Federal Register / Vol. 65, No. 95 / Tuesday, May 16, 2000 / Proposed Rules 31115

§ 39.13 [Amended]

2. Section 39.13 is amended by

adding the following new airworthiness

directive:

Airbus Industrie: Docket 2000–NM–105–AD.

Applicability: All Model A300–600 series

airplanes, certificated in any category.

Note 1: This AD applies to each airplane

identified in the preceding applicability

provision, regardless of whether it has been

modified, altered, or repaired in the area

subject to the requirements of this AD. For

airplanes that have been modified, altered, or

repaired so that the performance of the

requirements of this AD is affected, the

owner/operator must request approval for an

alternative method of compliance in

accordance with paragraph (e) of this AD.

The request should include an assessment of

the effect of the modification, alteration, or

repair on the unsafe condition addressed by

this AD; and, if the unsafe condition has not

been eliminated, the request should include

specific proposed actions to address it.

Compliance: Required as indicated, unless

accomplished previously.

To prevent cracking of the center section

of the fuselage, which could result in rupture

of the frame foot and reduced structural

integrity of the airplane, accomplish the

following:

High Frequency Eddy Current (HFEC) or

Rototest Inspection

(a) Perform a HFEC or rototest inspection

to detect cracking in the area surrounding the

frame feet attachment holes between fuselage

frames (FR) 41 and FR46 from stringers 24 to

28, left- and right-hand sides, in accordance

with Airbus Service Bulletin A300–53–6122,

dated February 9, 2000, at the time specified

in paragraph (a)(1) or (a)(2), as applicable.

(1) For airplanes on which Task 53–15–54

in Maintenance Review Board Document

(MRBD), Revision 3, dated April 1998, has

NOT been accomplished as of the effective

date of this AD: Perform the inspection at the

later of the times specified in paragraphs

(a)(1)(i) and (a)(1)(ii) of this AD.

(i) Prior to the accumulation of the total

flight-cycle or flight-hour threshold,

whichever occurs first, specified in

paragraph 1.E. (‘‘Compliance’’) of the service

bulletin; or

(ii) Within the applicable grace period

specified in paragraph 1.E. (‘‘Compliance’’) of

the service bulletin.

(2) For airplanes on which Task 53–15–54

in Maintenance Review Board Document

(MRBD), Revision 3, dated April 1998, has

been accomplished as of the effective date of

this AD: Perform the next repetitive

inspection at the later of the times specified

in paragraphs (a)(2)(i) and (a)(2)(ii) of this

AD.

(i) Within the flight-cycle or flight-hour

interval, whichever occurs first, specified in

paragraph 1.E. (‘‘Compliance’’) of the service

bulletin, following the latest inspection

accomplished in accordance with the MRBD;

or

(ii) Within the grace period specified in

paragraph 1.E. (‘‘Compliance’’) of the service

bulletin.

(b) For airplanes on which no cracking is

detected during the inspection required by

paragraph (a) of this AD, prior to further

flight, install new fasteners as applicable, in

accordance with Airbus Service Bulletin

A300–53–6122, dated February 9, 2000; and

repeat the inspection required by paragraph

(a) of this AD thereafter at intervals not to

exceed the applicable intervals specified in

paragraph 1.E. (‘‘Compliance’’) of the service

bulletin.

Corrective Actions

(c) For airplanes on which cracking is

detected during any inspection required by

this AD: Prior to further flight, except as

required by paragraph (d) of this AD,

accomplish corrective actions (e.g.,

performing rotating probe inspections,

reaming out cracks, cold working fastener

holes, and installing oversized fasteners) in

accordance with Airbus Service Bulletin

A300–53–6122, dated February 9, 2000.

Repeat the inspection required by paragraph

(a) of this AD thereafter at intervals not to

exceed the applicable intervals specified in

paragraph 1.E. (‘‘Compliance’’) of the service

bulletin.

(d) If cracking is detected during any

inspection required by this AD, and the

service bulletin specifies to contact the

manufacturer for an appropriate corrective

action: Prior to further flight, repair in

accordance with a method approved by the

Manager, International Branch, ANM–116,

FAA, Transport Airplane Directorate; or the

Direction Ge ́ne ́rale de l’Aviation Civile

(DGAC) (or it’s delegated agent).

Alternative Methods of Compliance

(e) An alternative method of compliance or

adjustment of the compliance time that

provides an acceptable level of safety may be

used if approved by the Manager,

International Branch, ANM–116. Operators

shall submit their requests through an

appropriate FAA Principal Maintenance

Inspector, who may add comments and then

send it to the Manager, International Branch,

ANM–116.

Note 2: Information concerning the

existence of approved alternative methods of

compliance with this AD, if any, may be

obtained from the International Branch,

ANM–116.

Special Flight Permits

(f) Special flight permits may be issued in

accordance with sections 21.197 and 21.199

of the Federal Aviation Regulations (14 CFR

21.197 and 21.199) to operate the airplane to

a location where the requirements of this AD

can be accomplished.

Note 3: The subject of this AD is addressed

in French airworthiness directive 2000–060–

303(B), dated February 9, 2000.

Issued in Renton, Washington, on May 10,

2000.

Donald L. Riggin,

Acting Manager, Transport Airplane

Directorate, Aircraft Certification Service.

[FR Doc. 00–12248 Filed 5–15–00; 8:45 am]

BILLING CODE 4910–13–U

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG–106186–98]

RIN 1545–AW36

Certain Corporate Reorganizations

Involving Disregarded Entities

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice of proposed rulemaking

and notice of public hearing.

SUMMARY: This document contains

proposed regulations that provide

guidance to corporations and their

shareholders about whether certain

transactions qualify as corporate

reorganizations. The proposed

regulations apply to certain mergers

under state or Federal law between two

entities, one of which is a corporation

and the other of which, for Federal tax

purposes, is disregarded as an entity

separate from its owner (for example, a

qualified REIT subsidiary, a qualified

subchapter S subsidiary, or a limited

liability company with a single

corporate owner that does not elect to be

treated as a separate corporation). This

document also provides a notice of

public hearing on these proposed

regulations.

DATES: Written or electronic comments

must be received by August 14, 2000.

Requests to speak (with outlines of oral

comments to be discussed) at the public

hearing scheduled for August 8, 2000,

must be received by July 18, 2000.

ADDRESSES: Send submissions to

CC:DOM:CORP:R (REG–106186–98),

room 5226, 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 am and

5 pm to: CC:DOM:CORP:R (REG–

106186–98), Courier’s desk, Internal

Revenue Service, 1111 Constitution

Avenue, NW., Washington, DC 20044.

Alternatively, taxpayers may submit

comments electronically via the Internet

by selecting the ‘‘Tax Regs’’ option on

the IRS Home Page, or by submitting

comments directly to the IRS Internet

site at http://www.irs.gov/taxlregs/

reglist.html. The public hearing will be

held in room 4718, Internal Revenue

Building, 1111 Constitution Avenue,

NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the proposed regulations,

Reginald Mombrun, (202) 622–7750,

concerning submissions of comments,

31116 Federal Register / Vol. 65, No. 95 / Tuesday, May 16, 2000 / Proposed Rules

the hearing, and/or to be placed on the

building access list to attend the

hearing, Guy Traynor, (202) 622–7180

(not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed

amendments to the Income Tax

Regulations (26 CFR Part 1) that provide

guidance as to whether certain mergers

under state or Federal law between two

entities, one of which is a corporation

and the other of which, for Federal tax

purposes, is disregarded as an entity

separate from its owner can be statutory

mergers qualifying as reorganizations

under section 368(a)(1)(A) of the

Internal Revenue Code of 1986 (Code).

The Code provides general

nonrecognition treatment for

reorganizations specifically described in

section 368(a). Section 368(a)(1)(A)

provides that the term reorganization

means ‘‘a statutory merger or

consolidation.’’ Section 1.368–2(b)(1)

provides that a statutory merger must be

accomplished under the ‘‘corporation

laws of the United States or a State or

territory or the District of Columbia.’’ In

addition to meeting the requirements of

section 368(a), a merger transaction

must meet other reorganization

requirements such as the requirement

that the persons engaged in the

transaction each qualify as ‘‘a party to

a reorganization’’ under section 368(b),

the continuity of interest requirement of

§ 1.368–1(e), and the continuity of

business enterprise requirement of

§ 1.368–1(d).

Certain entities that are respected

under state law are disregarded for

Federal tax purposes. These entities

include a qualified REIT subsidiary, a

qualified subchapter S subsidiary

(QSub), and an entity that is disregarded

under § 301.7701–3 as an entity separate

from its owner. Section 856(i)(2)

provides that a corporation that is

wholly owned by a real estate

investment trust (REIT) is a qualified

REIT subsidiary. Section 1361(b)(3)(B)

provides that a QSub is an eligible

domestic corporation, wholly owned by

an S corporation, for which the S

corporation makes a QSub election.

Under § 301.7701–3, a business entity

that is not classified as a corporation per

se (see § 301.7701–2(b)((1), (3), (4), (5),

(6), (7) or (8); for example, a limited

liability company) can elect to be

treated as a corporation or, if it has a

single owner, can choose to be

disregarded. (These entities hereinafter

are collectively referred to as

Disregarded Entities, and the

corporation that owns the Disregarded

Entity is referred to as the Owner.) For

Federal tax purposes, all of the assets,

liabilities, and items of income,

deduction, and credit of a Disregarded

Entity are treated as those of its Owner.

Because qualified REIT subsidiaries

and QSubs are corporations under state

law, state merger laws generally permit

them to merge with other corporations.

In addition, many state merger laws

permit mergers between limited liability

companies and corporations.

Commentators have raised questions

as to whether the merger under state or

Federal law of a Disregarded Entity into

an acquiring corporation or of a target

corporation into a Disregarded Entity

can qualify as a reorganization under

section 368(a)(1)(A). These regulations

address this issue.

Explanation of Provisions

The proposed regulations provide

guidance on the tax treatment of the

following two transactions: (1) the

merger of a Disregarded Entity into an

acquiring corporation, and (2) the

merger of a target corporation into a

Disregarded Entity. Under the Federal

tax laws, the merger under state or

Federal law of a Disregarded Entity into

an acquiring corporation in which the

Owner exchanges its interest in the

Disregarded Entity for stock in the

acquiring corporation and the

Disregarded Entity ceases to exist as a

result of the transaction by operation of

the state or Federal merger law

(hereinafter, the merger of a Disregarded

Entity into an acquiring corporation) is

treated as if the Owner transferred the

assets of the Disregarded Entity to the

acquiring corporation. Conversely, the

merger under state or Federal law of a

target corporation into a Disregarded

Entity in which the shareholders of the

target corporation exchange their target

corporation stock for stock in the Owner

and the Disregarded Entity does not lose

its status as a Disregarded Entity as a

result of the transaction (hereinafter, the

merger of a target corporation into a

Disregarded Entity) is treated as if the

Owner acquired all of the assets of the

target corporation.

The proposed regulations reflect

Treasury’s and the IRS’ view that

neither merger is a statutory merger

qualifying as a reorganization under

section 368(a)(1)(A). Compliance with a

corporate law merger statute does not by

itself qualify a transaction as a

‘‘statutory merger’’ for purposes of

section 368(a)(1)(A). See Roebling v.

Commissioner, 143 F.2d 810, 812 (3d

Cir. 1944), cert. denied, 323 U.S. 773

(1944). The proposed regulations

contain the requirements that must be

satisfied for a state or Federal law

merger or consolidation to qualify as a

reorganization under section

368(a)(1)(A). In addition, the proposed

regulations remove the word

‘‘corporation’’ from the requirement

that, in order to qualify as a

reorganization under section

368(a)(1)(A), a merger or consolidation

must be effected pursuant to the

corporation law of the relevant

jurisdiction. This change is necessary to

conform the regulations to the IRS’ longstanding position that a merger or

consolidation may qualify as a

reorganization under section

368(a)(1)(A) even if it is undertaken

pursuant to laws other than the

corporation law of the relevant

jurisdiction. See Rev. Rul. 84–104

(1984–2 C.B. 94) (a ‘‘consolidation’’

pursuant to the National Banking Act,

12 U.S.C. 215, is treated as a merger for

Federal tax purposes).

The Merger of a Disregarded Entity into

an Acquiring Corporation

Consistent with the views of all the

commentators, Treasury and the IRS

believe that the merger of a Disregarded

Entity into an acquiring corporation is

not a statutory merger qualifying as a

reorganization under section

368(a)(1)(A) because the Owner’s assets

(other than those held in the

Disregarded Entity) are not transferred

to the acquiring corporation and the

Owner does not cease to exist as a result

of the state or Federal law merger

transaction. ‘‘A merger ordinarily is an

absorption by one corporation of the

properties and franchises of another

whose stock it has acquired. The merged

corporation ceases to exist, and the

merging corporation alone survives.’’

Cortland Specialty Co. v. Commissioner

of Internal Revenue, 60 F. 2d 937, 939

(2d Cir. 1932), cert. denied, 288 U.S. 599

(1933). The merger of a Disregarded

Entity into an acquiring corporation, in

which the Owner’s assets and liabilities

are divided between the Owner and the

acquiring corporation after the

transaction, is a divisive transaction, not

a transaction in which the assets of the

Owner and the acquiring corporation

are combined. Congress intended that

section 355 be the sole means under

which divisive transactions will be

afforded tax-free status and, thus,

specifically required the liquidation of

the acquired corporation in

reorganizations under both sections

368(a)(1)(C) and 368(a)(1)(D) in order to

prevent these reorganizations from

being used in divisive transactions that

did not satisfy section 355. See S. Rep.

No. 1622, 83rd Cong., 2d Sess. 274

(1954); S. Rpt. No. 169, 98th Cong., 2d

Federal Register / Vol. 65, No. 95 / Tuesday, May 16, 2000 / Proposed Rules 31117

Sess. 204 (1984) and Rev. Rul. 2000–5

(2000–5 I.R.B. 436).

Accordingly, consistent with existing

law, the proposed regulations provide

that for a merger to qualify as a

reorganization under section

368(a)(1)(A), it must, by operation of the

merger statute of the relevant

jurisdiction, result in one corporation

acquiring the assets of the merging

corporation and the merging corporation

ceasing to exist. Thus, the merger of a

Disregarded Entity into an acquiring

corporation cannot qualify as a

reorganization under section

368(a)(1)(A). However, the transaction

may be treated as a reorganization under

section 368(a)(1)(C), (D), or (F) if all

applicable requirements are met

(including the liquidation of the

Owner). The transaction also may be

described in section 351.

The Merger of a Target Corporation into

a Disregarded Entity

There has been a split in views as to

whether the merger of a target

corporation into a Disregarded Entity is

a statutory merger qualifying as a

reorganization under section

368(a)(1)(A). Some commentators argue

that, because the Disregarded Entity is

disregarded for Federal tax purposes,

the transaction should be treated for

Federal tax purposes as a merger into

the Owner. Thus, they argue, as long as

the Owner is a corporation, all other

relevant reorganization requirements are

satisfied, and the target corporation

could have merged into the Owner in a

transaction that qualifies as a

reorganization under section

368(a)(1)(A), the merger should qualify

as a reorganization under section

368(a)(1)(A). According to these

commentators, treating such a merger as

a statutory merger into the Owner

qualifying as a reorganization under

section 368(a)(1)(A) does not

inappropriately facilitate avoidance of

any reorganization requirement under

section 368. Accordingly, the

commentators argue there is no sound

policy for not permitting the merger of

a target corporation into a Disregarded

Entity to be treated as a statutory merger

into the Owner qualifying as a

reorganization under section

368(a)(1)(A).

Other commentators argue that, as a

technical matter, the better

interpretation of the applicable

provisions of the Code and regulations

is that the merger of a target corporation

into a Disregarded Entity is not a

statutory merger of the target

corporation into the Owner qualifying

as a reorganization under section

368(a)(1)(A). Congress added the word

‘‘statutory’’ in 1934 so that the

definition ‘‘will conform more closely to

the general requirements of [state or

Federal] corporation law.’’ See H.R. Rep.

No. 704, 73rd Cong., 2nd Sess. 14

(1934). Treasury and the IRS believe

that it is inappropriate to treat the state

or Federal law merger of a target

corporation into a Disregarded Entity

instead as a statutory merger of the

target corporation into the Owner,

because the Owner, the only potential

party to a reorganization under section

368(b), is not a party to the state or

Federal law merger transaction. A

reorganization under section

368(a)(1)(A) is a combination of the

assets and liabilities of two corporations

through a merger under state or Federal

law. A merger of a target corporation

into a Disregarded Entity differs from a

merger of a target corporation into the

Owner because the target corporation

and the Owner have combined their

assets and liabilities only under the

Federal tax rules concerning

Disregarded Entities, and not under

state or Federal merger law, the law on

which Congress relied in enacting

section 368(a)(1)(A).

Accordingly, the proposed regulations

provide that the merger of a target

corporation into a Disregarded Entity is

not a statutory merger of the target

corporation into the Owner qualifying

as a reorganization under section

368(a)(1)(A). Such a transaction may

qualify as a reorganization under section

368(a)(1)(C), section 368(a)(1)(D), or

section 368(a)(1)(F) if all relevant

requirements are met. Such a

transaction also may qualify for

nonrecognition of gain under section

351.

Proposed Effective Date

These regulations as proposed apply

to any transaction occurring on or after

the date these regulations are published

as final regulations in the Federal

Register.

Comments Requested

Several states permit the merger of a

domestic corporation into a foreign

corporation under state law. Treasury

and the IRS are studying whether this

transaction qualifies as a reorganization

under section 368(a)(1)(A) and request

comments on this issue.

Special Analysis

It has been determined that this notice

of proposed rulemaking is not a

significant regulatory action as defined

in Executive Order 12866. Therefore, a

regulatory assessment is not required. It

has also been determined that section

553(b) of the Administrative Procedure

Act (5 U.S.C chapter 5) does not apply

to these regulations, and, because the

regulations do not impose a collection

of information on small entities, the

Regulatory Flexibility Act (5 U.S.C.

chapter 6) does not apply. Pursuant to

section 7805(f) of the Code, this notice

of proposed rulemaking will be

submitted to the Chief Counsel for

Advocacy of the Small Business

Administration for comment on its

impact on small business.

Comments and Public Hearing

Before these proposed regulations are

adopted as final regulations,

consideration will be given to any

written comments (a signed original and

eight copies) that are submitted timely

to the IRS. Alternatively, taxpayers may

submit comments electronically via the

Internet by selecting the ‘‘Tax Regs’’

option on the IRS Home Page, or by

submitting comments directly to the IRS

Internet site at http://www.irs.gov/

taxlregs/reglist.html. The IRS and

Treasury Department 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 August 8, 2000, beginning at 10:00

AM in Room 4718, Internal Revenue

Building, 1111 Constitution Avenue,

NW., Washington, DC. Due to building

security procedures, visitors must enter

at the 10th Street entrance, located

between Constitution and Pennsylvania

Avenues, NW. In addition, all visitors

must present photo identification to

enter the building. Because of access

restrictions, visitors will not be

admitted beyond the immediate

entrance area more than 15 minutes

before the hearing starts. For

information about having your name

placed on the building access list to

attend the hearing, see the FOR FURTHER

INFORMATION CONTACT portion of this

preamble.

The rules of 26 CFR 601.601(a)(3)

apply to the hearing. Persons who wish

to present oral comments must submit

written comments and an outline of the

topics to be discussed and the time to

be devoted to each topic (a signed

original and eight (8) copies) by July 18,

2000. 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

reviewing outlines has passed. Copies of

the agenda will be available free of

charge at the hearing.

Drafting Information: The principal

author of these regulations is Reginald

31118 Federal Register / Vol. 65, No. 95 / Tuesday, May 16, 2000 / Proposed Rules

Mombrun of the office of the Assistant

Chief Counsel (Corporate), IRS.

However, other personnel from the IRS

and the Treasury Department

participated in their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and

recordkeeping requirements.

Proposed Amendments to the

Regulations

Accordingly, 26 CFR Part 1 is

proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 continues to read in part as

follows:

Authority: 26 U.S.C. 7805 * * *.

Par. 2. Section 1.368–2 is amended by

revising paragraph (b)(1) to read as

follows:

§ 1.368–2 Definition of terms.

* * * * *

(b)(1) In order to qualify as a

reorganization under section

368(a)(1)(A), the transaction must be a

merger or consolidation involving two

corporations effected pursuant to the

laws of the United States or a State or

territory, or the District of Columbia. In

addition, by operation of such a merger

law, the transaction must result in one

corporation acquiring the assets of the

merging corporation and the merging

corporation ceasing to exist. Similarly,

by operation of such a consolidation

law, the transaction must result in one

newly formed corporation acquiring the

assets of both consolidating

corporations, and both consolidating

corporations ceasing to exist. Thus, the

merger under state or Federal law of an

entity that is disregarded as an entity

separate from its owner for Federal tax

purposes into an acquiring corporation

in which the owner exchanges its

interest in the disregarded entity for

stock in the acquiring corporation and

the disregarded entity ceases to exist as

a result of the transaction by operation

of the state or Federal merger law is not

a statutory merger qualifying as a

reorganization under section

368(a)(1)(A). Moreover, the merger of a

target corporation into an entity that is

disregarded as an entity separate from

its owner for Federal tax purposes that

does not lose its status as a disregarded

entity as a result of the transaction is not

a statutory merger qualifying as a

reorganization under section

368(a)(1)(A). Examples of entities that

are disregarded as entities separate from

their owners include a qualified REIT

subsidiary (within the meaning of

section 856(i)(2)), a qualified subchapter

S subsidiary (within the meaning of

section 1361(b)(3)(B)), and a business

entity that is not classified as a

corporation and that has a single owner

(as provided in § 301.7701–2(c)(2) of

this chapter). The preceding five

sentences apply to any transaction

occurring on or after [Date These

Regulations Are Published As Final

Regulations In The Federal Register].

* * * * *

Robert E. Wenzel,

Deputy Commissioner of Internal Revenue.

[FR Doc. 00–11902 Filed 5–11–00; 2:30 pm]

BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG–100163–00]

RIN 1545–AX73

Applying Section 197 to Partnerships;

Hearing Cancellation

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Cancellation of notice of public

hearing on proposed rulemaking.

SUMMARY: This document provides

notice of cancellation of a public

hearing on proposed regulations relating

to the application of section 197 to

partnerships.

DATES: The public hearing originally

scheduled for Wednesday, May 24,

2000, at 10 a.m., is canceled.

FOR FURTHER INFORMATION CONTACT: Guy

R. Traynor of the Regulations Unit,

Assistant Chief Counsel (Corporate), at

(202) 622–7180 (not a toll-free number).

SUPPLEMENTARY INFORMATION: A notice

of proposed rulemaking and notice of

public hearing that appeared in the

Federal Register on January 25, 2000,

(65 FR 3903), announced that a public

hearing was scheduled for May 24,

2000, at 10 a.m., in room 2615, Internal

Revenue Building, 1111 Constitution

Avenue NW., Washington, DC. The

subject of the public hearing is proposed

regulations under section 197 of the

Internal Revenue Code. The deadline for

requests to speak and outlines of oral

comments expired on May 3, 2000.

The notice of proposed rulemaking

and notice of public hearing, instructed

those interested in testifying at the

public hearing to submit a request to

speak and an outline of the topics to be

addressed. As of May 9, 2000, no one

has requested to speak. Therefore, the

public hearing scheduled for May 24,

2000, is canceled.

Cynthia E. Grigsby,

Chief, Regulations Unit, Assistant Chief

Counsel (Corporate).

[FR Doc. 00–12201 Filed 5–15–00; 8:45 am]

BILLING CODE 4830–01–P

POSTAL SERVICE

39 CFR Part 111

Sack Preparation Changes for

Periodicals Nonletter-Size Pieces and

Periodicals Prepared on Pallets

AGENCY: Postal Service.

ACTION: Proposed rule.

SUMMARY: This proposed rule would

revise the standards for the preparation

of nonautomation nonletter-size carrier

route Periodicals prepared in sacks and

the preparation of Periodicals packages

and bundles on pallets. For Periodicals

carrier route mail in sacks, the proposed

standards would require carrier route

sacks to contain a minimum of 24 pieces

and would make 5-digit scheme carrier

route sacks a required sack sortation

level. All other sack sortation criteria

would remain unchanged. For

Periodicals prepared in packages and

bundles on pallets, the proposal would

require preparation of 5-digit scheme

pallets.

DATES: Comments on the proposed

standards must be received on or before

June 15, 2000.

ADDRESSES: Written comments should

be mailed or delivered to the Manager,

Mail Preparation and Standards, U.S.

Postal Service, 475 L’Enfant Plaza SW,

Room 6800, Washington, DC 20260–

2405. Copies of all written comments

will be available for inspection and

photocopying at USPS Headquarters

Library, 475 L’Enfant Plaza SW, 11th

Floor N, Washington, DC between 9 a.m.

and 4 p.m., Monday through Friday.

Copies of comments also may be

requested via fax or email.

FOR FURTHER INFORMATION CONTACT: Joel

Walker, 202–268–3340;

jwalke13@email.usps.gov.

SUPPLEMENTARY INFORMATION: The Postal

Service and the Periodicals industry are

concerned over recent upward trends in

the costs associated with processing

Periodicals mail and have been studying

ways to reverse these trends. Several

ideas have come out of mutual

discussions that were based on joint

representation from the Postal Service

and the Periodicals industry. Cost

models suggest that we can reduce