credit of employee FICA or RRTA tax overcollected in an earlier year will be allowed if the employee has claimed a refund or credit of the amount of the overcollection which has not been rejected or if the employee has taken the amount of such tax into account in claiming a credit against or refund of the employee's income tax, including instances in which the employee has included an overcollection of employee FICA or RRTA tax in computing a special refund (see § 31.6413(c)-1).
(iii)For adjustments without interest of overpayments of taxes under the FICA or the RRTA, see § 31.6413(a)-2.
(iv)For provisions related to furnishing employee statements and corrected employee statements reporting wages and withheld taxes, see sections 6041 and 6051 and §§ 1.6041-2 and 31.6051-1 of this chapter. For provisions relating to filing information returns and corrected information returns reporting wages and withheld taxes, see sections 6041 and 6051 and §§ 1.6041-2 and 31.6051-2 of this chapter.
(v)For the period of limitations on credit or refund of taxes, see § 301.6511(a)-1 of this chapter (Regulations on Procedure and Administration).
(2)*Statements supporting employer's claims for employee tax.*
(i)Every claim, filed by an employer, for refund or credit of employee FICA tax under section 3101 or employee RRTA tax under section 3201 collected from an employee must include a certification that the employer has repaid or reimbursed the tax to its employee or has secured the employee's written consent to allowance of the filing of the claim for refund except to the extent that the taxes were not withheld from the employee. The employer must retain as part of its records the written receipt of the employee showing the date and amount of the repayment, evidence of reimbursement, or the written consent of the employee, whichever is used in support of the claim.
(ii)Every claim, filed by an employer, for refund or credit of employee FICA tax under section 3101 or employee RRTA tax under section 3201 collected from an employee in a calendar year prior to the year in which the credit or refund is claimed, also must include a certification that the employer has obtained the employee's written statement that the employee has not claimed refund or credit of the amount of the overcollection, or if so, such claim has been rejected, and that the employee will not claim refund or credit of the amount. The employer must retain the employee's written statement as part of the employer's records. **Par. 10.** Section 31.6413(a)-1 is revised to read as follows: § 31.6413(a)-1 Repayment or reimbursement by employer of tax erroneously collected from employee.
(a)*Federal Insurance Contributions Act and Railroad Retirement Tax Act* —(1) *Overcollection ascertained before return is filed.*
(i)If an employer during any return period collects from an employee more than the correct amount of employee Federal Insurance Contributions Act
(FICA)tax under section 3101 or employee Railroad Retirement Tax Act
(RRTA)tax under section 3201, and if the employer ascertains the error before filing the return on which the employee tax is required to be reported, repays or reimburses the amount of the overcollection to the employee before filing the return for such return period, and obtains and keeps as part of its records the written receipt of the employee showing the date and amount of the repayment or evidence of reimbursement, the employer shall not report on any return or pay to the IRS the amount of the overcollection.
(ii)Any overcollection not repaid or reimbursed to the employee as provided in paragraph (a)(1)(i) of this section shall be reported and paid to the IRS on the return for reporting such tax for the return period in which the overcollection is made. However, the reporting and payment of the overcollection may be treated as an error ascertained after the return is filed for purposes of paragraph (a)(2) of this section.
(iii)For purposes of this paragraph (a)(1), an error is ascertained when the employer has sufficient knowledge of the error to be able to correct it.
(2)*Error ascertained after return is filed.*
(i)If an employer files a return for a return period on which FICA tax or RRTA tax is reported, collects from an employee and pays to the IRS more than the correct amount of the employee FICA or RRTA tax, and if the employer ascertains the error within the applicable period of limitations on credit or refund, the employer shall repay or reimburse the employee in the amount of the overcollection prior to the expiration of the return period following the return period in which the error is ascertained and prior to the expiration of such limitations period. However, this paragraph (d)(2) does not apply to the extent that, after reasonable efforts, the employer cannot locate the employee. This paragraph (d)(2) has no application in any case in which an overcollection is made the subject of a claim by the employer for refund or credit, and the employer chooses to secure the written consent of the employee to the allowance of the refund or credit under the procedure provided in § 31.6402(a)-2.
(ii)If the employer repays the amount of the overcollection to an employee, the employer shall obtain and keep as part of its records the written receipt of the employee, showing the date and amount of the repayment.
(iii)If the employer reimburses the amount of the overcollection to an employee, the employer shall keep as part of its records evidence of reimbursement. The employer shall reimburse the employee by applying the amount of the overcollection against the employee FICA or RRTA tax which attaches to wages or compensation paid by the employer to the employee prior to the expiration of the return period following the return period in which the error is ascertained and prior to the expiration of the applicable period of limitations on credit or refund. If the amount of the overcollection exceeds the amount so applied against such employee tax, the excess amount shall be repaid to the employee as required by this section.
(iv)If, in any calendar year, an employer repays or reimburses an employee in the amount of an overcollection of employee FICA or RRTA tax that was collected from the employee in a prior calendar year, the employer shall obtain from the employee and keep as part of its records a written statement that the employee has not claimed refund or credit of the amount of the overcollection, or if so, such claim has been rejected, and that the employee will not claim refund or credit of such amount. For this purpose, a claim for refund or credit by the employee includes instances in which the employee has included an overcollection of employee FICA or RRTA tax in computing a special refund (see § 31.6413(c)-1).
(v)For purposes of this paragraph (a)(2), an error is ascertained when the employer has sufficient knowledge of the error to be able to correct it.
(vi)For the period of limitations on credit or refund of taxes, see § 301.6511(a)-1 of this chapter (Regulations on Procedure and Administration).
(b)*Income tax withheld from wages* —(1) *Overcollection ascertained before return is filed.*
(i)If an employer during any return period collects from an employee more than the correct amount of tax required to be withheld from wages under section 3402, and if the employer ascertains the error before filing the return on which such tax is required to be reported, repays or reimburses the amount of the overcollection to the employee before filing the return for such return period and before the end of the calendar year in which the overcollection was made, and obtains and keeps as part of its records the written receipt of the employee showing the date and amount of the repayment or evidence of reimbursement, the employer shall not report on any return or pay to the IRS the amount of the overcollection.
(ii)Any overcollection not repaid or reimbursed to the employee as provided in paragraph (b)(1)(i) of this section shall be reported and paid to the IRS on the return for reporting such tax for the return period in which the overcollection is made. However, the reporting and payment of the overcollection may be treated as an error ascertained after the return is filed for purposes of paragraph (b)(2) of this section.
(iii)For purposes of this paragraph (b)(1), an error is ascertained when the employer has sufficient knowledge of the error to be able to correct it.
(2)*Error ascertained after return is filed.*
(i)If an employer files a return for a return period on which tax required to be withheld from wages is reported, collects from an employee and pays to the IRS more than the correct amount of the tax required to be withheld from wages, and if the employer ascertains the error after filing the return but before the end of the calendar year in which the wages were paid, the employer shall repay or reimburse the employee in the amount of the overcollection prior to the end of the calendar year and by the expiration of the return period following the return period in which the error is ascertained. However, this paragraph does not apply to the extent that, after reasonable efforts, the employer cannot locate the employee.
(ii)If the employer repays the amount of the overcollection to an employee, the employer shall obtain and keep as part of its records the written receipt of the employee, showing the date and amount of the repayment.
(iii)If the employer reimburses the amount of the overcollection to an employee, the employer shall keep as part of its records evidence of reimbursement. The employer shall reimburse the employee by applying the amount of the overcollection against the tax under section 3402, which otherwise would be required to be withheld from wages paid by the employer to the employee in the calendar year in which the overcollection is made and prior to the expiration of the return period following the return period in which the error is ascertained. If the amount of the overcollection exceeds the amount so applied against such tax, the excess amount shall be repaid to the employee as required by this section.
(iv)For purposes of this paragraph (b)(2), an error is ascertained when the employer has sufficient knowledge of the error to be able to correct it. **Par. 11.** Section 31.6413(a)-2 is revised to read as follows: § 31.6413(a)-2 Adjustments of overpayments.
(a)*In general.*
(1)An employer who has overcollected or overpaid employee Federal Insurance Contributions Act
(FICA)tax under section 3101 or employer FICA tax under section 3111, employee Railroad Retirement Tax
(RRTA)tax under section 3201 or employer RRTA tax under section 3221, or income tax required under section 3402 to be withheld, and has repaid the amount of the overcollection of such tax to the employee, shall correct such error as provided in this section. Such correction may constitute an interest-free adjustment as provided in paragraph
(b)or
(c)of this section.
(2)Every correction under this section of an overpayment of tax shall be made on the prescribed form that corresponds to the return being corrected. The form, filed in accordance with this section and the instructions, will constitute an adjusted return for the return period being corrected.
(3)Every adjusted return on which an overpayment is corrected pursuant to this section shall include a certification that the employer has repaid or reimbursed its employee, except where taxes were not withheld from the employee or where, after reasonable efforts, the employer cannot locate the employee. Every adjusted return shall designate the return period in which the error was ascertained and the return period being corrected, explain in detail the grounds and facts relied upon to support the correction, and set forth such other information as may be required by this section and § 31.6413(a)-1 and by the instructions relating to the form. Every adjusted return, filed by an employer, for overpayment of employee FICA tax under section 3101 or employee RRTA tax under section 3201 collected from an employee in a calendar year prior to the year in which the adjusted return is filed, must also include a certification that the employer has obtained the employee's written statement that the employee has not claimed refund or credit of the amount of the overcollection, or if so, such claim has been rejected, and that the employee will not claim refund or credit of the amount.
(4)For purposes of this section, an error is ascertained when the employer has sufficient knowledge of the error to be able to correct it.
(5)For provisions related to furnishing employee statements and corrected employee statements reporting wages and withheld taxes, see sections 6041 and 6051 and §§ 1.6041-2 and 31.6051-1 of this chapter. For provisions relating to filing information returns and corrected information returns reporting wages and withheld taxes, see sections 6041 and 6051 and §§ 1.6041-2 and 31.6051-2 of this chapter.
(b)*Federal Insurance Contributions Act and Railroad Retirement Tax Act* —(1) *Overcollection ascertained before return is filed.* If an employer collects more than the correct amount of employee FICA or RRTA tax from an employee, and if the employer ascertains the error before filing the return on which the employee tax with respect to such wages or compensation is required to be reported, and repays or reimburses the employee under § 31.6413(a)-1(a)(1), the employer shall not report on any return or pay to the IRS the amount of the overcollection. If the employer does not repay or reimburse the amount of the overcollection under § 31.6413(a)-1(a)(1) before filing the return, the employer must report the amount of the overcollection on the return. However, the reporting and payment of the overcollection may be treated as an error ascertained after the return is filed for purposes of paragraph (b)(2) of this section.
(2)*Error ascertained after return is filed* —(i) *Employee tax.* If an employer files a return for a return period on which FICA tax or RRTA tax is required to be reported and reports on the return more than the correct amount of employee FICA or RRTA tax, and if the employer ascertains the error after filing the return, and repays or reimburses the employee the amount of the overcollection of employee tax, as provided in § 31.6413(a)-1(a)(2), the employer may correct the error through an interest-free adjustment as provided in this section. The employer shall adjust the overpayment of tax by reporting the overpayment on an adjusted return for the return period in which the wages or compensation was paid, accompanied by a detailed explanation of the amount being reported on the adjusted return as required by paragraph (a)(3) of this section. Except as provided in paragraph
(d)of this section, the reporting of the overpayment on an adjusted return constitutes an adjustment within the meaning of this section only if the adjusted return is filed by the due date of the return for the return period following the return period in which the error is ascertained and before the expiration of the period of limitations on credit or refund. For purposes of the preceding sentence, the due date for filing the adjusted return is determined by reference to the return being corrected. The employer shall take the adjusted amount as a credit towards payment of employment tax liabilities for the return period in which the adjusted return is filed unless the IRS notifies the employer that the adjustment is not permitted under paragraph
(d)of this section.
(ii)*Employer tax.* If an employer files a return for a return period on which FICA tax or RRTA tax is required to be reported and reports on the return more than the correct amount of employer FICA or RRTA tax, and if the employer ascertains the error after filing the return, the employer may correct the error through an interest-free adjustment as provided in this section. The employer must first repay or reimburse the employee the amount of any overcollection of employee tax, if any, pursuant to § 31.6413(a)-1(a)(2), before making the adjustment for the employer share, unless the employer could not locate the employee after reasonable efforts. The employer shall adjust the overpayment of tax by reporting the overpayment on an adjusted return for the return period in which the wages or compensation was paid, accompanied by a detailed explanation of the amount being reported on the adjusted return as required by paragraph (a)(3) of this section. Except as provided in paragraph
(d)of this section, the reporting of the overpayment on an adjusted return constitutes an adjustment within the meaning of this section only if the adjusted return is filed by the due date of the return for the return period following the return period in which the error is ascertained and before the expiration of the period of limitations on credit or refund. For purposes of the preceding sentence, the due date for filing the adjusted return is determined by reference to the return being corrected. The employer shall take the adjusted amount as a credit towards payment of employment tax liabilities for the return period in which the adjusted return is filed unless the IRS notifies the employer that the adjustment is not permitted under paragraph
(d)of this section.
(c)*Income tax withheld from wages* —(1) *Overcollection ascertained before return is filed.* If an employer collects more than the correct amount of income tax required to be withheld from wages, and if the employer ascertains the error before filing the return on which the tax is required to be reported, and repays or reimburses the employee under § 31.6413(a)-1(b)(1), the employer shall not report on any return or pay to the IRS the amount of the overcollection. If the employer does not repay or reimburse the amount of the overcollection under § 31.6413(a)-1(b)(1) before filing the return, the employer must report the amount of the overcollection on the return. However, the reporting and payment of the overcollection may be treated as an error ascertained after the return is filed for purposes of paragraph (c)(2) of this section.
(2)*Error ascertained after return is filed.* If an employer files a return for a return period on which income tax required to be withheld from wages is required to be reported and reports on the return more than the correct amount of income tax required to be withheld, and if the employer ascertains the error after filing the return, and repays or reimburses the employee in the amount of the overcollection as provided in § 31.6413(a)-1(b)(2), the employer may correct the error through an interest-free adjustment as provided in this section. The employer shall adjust the overpayment of tax by reporting the overpayment on an adjusted return for the return period in which the wages were paid, accompanied by a detailed explanation of the amount being reported on the adjusted return as required in paragraph (a)(3) of this section. Except as provided in paragraph
(d)of this section, the reporting of the overpayment on an adjusted return constitutes an adjustment within the meaning of this section only if the adjusted return is filed by the due date of the return for the return period following the return period in which the error is ascertained. For purposes of the preceding sentence, the due date for filing the adjusted return is determined by reference to the return being corrected. If the amount of the overcollection is not repaid or reimbursed to the employee under § 31.6413(a)-1(b)(2), there is no overpayment to be adjusted under this section. However, the employer may adjust an overpayment of tax attributable to an administrative error, that is, an error involving the inaccurate reporting of the amount withheld, pursuant to this section. The employer shall take the adjusted amount as a credit towards payment of employment tax liabilities for the return period in which the adjusted return is filed unless the IRS notifies the employer that the adjustment is not permitted under paragraph
(d)of this section.
(d)*Adjustments not permitted* —(1) *In general.* If an adjustment cannot be made, a claim for refund or credit may be filed in accordance with § 31.6402(a)-2 or § 31.6414-1.
(2)*90-day exception.* No adjustment in respect of an overpayment may be made if the overpayment relates to a return period for which the period of limitations on credit or refund of such overpayment will expire within 90 days of filing the adjusted return.
(3)*No adjustment after claim for refund filed.* No adjustment in respect of an overpayment may be made after the filing of a claim for credit or refund of such overpayment under § 31.6402(a)-2.
(4)*No adjustment after IRS notification.* No adjustment may be made upon notification by the IRS that the adjustment is not permitted. **Par. 12.** Section 31.6414-1 is amended by revising paragraph
(a)to read as follows: § 31.6414-1 Credit or refund of income tax withheld from wages.
(a)*In general.*
(1)Any employer who pays to the IRS more than the correct amount of income tax required to be withheld from wages under section 3402 or interest, addition to the tax, additional amount, or penalty with respect to such tax, may file a claim for refund of the overpayment in the manner and subject to the conditions stated in this section. The claim for refund must designate the return period to which the claim relates, explain in detail the grounds and facts relied upon to support the claim, and set forth such other information as may be required by the regulations in this section and by the instructions relating to the form. No refund to the employer will be allowed under this section for the amount of any overpayment of tax which the employer deducted or withheld from an employee.
(2)For provisions related to furnishing employee statements and corrected employee statements reporting wages and withheld taxes, see sections 6041 and 6051 and §§ 1.6041-2 and 31.6051-1. For provisions relating to filing information returns and corrected information returns reporting wages and withheld taxes, see sections 6041 and 6051 and §§ 1.6041-2 and 31.6051-2.
(3)For interest-free adjustments of overpayments of income tax withheld from wages, see § 31.6413(a)-2. Linda E. Stiff, Deputy Commissioner for Services and Enforcement. [FR Doc. E7-25134 Filed 12-28-07; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 301 [REG-147832-07] RIN 1545-BH29 Disclosure of Return Information to the Bureau of the Census AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Notice of proposed rulemaking by cross-reference to temporary regulation. SUMMARY: In the Rules and Regulations section of this issue of the **Federal Register** , the IRS is issuing a regulation that would add an additional item of return information that may be disclosed to the Bureau of the Census (Bureau) for use in the Bureau's annual Survey of Industrial Research and Development. This proposed regulation provides guidance to IRS personnel responsible for disclosing the information. This regulation facilitates the assistance of the IRS to the Bureau in its statistics programs and requires no action by taxpayers and has no effect on their tax liabilities. DATES: Written and electronic comments and requests for a public hearing must be received by March 31, 2008. ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-147832-07), room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-147832-07), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC or sent electronically via the Federal eRulemaking Portal at *www.regulations.gov* (IRS and REG-147832-07). FOR FURTHER INFORMATION CONTACT: Concerning submission of comments, Richard Hurst,
(202)622-7180 (not a toll-free number); concerning the notice of proposed rulemaking, Glenn Melcher,
(202)622-4570 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background Under section 6103(j)(1)(A), upon written request from the Secretary of Commerce, the Treasury Secretary is to furnish to the Bureau of the Census (Bureau) return information as may be prescribed by Treasury regulations for the purpose of, but only to the extent necessary in, structuring censuses and conducting related statistical activities authorized by law. Section 301.6103(j)(1)-1 of the regulation provides an itemized description of the items of return information authorized to be disclosed for this purpose. Periodically, the disclosure regulation is amended to reflect the changing needs of the Bureau for data for its statutorily authorized statistical activities. This document contains a proposed regulation authorizing IRS personnel to disclose an additional item of return information that has been requested by the Secretary of Commerce. A temporary regulation in this issue of the **Federal Register** amends the Procedure and Administration Regulations (26 CFR part 301) relating to Internal Revenue Code
(Code)section 6103(j). The amendments to the regulation contain rules relating to the disclosure of return information reflected on returns to officers and employees of the Department of Commerce for structuring censuses and conducting related statistical activities authorized by law. Specifically, the amendment to the regulation authorizes the IRS to disclose an additional item of return information that has been requested by the Secretary of Commerce that is necessary for the Bureau's annual Survey of Industrial Research and Development. The text of the temporary regulation also serves as the text of this proposed regulation. The preamble to the temporary regulation explains the proposed regulation. 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 also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulation does not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, this proposed regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Comments and Requests for a Public Hearing Before the proposed regulation is adopted as a final regulation, consideration will be given to any electronic and written comments (a signed original and eight
(8)copies) that are submitted timely to the IRS. The IRS and Treasury Department specifically request comments on the clarity of the proposed regulation and how it can be made easier to understand. All comments will be available for public inspection and copying. A public hearing may be scheduled if requested in writing by a person who timely submits comments. If a public hearing is scheduled, notice of the date, time, and place for the hearing will be published in the **Federal Register** . Drafting Information The principal author of this proposed regulation is Glenn Melcher, Office of the Associate Chief Counsel (Procedure & Administration). List of Subjects in 26 CFR Part 301 Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements. Proposed Amendments to the Regulations Accordingly, 26 CFR part 301 is proposed to be amended as follows: PART 301—PROCEDURE AND ADMINISTRATION **Paragraph 1.** The authority citation for part 301 continues to read in part as follows: Authority: 26 U.S.C. 7805 * * * **Par. 2.** Section § 301.6103(j)(1)-1 is amended by revising paragraphs (b)(3)(xxv) and
(e)to read as follows: § 301.6103(j)(1)-1 Disclosure of return information reflected on returns to officers and employees of the Department of Commerce for certain statistical purposes and related activities.
(b)* * *
(3)* * *
(xxv)[The text of proposed amended paragraph (b)(3)(xxv) is the same as the text of § 301.6103(j)(1)-1T(b)(3)(xxv) published elsewhere in this issue of the **Federal Register** ].
(e)[The text of proposed amended paragraph
(e)is the same as the text of § 301.6103(j)(1)-1T(e) published elsewhere in this issue of the **Federal Register** ]. Linda E. Stiff, Deputy Commissioner for Services and Enforcement. [FR Doc. E7-25127 Filed 12-28-07; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF TRANSPORTATION Saint Lawrence Seaway Development Corporation 33 CFR Part 401 [Docket No. SLSDC 2007-0005] RIN 2135-AA27 Seaway Regulations and Rules: Periodic Update, Various Categories AGENCY: Saint Lawrence Seaway Development Corporation, DOT. ACTION: Notice of proposed rulemaking. SUMMARY: The Saint Lawrence Seaway Development Corporation (SLSDC) and the St. Lawrence Seaway Management Corporation (SLSMC) of Canada, under international agreement, jointly publish and presently administer the St. Lawrence Seaway Regulations and Rules (Practices and Procedures in Canada) in their respective jurisdictions. Under agreement with the SLSMC, the SLSDC is proposing to amend the joint regulations by updating the Regulations and Rules in various categories. The proposed changes would update the following sections of the Regulations and Rules: Condition of Vessels; Seaway Navigation; and, Information and Reports. The SLSDC is seeking to harmonize the ballast water requirements for vessels transiting the U.S. waters of the Seaway with those currently required by Canadian authorities for transit in waters under Canadian jurisdiction of the Seaway. These proposed amendments are necessary to take account of updated procedures and would eliminate the confusion regarding the requirements for saltwater flushing in the binational waters of the Seaway System. DATES: Any party wishing to present views on the proposed amendments may file comments with the Corporation on or before January 30, 2008. ADDRESSES: You may submit comments [identified by Docket Number SLSDC 2007-0005] by any of the following methods: • *Web Site: http://www.Regulations.gov.* Follow the online instructions for submitting comments/submissions. • *Fax:* 1-202-493-2251. • *Mail:* Docket Management Facility; U.S. Department of Transportation, 1200 New Jersey Avenue, SE., West Building Ground Floor, Room W12-140, Washington, DC 20590-001. • *Hand Delivery:* Documents may be submitted by hand delivery or courier to West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal Holidays. *Instructions:* All submissions must include the agency name and docket number or Regulatory Identification Number
(RIN)for this rulemaking. Note that all comments received will be posted without change at *http://www.Regulations.gov* including any personal information provided. Please see the Privacy Act heading under Regulatory Notices. *Docket:* For access to the docket to read background documents or comments received, go to *http://www.Regulations.gov* ; or in person at the Docket Management Facility; U.S. Department of Transportation, 1200 New Jersey Avenue, SE., West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: Carrie Bedwell Mann, Chief Counsel, Saint Lawrence Seaway Development Corporation, 1200 New Jersey Avenue, SE., Washington, DC 20590,
(202)366-0091. SUPPLEMENTARY INFORMATION: The Saint Lawrence Seaway Development Corporation (SLSDC) and the St. Lawrence Seaway Management Corporation (SLSMC) of Canada, under international agreement, jointly publish and presently administer the St. Lawrence Seaway Regulations and Rules (Practices and Procedures in Canada) in their respective jurisdictions. Under agreement with the SLSMC, the SLSDC is proposing to amend the joint regulations by updating the Regulations and Rules in various categories. The proposed changes would update the following sections of the Regulations and Rules: Condition of Vessels; Seaway Navigation; and, Information and Reports. The SLSDC is seeking to harmonize the ballast water requirements for vessels transiting the U.S. waters of the Seaway with those currently required by Canadian authorities for transit in waters under Canadian jurisdiction of the Seaway. These updates are necessary to take account of updated procedures which would enhance the safety of transits through the Seaway and eliminate the confusion regarding the requirements for saltwater flushing of ballast tanks containing only residual amounts of water and/or sediment in the binational waters of the Seaway System. Several of the proposed amendments are merely editorial or clarification of existing requirements. Where new requirements or regulations are being proposed, an explanation for such a change is provided below. *Regulatory Notices: Privacy Act:* Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review the U.S. Department of Transportation's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit *http://www.Regulations.gov* . The SLSDC is proposing to make one amendment to the Condition of Vessels section of the joint Seaway regulations. In § 401.12, “Minimum requirements—mooring lines and fairleads,” the language is modified to provide vessels the option of using mooring lines that are either wire or synthetic based upon the length of the vessel. Since mooring lines can be wire or synthetic some smaller vessels have presented themselves for transit with a mix of mooring wires and/or synthetic lines. Synthetic lines or hawsers are sufficient to moor the smaller vessels and mooring wire is more than capable of mooring the smaller vessels; therefore, the use of either wire or synthetic lines will be acceptable. Several amendments to the joint regulations pertaining to Seaway Navigation are being proposed. In § 401.34, “Vessels in tow,” the SLSDC is proposing to add a provision that would require every vessel in tow be inspected prior to every transit. The SLSDC is proposing this amendment to ensure navigation safety through inspection of all vessels even when a vessel is in tow. Currently such vessels are being inspected; however, this proposed change will make it a mandatory requirement. The SLSDC is proposing to amend the joint regulations in § 401.30, “Ballast water and trim.” The proposed amendment seeks to harmonize the requirements for saltwater flushing of ballast water tanks containing residual amounts of ballast water and/or sediment with the requirements already in place for vessels transiting Canadian waters of the Seaway System. Vessels transiting the Seaway traverse Canadian and U.S. waters multiple times en route to ports in the Great Lakes St. Lawrence Seaway System. The proposed amendments would make the requirements for foreign flagged vessels (non U.S. or Canadian flagged) to conduct saltwater flushing of each ballast water tank that contains residual amounts of ballast water and/or sediment the same whether the vessel is transiting U.S. or Canadian waters of the Seaway after having operated outside the Canadian and/or U.S. exclusive economic zone (EEZ). The proposed requirement for saltwater flushing of ballast tanks is intended to mirror the regulations already in effect in waters under Canadian jurisdiction for vessels transiting the Seaway. Specifically, the SLSDC, in agreement with the SLSMC, proposes to amend the Seaway Regulations and Rules by adding new subsections
(f)and
(g)to § 401.30, “Ballast water and trim.” These new subsections would require that, as a condition of transiting the Seaway, every foreign flagged vessel (non Canadian or U.S. flagged) must conduct a saltwater flushing of its ballast tanks that contain residual amounts of ballast water in an area 200 nautical miles from any shore before entering waters under Canadian jurisdiction. Saltwater flushing is defined as the addition of mid-ocean water to ballast water tanks: The mixing of the freshwater with residual water and sediment through the motion of the vessel; and the discharge of the mixed water. The resultant residual water remaining in the tank must have a salinity level of at least 30 parts per thousand (ppt). Further, each foreign flagged vessel must maintain the ability to measure salinity levels in each tank onboard the vessel so that final salinities of at least 30 parts per thousand can be ensured. Any vessel that has tanks that fail to reach this salinity level will be required to retain any water in those tanks that is taken onboard in the St. Lawrence River or Great Lakes. The requirements for saltwater flushing would not apply to U.S. or Canadian flagged vessels or to any vessel that has operated exclusively inside the U.S. and/or Canadian EEZ. In addition, the SLSDC and SLSMC will continue to require that as a mandatory prerequisite for clearance of a commercial vessel for transit of the Seaway System after operating beyond the EEZ, the vessel must agree to comply with the “Code of Best Practices for Ballast Water Management” of the Shipping Federation of Canada dated September 28, 2000. In light of the amount of interest and activity regarding control of aquatic nuisance species
(ANS)at all levels of government, especially in the U.S. Congress and the U.S. Coast Guard, the joint regulations would be reviewed and revised once either national legislation and/or regulations are issued that would pertain directly to this issue. In § 401.40, “Entering, exiting, or position in lock”, the SLSDC proposes to prohibit a vessel, when it is being cast off in a lock, from departing in a manner that the stern passes the stop symbol on the local wall nearest the closed gates. Occasionally vessels drift backward in the lock while the mooring lines are being released; preventing the vessel's stern from passing the stop symbol will protect the vessel and the lock gates from possible damage. Other proposed changes made to the joint regulations, including one to the regulations pertaining to Information and Reports, are merely editorial or for clarification purposes. Regulatory Evaluation This proposed regulation involves a foreign affairs function of the United States and therefore Executive Order 12866 does not apply and evaluation under the Department of Transportation's Regulatory Policies and Procedures is not required. Regulatory Flexibility Act Determination I certify this proposed regulation will not have a significant economic impact on a substantial number of small entities. The Saint Lawrence Seaway Regulations and Rules primarily relate to commercial users of the Seaway, the vast majority of whom are foreign vessel operators. Therefore, any resulting costs will be borne mostly by foreign vessels. Environmental Impact This proposed regulation does not require an environmental impact statement under the National Environmental Policy Act (49 U.S.C. 4321, et reg.) because it is not a major federal action significantly affecting the quality of the human environment. The environmental considerations applicable to the basic substance of this proposed regulation are essentially discussed in the U.S. Coast Guard's Environmental Assessment for its May 17, 1999, “Implementation of the National Invasive Species Act of 1996” rulemaking (64 FR 26672) and the U.S. Coast Guard's Environmental Assessment for its August 31, 2005, “Ballast Water Management for Vessels Entering the Great Lakes That Declare No Ballast Onboard” (71 FR 4605). Federalism The Corporation has analyzed this proposed rule under the principles and criteria in Executive Order 13132, dated August 4, 1999, and has determined that this proposal does not have sufficient federalism implications to warrant a Federalism Assessment. Unfunded Mandates The Corporation has analyzed this proposed rule under Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48) and determined that it does not impose unfunded mandates on State, local, and tribal governments and the private sector requiring a written statement of economic and regulatory alternatives. Paperwork Reduction Act This proposed regulation has been analyzed under the Paperwork Reduction Act of 1995 and does not contain new or modified information collection requirements subject to the Office of Management and Budget review. List of Subjects in 33 CFR Part 401 Hazardous materials transportation, Navigation (water), Penalties, Radio, Reporting and recordkeeping requirements, Vessels, Waterways. Accordingly, the Saint Lawrence Seaway Development Corporation proposes to amend 33 CFR part 401, Regulations and Rules, as follows: PART 401—SEAWAY REGULATIONS AND RULES Subpart A—Regulations 1. The authority citation for subpart A of part 401 continues to read as follows: Authority: 33 U.S.C. 983(a) and 984(a)(4), as amended; 49 CFR 1.52, unless otherwise noted. 2. In § 401.12 paragraphs (a)(1) introductory text, (a)(1)(i), (a)(2) introductory text, (a)(3) introductory text, and (a)(4) introductory text are revised to read as follows: § 401.12 Minimum requirements—mooring lines and fairleads.
(a)* * *
(1)Vessels of 80m or less in overall length shall have at least three mooring lines—wires or synthetic hawsers, two of which shall be independently power operated and one of which shall be hand held:
(i)One line shall lead forward from the break of the bow and one line shall lead astern from the quarter and be independently power operated by winches, capstans or windlasses and lead through closed chocks or fairleads acceptable to the Manager and the Corporation; and
(2)Vessels of more than 80m but not more than 100m in overall length shall have four mooring lines—wires or synthetic hawsers, of which three shall be independently power operated by winches, capstans or windlasses and one being hand held. All lines shall be led through closed chocks or fairleads acceptable to the Manager and the Corporation, of which three mooring lines:
(3)Vessels of more than 100m but not more than 120m in overall length shall have four mooring wires or synthetic hawsers independently power operated by winches, capstan or windlasses as follows:
(4)Vessels of more than 120m in overall length shall have four mooring wires, two of which shall lead from the break of the bow and two of which shall lead from the quarter, and; 3. § 401.27 is revised to read as follows: § 401.27 Compliance with instructions. Every vessel shall comply promptly with transit instructions given by the traffic controller or any other officer of the Corporation. 4. In § 401.29 paragraph
(a)is revised to read as follows: § 401.29 Maximum draft.
(a)The draft and speed of a vessel in transit shall be controlled by the master, who shall take into account the vessel's individual characteristics and its tendency to list or squat, so as to avoid striking bottom. 1 1 The main channels between the Port of Montreal and Lake Erie have a controlling depth of 8.23m. 5. § 401.30 is amended by adding new paragraphs
(f)and
(g)to read as follows: § 401.30 Ballast water and trim.
(f)As a condition of transit of the Seaway after having operated outside the Canadian and or U.S. exclusive economic zone
(EEZ)every foreign flagged vessel (a non Canadian or U.S. flagged vessel) that carries only residual amounts of ballast water and/or sediment that were taken onboard the vessel outside waters under Canadian or U.S. jurisdiction shall:
(1)Conduct a saltwater flushing of their ballast water tanks that contain the residual amounts of ballast water and/or sediment in an area 200 nautical miles from any shore before entering waters of the Seaway. Saltwater flushing is defined as the addition of midocean water to ballast water tanks: The mixing of the freshwater with residual water and sediment through the motion of the vessel; and the discharge of the mixed water, such that the resultant residual water remaining in the tank has as high salinity as possible, and is at least 30 parts per thousand (ppt). The vessel should take on as much mid-ocean water into each tank as is safe (for the vessel and crew) in order to conduct saltwater flushing. And adequate flushing may require more than one fill-mix-empty sequence, particularly if only small amounts of water can be safely taken onboard at one time. The master of the vessel is responsible for ensuring the safety of the vessel, crew, and passengers. Vessels reporting only residual ballast water onboard should take particular care to conduct saltwater flushing on the transit to the Great Lakes so as to eliminate fresh and or brackish water residuals in ballast tanks; and
(2)Maintain the ability to measure salinity levels in each tank onboard the vessel so that final salinities of at least 30 ppt can be ensured.
(g)Every foreign flagged vessel that is found not in compliance with § 401.30(f) shall retain any ballast water taken aboard in the St. Lawrence River or Great Lakes. 6. In § 401.31 paragraph
(c)introductory text is revised to read as follows: § 401.31 Meeting and passing.
(c)Except as instructed by the traffic controller, no vessel shall overtake and pass or attempt to overtake and pass another vessel— 7. § 401.34 is revised to read as follows: § 401.34 Vessels in tow. No vessel that is not self-propelled (including but not limited to tug/tows and/or deadship/tows) shall be underway in any Seaway waters unless it is securely tied to an adequate tug or tugs, in accordance with special instructions given by the Manager or the Corporation pursuant to § 401.33. Every vessel in tow has to be inspected prior to every transit unless it has a valid Seaway Inspection Certificate. The owner/master shall give a 24 hour notice of arrival when an inspection is requested. 8. § 401.36 is revised to read as follows: § 401.36 Order of passing through. Vessels shall advance to a lock in the order instructed by the traffic controller. 9. In § 401.37 paragraph
(a)is revised to read as follows: § 401.37 Mooring at tie-up walls.
(a)Upon arrival at a lock, a vessel awaiting instructions to advance shall moor at the tie-up wall, close up to the designated limit or approach sign or to the ship preceding it, whichever is specified by the traffic controller or an officer of the Corporation. 10. In § 401.40 paragraph
(b)is revised to read as follows: § 401.40 Entering, exiting or position in lock.
(b)On being cast off in a lock, no vessel shall be able to fall back in such a manner that the stern passes the stop symbol on the lock wall nearest the closed gates. 11. In § 401.48 paragraph
(a)is revised to read as follows: § 401.48 Turning basins.
(a)With permission from the traffic controller; and 12. § 401.49 is revised to read as follows: § 401.49 Dropping anchor or tying to canal bank. Except in an emergency, no vessel shall drop anchor in any canal or tie-up to any canal bank unless authorized to do so by the traffic controller. 13. In § 401.50 the introductory text is revised to read as follows: § 401.50 Anchorage areas. Except in an emergency, or unless authorized to do so by the traffic controller, no vessel shall drop anchor in any part of the Seaway except in the following designated anchorage areas: 14. In § 401.51 paragraph
(a)is revised to read as follows: § 401.51 Signaling approach to a bridge.
(a)Unless a vessel's approach has been recognized by a flashing signal, the master shall signal the vessel's presence to the bridge operator by VHF radio when it comes abreast of any of the bridge whistle signs. 15. In § 401.58 paragraph
(a)is revised to read as follows: § 401.58 Pleasure craft scheduling.
(a)The transit of pleasure craft shall be scheduled by the traffic controller or the officer in charge of a lock and may be delayed so as to avoid interference with other vessels; and 16. § 401.83 is revised to read as follows: § 401.83 Reporting position at anchor, wharf, etc. A vessel anchoring in a designated anchorage area, or elsewhere, and a vessel mooring at a wharf or dock, tying-up to a canal bank or being held on a canal bank in any manner shall immediately report its position to the traffic controller and it shall not resume its voyage without the traffic controller's permission. Issued at Washington, DC, on December 21, 2007. Saint Lawrence Seaway Development Corporation. Collister Johnson, Jr., Administrator. [FR Doc. E7-25340 Filed 12-28-07; 8:45 am] BILLING CODE 4910-61-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R05-OAR-2006-0003; FRL-8512-5] Approval and Promulgation of Air Quality Implementation Plans; Illinois AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: EPA is proposing disapproval of a revision to the Illinois Ozone State Implementation Plan (SIP). On August 17, 2005, Illinois requested that five compounds be added to its list of compounds exempt from being considered a volatile organic compound (VOC). EPA no longer considers four of the compounds to be VOCs because the compounds were shown to be negligibly photochemically reactive. Thus, the compounds do not lead to ozone formation. For the fifth compound, t-butyl acetate, EPA determined that it is not considered a VOC for emission limits and VOC content requirements, but it is considered a VOC for recordkeeping, emission reporting, and inventory requirements. Illinois has indicated it is correcting the restrictions on t-butyl acetate. Consequently, EPA is alternatively proposing approval of the SIP revisions if t-butyl acetate is removed from the list of compounds exempt from being considered VOC or if the special requirements for t-butyl acetate are clearly indicated. Illinois must submit the supporting documentation during the comment period for this rule. DATES: Comments must be received on or before January 30, 2008. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R05-OAR-2006-0003, by one of the following methods: 1. *http://www.regulations.gov:* Follow the on-line instructions for submitting comments. 2. *E-mail:* *mooney.john@epa.gov.* 3. *Fax:* (312)886-5824. 4. *Mail:* John M. Mooney, Chief, Criteria Pollutant Section, Air Programs Branch (AR-18J), U.S. Environmental Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. 5. *Hand Delivery:* John M. Mooney, Chief, Criteria Pollutant Section, Air Programs Branch (AR-18J), U.S. Environmental Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. Such deliveries are only accepted during the Regional Office normal hours of operation, and special arrangements should be made for deliveries of boxed information. The Regional Office official hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m. excluding Federal holidays. *Instructions:* Direct your comments to Docket ID No. EPA-R05-OAR-2006-0003. 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* or e-mail. The *www.regulations.gov* Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through *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 instructions on submitting comments, go to Section I of the SUPPLEMENTARY INFORMATION section of this document. *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 Environmental Protection Agency, Region 5, Air and Radiation Division, 77 West Jackson Boulevard, Chicago, Illinois 60604. This Facility is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. We recommend that you telephone Matt Rau, Environmental Engineer,
(312)886-6524 before visiting the Region 5 office. FOR FURTHER INFORMATION CONTACT: Matt Rau, Environmental Engineer, Criteria Pollutant Section, Air Programs Branch (AR-18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604,
(312)886-6524, *rau.matthew@epa.gov.* SUPPLEMENTARY INFORMATION: Throughout this document, whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows: I. What Should I Consider as I Prepare My Comments for EPA? II. What Revisions Did the State Request? III. What Is EPA's Analysis of the Revisions? IV. What Action Is EPA Taking Today? V. Statutory and Executive Order Reviews I. What Should I Consider as I Prepare My Comments for EPA? When submitting comments, remember to: 1. Identify the rulemaking by docket number and other identifying information (subject heading, **Federal Register** date and page number). 2. Follow directions—The EPA may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations
(CFR)part or section number. 3. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes. 4. Describe any assumptions and provide any technical information and/or data that you used. 5. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced. 6. Provide specific examples to illustrate your concerns, and suggest alternatives. 7. Explain your views as clearly as possible, avoiding the use of profanity or personal threats. 8. Make sure to submit your comments by the comment period deadline identified. II. What Revisions Did the State Request? Illinois requested revisions to its ozone SIP which would add five compounds from the list of compounds considered to not be VOC. The State requested the compounds 1,1,1,2,2,3,3-heptafluoro-3-methoxypropane (n-C <sup>3</sup> F <sup>7</sup> OCH <sup>3</sup> ), 3-ethoxy 1,1,1,2,3,4,4,5,5,6,6,6-dodecafluoro-2-(trifluoromethyl)hexane (HFE-7500), 1,1,1,2,3,3,3-heptafluoropropane (HFC-227ea), methyl formate, and t-butyl acetate be added to its list of compounds exempt from VOC requirements. Illinois also requested the addition of special requirements for t-butyl acetate. The compound, t-butyl acetate, will be considered VOC for recordkeeping, emissions reporting, modeling, and inventory requirements, but is not considered VOC for emission limits or content requirements. The special restrictions on t-butyl acetate are listed in a separate section from the listing of compounds exempt from being considered VOCs. III. What Is EPA's Analysis of the Revisions? EPA added four compounds, n-C <sup>3</sup> F <sup>7</sup> OCH <sup>3</sup> , HFE-7500, HFC-227ea, and methyl formate, to its list of compounds exempt from VOC requirements on November 29, 2004 (69 FR 69290). EPA also provided special requirements for t-butyl acetate users in a separate November 29, 2004, action (69 FR 69298). Users of t-butyl acetate still must follow the recordkeeping, emissions reporting, modeling, and inventory requirements. However, t-butyl acetate is not considered a VOC for content requirements and emission limits. Illinois added the four compounds from the EPA plus t-butyl acetate to Title 35 of the Illinois Administration Code Section 211.7150(a), its list of compounds exempt from VOC requirements. It also added Section 211.7150(e), which provides the same unique requirements for t-butyl acetate users as the EPA action did. It is not appropriate for t-butyl acetate to be listed in 211.7150(a) because this compound is not exempt from all VOC requirements as are the other compounds listed there. It should be listed in 211.7150(e) only, so the unique requirements for t-butyl acetate are clear. This would follow the approach EPA took in making these revisions to the Federal definition of VOC through separate actions. EPA would find the requested revisions approvable if Illinois removes t-butyl acetate from the list of compounds exempt from VOC requirements in 211.7150(a). This would leave it listed only under 211.7150(e) which makes it clear what requirements apply to t-butyl acetate users. EPA would also find it acceptable for Illinois to add a note to section 211.7150(a) that certain compounds listed in section 211.7150(a) are subject to the requirements of 211.7150(e). This would direct t-butyl acetate users to section 211.7150(e) where the special requirements for this compound are stated. IV. What Action Is EPA Taking Today? EPA is proposing disapproval of the requested ozone revisions to the Illinois SIP. In the alternative, EPA is proposing approval of ozone revisions to the Illinois SIP if a correction is made to Title 35 of the Illinois Administration Code Section 211.7150(a) to remove t-butyl acetate from the list of compounds exempt from VOC regulations or if it is clearly stated that t-butyl acetate is subject to the requirements of section 211.7150(e). Illinois must submit the supporting documentation of the correction during the comment period for this rule for the alternative, proposed approval to be considered. Illinois has proposed adding language to section 211.7150(a) that states some compounds listed in that section must also follow the restrictions in section 211.7150(e). EPA finds this language acceptable. If Illinois submits the final state rule with language of the proposed state rule, this action should be considered a proposed approval. VI. Statutory and Executive Order Reviews Executive Order 12866: Regulatory Planning and Review Under Executive Order 12866 (58 FR 51735, September 30, 1993), this action is not a “significant regulatory action” and, therefore, is not subject to review by the Office of Management and Budget. Paperwork Reduction Act This proposed rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ). Regulatory Flexibility Act This proposed action merely proposes to approve state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ). Unfunded Mandates Reform Act Because this rule proposes to approve pre-existing requirements under State law and does not impose any additional enforceable duty beyond that required by State law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Order 13132: Federalism This action also does not have Federalism implications because it does not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely proposes to approve a State rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments This proposed rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). Executive Order 13045: Protection of Children From Environmental Health and Safety Risks This proposed rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it proposes approval of a state rule implementing a Federal Standard. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use Because it is not a “significant regulatory action” under Executive Order 12866 or a “significant regulatory action,” this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). National Technology Transfer Advancement Act Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), 15 U.S.C. 272, requires Federal agencies to use technical standards that are developed or adopted by voluntary consensus to carry out policy objectives, so long as such standards are not inconsistent with applicable law or otherwise impractical. In reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the Clean Air Act. Absent a prior existing requirement for the state to use voluntary consensus standards, EPA has no authority to disapprove a SIP submission for failure to use such standards, and it would thus be inconsistent with applicable law for EPA to use voluntary consensus standards in place of a program submission that otherwise satisfies the provisions of the Clean Air Act. Therefore, the requirements of section 12(d) of the NTTAA do not apply. List of Subjects in 40 CFR Part 52 Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds. Dated: December 18, 2007. Bharat Mathur, Acting Regional Administrator, Region 5. [FR Doc. E7-25405 Filed 12-28-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 81 [EPA-R06-OAR-2007-0554; FRL-8512-6] Clean Air Act Reclassification of the Houston/Galveston/Brazoria Ozone Nonattainment Area; Texas; Proposed Rule AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: EPA proposes to grant a request by the Governor of the State of Texas to voluntarily reclassify the Houston/Galveston/Brazoria
(HGB)ozone nonattainment area from a moderate 8-hour ozone nonattainment area to a severe 8-hour ozone nonattainment area. This request was made in a letter from Governor Rick Perry to the EPA Administrator on June 15, 2007. In addition to the reclassification proposal, EPA is also proposing and taking comment on a range of dates from December 15, 2008 to April 15, 2010 for the State to submit a revised State Implementation Plan
(SIP)addressing the severe ozone nonattainment area requirements of the Clean Air Act (CAA). EPA will accept comments on all aspects of this proposed action. However, as discussed in Section II below, the CAA mandates the Agency to grant a voluntary reclassification when requested by a State. DATES: Written comments must be received on or before January 30, 2008. ADDRESSES: Submit your comments, identified by Docket No. EPA-R06-OAR-2007-0554, by one of the following methods: • *Federal eRulemaking Portal:* *http://www.regulations.gov.* Follow the on-line instructions for submitting comments. • *EPA Region 6 “Contact Us” Web site: http://epa.gov/region6/r6coment.htm.* Please click on “6PD” (Multimedia) and select “Air” before submitting comments. • *E-mail:* Mr. Guy Donaldson at *donaldson.guy@epa.gov.* • *Fax:* Mr. Guy Donaldson, Chief, Air Planning Section (6PD-L), at fax number 214-665-7263. • *Mail:* Mr. Guy Donaldson, Chief, Air Planning Section (6PD-L), Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, Texas 75202-2733. • *Hand or Courier Delivery:* Mr. Guy Donaldson, Chief, Air Planning Section (6PD-L), Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, Texas 75202-2733. Such deliveries are accepted only between the hours of 8 a.m. and 4 p.m. weekdays except for legal holidays. Special arrangements should be made for deliveries of boxed information. *Instructions:* Direct your comments to Docket ID No. EPA-R06-OAR-2007-0554. 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* or e-mail. The *www.regulations.gov* Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through *www.regulations.gov* your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. *Docket:* All documents in the docket are listed in the *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 Planning Section (6PD-L), Environmental Protection Agency, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733. The file will be made available by appointment for public inspection in the Region 6 FOIA Review Room between the hours of 8:30 a.m. and 4:30 p.m. weekdays except for legal holidays. Contact the person listed in the FOR FURTHER INFORMATION CONTACT paragraph below or Mr. Bill Deese at 214-665-7253 to make an appointment. If possible, please make the appointment at least two working days in advance of your visit. There will be a 15 cent per page fee for making photocopies of documents. On the day of the visit, please check in at the EPA Region 6 reception area at 1445 Ross Avenue, Suite 700, Dallas, Texas. FOR FURTHER INFORMATION CONTACT: Carl Young, Air Planning Section (6PD-L), Environmental Protection Agency, Region 6, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733, telephone
(214)665-6645; fax number 214-665-7263; e-mail address *young.carl@epa.gov.* SUPPLEMENTARY INFORMATION: Throughout this document, whenever “we,” “us” or “our” is used, we mean the EPA. Correspondence discussed in this proposal can be found on the internet in the electronic docket for this action. To access the correspondence, please go to *http://www.regulations.gov* and search for Docket No. EPA-R06-OAR-2007-0554, or contact the person listed in the FOR FURTHER INFORMATION CONTACT paragraph above. Table of Contents I. Background II. Reclassification of the HGB Nonattainment Area to Severe Ozone Nonattainment III. Consequences of Reclassification A. Effect on Stationary Air Pollution Sources B. Relief From Attainment Demonstration Deadlines of Previous Classification C. Required Plan and Submission Date 1. Submission Date for HGB's 8-Hour Ozone Severe State Implementation Plan 2. Severe Area Plan Requirements IV. Proposed Action V. Statutory and Executive Order Reviews I. Background The HGB area consists of Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller counties. Upon the date of enactment of the 1990 CAA Amendments, the HGB area was classified as a severe ozone nonattainment area for the 1-hour ozone National Ambient Air Quality Standard (NAAQS). 1 1 56 FR 56694, November 6, 1991 and CAA section 181(a)(1). On July 18, 1997, EPA, citing continued health concerns with the 1-hour ozone standard, promulgated a new 8-hour ozone NAAQS aimed at better protecting the health of those particularly susceptible to the effects of ozone (62 FR 38856, July 18, 1997). The 8-hour standard is more protective of public health than the older 1-hour standard. On April 30, 2004, we established 8-hour ozone standard designations and classifications for every area in the United States (69 FR 23858). The HGB area was classified as a moderate nonattainment area for the 8-hour ozone standard with an attainment date no later than June 15, 2010. Also on April 30, 2004, we issued a final rule addressing key elements of the program to implement the 8-hour standard (Phase 1 Rule) (69 FR 23951). The classifications and Phase 1 Rule were the subject of litigation, but since mid-2007 it has been clear that the HGB classification under the 8-hour rule will remain in effect. 2 2 *South Coast Air Quality Management District* v. *EPA* , 472 F.3d 882 (D.C. Cir. 2006). II. Reclassification of the HGB Nonattainment Area to Severe Ozone Nonattainment On June 15, 2007, EPA received a request from Governor Perry seeking voluntary reclassification of the HGB area. The Governor requested that EPA reclassify the HGB area from a moderate nonattainment area to a severe nonattainment area under the 8-hour ozone standard. A severe classification is two classification categories higher than the current classification of moderate. This request was made because the State does not believe that it can reduce emissions enough to reach attainment by the current June 2010 attainment date. 3 A severe classification means that the HGB area must attain the 8-hour ozone standard as expeditiously as practicable but no later than June 15, 2019. 3 Letter from Governor Rick Perry to Mr. Stephen Johnson, Administrator of the EPA, dated June 15, 2007. EPA is reviewing this request as one made pursuant to section 181(b)(3) of the CAA which provides for “voluntary reclassification” and states that “* * * [t]he Administrator shall grant the request of any State to reclassify a nonattainment area in that State * * * to a higher classification” and that “* * * [t]he Administrator shall publish a notice in the **Federal Register** of any such request and of action by the Administrator granting the request.” EPA intends to take a final action granting the State's request for a voluntary reclassification. The plain language of section 181(b)(3) mandates that we approve such a request and, as such, gives the Agency no discretion to deny it. III. Consequences of Reclassification A. Effect on Stationary Air Pollution Sources Upon reclassification, stationary air pollution sources in the HGB ozone nonattainment area will be subject to severe ozone nonattainment area New Source Review
(NSR)and Title V permit requirements. The source applicability thresholds for major sources and major source modification emissions will be 25 tons per year for volatile organic compounds
(VOC)and nitrogen oxides (NO <sup>X</sup> ). For new and modified major stationary sources subject to review under Texas Administrative Code Title 30, Chapter 116, Section 116.150 (30 TAC 116.150) in the EPA approved SIP, VOC and NO <sup>X</sup> emission increases from the proposed construction of the new or modified major stationary sources must be offset by emission reductions by a minimum offset ratio of 1.30 to 1. (See 30 TAC 116 and 40 CFR 52.2270(c)). B. Relief From Attainment Demonstration Deadline of Previous Classification EPA believes that when a nonattainment area is reclassified, the CAA attainment demonstration requirements of the new classification supersede those of the previous classification. In other words, once a nonattainment area has been reclassified and as a result has a new statutory attainment deadline, the deadline applicable to the attainment demonstration under the previous classification no longer has any logical, practical or legal significance. Consequently, when HGB is reclassified to severe, any potential for EPA to find the area has failed to submit any required documents pertinent to the attainment demonstration under the previous classification will be moot. EPA also believes that reclassification would not provide a basis for extending submission deadlines for SIP elements unrelated to the attainment demonstration, that were due for the area's moderate classification. In June 2007 Texas submitted an 8 hour SIP to EPA that included the requirements of
(1)a moderate area reasonable further progress demonstration (40 CFR 51.910) which includes contingency control measures if the area fails to meet reasonable further progress (CAA 172(c)(9)),
(2)a reasonably available control technology demonstration (40 CFR 51.912), and
(3)a 2002 emissions inventory (40 CFR 51.915). Other moderate area SIP requirements are currently being implemented. These include NSR rules (40 CFR part 165) and a vehicle inspection and maintenance program (40 CFR 51.905(a)(1)(i)). C. Required Plan and Submission Date 1. Submission Date for HGB's 8-Hour Ozone Severe State Implementation Plan In a letter dated May 21, 2007, in response to questions from the Texas Commission on Environmental Quality (TCEQ), the EPA's Acting Assistant Administrator for Air requested that the Chairman of TCEQ provide to EPA a basis for setting a new deadline for submission of the severe area SIP attainment demonstration and other required elements of the new classification, and that based on this recommendation and documentation, along with other relevant information, EPA would establish a SIP submission date. 4 The Wehrum letter further stated that the submission date should be as soon as practicable but not beyond June 15, 2010. In a July 10, 2007 letter to Texas Governor Rick Perry we also requested that TCEQ provide information to show the amount of time needed for the State to submit its plan as soon as practical and stated that we would work with TCEQ on setting a date for submission of the new SIP obligations and ensuring interim progress in reducing emissions prior to attainment. 5 In a letter dated August 21, 2007, the Executive Director of TCEQ provided a schedule of milestones leading to a SIP adoption date of March 2010. TCEQ stated that the recommended timeline reflects the complex technical work in developing an attainment demonstration; updating emissions inventory data (including reasonable further progress milestones); revising the existing 2005 photochemical modeling; developing a new and more representative 2006 photochemical modeling episode; and developing and adopting effective control strategies. TCEQ also stated that its schedule would allow for a meaningful stakeholder process for developing effective control strategies. 6 If we accept the timing set forth in the Texas letter it suggests to us that April 15, 2010 could be an appropriate date for submission of the revised SIP for the 8-hour ozone standard. 4 Letter from William Wehrum, EPA Assistant Administrator, to Ms. Kathleen Hartnett White, TCEQ Chairman, dated May 21, 2007. 5 Letter from Lawrence E. Starfield, Acting EPA Regional Administrator, to Governor Rick Perry, dated July 10, 2007. 6 Letter from Glenn Shankle, TCEQ Executive Director to Mr. Richard E. Greene, EPA Regional Administrator, dated August 21, 2007. Alternatively, December 15, 2008, (18 months from the request for reclassification), could be considered an appropriate date for submission of the SIP revision to EPA. This date is analogous to the 18 months allowed for SIP submissions pursuant to a SIP call under CAA section 110(k)(5). It is also in keeping with the timeframes set forth in the involuntary reclassifications, which in general have been approximately 12 months from the effective date of a final reclassification. 7 Given these two dates, we are proposing and taking comment on a range of dates from December 15, 2008 to April 15, 2010 for submission of the revised SIP for the 8-hour ozone standard. We request that any comments on the date for submission of the revised SIP be accompanied by justification for the commenter's position. We will review the comments and make a decision on the appropriate SIP submission date in our final action on the reclassification. 7 See the reclassification notices for the Dallas/Fort Worth area (63 FR 8128, February 18, 1998) and the Beaumont/Port Arthur area (69 FR 16483, March 30, 2004). 2. Severe Area Plan Requirements A revised SIP for the HGB area must include all the requirements for serious ozone nonattainment area plans such as:
(1)Enhanced ambient monitoring (CAA 182(c)(1)),
(2)an enhanced vehicle inspection and maintenance program (CAA 182(c)(3)),
(3)a clean fuel vehicle program or an approved substitute (CAA 182(c)(4)), and
(4)gasoline vapor recovery for motor vehicle refueling emissions (CAA 182(b)(3) 8 ). It must also meet the severe area requirements including:
(1)an attainment demonstration (40 CFR 51.908),
(2)provisions for reasonably available control technology and reasonably available control measures (40 CFR 51.912),
(3)reasonable further progress reductions in VOC and NO <sup>X</sup> emissions (40 CFR 51.910),
(4)contingency measures to be implemented in the event of failure to meet a milestone or attain the standard (CAA 172(c)(9) and 182(c)(9)),
(5)transportation control measures to offset emissions from growth in vehicle miles traveled (CAA 182(d)(1)(A)),
(6)reformulated gasoline (CAA 211(k)(10)(D)),
(7)NSR permits (40 CFR part 165), and
(7)fees on major sources if the area fails to attain the standard (CAA 182(d)(3) and 185). See also the requirements for serious and severe ozone nonattainment areas set forth in CAA sections 182(c), 182(d) and 185. Because the HGB area was classified as severe under the 1-hour ozone standard, many of these requirements are currently being implemented. 8 Under CAA section 202(a)(6) gasoline vapor recovery remains a requirement for serious and above nonattainment areas but is no longer a requirement for moderate nonattainment areas. Please see 59 FR 16262, April 6, 1994. The revised SIP for the HGB area must also contain adopted regulations to adopt and implement control measures in regulatory form by specified dates sufficient to make required reasonable further progress in emission reductions and to attain the 8-hour ozone NAAQS as expeditiously as practicable but not later than June 15, 2019. The new attainment demonstration should be based on the best information available. IV. Proposed Action Pursuant to section 181(b)(3) and based on a voluntary request by the state of Texas, we are proposing to grant the request of the Governor of Texas to reclassify the HGB 8-hour ozone nonattainment area from moderate to severe. We are also proposing to set due dates for the submission of a revised SIP addressing the severe area requirements. We are proposing to set a date within the range from December 15, 2008 to April 15, 2010 for the State to submit a revised SIP addressing the CAA severe ozone nonattainment area requirements. V. Statutory and Executive Order Reviews Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. EPA has determined that the voluntary reclassification would not result in any of the effects identified in Executive Order 12866 section 3(f). Voluntary reclassifications under 181(b)(3) of the CAA are based solely upon requests by the State and EPA is required under the CAA to grant them. These actions do not, in and of themselves, impose any new requirements on any sectors of the economy. In addition, because the statutory requirements are clearly defined with respect to the differently classified areas, and because those requirements are automatically triggered by classification, reclassification cannot be said to impose a materially adverse impact on State, local or tribal governments or communities. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). In addition, I certify that this proposed rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). And these actions do not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), because EPA is required to grant requests by States for voluntary reclassifications and such reclassifications in and of themselves do not impose any federal intergovernmental mandate. This proposed rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action does not alter the relationship or the distribution of power and responsibilities established in the CAA. This proposed rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant. As discussed above, a voluntary reclassification under section 181(b)(3) of the CAA is based solely on the request of a State and EPA is required to grant such a request. In this context, it would thus be inconsistent with applicable law for EPA, when it grants a State's request for a voluntary reclassification to, use voluntary consensus standards. Thus the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) also do not apply. In addition, this proposed rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). Lastly, executive Order 12898 (59 FR 7629, February 16, 1994) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States. As stated earlier in this Notice EPA intends to take a final action granting the State's request for a voluntary reclassification. The plain language of section 181(b)(3) of CAA mandates that we “shall” approve such a request if it is made in accordance with the requirements of the Act, and, as such, does not provide the Agency with the discretionary authority to address concerns raised outside the Act, including those contained in Executive Order 12898. List of Subjects in 40 CFR Part 81 Environmental protection, Air pollution control, Intergovernmental relations, Nitrogen oxides, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds. Authority: 42 U.S.C. 7401 et seq. Dated: December 18, 2007. Richard E. Greene, Regional Administrator, Region 6. [FR Doc. E7-25402 Filed 12-28-07; 8:45 am] BILLING CODE 6560-50-P DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Parts 4, 8, 13, 17, 32, and 52 [FAR Case 2006-026; Docket 2007-0001; Sequence 13] RIN 9000-AK87 Federal Acquisition Regulation; FAR Case 2006-026, Governmentwide Commercial Purchase Card Restrictions for Treasury Offset Program Debts AGENCIES: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Proposed rule. SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) are proposing to amend the Federal Acquisition Regulation
(FAR)to restrict the use of the Governmentwide commercial purchase card as a method of payment for contractors with debts subject to the Treasury Offset Program. DATES: Interested parties should submit written comments to the FAR Secretariat on or before February 29, 2008 to be considered in the formulation of a final rule. ADDRESSES: Submit comments identified by FAR case 2006-026 by any of the following methods: Federal eRulemaking Portal: *http://www.regulations.gov* . • To search for any document, first select under “Step 1,” “Documents with an Open Comment Period” and select under “Optional Step 2,” “Federal Acquisition Regulation” as the agency of choice. Under “Optional Step 3,” select “Proposed Rules”. Under “Optional Step 4,” from the drop down list, select “Document Title” and type the FAR case number “2006-026”. Click the “Submit” button. Please include your name and company name (if any) inside the document. You may also search for any document by clicking on the “Search for Documents” tab at the top of the screen. Select from the agency field “Federal Acquisition Regulation”, and type “2006-026” in the “Document Title” field. Select the “Submit” button. • Fax: 202-501-4067. • Mail: General Services Administration, Regulatory Secretariat (VPR), 1800 F Street, NW, Room 4035, ATTN: Diedra Wingate, Washington, DC 20405. *Instructions* : Please submit comments only and cite FAR case 2006-026 in all correspondence related to this case. All comments received will be posted without change to *http://www.regulations.gov* , including any personal and/or business confidential information provided. FOR FURTHER INFORMATION CONTACT: Mr. Michael Jackson, Procurement Analyst, at
(202)208-4949 for clarification of content. For information pertaining to status or publication schedules, contact the FAR Secretariat at
(202)501-4755. Please cite FAR case 2006-026. SUPPLEMENTARY INFORMATION: A. Background The Debt Collection Improvement Act of 1996 and other statutes provide the tools for administering a centralized program for the collection of delinquent, non-tax and tax debts. The Financial Management Service (FMS), a bureau of the Department of the Treasury, is charged with implementing the Government’s delinquent debt collection program. Since 1996, FMS has collected more than $24.4 billion in delinquent debt. In fiscal year 2006, collections of delinquent debt remained at a constant $3.1 billion. To collect delinquent debts owed to Federal agencies and states, FMS uses the Treasury Offset Program (TOP). Information on TOP is available at *http://fms.treas.gov/debt/index.html* . TOP uses both “offsets” and “continuous levies” to collect delinquent debts. Offset is a process whereby Federal payments are reduced or “offset” to satisfy a person’s overdue Federal debt, child support obligation, or state tax debt. A payee’s name and taxpayer identification number are matched against a Treasury/FMS database of delinquent debtors for automatic offset of funds. Offset funds are then used to satisfy payment of the delinquent debt to the extent allowed by law. Under the continuous levy program, delinquent Federal tax debts are collected by levying non-tax payments until the debt is satisfied, as authorized by the 1997 Taxpayer Relief Act. The continuous levy program includes levy of some vendor payments (Treasury disbursed and non-Treasury disbursed payments), Federal employee salary payments, the Office of Personnel Management retirement payments, and social security benefit payments. Continuous levy is accomplished through a process almost identical to that of offset. FMS matches delinquent debtor data with payment record data for automated collection of the debt at the time of payment, after the delinquent taxpayer has been afforded due process. FMS is currently unable to offset or apply a continuous levy to payments made to contractors with delinquent debts when the Governmentwide commercial purchase card is used as the method of payment. When the Governmentwide commercial purchase card is used as the method of payment, the Government does not make a direct payment to the contractor. Instead, the processing bank for the Governmentwide commercial purchase card pays the contractor. To assess the significance of the problem, FMS and VISA, one of the processing banks, matched VISA payments for Governmentwide purchase card transactions for one year. As a result of the match, FMS determined that approximately $73.5 million dollars of delinquent debts subject to collection under TOP were not collected because the debtors were paid using the Governmentwide commercial purchase card. The individual payments that would otherwise have been collected were all in excess of the micropurchase threshold. To help increase the collection of delinquent debts owed to the Government, the rule proposes to amend the FAR to require contracting officers to determine whether the Central Contractor Registration
(CCR)indicates that the contractor has delinquent debt that is subject to collection under the TOP. If a debt indicator is found, the Governmentwide commercial purchase card is not authorized as a method of payment. The contracting officer is required to check for the flag at the time of contract award, order placement, and again before exercising any options. The rule also proposes to amend the applicable Governmentwide commercial purchase card payment clause at 52.232-36 to advise contractors that the Governmentwide commercial purchase card is not authorized as a method of payment if a debt indicator is included in the CCR for the contractor. The clause is written to allow contracting officers to unilaterally exercise options without having to bilaterally negotiate revisions to the original contract terms and conditions if the debt indicator is subsequently found during the execution of an option. This rule would not apply to individual travel charge cards or centrally billed accounts for travel/transportation services. This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804. B. Regulatory Flexibility Act The Councils do not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, *et seq.* , because the rule only impacts the method by which a contractor can be paid when the contractor has a delinquent debt. An Initial Regulatory Flexibility Analysis has, therefore, not been performed. We invite comments from small businesses and other interested parties. The Councils will consider comments from small entities concerning the affected FAR Parts 4, 8, 13, 17, 32, and 52 in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 601, *et seq.* (FAR case 2006-026), in correspondence. C. Paperwork Reduction Act The Paperwork Reduction Act does not apply because the proposed changes to the FAR do not impose information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, *et seq.* List of Subjects in 48 CFR Parts 4, 8, 13, 17, 32, and 52 Government procurement. Dated: December 20, 2007. Al Matera, Director, Office of Acquisition Policy. Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 4, 8, 13, 17, 32, and 52 as set forth below: 1. The authority citation for 48 CFR parts 4, 8, 13, 17, 32, and 52 continues to read as follows:>Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c). PART 4—ADMINISTRATIVE MATTERS 2. Amend section 4.1103 by revising paragraph (a)(3) to read as follows: 4.1103 Procedures.
(a)* * *
(3)Need not verify registration before placing an order or call if the contract or agreement includes the clause at 52.204-7, or 52.212-4(t), or a similar agency clause, except when payment by the Governmentwide commercial purchase card is contemplated (see 32.1108(b)(2)). PART 8—REQUIRED SOURCES OF SUPPLIES AND SERVICES 3. Revise section 8.405-7 to read as follows: 8.405-7 Payment. Agencies may make payments for oral or written orders by any authorized means, including the Governmentwide commercial purchase card (but see 32.1108(b)(2)). PART 13—SIMPLIFIED ACQUISITION PROCEDURES 4. Amend section 13.003 by revising paragraph
(e)to read as follows: 13.003 Policy.
(e)Agencies shall use the Governmentwide commercial purchase card and electronic purchasing techniques to the maximum extent practicable in conducting simplified acquisitions (but see 32.1108(b)(2)). 5. Amend section 13.301 by revising the first sentence of paragraph
(a)and paragraph (c)(3) to read as follows: 13.301 Governmentwide commercial purchase card.
(a)Except as provided in 32.1108(b)(2), the Governmentwide commercial purchase card is authorized for use in making and/or paying for purchases of supplies, services, or construction. * * *
(c)* * *
(3)Make payments, when the contractor agrees to accept payment by the card (but see 32.1108(b)(2)). PART 17—SPECIAL CONTRACTING METHODS 6. Amend section 17.207 by revising paragraph
(f)to read as follows: 17.207 Exercise of options.
(f)Before exercising an option—
(1)The contracting officer shall make a written determination for the contract file that exercise is in accordance with the terms of the option, the requirements of this section, and Part 6. To satisfy requirements of Part 6 regarding full and open competition, the option must have been evaluated as part of the initial competition and be exercisable at an amount specified in or reasonably determinable from the terms of the basic contract, *e.g.* —
(i)A specific dollar amount;
(ii)An amount to be determined by applying provisions (or a formula) provided in the basic contract, but not including renegotiation of the price for work in a fixed-price type contract;
(iii)In the case of a cost-type contract, if—
(A)The option contains a fixed or maximum fee; or
(B)The fixed or maximum fee amount is determinable by applying a formula contained in the basic contract (but see 16.102(c));
(iv)A specific price that is subject to an economic price adjustment provision; or
(v)A specific price that is subject to change as the result of changes to prevailing labor rates provided by the Secretary of Labor.
(2)See 32.1108(b)(2) for restrictions on the use of the Governmentwide commercial purchase card as a method of payment when the Central Contractor Registration
(CCR)shows a delinquent debt flag. PART 32—CONTRACT FINANCING 7. Amend section 32.1108 by revising paragraph
(b)to read as follows: 32.1108 Payment by Governmentwide commercial purchase card. (b)(1) Written contracts to be paid by purchase card should include the clause at 52.232-36, Payment by Third Party, as prescribed by 32.1110(d). However, payment by a purchase card also may be made under a contract that does not contain the clause to the extent the contractor agrees to accept that method of payment. (2)(i) Contracting officers are required to verify (by looking in CCR) whether the contractor has any delinquent debt subject to collection under the Treasury Offset Program
(TOP)program at contract award, order placement, and prior to any option exercise. Information on TOP is available at *http://fms.treas.gov/debt/index.html* .
(ii)The contracting officer shall not authorize the Governmentwide commercial purchase card as a method of payment when the Central Contractor Registration
(CCR)indicates that the contractor has delinquent debt subject to collection under the TOP. In such cases, the contracting officer shall provide alternative payment instructions to the contractor. Contracting officers shall not use the presence of the delinquent debt indicator to exclude a contractor from receipt of the contract, order, or exercised option.
(iii)If a contractor alerts the contracting officer that the CCR debt flag indicator has been changed to no longer show a delinquent debt, the contracting officer may take steps to authorize payment by Governmentwide commercial purchase card. PART 52—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 8. Amend section 52.232-36 by revising the date of the clause and paragraphs
(a)and
(b)to read as follows: 52.232-36 Payment by Third Party. PAYMENT BY THIRD PARTY
(a)*General* .
(1)Except as provided in paragraph (a)(2) of this clause, the Contractor agrees to accept payments due under this contract, through payment by a third party in lieu of payment directly from the Government, in accordance with the terms of this clause. The third party and, if applicable, the particular Governmentwide commercial purchase card to be used are identified elsewhere in this contract.
(2)The Governmentwide commercial purchase card is not authorized as a method of payment when the Central Contractor Registration
(CCR)indicates that the Contractor has delinquent debt that is subject to collection under the Treasury Offset Program (TOP). Information on TOP is available at *http://fms.treas.gov/debt/index.html* . If the CCR subsequently indicates that the Contractor no longer has delinquent debt, the Contractor may request the Contracting Officer to authorize payment by Governmentwide commercial purchase card.
(b)*Contractor payment request* .
(1)Except as provided in paragraph (b)(2) of this clause, the Contractor shall make such payment requests through a charge to the Government account with the third party, at the time and for the amount due in accordance with those clauses of this contract that authorize the Contractor to submit invoices, contract financing requests, other payment requests, or as provided in other clauses providing for payment to the Contractor.
(2)When the Contracting Officer has notified the Contractor that the Governmentwide commercial purchase card is no longer an authorized method of payment, the Contractor shall make such payment requests in accordance with instructions provided by the Contracting Officer during the period when the purchase card is not authorized. [FR Doc. E7-25424 Filed 12-28-07; 8:45 am] BILLING CODE 6820-EP-S DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 300 [Docket No. 071031633-7834-01] RIN 0648-AW23 Pacific Halibut Fisheries; Guided Sport Charter Vessel Fishery for Halibut AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Proposed rule; request for comments. SUMMARY: NMFS proposes regulations that would limit the harvest of Pacific halibut by guided sport charter vessel anglers in International Pacific Halibut Commission
(IPHC)Area 2C of Southeast Alaska to the guideline harvest level
(GHL)for that area under two different scenarios. First, if the GHL remains unchanged in 2008, a suite of three management measures are proposed to be added to an existing two-halibut daily catch and size limit. These management measures include a prohibition on the harvest of halibut by charter vessel guides, operators, and crew; a limit on the number of fishing lines that may be used on a charter vessel of six or the number of charter vessel anglers onboard, whichever is less; and an annual catch limit of four halibut per charter vessel angler. Second, if the GHL decreases in 2008, then a one-halibut daily catch limit is proposed to be substituted for the existing two-halibut daily catch limit. The prohibition of halibut harvest by charter vessel guides, operators, and crew, and the 6-line limit also are proposed under the second scenario. This proposed regulatory change is necessary to reduce the halibut harvest in the charter vessel sector to the GHL for Area 2C. The intended effect of this action is a reduction in the poundage of halibut harvested by the guided sport charter vessel sector in Area 2C to the GHL while minimizing adverse impacts on the charter fishery, its sport fishing clients, the coastal communities that serve as home ports for this fishery, and on fisheries for other species. DATES: Comments must be received no later than January 30, 2008. ADDRESSES: Send comments to Sue Salveson, Assistant Regional Administrator, Sustainable Fisheries Division, Alaska Region, NMFS, Attn: Ellen Sebastian. You may submit comments, identified by “RIN 0648- AW23” by any one of the following methods: • *Electronic Submissions* : Submit all electronic public comments via the Federal eRulemaking Portal Web site at *http://www.regulations.gov.* • *Mail* : P. O. Box 21668, Juneau, AK 99802. • *Fax* :
(907)586-7557. • *Hand delivery to the Federal Building* : 709 West 9th Street, Room 420A, Juneau, AK. All comments received are a part of the public record and will be posted to *http://www.regulations.gov* without change. All Personal Identifying Information (e.g., name, address) voluntarily submitted by the commenter may be publicly accessible. Do not submit Confidential Business Information or otherwise sensitive or protected information. NMFS will accept anonymous comments. Attachments to electronic comments must be in Microsoft Word, Excel, WordPerfect, or Adobe portable document file
(pdf)formats to be accepted. Copies of the Environmental Assessment (EA), Regulatory Impact Review (RIR), and Initial Regulatory Flexibility Analysis
(IRFA)prepared for this action may be obtained from the North Pacific Fishery Management Council (Council) at 605 West 4th, Suite 306, Anchorage, Alaska 99501-2252, 907-271-2809, or the NMFS Alaska Region, P.O. Box 21668, Juneau, Alaska 99802, Attn: Ellen Sebastian, and on the NMFS Alaska Region Web site at *http://www.noaa.fakr.gov.* Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this rule may be submitted to NMFS at the above address, and by e-mail to *David_Rostker@omb.eop.gov* or by fax to 202-395-7285. FOR FURTHER INFORMATION CONTACT: Jay Ginter, 907-586-7228, *jay.ginter@noaa.gov* , or Julie Scheurer, 907-586-7356, *julie.scheurer@noaa.gov.* SUPPLEMENTARY INFORMATION: The International Pacific Halibut Commission
(IPHC)and NMFS manage fishing for Pacific halibut ( *Hippoglossus stenolepis* ) through regulations established under the authority of the Northern Pacific Halibut Act of 1982 (Halibut Act). The IPHC promulgates regulations governing the halibut fishery under the Convention between the United States and Canada for the Preservation of the Halibut Fishery of the Northern Pacific Ocean and Bering Sea (Convention). The IPHC's regulations are subject to approval by the Secretary of State with concurrence from the Secretary of Commerce (Secretary). After approval by the Secretaries of State and Commerce, the IPHC regulations are published in the **Federal Register** as annual management measures pursuant to 50 CFR 300.62 (March 14, 2007; 72 FR 11792). The Halibut Act also provides the Council with authority to recommend regulations to the Secretary to allocate harvesting privileges among U.S. fishermen. This process requires the Council to submit a recommendation to the Secretary as a proposed rule for publication in the **Federal Register** along with supporting analyses as required by other applicable law. The Council has exercised this authority, most notably in the development of its Individual Fishing Quota
(IFQ)Program, codified at 50 CFR part 679, and subsistence halibut fishery management measures, codified at 50 CFR 300.65. The Council also has been developing a regulatory program to manage the guided sport charter vessel fishery for halibut. The regulatory program proposed by this action is linked to the overall management of the halibut fisheries by the IPHC and a previous action by the Council and NMFS to establish a guideline harvest level
(GHL)for managing the harvest of halibut by the guided sport charter vessel fishery (August 8, 2003; 68 FR 47256). Management of the Halibut Fisheries The harvest of halibut occurs in three basic fisheries—the commercial, sport, and subsistence fisheries. Additional fishing mortality occurs as bycatch or incidental catch while targeting other species and wastage of halibut that are caught but cannot be used for human food. The IPHC annually determines the amount of halibut that may be removed from the resource without causing biological conservation problems on an area-by-area basis in all areas of Convention waters. It imposes catch limits, however, on only the commercial sector in areas in and off of Alaska. The IPHC estimates the exploitable biomass of halibut using a combination of harvest data from the commercial, recreational, subsistence fisheries, and information collected during scientific surveys and sampling of bycatch in other fisheries. The target amount of allowable harvest for a given area is calculated by multiplying a fixed harvest rate by the estimate of exploitable biomass. This target level is called the total constant exploitation yield
(CEY)as it represents the target level for total removals (in net pounds) for that area in the coming year. The IPHC subtracts estimates of all non-commercial removals (sport, subsistence, bycatch, and wastage) from the total CEY. The remaining CEY, after the removals are subtracted, is the maximum catch or “fishery CEY” for an area's directed commercial fixed gear fishery. This method of determining the commercial fishery's catch limit in an area results in a decrease in the commercial fishery's use of the resource as other non-commercial uses increase their proportion of the total CEY. As conservation of the halibut resource is the overarching goal of the IPHC, it attempts to include all sources of fishing mortality of halibut within the total CEY. This method for determining the limit for the commercial use of halibut has worked well for many years to conserve the halibut resource, provided that the other non-commercial uses of the resource have remained relatively stable and small. Although most of the non-commercial uses of halibut have been relatively stable, growth in the guided sport charter vessel fishery in recent years, particularly in Area 2C, has resulted in the guided sport charter vessel fishery harvesting a larger amount of halibut, thereby reducing the amount available to the commercial fishery. Guideline Harvest Level
(GHL)Currently, the Council's only approved management policy in effect for the charter vessel fisheries is to have separate GHLs for Area 2C and Area 3A (50 CFR 300.65(c)). The GHLs serve as benchmarks for monitoring the charter vessel fishery relative to the commercial fishery and other sources of fishing mortality. The GHLs do not limit the charter vessel fisheries. Although it is the Council's policy that the charter vessel fisheries should not exceed the GHLs, no constraints have been imposed on the charter vessel fisheries for GHLs that have been exceeded in the past. The Council has discussed the expansion of the charter vessel fishery for halibut since 1993. The GHLs were initially adopted by the Council in 1997 without implementing regulations. The Council stated its intent to maintain a stable charter vessel fishing season without a mid-season closure. If a GHL were exceeded, other management measures would be triggered to take effect in years following attainment of the GHL. The Council envisioned “framework” regulations of increasing restrictiveness depending on the extent to which a GHL was exceeded. Proposed framework regulations were published in 2002 (January 28, 2002; 67 FR 3867); however, NMFS informed the Council later that year that its framework regulations could not be implemented as envisioned. Hence, a final rule establishing the GHLs was published without any restrictive regulations (August 8, 2003; 68 FR 47256). The GHLs represent a pre-season specification of acceptable annual halibut harvests in the charter vessel fisheries in Areas 2C and 3A. To accommodate some growth in the charter vessel sector while approximating historical harvest levels, the Council recommended GHLs based on 125 percent of the average 1995 through 1999 charter vessel harvest. For Area 2C the GHL was set at 1,432,000 lb (649.5 mt) net weight, and in Area 3A the GHL was set at 3,650,000 lb (1,655.6 mt) net weight. When the Council recommended these GHLs, halibut stocks were considered to be near record high levels of abundance. To accommodate decreases and subsequent increases in abundance, the Council recommended a system of step-wise adjustments in each GHL based on a predetermined uniform measure of stock abundance. The measure used was the CEY determined annually by the IPHC. Specifically, the Council linked a step-wise reduction in the GHL in any one year to the decrease in the CEY as compared to the 1999 through 2000 average CEY. For example, if the halibut stock in Area 2C were to fall from 15 to 24 percent below its 1999 through 2000 average CEY, then the GHL for Area 2C would be reduced by 15 percent. Conversely, as the CEY increased from low levels, the GHL also would increase in the same step-wise manner. However, regardless of how high the CEY may rise above its 1999 through 2000 average, the GHLs were not designed to increase above their maximum amounts. Since 2003 when the GHLs became effective, they have never been reduced below their maximum level because declines in the total CEY have not been sufficient to trigger the first step reduction of the GHLs. Recent Harvests of Halibut in Area 2C In Area 2C, the commercial, sport and subsistence harvest of halibut over the past 10 years (1997 through 2006) has been estimated by the IPHC to average about 12.454 million lb (5,649.0 mt) per year. Of this annual average total removal from the halibut resource, the commercial fishery accounts for about 76.7 percent, the sport fishery (guided and unguided combined) account for about 19.1 percent, and the remaining 4.2 percent may be attributed to subsistence, bycatch, and wastage combined. Estimates of the subsistence harvest of halibut were made based on surveys conducted by the Alaska Department of Fish and Game (ADF&G) during the past three years and average about 600,000 lb (272.2 mt) per year. In the most recent three years (2004 through 2006), the annual average of total halibut removals in Area 2C is 14.142 million lb (6,414.7 mt) of which the commercial fishery has taken about 73.8 percent, the sport fishery has taken about 20.7 percent, the subsistence fishery has taken about 4.3 percent, and about 1.2 percent is attributed to bycatch and wastage. The commercial fishery is the primary user of the halibut resource in Area 2C followed by the sport fishery, which together account for almost 95 percent of the total removals from the halibut resource. In Area 2C, the sport fishery is comprised of guided fishing on charter vessels and unguided angling. Residents of Southeast Alaska and their family and friends are the primary unguided anglers, while non-resident tourists are the main clients for guided fishing on charter vessels. The linkage between guided sport fishing and tourism is apparent from data collected by ADF&G and compiled by IPHC staff. Over the past 10 years (1997 through 2006), the average guided sport harvest of halibut has been 1.431 million lb (649.1 mt) per year and the unguided sport harvest of halibut has amounted to 0.951 million lb (431.4 mt) per year. Proportionately, the guided charter vessel harvest to unguided sport harvest has been a ratio of about 60 to 40. The guided sport harvest has increased in more recent years. Over the past five years (2002 through 2006), the annual guided sport charter vessel harvest amounted to an average 63.9 percent of the total sport harvest of halibut in Area 2C, and in 2005 reached a record 69.8 percent of the total sport harvest. In response, the Council is considering a management program to restrict the charter vessel harvest of halibut. Since their implementation in 2003, the GHLs for Areas 3A and 2C have been exceeded by the charter vessel halibut harvest in 2004, 2005, and 2006. In Area 2C, based on ADF&G sport fishing survey data, the charter vessel harvest in 2003 was one percent under the GHL, but in 2004 and 2005, it was 22 percent and 36 percent over the GHL, respectively. The total Area 2C harvest of halibut by the sport fishery in 2006 was 2.537 million lb (1,150.8 mt), based on final ADF&G sport harvest estimates reported in October 2007. Of this amount, the charter fishery harvested 1.812 million lb (821.9 mt) or 71.4 percent and the unguided harvest was 0.725 million lb (328.8 mt) or 28.6 percent. Hence, the charter harvest exceeded its 2006 Area 2C GHL by 380,000 lb (172.4 mt) or 26.5 percent. This overage is substantially less than ADF&G's preliminary projection of 2006 charter harvests made in October 2006. At that time, ADF&G had preliminary projections indicating that the 2006 charter harvest of halibut could be as much as 2.113 million pounds (958.4 mt) or 47 percent above the Area 2C GHL. The ADF&G preliminary projections of the overage of the GHL in 2006 produced responses in 2007 from the Council and the three management agencies involved: IPHC, NMFS, and ADF&G. Management Agencies' Response in 2007 At its annual meeting in January 2007, the IPHC adopted a motion to recommend reducing the daily bag limit for anglers on charter vessels in Areas 2C and 3A from two halibut to one halibut during certain time periods. Specifically, for Area 2C, the IPHC recommended that the one-fish daily bag limit should apply to guided anglers from June 15 through July 30. The IPHC recommended this temporary bag limit reduction because it believed its management goals were at risk by the magnitude of the charter halibut harvest in excess of the GHL, especially in Area 2C. This action was not explicitly designed to manage the charter fishery to the Council's GHLs but rather to initiate some control on what appeared to be a constantly increasing charter vessel harvest. The IPHC took this action reluctantly. It stated that its preference was for the Council to resolve the allocation issue between the sport charter and commercial sectors. Moreover, it delayed the effective date of the reduced bag limit to June 15 to afford the Secretary time to resolve the issue under U.S. domestic law with regulations that would achieve “comparable reductions” in halibut harvest by the charter vessel fishery. In a letter to the IPHC on March 1, 2007, the Secretary of State, with concurrence from the Secretary, rejected the recommended one-fish daily bag limit in Areas 2C and 3A, and indicated that appropriate reduction in the charter vessel harvest in these areas would be achieved by a combination of ADF&G and NMFS regulatory actions. For Area 2C, the State of Alaska Commissioner of Fish and Game (hereafter, State Commissioner) issued an emergency order to prohibit retention of fish by charter vessel guides and crew members (No. 1-R-02-07). This emergency order was similar to one issued for 2006. This action was intended, in conjunction with other measures, to reduce the 2007 charter vessel harvest of halibut to levels comparable to the IPHC-recommended bag limit reduction which was estimated to range from 397,000 (180.1 mt) pounds to 432,000 pounds (195.9 mt). Regulatory action to remedy this problem by June 2007 required the Secretary, through NMFS, to develop regulations independent of the Council process. The analysis of alternative restrictions had an explicit goal of finding the best alternative that would reduce sport fishing mortality of halibut in the charter vessel sector in Area 2C to a level comparable to the level that would have been achieved by the IPHC-recommended regulations and in a manner that would minimize adverse impacts on the charter fishery, its sport fishing clients, the coastal communities that serve as home ports for this fishery, and on fisheries for other species. The preferred alternative selected by NMFS maintained the traditional two-fish daily bag limit provided that at least one of the harvested halibut has a head-on length of no more than 32 inches (81.3 cm). If a charter vessel angler retains only one halibut in a calendar day, that fish may be of any length. Regulations implementing this partial maximum size limit were published on June 4, 2007 (72 FR 30714). The Council also was considering management alternatives for the charter vessel halibut fishery in Area 2C during the first half of 2007. Unlike the IPHC, ADF&G, and NMFS actions, however, the Council's alternatives were designed specifically to maintain the charter vessel fishery to its GHL. In June 2007, the Council adopted a preferred alternative that contained two options. The Council recommended that the selection between the options depend on whether the CEY decreases substantially for 2008. As explained above, the GHLs for Area 2C and 3A are linked to the CEY determined annually by the IPHC as a basis for setting the commercial fishery catch limits in these areas. A substantial decrease in the CEY could cause the GHL for Area 2C to decrease from its current 1.432 million lb (649.5 mt) to 1.217 million lb (552.0 mt). Not knowing in June 2007 how the GHL may be affected by IPHC action in January 2008, the Council recommended a suite of charter vessel fishery restrictions if the GHL remains the same in 2008 (Option A) and a different, more restrictive, suite of restrictions if the GHL decreases in 2008 (Option B). This Council recommendation is the basis for this proposed regulatory action. The Proposed Action As recommended by the Council in June 2007, this action proposes management measures to reduce the charter vessel fishery harvest of halibut in Area 2C to the GHL under two scenarios—Option A if the GHL for this area remains the same in 2008, and Option B if the GHL decreases in 2008. NMFS encourages public comment on all regulatory options to maximize the ability of NMFS to achieve the intent of the Council to limit the catch of the guided sport charter vessel fishery in Area 2C to the GHL while minimizing the adverse impacts on the charter fishery, its sport fishing clients, the coastal communities that serve as home ports for this fishery, and on fisheries for other species. In brief, the specific options recommended by the Council are as follows: *Option A management measures for the charter vessel halibut fishery in Area 2C.* • Two fish daily bag limit provided that one fish is no more than 32 inches (81.3 cm) in length (existing regulation at 50 CFR 300.65(d)); • A charter vessel guide, a charter vessel operator, and crew of a charter vessel must not catch and retain halibut during a charter fishing trip; • The number of lines used to fish for halibut must not exceed six or the number of charter vessel anglers onboard the charter vessel, whichever is less; and • The combined number of halibut that may be harvested by a charter vessel angler in Area 2C during a calendar year must not exceed four fish. *Option B management measures for the charter vessel halibut fishery in Area 2C.* • The number of halibut caught and retained by each charter vessel angler in Area 2C is limited to no more than one halibut per calendar day; • A charter vessel guide, a charter vessel operator, and crew of a charter vessel must not catch and retain halibut during a charter fishing trip; and • The number of lines used to fish for halibut must not exceed six or the number of charter vessel anglers onboard the charter vessel, whichever is less. Option A Management Measures The following management measures were recommended by the Council if the GHL remains unchanged in 2008. If implemented, the proposed regulations would remain in effect until changed by a new Federal regulatory action. *Daily bag and maximum size limit.* The existing regulation (at 50 CFR 300.65(d)) in effect since June 1, 2007 (72 FR 30714, June 4, 2007), reads as follows: In Commission Regulatory Area 2C, halibut harvest on a charter vessel is limited to no more than two halibut per person per calendar day provided that at least one of the harvested halibut has a head-on length of no more than 32 inches (81.3 cm). If a person sport fishing on a charter vessel in Area 2C retains only one halibut in a calendar day, that halibut may be of any length. Before June 1, 2007, the daily catch limit applicable to charter vessel anglers was the same as that which applies to all sport fishing for halibut in Alaska, which is two halibut of any size per person. This two-fish daily bag limit for sport fishermen is an IPHC regulation (section 25(2)(b) at 72 FR 11801; March 14, 2007) first imposed in 1975. The NMFS regulation in June 2007 simply supplemented the traditional two-fish bag limit with the additional requirement that one of the two fish must be no more than 32 inches (81.3 cm) in length. If only one halibut is retained, it may be of any length. No substantive change in this requirement is proposed by Option A. Minor changes in the text are proposed, however, due to other changes proposed in this action. Specifically, § 300.65(d) would have a new heading that would move the text currently at § 300.65(d) to § 300.65(d)(1), and that would have a new heading specifying “daily bag limit in Area 2C.” As a result, the existing introductory phrase, “In Commission Regulatory Area 2C” would be removed as redundant. In addition, the second sentence of the paragraph would be changed by substituting the phrase, “If a charter vessel angler” for the existing phrase “If a person sport fishing on a charter vessel in Area 2C.” This change is proposed because a new definition of “charter vessel angler” is proposed and reiterating “in Area 2C” is unnecessary due to the new paragraph heading that already makes clear the geographic application of the regulation. *No harvest by skipper and crew.* A new Federal restriction is proposed prohibiting the harvest of halibut by the charter vessel guide, the charter vessel operator, and the charter vessel crew during a charter vessel fishing trip. The language of the Council's motion adopting this recommendation reads, “no harvest by skipper and crew when clients are on board the charter vessel.” Although a sport fishing guide on a charter vessel in Area 2C is likely to be the same person as the “skipper,” captain, or operator of the vessel, in some cases the skipper and guide could be different persons. Hence, this proposed rule makes clear the Council's intent of applying this restriction to all persons-guide, skipper or operator, and crew-involved with the delivery of onboard services to the charter vessel angler. The proposed regulation deviates from the Council's adopted motion language also in that the phrase “when clients are on board” is not used in the proposed regulation. Instead, the proposed regulation would limit the skipper and crew harvesting prohibition to a charter vessel fishing trip. A new definition is proposed in this action for “charter vessel fishing trip” which describes the period from the first deployment of fishing gear from a charter vessel until the offloading of any charter vessel angler or halibut. Also, an existing definition of “charter vessel” (at § 300.61) describes such a vessel as one “used for hire in sport fishing for halibut, but not including a vessel without a hired operator.” Hence, the effect of the proposed regulation would be the same as that intended by the Council, which is to prohibit retention of halibut caught by the guide, skipper, and crew on a charter vessel, but not to impose this restriction when no clients or charter vessel anglers are onboard. A vessel without clients or paying anglers onboard is, by definition, not a charter vessel. Therefore, guides, skippers, and crew would not be prevented from sport fishing for halibut for themselves when they are not on a charter vessel fishing trip. The Council recommended this restriction to make it more specific to halibut harvest on charter vessels in Area 2C. As discussed above, the State Commissioner's emergency order prohibiting the retention of all fish by the skipper and crew of a charter vessel in Area 2C was implemented in 2007. The State Commissioner could not make his emergency order apply only to halibut because he has no authority under the Halibut Act to directly regulate halibut fishing. A comprehensive application of the emergency order to all fish effectively prevented charter vessel skippers and crews from harvest of salmon, rockfish, lingcod, and other species. Charter vessel operators requested relief from this comprehensive prohibition on skipper and crew harvests by having a Federal prohibition on skipper and crew harvest apply only to halibut. Assuming that the State Commissioner does not reissue his earlier emergency order for other reasons, this action would relieve charter vessel skippers and crew from the more comprehensive prohibition against retention of all fish on charter vessels but would impose this prohibition on the retention of halibut. The Council's original analysis of alternatives, prepared for its meeting in June 2007, indicated that the daily bag/maximum size limit and prohibition on skipper/crew harvest of halibut together would reduce the charter vessel harvest in Area 2C to 115 percent to 106 percent of the GHL (Table 15 in EA/RIR/IRFA, see ADDRESSES ). The fact that these management measures would fall short of achieving the GHL is not surprising as they were designed by NMFS and ADF&G and implemented in 2007 for a different purpose-not to achieve the GHL, but instead to reduce charter vessel halibut harvests to a comparable extent to what would have been realized under the IPHC recommendation. In October 2007, ADF&G published its final estimate of charter vessel harvests in Area 2C. This final estimate indicated fewer halibut were being harvested by the charter vessel sector in 2006 than had been preliminarily estimated by ADF&G a year earlier. In fact, the revised ADF&G estimate for 2006 showed the first decrease in the growth of halibut pounds harvested by charter vessels since 1999. The agency's preliminary estimate of the 2006 charter vessel halibut harvest in Area 2C in October 2006 of 2.113 million lb (958.4 mt) was reduced in its final estimate in October 2007 to 1.812 million lb (821.9 mt). The Council staff subsequently reviewed its analysis in light of these new harvest data for 2006 and submitted a supplement to the EA/RIR/IRFA (Appendix IV to the EA/RIR/IRFA, see ADDRESSES ). The supplement revises Table 15 (Table A4-1 in Appendix IV). This table estimates the impact of each management option under the action alternative on the total amount of halibut harvested by the sport charter vessel fishery in 2006 relative to the current GHL if that management option had been in place in 2006. The revised analysis indicates that the daily bag/maximum size limit and prohibition on skipper/crew harvest of halibut together would reduce the charter vessel harvest in Area 2C to a range of 101 percent to 93 percent of the GHL. By weight, this expected harvest would be in the range of 1.448 million lb (656.8 mt) to 1.333 million lb (604.6 mt). This range would bracket the current GHL in Area 2C which is 1.432 million lb (649.5 mt). It is important to note that although the daily bag/maximum size limit and prohibition on skipper/crew harvest of halibut together would appear from the analysis to achieve the GHL, the analysis does not account for possible changes in fishing effort between 2006 and 2008. When ADF&G presented its final estimate of the 2006 charter vessel harvest to the Council in October 2007, the Council decided not to reconsider its June 2007 recommendation which this action proposes to implement with Federal regulations. However, NMFS is particularly interested in public comment on these proposed regulations in light of the new final estimate of 2006 harvests of halibut by the charter vessel sector and the revised analysis of the potential effect of the proposed management measures, as indicated in the above paragraph. The intent of particularly soliciting public comment on this and other specific issues in this action is to maximize the ability of NMFS to achieve the intent of the Council to limit the catch of the guided sport charter vessel fishery in Area 2C to the GHL while minimizing the adverse impacts on the charter fishery, its sport fishing clients, the coastal communities that serve as home ports for this fishery, and on fisheries for other species. Based on public comment, and to achieve the intent of the Council and minimize adverse impacts, NMFS may implement either Option A or Option B in their entirety, or some portion of either option. *Line limits.* A new Federal restriction is proposed that would limit the number of lines that could be fished from a charter vessel to six or the number of charter vessel anglers onboard the charter vessel, whichever is less. The existing IPHC gear limitation for a person sport fishing for halibut is a single line with no more than two hooks attached, or a spear (section 25(1) at 72 FR 11801). Hence, this restriction would prevent more than six charter vessel anglers on a vessel from fishing at the same time. This restriction is not viewed as onerous, however, because the charter vessels and charter vessel skippers in Southeast Alaska (Area 2C) typically are licensed by the U.S. Coast Guard to carry no more than six passengers. In addition, existing State of Alaska regulations (at 5 AAC 47.030(b)) limit the number of lines fished from a charter vessel generally to the number of clients onboard the vessel. A six-line limit has been in Alaska regulations since 1983, and limiting the number of lines fished to the number of clients onboard has been a requirement since 1997. The proposed line limits would reflect the existing Alaska regulations in Federal regulations specifically for halibut fishing. *Annual catch limit.* The proposed annual catch limit of four halibut would impose a new restriction on each charter vessel angler in Area 2C of two daily bag limits of halibut per year. A sport fishing guide or charter vessel operator also would be responsible to know how many halibut each of his clients had previously harvested on a charter vessel that year and limit a charter vessel angler's harvest if necessary. For example, if a charter vessel angler arrives for a charter vessel fishing trip, the charter vessel guide would be required, before the trip begins, to record the number of halibut caught and retained year-to-date by each angler on the charter vessel (see discussion of recordkeeping and reporting below). A charter vessel angler who begins the trip with three halibut already harvested that year would be limited to only one additional halibut regardless of the two halibut daily bag limit. No exceptions are proposed for this annual catch limit. This restriction would apply equally to youth anglers under 16 years of age who are not required to have an Alaska sport fishing license, anglers who are over 60 years of age, and anglers who are disabled veterans, both of which may have special Alaska sport fishing licenses. The proposed annual catch limit, however, would apply only to charter vessel anglers. Halibut harvested by non-guided sport fishermen would not count toward the proposed four-fish annual catch limit. Likewise, a charter vessel angler who has harvested her annual catch limit would be allowed to continue sport fishing for halibut as a non-guided angler subject to the existing two-halibut per day catch limit. The analysis indicates that the proposed annual catch limit would reduce the charter vessel harvest by an estimated 0.335 million lb (151.9 mt). In conjunction with the other management measures under Option A, the anticipated effect of this restriction would be a reduction in total charter vessel harvests in Area 2C to a range of 84 percent to 78 percent of the current GHL (Table A4-1 of Appendix IV of the EA/RIR/IRFA). In terms of weight, the supplement to the analysis predicts (based on 2006 data) a charter vessel halibut harvest in Area 2C of between 1.208 million lb (547.9 mt) and 1.111 million lb (503.9 mt). Harvests in this range would be less than the current GHL in Area 2C, which is 1.432 million lb (649.5 mt). The Council considered but did not recommend more liberal annual catch limits of five halibut and six halibut which would allow a total charter vessel harvest in Area 2C closer to the GHL. According to the supplement of the analysis, the predicted harvest under the Option A management measures using a six-halibut annual catch limit instead of a four-halibut annual catch limit would range from 1.386 million lb (628.7 mt) to 1.276 million lb (578.8 mt), and using a five-halibut annual catch limit instead of a four-halibut annual catch limit would range from 1.313 million lb (595.6 mt) to 1.209 million lb (548.4 mt). NMFS is particularly interested in public comment on these annual catch limits (6, 5, and 4 halibut) given the new final estimate of 2006 charter vessel harvest. The intent of particularly soliciting public comment on this and other specific issues in this action is to maximize the ability of NMFS to achieve the intent of the Council to limit the catch of the guided sport charter vessel fishery in Area 2C to the GHL while minimizing the adverse impacts on the charter fishery, its sport fishing clients, the coastal communities that serve as home ports for this fishery, and on fisheries for other species. Based on public comment, and to achieve the intent of the Council and minimize adverse impacts, NMFS may implement an annual catch limit of 6, 5, or 4 halibut, or no annual limit. *Recordkeeping and reporting.* The Area 2C annual catch limit for charter vessel anglers proposed under Option A would require new recordkeeping and reporting requirements for charter vessel anglers and guides. This information collection is necessary to monitor and enforce the area specific annual catch limit. Charter vessel guides and anglers are individually and collectively responsible for the accuracy and completeness of recorded information on halibut caught and retained. The Council, NMFS, and ADF&G stressed the importance of minimizing reporting burden on the charter vessel industry and developed a proposed information collection program that allows for the recording of necessary information in the existing ADF&G Saltwater Sport Fishing Charter Trip Logbook and on existing State of Alaska sport fishing licenses or catch cards. Each charter vessel angler would be required to record on the back of his or her State of Alaska Sport Fishing License or catch card the date and number of halibut caught and retained in Area 2C. This information is necessary to monitor retained catch relative to the annual catch limit and to provide information to a charter vessel guide on the number of halibut retained to date during a calendar year so that the angler's annual catch limit is not exceeded during a charter vessel fishing trip. Each angler who retains halibut catch from Area 2C would be required to retain his or her license or catch card for a period of three years from the date of the latest Area 2C halibut entry. Maintenance of these records is necessary in the event that NMFS Enforcement needs to verify the number of retained halibut catch recorded by the angler or compare an angler's record of retained halibut with the number of retained halibut in Area 2C as recorded by charter vessel guides for that angler in the ADF&G Saltwater Sport Fishing Charter Trip Logbook. Information recorded in the ADF&G Saltwater Sport Fishing Charter Trip Logbook on the number of halibut caught and retained in Area 2C by each charter vessel angler would be used by NMFS to monitor and enforce the annual catch limit. Specific logbook information requirements are summarized below for charter vessel guides and anglers. Information Recorded in the ADF&G Saltwater Sport Fishing Charter Trip Logbook Who records the information? What information is recorded? Purpose of information collection Charter vessel guide Sport fish charter business license number issued by ADF&G to a person that owns or employs the charter vessel The charter vessel guide license number issued by ADF&G to the guide that led the fishing trip To provide the identity of the charter vessel business owner and guide who are mutually and severally responsible for accurate recordkeeping and reporting of charter vessel angler harvest of halibut in Area 2C. IPHC regulatory area fished—circle either regulatory area 2C or 3A where halibut were caught and retained. Separate logbook sheets must be completed if both areas were fished during the same charter vessel fishing trip To verify that charter vessel fishing did or did not occur in Area 2C where an annual catch applies. The catch and retention of halibut in Area 2C triggers additional recordkeeping and reporting requirements. Angler sport fishing license number and printed name; the printed name and date of birth is recorded for each youth angler under 16 years of age To record the identity of charter vessel anglers subject to the annual catch limit. From each angler's ADF&G sport fishing license or catch card, the total number of halibut caught and retained in the current year-to-date aboard a charter vessel in Area 2C To provide the charter vessel guide information on the number of halibut each angler is allowed to retain during the fishing trip so that halibut are not retained in excess of each angler's annual catch limit. The total number of halibut caught and retained in Area 2C aboard a charter vessel during the current year-to-date from each charter vessel angler's sport fishing license or catch card This information currently is required by ADF&G to estimate sport fish harvest of halibut and the proposed Federal requirement will be used to monitor angler-specific compliance with the annual catch limit. Signature of the charter vessel guide Guide's acknowledgement that the recorded information is correct. Charter vessel angler Signature of the charter vessel angler Angler's acknowledgement that his or her Area 2C halibut retention information is correctly recorded. The ADF&G Saltwater Sport Fishing Charter Trip Logbook data sheets would be required to be submitted to the appropriate ADF&G office and according to the time schedule described in the instructions at the beginning of the logbook. Option B Management Measures The following management measures were recommended by the Council if the GHL decreases in Area 2C in 2008 to 1.217 million lb (552.0 mt). If implemented, the proposed regulations would remain in effect until changed by a new Federal regulatory action. *One-fish daily bag limit.* This restriction would substitute a daily catch limit for a charter vessel angler of one halibut per day of any size for the existing daily catch limit of two halibut per day providing one of the two fish is no longer than 32 inches (81.3 cm). This restriction would be more onerous than the management measures described above under Option A. The Council reasoned that this more restrictive action would be necessary if the GHL in Area 2C were to decrease in 2008 to 1.217 million lb (552.0 mt). In conjunction with the proposed restrictions on harvest by skipper and crew and line limits, the Option B management measures are estimated to reduce the charter vessel harvest to a range of 76 percent to 53 percent of the current Area 2C GHL, or to a range of 63 to 89 percent of the reduced GHL. By weight, the estimated effect of the Option B management measures would be to allow a charter vessel harvest of from 1.089 million lb (494.0 mt) to 0.762 million lb (345.6 mt). *No harvest by skipper and crew.* This restriction would be the same as that described above under Option A. *Line limits.* This restriction would be the same as that described above under Option A. Classification An Initial Regulatory Flexibility Analysis
(IRFA)was prepared, as required by section 603 of the Regulatory Flexibility Act. The IRFA describes the economic impact that this proposed rule, if adopted, would have on directly regulated small entities. A copy of this analysis and its updated supplement are available from NMFS (see ADDRESSES ). A description of this action, why it is being considered, and the legal basis for this action are discussed above. The proposed action would implement one of two management options—Option A or Option B, or portions thereof, as described above—for the charter vessel halibut fishery in Area 2C. A summary of the analysis follows. In 2006, 696 vessels operated as charter vessels in Area 2C. All of these operations are believed to be small entities, with annual gross revenues of less than the limit of $6.5 million dollars for charter vessels. The largest companies involved in the fishery, lodges or resorts that offer accommodations as well as an assortment of visitor activities, may be large entities under the Small Business Administration size standard. Key informant interviews have indicated that the absolute largest of these companies may gross more than $6.5 million per year, but that it was also possible for all of the entities involved in the charter vessel halibut of harvest to have grossed less than this amount. The number of small entities is likely to be overestimated because of the limited information on vessel ownership and operator revenues. However, it is likely that nearly all entities qualify as small businesses. The demand for sport fishing on charter vessels depends on a number of factors including the number of halibut a charter vessel angler may catch and retain in a year or in a day. The proposed annual catch limit on charter vessel anglers under Option A may reduce demand for trips that target halibut. An annual catch limit may reduce the demand for multi-day trips and affect remote fishing lodges more than day-trip operators. Other species of bottom fish and salmon also are targeted by charter vessels. Some charter vessel operators also may have non-fishing business taking passengers for whale watching, bird watching or general sightseeing trips. A larger effect on the demand for charter vessel fishing trips may be experienced under reduced GHL, which would impose a one-halibut daily catch limit under Option B. The current daily catch limit is two halibut per day providing one of the fish is no more than 32 inches (81.3 cm) in length. Prohibiting the harvest of halibut by charter vessel guides and crew may reduce the their overall compensation because the ability to harvest fish while working is sometimes considered part of their compensation. As discussed above, the State Commissioner has issued an emergency order in recent years to prohibit retention of fish by charter vessel guides and crew members (No. 1-R-02-07). This emergency order was comprehensive in that all fish were covered by the emergency order, and not just halibut. A Federal prohibition on charter vessel guide and crew harvest of halibut in Area 2C would be specific to halibut and therefore would be less restrictive and have less of an economic impact than has been experienced under the current State of Alaska emergency order. Little information is available on charter vessel operations or on how charter vessel anglers and operators may respond to proposed changes. It is not possible to predict quantitatively the impact on gross or net revenues, or on entry or exit from the industry. This proposed action is expected to reduce the amount of halibut harvested by charter vessels relative to what they have harvested in recent years. The regulatory burden is expected to be highest for the smallest firms, those involved in multiple trips per day, those who offer multiday packages, and those who are unable to target species other than halibut. These operators may face reduced profits or losses. Key informant interviews indicated that profit margins in the industry are small for some operators and that the proposed management options could reduce or eliminate those margins and force some operators out of business. NMFS has examined two alternatives to this action: the no-action or status quo alternative, and the action alternative. Alternative 1, the status quo, would retain the two-fish bag limit with one of the two fish less than or equal to 32 inches (83.1 cm) in length, without changes. Alternative 2, the action alternative, considered 13 options for different combinations of management measures to restrict the charter halibut harvest to the Area 2C GHL. The options included limiting vessels to one trip per day; restricting harvest by guide and crew while clients are onboard; limiting the number of lines to six per vessel, not to exceed the number of paying clients onboard; daily bag limits of one or two fish (including sub-options for size limit slots and specific months when the bag limit would apply); and annual harvest limits of four, five, or six fish per charter angler. Two preferred options (Option A and Option B) were selected by considering different combinations of management measures that would minimize the impacts on small entities while still meeting the management objective of restricting the charter vessel harvest of halibut to the GHL. This proposed rule has been determined to be not significant for the purposes of Executive Order (E.O.) 12866. This proposed rule complies with the Halibut Act and the Secretary's authority to implement allocation measures for the management of the halibut fishery. This proposed rule contains a collection-of-information requirement subject to review and approval by OMB under the Paperwork Reduction Act (PRA). This requirement has been submitted to OMB for approval. The public reporting burden for charter vessel guide respondents to fill out and submit logbook data sheets is estimated to average five minutes per response. The public reporting burden for charter vessel anglers to sign the logbook, record the number of halibut caught and retained in Area 2C on an Alaska Sport Fishing License or catch card, and retain that document is estimated to average 2 minutes per response. These estimates include the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection-of-information. Public comment is sought regarding whether this proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; the accuracy of the burden estimate; ways to enhance the quality, utility, and clarity of the information to be collected; and ways to minimize the burden of the collection of information, including through the use of automated collection techniques or other forms of information technology. Send comments on these or any other aspects of the collection of information to NMFS Alaska Region (see ADDRESSES ) and by e-mail to *David_Rostker@omb.eop.gov* or fax to
(202)395-7285. Notwithstanding any other provision of the law, no person is required to respond to, and no person shall be subject to penalty for failure to comply with, a collection-of-information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB control number. This proposed action is consistent with E.O. 12962 which directs Federal agencies to improve the quantity, function, sustainable productivity, and distribution of aquatic resources for increased recreational fishing opportunities “to the extent permitted by law and where practicable.” This E.O. does not diminish NMFS's responsibility to address allocation issues, nor does it require NMFS or the Council to limit their ability to manage recreational fisheries. E.O. 12962 provides guidance to NMFS to improve the potential productivity of aquatic resources for recreational fisheries. This proposed rule does not diminish that productivity or countermand the intent of E.O. 12962. List of Subjects in 50 CFR Part 300 Fisheries, Fishing, Reporting and recordkeeping requirements, Treaties. Dated: December 21, 2007. Samuel D. Rauch III, Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service. For the reasons set out in the preamble, NMFS proposes to amend 50 CFR part 300 as follows: PART 300—INTERNATIONAL FISHERIES REGULATIONS 1. The authority citation for 50 CFR part 300, subpart E, continues to read as follows: Authority: 16 U.S.C. 773-773k. Subpart E—[Amended] 2. In § 300.61, add definitions for “Area 3A”, “Charter vessel angler”, “Charter vessel fishing trip”, and “Charter vessel guide” in alphabetical order to read as follows: § 300.61 Definitions. *Area 3A* means all waters between Area 2C and a line extending from the most northerly point on Cape Aklek (57°41′15″ N. latitude, 155°35′00″ W. longitude) to Cape Ikolik (57°17′17″ N. latitude, 154°47′18″ W. longitude), then along the Kodiak Island coastline to Cape Trinity (56°44′50″ N. latitude, 154°08′44″ W. longitude), then 140° true. *Charter vessel angler* means a person, paying or nonpaying, using the services of a charter vessel guide. *Charter vessel fishing trip* means the time period between the first deployment of fishing gear into the water from a charter vessel and offloading one or more charter vessel anglers or any halibut from the charter vessel. *Charter vessel guide* means a person who has been issued an annual guide license by the Alaska Department of Fish and Game. 3. In § 300.65, revise paragraph
(d)to read as follows: § 300.65 Catch sharing plan and domestic management measures in waters in and off Alaska. OPTION A
(d)*Guideline harvest level management measures* —(1) *Daily bag limit in Area 2C.* Halibut harvest on a charter vessel is limited to no more than two halibut per person per calendar day provided that at least one of the harvested halibut has a head-on length of no more than 32 inches (81.3 cm). If a charter vessel angler retains only one halibut in a calendar day, that halibut may be of any length.
(2)*Charter vessel guide and crew restriction in Area 2C.* A charter vessel guide, a charter vessel operator, and crew of a charter vessel must not catch and retain halibut during a charter vessel fishing trip.
(3)*Line limit in Area 2C.* The number of lines used to fish for halibut must not exceed six or the number of charter vessel anglers onboard the charter vessel, whichever is less.
(4)*Annual limit in Area 2C.* The combined number of halibut that may be harvested by a charter vessel angler in Area 2C during a calendar year must not exceed four fish.
(5)*Recordkeeping and reporting requirements in Area 2C.* The following information must be recorded by charter vessel anglers and charter vessel guides for each charter vessel fishing trip in Area 2C:
(i)*Charter vessel angler requirements* —(A) *State of Alaska Sport Fishing License.* Each charter vessel angler, including a youth angler under 16 years of age and an angler over 60 years of age, who retains halibut caught in Area 2C must record on the back of his or her State of Alaska Sport Fishing License or catch card the date and number of halibut caught and retained in Area 2C.
(B)*Retention requirements* . A State of Alaska Sport Fishing License or catch card with a record of halibut caught and retained in Area 2C must be retained by the individual named on the license or catch card for a period of three years from the date of the latest Area 2C halibut entry.
(C)*Angler signature* . At the end of a charter fishing trip, each charter vessel angler who retains halibut caught in Area 2C must acknowledge that his or her information and the number of halibut kept are recorded correctly by signing the back of the Alaska Department of Fish and Game Saltwater Sport Fishing Charter Trip Logbook data sheet on the line number that corresponds to the angler's information on the front of the logbook data sheet.
(ii)*Charter vessel guide requirements.* For each charter vessel fishing trip in Area 2C, the charter vessel guide leading the charter vessel fishing trip is required to record the following information in the Alaska Department of Fish and Game Saltwater Sport Fishing Charter Trip Logbook:
(A)*Business owner license number.* The sport fish charter business license number issued by the Alaska Department of Fish and Game to a person who owns or employs the charter vessel.
(B)*Guide license number.* The charter vessel guide license number issued by the Alaska Department of Fish and Game to the charter vessel guide that led the fishing trip and certified the logbook data sheet.
(C)*Date.* Month and day for each charter vessel fishing trip taken. A separate logbook data sheet is required for each charter vessel fishing trip if two or more trips were taken on the same day. A separate logbook data sheet is required for each calendar day that halibut are caught and kept during a multi-day trip.
(D)*Regulatory area fished.* Circle the regulatory area (Area 2C or Area 3A) where halibut were caught and kept during each charter vessel fishing trip. If halibut were caught and retained in Area 2C and Area 3A during the same charter vessel fishing trip, then a separate logbook data sheet must be used to record halibut caught and retained for each regulatory area.
(E)*Angler sport fishing license number and printed name.* Before a charter vessel fishing trip begins, record for each charter vessel angler the Alaska Sport Fishing License number for the current year, resident permanent license number, or disabled veteran license number, and print the name of each paying and nonpaying charter vessel angler onboard that will fish for halibut. Record the name and date of birth of each youth angler under 16 years of age.
(F)*Year-to-date halibut caught.* Before a charter vessel fishing trip begins, record the total number of halibut caught and retained in the current year to date aboard a charter vessel in Area 2C for each charter vessel angler from his or her sport fishing license or catch card.
(G)*Number of halibut retained.* For each charter vessel angler, record the number of halibut caught and retained during the charter vessel fishing trip.
(H)*Signature* . At the end of a charter vessel fishing trip, acknowledge that the recorded information is correct by signing the logbook data sheet.
(I)*Angler signature.* Charter vessel guide is responsible for ensuring that anglers comply with the signature requirements at § 300.65(d)(5)(i)(C).
(6)*Recordkeeping and reporting requirements in Area 3A.* For each charter vessel fishing trip in Area 3A, the charter vessel guide leading the charter vessel fishing trip is required to record the regulatory area (Area 2C or Area 3A) where halibut were caught and kept by circling the appropriate area in the Alaska Department of Fish and Game Saltwater Sport Fishing Charter Trip Logbook. If halibut were caught and retained in Area 2C and Area 3A during the same charter vessel fishing trip, then a separate logbook data sheet must be used to record halibut caught and retained for each regulatory area.
(7)*Logbook submission.* Alaska Department of Fish and Game Saltwater Sport Fishing Charter Trip Logbook data sheets must be submitted to the appropriate Alaska Department of Fish and Game office according to the time schedule printed in the instructions at the beginning of the logbook. OPTION B
(d)*Charter vessels in Area 2C* —(1) *Daily bag limit.* The number of halibut caught and retained by each charter vessel angler in Area 2C is limited to no more than one halibut per calendar day.
(2)*Charter vessel guide and crew restriction* . A charter vessel guide, a charter vessel operator, and crew of a charter vessel must not catch and retain halibut during a charter fishing trip.
(3)*Line limit* . The number of lines used to fish for halibut must not exceed six or the number of charter vessel anglers onboard the charter vessel, whichever is less. 4. In § 300.66, add paragraphs (n), (o), and
(p)to read as follows: § 300.66 Prohibitions.
(n)Exceed any of the harvest or gear limitations specified at § 300.65(d).
(o)Fail to comply with the requirements at § 300.65(d).
(p)Fail to submit or submit inaccurate information on any report, license, catch card, application or statement required under § 300.65. [FR Doc. E7-25407 Filed 12-28-07; 8:45 am] BILLING CODE 3510-22-P 72 249 Monday, December 31, 2007 Notices DEPARTMENT OF AGRICULTURE Forest Service Information Collection; Foreign Travel Proposal AGENCY: Forest Service, USDA. ACTION: Notice; request for comment. SUMMARY: In accordance with the Paperwork Reduction Act of 1995, the Forest Service is seeking comments from all interested individuals and organizations on the new information collection, Foreign Travel Proposal. DATES: Comments must be received in writing on or before February 29, 2008 to be assured of consideration. Comments received after that date will be considered to the extent practicable. ADDRESSES: Comments concerning this notice should be addressed to Forest Service, U.S. Department of Agriculture, International Programs, Travel Section, 1099 14th Street, NW., Washington, DC 20050. Comments also may be submitted via facsimile to 540-659-4670 or by e-mail to: *sfarber@fs.fed.us.* The public may inspect comments received at 1099 14th St., NW., Room 5500W, Washington, DC, during normal business hours. Visitors are encouraged to call ahead to 202-273-4695 to facilitate entry to the building. FOR FURTHER INFORMATION CONTACT: Sandra Farber, Forest Service, U.S. Department of Agriculture, International Programs, Travel Section, 540-659-2973. Individuals who use TDD may call the Federal Relay Service
(FRS)at 1-800-877-8339, 24 hours a day, every day of the year, including holidays. SUPPLEMENTARY INFORMATION: *Title:* Foreign Travel Proposal. *OMB Number:* 0596-New. *Type of Request:* New. *Abstract:* The Forest Service is seeking approval to collect information from individuals traveling to foreign countries on behalf of the Agency. The collection of this information is necessary to facilitate timely issuance of foreign travel authorizations, including the release, issuance, and/or renewal of official United States government passports; issuance of necessary visas; and country clearance. Forest Service, U.S. Department of Agriculture, International Programs Travel Section uses FS-6500-1, Foreign Travel Proposal, to collect the information. Information collected includes the traveler's destination, purpose of trip, and dates of travel. Also collected are name, address, contact telephone numbers, birth date and place, social security numbers, passport information, security clearance, as well as contacts at each destination and hotel information. Analysis of the information for accuracy is routine. Use of the information provided by the traveler or their designee depends upon circumstances. Name, place of birth, and passport goes to each destination's United States embassy via a country clearance cable and is necessary to obtain the embassy's approval of travel. Security clearance is necessary to allow the traveler entry to specific areas within United States embassies abroad. The embassies use the destination information for contact purposes, and it is for the safety of the traveler. Without collection of this information, the Forest Service cannot provide support to international programs or other countries who have requested assistance. Collection of this information occurs each time a non-federal traveler requests approval for foreign travel on behalf of the Forest Service. The International Programs Travel Section does maintain files beyond the end of each trip. Shredding of records containing the collected information occurs upon the completion of the associated trip. *Estimate of Annual Burden:* 15 minutes. *Type of Respondents:* Personal services agreement employees, personal services contractors, contractors, and volunteers. *Estimated Annual Number of Respondents:* 25. *Estimated Annual Number of Responses per Respondent:* 1. *Estimated Total Annual Burden on Respondents:* 6.25 hours. Comment is invited on:
(1)Whether this collection of information is necessary for the stated purposes and the proper performance of the functions of the Agency, including whether the information will have practical or scientific utility;
(2)the accuracy of the Agency's estimate of the burden of the collection of information, including the validity of the methodology and assumptions used;
(3)ways to enhance the quality, utility, and clarity of the information to be collected; and
(4)ways to minimize the burden of the collection of information on respondents, including the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. All comments received in response to this notice, including names and addresses when provided, will be a matter of public record. Comments will be summarized and included in the request for Office of Management and Budget approval. Dated: December 17, 2007. Abigail R. Kimbell, Chief, Forest Service. [FR Doc. E7-25408 Filed 12-28-07; 8:45 am] BILLING CODE 3410-11-P DEPARTMENT OF AGRICULTURE Rural Business-Cooperative Service Guarantee Fee Rates for Guaranteed Loans for Fiscal Year 2008; Maximum Portion of Guarantee Authority Available for Fiscal Year 2008; Annual Renewal Fee for Fiscal Year 2008 AGENCY: Rural Business-Cooperative Service, USDA. ACTION: Notice. SUMMARY: As set forth in 7 CFR 4279.107(b) and 4280.126(c), Rural Development (the Agency) has the authority to charge an annual renewal fee for loans made under the Business and Industry (B&I) Guaranteed Loan Program and the Renewable Energy and Energy Efficiency Improvements
(9006)Guaranteed Loan Program. Pursuant to that authority, the Agency is establishing the renewal fee rate at one-fourth of 1 percent for the B&I Guaranteed Loan Program and one-fourth of 1 percent for the 9006 Guaranteed Loan Program. These rates will apply to all loans obligated in fiscal year
(FY)2008 that are made under the cited programs. As established in 7 CFR 4279.107 and 4280.126, the amount of the fee on each guaranteed loan will be determined by multiplying the fee rate by the outstanding principal loan balance as of December 31, multiplied by the percent of guarantee. As set forth in 7 CFR 4280.126(a), each fiscal year the Agency shall establish the initial guarantee fee rate for loans made under the 9006 Guaranteed Loan Program. Pursuant to that authority, the Agency is establishing the initial guarantee fee rate at 1 percent for loans made in FY 2008. As set forth in 7 CFR 4279.107(a) and 4279.119(b)(4), each fiscal year the Agency shall establish a limit on the maximum portion of B&I guarantee authority available for that fiscal year that may be used to guarantee loans with a B&I guarantee fee of 1 percent or guaranteed loans with a guarantee percentage exceeding 80 percent. Allowing the guarantee fee to be reduced to 1 percent or exceeding the 80 percent guarantee on certain B&I guaranteed loans that meet the conditions set forth in 7 CFR 4279.107 and 4279.119 will increase the Agency's ability to focus guarantee assistance on projects which the Agency has found particularly meritorious. For 1 percent fees, the borrower's business supports value-added agriculture and results in farmers benefiting financially, or such projects are high impact as defined in 7 CFR 4279.155(b)(5) and located in rural communities that remain persistently poor, which experience long-term population decline and job deterioration, are experiencing trauma as a result of natural disaster, or are experiencing fundamental structural changes in its economic base. For guaranteed loans exceeding 80 percent, such projects must be a high-priority project in accordance with 7 CFR 4279.155. Not more than 12 percent of the Agency's quarterly apportioned B&I guarantee authority will be reserved for loan requests with a guarantee fee of 1 percent, and not more than 15 percent of the Agency's quarterly apportioned guarantee authority will be reserved for guaranteed loan requests with a guaranteed percentage exceeding 80 percent. Once the respective quarterly limits are reached, all additional loans for that quarter will be at the standard fee and guarantee limits in 7 CFR part 4279. As an exception to this paragraph and for the purposes of this notice, loans developed by the North American Development Bank (NADBank) Community Adjustment and Investment Program
(CAIP)will not count against the 15 percent limit. Up to 50 percent of CAIP loans may have a guaranteed percentage exceeding 80 percent. The funding authority for CAIP loans is not derived carryover or recovered funding authority of the B&I Guaranteed Loan Program. EFFECTIVE DATE: December 31, 2007. FOR FURTHER INFORMATION CONTACT: Fred Kieferle, USDA, Rural Development, Business Programs, Business and Industry Division, Stop 3224, 1400 Independence Avenue, SW., Washington, DC 20250-3224, telephone
(202)720-7818. SUPPLEMENTARY INFORMATION: This action has been reviewed and determined not to be a rule or regulation as defined in Executive Order 12866 as amended by Executive Order 13258. Dated: December 21, 2007. Ben Anderson, Administrator, Rural Business-Cooperative Service. [FR Doc. E7-25352 Filed 12-28-07; 8:45 am] BILLING CODE 3410-XY-P DEPARTMENT OF COMMERCE International Trade Administration [A-533-820] Certain Hot-Rolled Carbon Steel Flat Products from India: Notice of Preliminary Results of Antidumping Duty Administrative Review AGENCY: Import Administration, International Trade Administration, Department of Commerce. SUMMARY: In response to requests from petitioners 1 and respondents, 2 the Department of Commerce (the Department) is conducting an administrative review of the antidumping order on certain hot-rolled carbon steel flat products from India (hot-rolled carbon steel). This review covers four manufacturers and exporters (respondents) of the subject merchandise: Ispat, Tata, JSW, and Essar. The Department has preliminarily determined that during the period of review (POR), JSW made sales of subject merchandise at less than normal value (NV). The Department has also preliminarily determined that no dumping margin or a *de minimis* dumping margin exists for Ispat, Tata and Essar during the POR. If these preliminary results are adopted in the final results of this administrative review, we will instruct U.S. Customs and Border Protection
(CBP)to assess antidumping duties on all appropriate entries of subject merchandise during the POR. 1 The petitioners are Nucor Corporation (Nucor), Mittal Steel U.S.A. Inc., and United States Steel Corporation (U.S. Steel) (collectively, petitioners). 2 Respondents are Ispat Industries Limited (Ispat), Essar Steel Limited (Essar), JSW Steel Limited (JSW), and Tata Steel Limited
(Tata)(collectively, respondents). EFFECTIVE DATE: December 31, 2007. FOR FURTHER INFORMATION CONTACT: Christopher Hargett (Ispat), Joy Zhang (Tata), Stephanie Moore
(JSW)or Victoria Cho (Essar), AD/CVD Operations Office 3, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone:
(202)482-4161,
(202)482-1168,
(202)482-3692, and
(202)482-5075, respectively. SUPPLEMENTARY INFORMATION: Background On December 3, 2001, the Department published in the **Federal Register** the antidumping duty order on hot-rolled carbon steel. *See Notice of Amended Final Antidumping Duty Determination of Sales at Less Than Fair Value and Antidumping Duty Order: Certain Hot-Rolled Carbon Steel Flat Products from India* , 66 FR 60194 (December 3, 2001) ( *Amended Final Determination* ). On December 1, 2006, the Department published in the **Federal Register** a notice of “Opportunity to Request Administrative Review” of the antidumping duty order on hot-rolled carbon steel. *See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review* , 71 FR 69543 (December 1, 2006). Petitioners requested a review of Essar. Ispat, Tata, Essar, and JSW self-requested a review of the antidumping duty order on hot-rolled carbon steel. On February 2, 2007, the Department published a notice of initiation of the administrative review of the antidumping duty order on hot-rolled carbon steel, covering the period December 1, 2005 to November 30, 2006. *See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part* , 72 FR 5005 (February 2, 2007). On February 21, 2007, the Department issued an antidumping questionnaire to Ispat, Tata, JSW, and Essar. The Department received responses to the original questionnaires from Ispat, Tata, JSW, and Essar. The Department subsequently issued supplemental questionnaires to all parties and received responses to the same. On August 30, 2007, the Department published a notice extending the time period for issuing the preliminary results of the administrative review from September 2, 2007, to December 19, 2007. *See Certain Hot-Rolled Carbon Steel Flat Products from India: Extension of Time Limits for the Preliminary Results of Antidumping Duty Administrative Review* , 72 FR 50098 (August 30, 2007). Period of Review The POR covered by this review is December 1, 2005, through November 30, 2006. Scope of the Order The merchandise subject to this order is hot-rolled carbon steel products of a rectangular shape, of a width of 0.5 inch or greater, neither clad, plated, nor coated with metal and whether or not painted, varnished, or coated with plastics or other non-metallic substances, in coils (whether or not in successively superimposed layers), regardless of thickness, and in straight lengths, of a thickness of less than 4.75 mm and of a width measuring at least 10 times the thickness. Universal mill plate ( *i.e.* , flat-rolled products rolled on four faces or in a closed box pass, of a width exceeding 150 mm, but not exceeding 1250 mm, and of a thickness of not less than 4 mm, not in coils and without patterns in relief) of a thickness not less than 4.0 mm is not included within the scope of this order. Specifically included in the scope of this order are vacuum-degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high-strength low-alloy
(HSLA)steels, and the substrate for motor lamination steels. IF steels are recognized as low-carbon steels with micro-alloying levels of elements such as titanium or niobium (also commonly referred to as columbium), or both, added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum. Steel products included in the scope of this order, regardless of definitions in the Harmonized Tariff Schedule of the United States (HTS), are products in which: i) iron predominates, by weight, over each of the other contained elements; ii) the carbon content is 2 percent or less, by weight; and iii) none of the elements listed below exceeds the quantity, by weight, respectively indicated: 1.80 percent of manganese, or 2.25 percent of silicon, or 1.00 percent of copper, or 0.50 percent of aluminum, or 1.25 percent of chromium, or 0.30 percent of cobalt, or 0.40 percent of lead, or 1.25 percent of nickel, or 0.30 percent of tungsten, or 0.10 percent of molybdenum, or 0.10 percent of niobium, or 0.15 percent of vanadium, or 0.15 percent of zirconium. All products that meet the physical and chemical description provided above are within the scope of this order unless otherwise excluded. The following products, by way of example, are outside or specifically excluded from the scope of this order: • Alloy hot-rolled carbon steel products in which at least one of the chemical elements exceeds those listed above (including, *e.g.* , American Society for Testing and Materials
(ASTM)specifications A543, A387, A514, A517, A506)). • Society of Automotive Engineers (SAE)/American Iron & Steel Institute
(AISI)grades of series 2300 and higher. • Ball bearings steels, as defined in the HTS. • Tool steels, as defined in the HTS. • Silico-manganese (as defined in the HTS) or silicon electrical steel with a silicon level exceeding 2.25 percent. • ASTM specifications A710 and A736. • United States Steel
(USS)Abrasion-resistant steels (USS AR 400, USS AR 500). • All products (proprietary or otherwise) based on an alloy ASTM specification (sample specifications: ASTM A506, A507). • Non-rectangular shapes, not in coils, which are the result of having been processed by cutting or stamping and which have assumed the character of articles or products classified outside chapter 72 of the HTS. The merchandise subject to this order is currently classifiable in the HTS at subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00, 7208.90.00.00, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 7211.19.75.60, and 7211.19.75.90. Certain hot-rolled carbon steel covered by this order, including: vacuum-degassed fully stabilized; high-strength low-alloy; and the substrate for motor lamination steel may also enter under the following tariff numbers: 7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00, 7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. Subject merchandise may also enter under 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 7212.40.10.00, 7212.40.50.00, and 7212.50.00.00. Although the HTS subheadings are provided for convenience and customs purposes, the Department's written description of the merchandise subject to this order is dispositive. Affiliation On June 13, 2007 and on October 31, 2007, Nucor alleged that JSW's ownership and affiliations, as part of the O.P. Jindal Group, are not accurately reflected on the record, and that JSW has a close-supplier and a debt financing relationship with another steel company that rises to the level of control. 3 Therefore, Nucor argues that pursuant to section 771(33) of the Tariff Act of 1930, as amended (the Act), JSW has two affiliations, 1) JSW with the O.P. Jindal Group, and 2) JSW and another steel company. 3 Because the identity of this company, and related information, is business proprietary, *see* Memorandum to Melissa Skinner, Office Director, through James Terpstra from the Team regarding JSW Affiliation Issue (JSW Affiliation Memorandum), dated December 19, 2007, for a detailed discussion. Regarding JSW's affiliations with the O.P. Jindal Group, information on the record shows that the group is comprised of nine business sectors headed by four brothers. JSW's financial statements and notes thereto list some of the other O.P. Jindal Group companies as related parties. Also, JSW submitted consolidated financial highlights of the Group. Thus, by virtue of the familial relationships of the companies' owners, they are affiliated under sections 771(33)(A) and
(F)of the Act, as they are under the common control of a family group. *See also* 19 CFR 351.102. Nucor claims that the Department should collapse JSW and the O.P. Jindal Group. *See* October 31, 2007, submission at page 14. The Department finds that the record facts do not provide a basis for collapsing JSW and other entities in the O.P. Jindal Group. Pursuant to 19 CFR 351.401, the Department collapses the operations of producers into a single entity when: 1) the producers are affiliated, 2) the producers have production facilities which would not require substantial retooling for producing similar or identical products, and 3) there is a significant potential for manipulation of price or production. In this instant case, the record shows that JSW is affiliated with the companies that comprise the O.P. Jindal Group, and is the only company in the group that produces and sells subject merchandise. The evidence on the record indicates that the other companies in the Group have production facilities which would require substantial retooling for producing similar or identical products. Accordingly, the criteria for collapsing JSW into the O.P. Jindal Group has not been satisfied. For these reasons, for purposes of the preliminary results, we are not treating JSW and the O.P. Jindal Group as a single entity. *See Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Wire Rod from Sweden* , 63 FR 40449, 40452-54 (July 29, 1998). In support of its allegations regarding the affiliation between JSW and another steel company, Nucor provides copies of newspaper articles referring to different transactions involving JSW, the other steel company and/or other parties. As discussed in detail in the JSW Affiliation Memorandum, we preliminary find that JSW is not affiliated with the other steel producer. We find that the articles submitted by Nucor do not establish that JSW and this company are affiliated. In accordance with 19 CFR 351.102(b), the Department may find that control exists when one person is legally or operationally in a position to exercise restraint or direction over the other person and the relationship has the potential to impact decisions concerning the production, pricing, or cost of the subject merchandise or foreign like product. Nucor has not clearly explained or provided sufficient information supporting the factual basis for a “close supplier relationship” or a “debt financing relationship,” or why such relationships would cause a finding of control. The standard is not whether one company might be in a position to become reliant upon another by means of their supplier-buyer relationship; rather the Department must find that a situation exists where the buyer has, in fact, become reliant on the seller, or vice versa. Only if we make such a finding can we address the issue of whether one of the parties is in a position to exercise restraint or direction over the other. *See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: Final Results of Antidumping Duty Administrative Reviews* , 62 FR 18404, 18417 (April 15, 1997). The information on the record does not show that JSW is reliant upon the other steel company, or vice versa. Product Comparisons In accordance with section 771(16) of the Act, we considered all hot-rolled carbon steel produced by the respondents, covered by the scope of the order, and sold in the home market during the POR to be foreign like product for the purpose of determining appropriate product comparisons to hot-rolled carbon steel sold in the United States. Where there were no sales in the ordinary course of trade of identical merchandise in the home market to compare to U.S. sales, we compared U.S. sales to the next most similar foreign like product on the basis of the characteristics listed in Appendix V of the Department's antidumping questionnaire. In making the product comparisons, we matched foreign like products based on the Appendix V physical characteristics reported by each respondent. Where sales were made in the home market on a different weight basis from the U.S. market (theoretical versus actual weight), we converted all quantities to the same weight basis, using the conversion factors supplied by the respondents, before making our fair-value comparisons. Fair Value Comparisons To determine whether sales of hot-rolled carbon steel by the respondents to the United States were made at less than NV, we compared the constructed export price
(CEP)or export price
(EP)to the NV, as described in the “Constructed Export Price/Export Price” and “Normal Value” sections of this notice. In accordance with section 777A(d)(2) of the Act, we calculated monthly weighted-average prices for NV and compared these to individual U.S. transactions. Export Price/Constructed Export Price Section 772(a) of the Act defines EP as “the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States, as adjusted under subsection (c).” During the POR, Ispat, JSW and Essar produced and sold subject merchandise to the first unaffiliated purchaser in the United States prior to importation. For these sales of subject merchandise, we have applied the EP methodology. Section 772(b) of the Act defines CEP as “the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter, as adjusted under subsections
(c)and (d).” During the POR, Tata and Essar also had CEP sales because, through their affiliates in the United States, they sold subject merchandise to the first unaffiliated purchaser in the United States after the date of importation of the merchandise. Thus, we have applied the CEP methodology to these sales. We based EP and CEP on the packed price to unaffiliated purchasers in the United States. We made deductions, as appropriate, for billing adjustments. We also made deductions for movement expenses in accordance with section 772(c)(2)(A) of the Act. Accordingly, we made deductions for foreign inland freight, foreign inland insurance, foreign brokerage and handling, international freight, U.S. brokerage and handling, and U.S. customs duties. In addition, in accordance with section 772(c)(1)(C) of the Act, when appropriate, we increased EP or CEP, by an amount equal to the countervailing duty rate attributed to export subsidies in the most recently completed administrative review of the countervailing duty order applicable to the POR for Ispat and Essar. For JSW and Tata, we used the countrywide rate from the investigation. In accordance with section 772(d)(1) of the Act and the SAA at 823-824, 4 we deducted from the CEP the selling expenses associated with economic activities occurring in the United States, which consisted of credit expenses and commissions. In accordance with section 772(d)(1) of the Act, we also deducted indirect selling expenses associated with economic activities occurring in the United States. Pursuant to section 772(d)(3) of the Act, we made an adjustment for CEP profit. 4 *See* the Statement of Administrative Action accompanying the Uruguay Round Agreements Act (SAA), H. R. Doc. No. 103-316, vol. 1 (1994). Normal Value Based on a comparison of the aggregate quantity of home market and U.S. sales, we determined that the quantity of the foreign like product sold by each respondent in the exporting country was sufficient to permit a proper comparison with the sales of the subject merchandise to the United States, pursuant to section 773(a) of the Act. Therefore, in accordance with section 773(a)(1)(B)(i) of the Act, we based NV on the price at which the foreign like product was first sold for consumption in the home market, in the usual commercial quantities and in the ordinary course of trade. Where appropriate, in accordance with section 773(a)(6)(B) of the Act, we deducted from the starting price inland freight (offset, where applicable, by freight revenue), inland insurance, and packing. Pursuant to 19 CFR 351.401(c), we deducted rebates and discounts. We also increased NV by U.S. packing costs in accordance with section 773(a)(6)(A) of the Act. For comparisons to EP, pursuant to section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410(b), we made circumstance-of-sale adjustments for credit expenses, bank charges and commissions. In accordance with section 773(a)(1)(B)(i) of the Act, we based NV on sales at the same level of trade as the EP. *See* the “Level of Trade” section below. For purposes of calculating NV, section 771(16) of the Act defines “foreign like product” as merchandise which is either
(1)identical or
(2)similar to the merchandise sold in the United States. When there are no identical products sold in the home market, the products which are most similar to the product sold in the United States are identified. For the non-identical or most similar products which are identified based on the Department's product matching criteria, an adjustment is made to the home market sales price to account for the actual physical differences between the products sold in the United States and the home market. See section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. Level of Trade In accordance with section 773(a)(1)(B) of the Act, we determined NV based on sales in the comparison market at the same level of trade
(LOT)as the CEP/EP sales, to the extent practicable. When there were no sales at the same LOT, we compared U.S. sales to comparison market sales at a different LOT. Pursuant to 19 CFR 351.412, to determine whether CEP/EP sales and NV sales were at different LOTs, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the customers. If the comparison market sales are at a different LOT and the differences affect price comparability, as manifested in a pattern of consistent price differences between sales at different LOTs in the country in which NV is determined, we will make an LOT adjustment under section 773(a)(7)(A) of the Act. For CEP sales, if the NV LOT is at a more advanced stage of distribution than the CEP LOT and the data available do not provide an appropriate basis to determine an LOT adjustment, we will grant a CEP offset, as provided in section 773(a)(7)(B) of the Act. *See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa* , 62 FR 61731, 61732-33 (November 19, 1997). Essar, Ispat, Tata, and JSW each reported different channels of distribution in the home market; however, based on our analysis of the selling functions performed for each channel, we found one level of trade for each. For a detailed description of our LOT methodology and a summary of company-specific LOT findings for these preliminary results, *see* the December 19, 2007, Preliminary Sales Calculation Memorandum for Ispat (Calculation Memorandum for Ispat); Preliminary Sales Calculation Memorandum for Tata (Calculation Memorandum for Tata); Preliminary Sales Calculation Memorandum for JSW Steel Limited (Calculation Memorandum for JSW), and Preliminary Sales Calculation Memorandum for Essar (Calculation Memorandum for Essar), the public versions of which are on file in the Central Records Unit (CRU), Room B-099 of the main Department building. Based on these findings, we did not make an LOT adjustment under section 773(a)(7)(A) of the Act and 19 CFR 351.412(e) because, as there was only one home market LOT for each respondent, we were unable to identify a pattern of consistent price differences attributable to differences in LOTs ( *see* 19 CFR 351.412(d)). Under 19 CFR 351.412(f), we are preliminarily granting a CEP offset for Tata and Essar because the NV is at a more advanced LOT than the LOT for its U.S. CEP sales. Cost of Production
(COP)A. Calculation of COP In the most recently completed administrative reviews in which Essar and Ispat participated, the Department determined that Essar and Ispat sold foreign like product at prices below the cost of producing the merchandise and excluded such sales from the calculation of NV. For Essar, *see Certain Hot-Rolled Carbon Steel Flat Products From India: Preliminary Results of Antidumping Duty Administrative Review* , 71 FR 2018 (January 12, 2006) unchanged in the final results, *Certain Hot-Rolled Carbon Steel Flat Products From India: Final Results of Antidumping Duty Administrative Review* , 71 FR 40694 (July 18, 2006). For Ispat, *see Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Hot-Rolled Carbon Steel Flat Products from India* , 66 FR 22157 (May 3, 2001), unchanged in the final results, *Notice of Final Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products From India* , 66 FR 50406 (October 3, 2001). As a result, the Department determined that there are reasonable grounds to believe or suspect that during the instant POR, Essar and Ispat sold foreign like product at prices below the cost of producing the merchandise. *See* section 773(b)(2)(A)(ii) of the Act. Therefore, the Department initiated a sales-below-cost inquiry with respect to Essar and Ispat. We calculated a company-specific COP for Essar and Ispat based on the sum of each Essar's and Ispat's cost of materials and fabrication for the foreign like product, plus amounts for home-market selling expenses, selling, general and administrative expenses (SG&A), and packing costs in accordance with section 773(b)(3) of the Act. We relied on Essar's and Ispat's information as submitted. B. Test of Home-Market Prices In determining whether to disregard home market sales made at prices below the COP, as required under sections 773(b)(1)(A) and
(B)of the Act, we compared the weighted-average COP to home market sales of the foreign like product and we examined whether
(1)within an extended period of time, such sales were made in substantial quantities, and
(2)such sales were made at prices which permitted the recovery of all costs within a reasonable period of time. On a product-specific basis, we compared the COP to the home market prices (not including VAT), less any applicable movement charges, discounts, and rebates. C. Results of COP Test Pursuant to section 773(b)(1) of the Act, we may disregard below-COP sales in the determination of NV if these sales have been made within an extended period of time in substantial quantities and were not at prices which permit recovery of all costs within a reasonable period of time. Where 20 percent or more of a respondent's sales of a given product during the POR were at prices less than the COP for at least six months of the POR, we determined that sales of that model were made in “substantial quantities” within an extended period of time, in accordance with sections 773(b)(2)(B) and
(C)of the Act. Where prices of a respondent's sales of a given product were below the per-unit COP at the time of sale and below the weighted-average per-unit costs for the POR, we determined that sales were not at prices which would permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act. In such cases, we disregarded the below-cost sales in accordance with section 773(b)(1) of the Act. Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of a respondent's sales of a given product were at prices less than the COP, we did not disregard any below-cost sales of that product because we determined that the below-cost sales were not made in “substantial quantities.” We tested and identified below-cost home market sales for Ispat and Essar. We disregarded individual below-cost sales of a given product and used the remaining sales as the basis for determining NV, in accordance with section 773(b)(1) of the Act. *See* Calculation Memorandum for Ispat and the Calculation Memorandum for Essar. Arm's-Length Sales Tata and Essar reported that they made sales of the foreign like product in the home market to affiliated parties. The Department calculates NV based on a sale to an affiliated party only if it is satisfied that the price to the affiliated party is comparable to the price at which sales are made to parties not affiliated with the producer or exporter, *i.e.* , sales at arm's length. *See* 19 CFR 351.403(c). To test whether these sales were made at arm's length, we compared the starting prices of sales to affiliated and unaffiliated customers net of all movement charges, direct selling expenses, discounts and packing. In accordance with the Department's current practice, if the prices charged to an affiliated party were, on average, between 98 and 102 percent of the prices charged to unaffiliated parties for merchandise identical or most similar to that sold to the affiliated party, we considered the sales to be at arm's-length prices. *See Notice of Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review: Ninth Administrative Review of the Antidumping Duty Order on Certain Pasta from Italy* , 71 FR 45017, 45020 (August 8, 2006), and unchanged in the final results. *See Notice of Final Results of the Ninth Administrative Review of the Antidumping Duty Order on Certain Pasta from Italy* , 72 FR 7011 (February 14, 2007); 19 CFR 351.403(c). Conversely, where we found sales to the affiliated party that did not pass the arm's-length test, all sales to that affiliated party have been excluded from the NV calculation. *See Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course of Trade* , 67 FR 69186, 69187 (November 15, 2002). Currency Conversion For purposes of these preliminary results, we made currency conversions in accordance with section 773A(a) of the Act, based on the official exchange rates published by the Federal Reserve Bank. Preliminary Results of the Review As a result of this review, we preliminarily find that the following weighted-average dumping margins exist: Producer/Manufacturer Weighted-Average Margin Ispat 0.00 %% Tata 0.24 %% JSW 37.01 %% Essar 0.00 %% The Department will disclose calculations performed within five days of the date of publication of this notice to the parties of this proceeding in accordance with 19 CFR 351.224(b). Interested parties may submit case briefs and/or written comments no later than 30 days after the date of publication of these preliminary results of review. *See* 19 CFR 351.309(c)(ii). Rebuttal briefs are limited to issues raised in such briefs or comments and may be filed no later than five days after the time limit for filing the case briefs or comments. *See* 19 CFR 351.309(d). Parties submitting arguments in this proceeding are requested to submit with the argument: 1) a statement of the issue, 2) a brief summary of the argument, and 3) a table of authorities. See 19 CFR 351.309(c)(2) and (d)(2). Case and rebuttal briefs and comments must be served on interested parties in accordance with 19 CFR 351.303(f). Further, parties submitting written comments are requested to provide the Department with an additional copy of the public version of any such comments on a diskette. An interested party may request a hearing within 30 days of publication of these preliminary results. *See* 19 CFR 351.310(c). A hearing, if requested, ordinarily will be held two days after the due date of the rebuttal briefs. The Department will issue the final results of this administrative review, which will include the results of its analysis of issues raised in the written comments, or at a hearing, if requested, within 120 days of publication of these preliminary results. Assessment Rate Upon completion of this administrative review, the Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries, in accordance with 19 CFR 351.212. The Department intends to issue assessment instructions to CBP 15 days after the date of publication of the final results of this review. The Department clarified its “automatic assessment” regulation on May 6, 2003. *See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties* , 68 FR 23954 (May 6, 2003) (Assessment Policy Notice). This clarification will apply to entries of subject merchandise during the POR produced by companies included in the final results of review for which the reviewed companies did not know that the merchandise they sold to the intermediary ( *e.g.* , a reseller, trading company, or exporter) was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the “all-others” rate if there is no rate for an intermediary involved in the transaction. *See Assessment Policy Notice* for a full discussion of this clarification. Cash Deposit Requirements To calculate the cash deposit rate for each producer and/or exporter included in this administrative review, we divided the total dumping margins for each company by the total net value for that company's sales during the review period. The following deposit rates will be effective upon publication of the final results of this administrative review for all shipments of hot-rolled carbon steel from India entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a)(2)(C) of the Act:
(1)The cash deposit rates for the companies listed above will be the rates established in the final results of this review, except if the rate is less than 0.5 percent and, therefore, *de minimis* , the cash deposit will be zero;
(2)for previously reviewed or investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent final results in which that manufacturer or exporter participated;
(3)if the exporter is not a firm covered in these reviews, a prior review, or the original less-than-fair-value
(LTFV)investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent final results for the manufacturer of the merchandise; and
(4)if neither the exporter nor the manufacturer is a firm covered in this or any previous review or the LTFV conducted by the Department, the cash deposit rate will be 38.72 percent, the “all-others” rate established in the LTFV. *See Amended Final Determination* . These cash deposit requirements, when imposed, shall remain in effect until further notice. Verification The Department intends to conduct sales verifications after these preliminary results for Ispat, Tata, and JSW. Notification to Importers This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties. These preliminary results of review are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act. Dated: December 19, 2007. David M. Spooner, Assistant Secretary for Import Administration. [FR Doc. E7-25397 Filed 12-28-07; 8:45 am] BILLING CODE 3510-DS-S DEPARTMENT OF COMMERCE International Trade Administration [A-821-802] Extension of Time to Submit Comments Concerning the Initialed Draft Amendment to the Agreement Suspending the Antidumping Investigation on Uranium from the Russian Federation AGENCY: Import Administration, International Trade Administration, Department of Commerce. SUMMARY: The Department of Commerce (“the Department”) and the Russian Federation's Federal Atomic Energy Agency (“Rosatom”) have initialed a draft amendment to the Agreement Suspending the Antidumping Investigation on Uranium from the Russian Federation (“Suspension Agreement”). *See Initialed Draft Amendment to the Agreement Suspending the Antidumping Investigation on Uranium from the Russian Federation; Request for Comment* , 72 FR 68124 (December 4, 2007) (“Draft Amendment”). On December 20, 2007, Power Resources, Inc. (“PRI”) and Crow Butte Resources, Inc (“CBR”), U.S. producers of uranium concentrates, requested a one-week extension to the comment period outlined in the Draft Amendment. The Department is granting this request in full. FOR FURTHER INFORMATION CONTACT: Sally C. Gannon at
(202)482-0162, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street & Constitution Avenue, N.W., Washington, D.C. 20230. SUPPLEMENTARY INFORMATION: Background On October 30, 1992, the Department suspended the antidumping duty investigation involving uranium from Russia on the basis of an agreement by its government to restrict the volume of direct or indirect exports to the United States in order to prevent the suppression or undercutting of price levels of U.S. domestic uranium. *See Antidumping; Uranium from Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Ukraine, and Uzbekistan; Suspension of Investigations and Amendment of Preliminary Determinations* , 57 FR 49220 (October 30, 1992). The Suspension Agreement was subsequently amended, by agreement of both governments, on March 11, 1994, October 3, 1996, and May 7, 1997. *See, respectively, Amendment to Agreement Suspending the Antidumping Investigation on Uranium from the Russian Federation* , 59 FR 15373 (April 1, 1994); Amendments to the *Agreement Suspending the Antidumping Investigation on Uranium from the Russian Federation* , 61 FR 56665 (November 4, 1996); and *Amendment to Agreement Suspending the Antidumping Investigation on Uranium from the Russian Federation* , 62 FR 37879 (July 15, 1997). On July 31, 1998, the Department notified interested parties of an administrative change with respect to the Suspension Agreement. *See Agreement Suspending the Antidumping Investigation on Uranium from the Russian Federation* , 63 FR 40879 (July 31, 1998). On November 27, 2007, the Department and Rosatom initialed a new draft amendment to the Suspension Agreement. Extension Request The Department provided parties with thirty days from the publication date of the Draft Amendment in the **Federal Register** to submit comments on the proposed amendment. The Draft Amendment published in the **Federal Register** on December 4, 2007, and, therefore, comments were due on January 3, 2008. On December 20, 2007, PRI and CBR requested a one-week extension to the deadline for submitting comments on the proposed amendment. PRI and CBR stated in their submission that the complexity of the Suspension Agreement and Draft Amendment, coupled with the December holiday, necessitate additional time for PRI and CBR to review and analyze the Draft Amendment and submit meaningful comments. For the reasons stated in PRI's and CBR's submission, the Department is granting this request in full. The comments on the Draft Amendment are now due on January 10, 2008. Dated: December 21, 2007. David M. Spooner, Assistant Secretary for Import Administration. [FR Doc. E7-25390 Filed 12-28-07; 8:45 am] BILLING CODE 3510-DS-S DEPARTMENT OF COMMERCE International Trade Administration North American Free Trade Agreement (NAFTA), Article 1904 Binational Panel Reviews: Notice of Withdrawal of Panel Review AGENCY: NAFTA Secretariat, United States Section, International Trade Administration, Department of Commerce. ACTION: On December 20, 2007, a Notice of Withdrawal of Request for Panel Review of the Changed Circumstances Review and the Complaint regarding Gray Portland Cement and Clinker from Mexico was filed on behalf of Holcim Apasco, S.A. de C.V. and Cementos Apasco, S.A. de C.V. (Secretariat File No. USA-MEX-2007-1904-02). SUMMARY: Pursuant to the Withdrawal of the Request for Panel Review and the Complaint, the panel review is terminated as of December 20, 2007. A panel has not been appointed to this panel review. Pursuant to Rule 71(2) of the *Rules of Procedure for Article 1904 Binational Panel Review,* this panel review is terminated. FOR FURTHER INFORMATION CONTACT: Caratina L. Alston, United States Secretary, NAFTA Secretariat, Suite 2061, 14th and Constitution Avenue, Washington, DC 20230,
(202)482-5438. SUPPLEMENTARY INFORMATION: Chapter 19 of the North American Free-Trade Agreement (“Agreement”) establishes a mechanism to replace domestic judicial review of final determinations in antidumping and countervailing duty cases involving imports from a NAFTA country with review by independent binational panels. When a Request for Panel Review is filed, a panel is established to act in place of national courts to review expeditiously the final determination to determine whether it conforms with the antidumping or countervailing duty law of the country that made the determination. Under Article 1904 of the Agreement, which came into force on January 1, 1994, the Government of the United States, the Government of Canada and the Government of Mexico established Rules of Procedure for Article 1904 Binational Panel Reviews (“Rules”). These Rules were published in the **Federal Register** on February 23, 1994 (59 FR 8686). The panel review in this matter was requested and terminated pursuant to these Rules. Dated: December 20, 2007. Caratina L. Alston, United States Secretary, NAFTA Secretariat. [FR Doc. 07-6240 Filed 12-28-07; 8:45 am]
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Traces to 59 documents
U.S. Code
- Other requirements and authority§ 1855
- Rule making§ 553
- Findings, purposes and policy§ 1801
- Determination of other material as special nuclear material; Presidential assent; effective date§ 2071
- Cooperation with States§ 2021
- Establishment and transfers§ 5841
- Employee protection§ 5851
- Cooperation of agencies; reports; availability of information; recommendations; international and national coordination of efforts§ 4332
- Findings and purposes§ 10151
- Authority and functions of Director§ 3504
- Definitions§ 2014
- Authorization of monitored retrievable storage§ 10162
- Hearings and judicial review§ 2239
- Licensing of facility expansions and transshipments§ 10154
- Site selection§ 10165
- Definitions§ 10101
- Interim at-reactor storage§ 10153
- Research and development on spent nuclear fuel§ 10198
- Federal Aviation Administration§ 106
- Public information collection activities; submission to Director; approval and delegation§ 3507
- Confidentiality and disclosure of returns and return information§ 6103
- Rules and regulations§ 7805
- Functions of Corporation§ 983
- Purposes§ 3501
- Definitions§ 601
- Establishment, functions, and activities§ 272
- Congressional findings and declaration of purpose§ 7401
- EXPEDITED PROCESSING OF REQUESTS FOR JAPANESE IMPERIAL GOVERNMENT RECORDS.§ 804
- Periodic review of rules§ 610
- Administrative§ 121
register
CFR
- May I address the unsafe condition in a way other than that set out in the airworthiness directive?§ 39.19
- Federal speculative position limits.§ 150.2
- Rules and regulations.§ 601.601
- Identification of plan.§ 52.2270
- What requirements for reasonable further progress (RFP) under sections 172(c)(2) and 182 apply for areas designated nonattainment for the 8-hour ozone NAAQS?§ 51.910
- What requirements apply for reasonably available control technology (RACT) and reasonably available control measures (RACM) under the 8-hour NAAQS?§ 51.912
- What emissions inventory requirements apply under the 8-hour NAAQS?§ 51.915
- How do areas transition from the 1-hour NAAQS to the 1997 8-hour NAAQS and what are the anti-backsliding provisions?§ 51.905
- What modeling and attainment demonstration requirements apply for purposes of the 8-hour ozone NAAQS?§ 51.908
- Definitions.§ 351.102
- In general.§ 351.401
- Differences in circumstances of sale§ 351.410
- Differences in physical characteristics.§ 351.411
- Levels of trade; adjustment for difference in level of trade; constructed export price offset.§ 351.412
- Sales used in calculating normal value; transactions between affiliated parties.§ 351.403
- Disclosure of calculations and procedures for the correction of ministerial errors.§ 351.224
- Written argument.§ 351.309
- Filing, document identification, format, translation, service, and certification of documents.§ 351.303
- Hearings.§ 351.310
- Assessment of antidumping and countervailing duties; provisional measures deposit cap; interest on certain overpayments and underpayments.§ 351.212
- Calculation of export price and constructed export price; reimbursement of antidumping and countervailing duties.§ 351.402
statutes-at-large
63 references not yet in our index
- 50 CFR 648
- 10 CFR 72
- 68 Stat. 929
- 83 Stat. 444
- Pub. L. 86-373
- 73 Stat. 688
- 88 Stat. 1242
- Pub. L. 95-601
- 92 Stat. 2951
- Pub. L. 102-486
- 106 Stat. 3123
- Pub. L. 91-190
- 83 Stat. 853
- Pub. L. 97-425
- 96 Stat. 2229
- Pub. L. 100-203
- 101 Stat. 1330
- 112 Stat. 2750
- Pub. L. 109-58
- 119 Stat. 806
- 68 Stat. 955
- 96 Stat. 2230
- 96 Stat. 2202
- 98 Stat. 2230
- 96 Stat. 2252
- 14 CFR 39
- 17 CFR 150
- 26 CFR 1
- 119 Stat. 594
- 26 USC 468A(e)(5)
- Pub. L. 109-280
- 120 Stat. 780
- Rev. Rul. 79-325
- Pub. L. 110-28
- 26 CFR 31
- Rev. Rul. 75-464
- Rev. Rul. 81-310
- Pub. L. 103-387
- 26 CFR 301
- 33 CFR 401
+ 23 more
Citation graph
cites case law
Proposed Rules
Temporary rule; emergency action; extension of effective period; request for comments
F. App'x472 F.3d 882
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Cite10 CFR 72
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