Federal Register / Vol. 72, No. 40 / Thursday, March 1, 2007 / Proposed Rules 9281 

1There are a variety of technologies in various 

stages of development to produce electric power 

using ocean currents, tides, and wave action, rather 

than the traditional hydropower model involving 

hydraulic head developed by use of a dam or other 

diversion structure. For purposes of this notice of 

inquiry, the Commission refers to these newer 

forms of technology as ‘‘wave, current, and instream 

new technology’’ or simply ‘‘new technology.’’

However, the Commission is using the terms as 

shorthand, and is not attempting to define or limit 

the scope of these technologies. 

2See Hydroelectric Infrastructure Technical 

Conference, Docket No. AD06–13–000 (December 6, 

2006), transcript at 12; 22 (testimony of George 

Hagerman). 

3For example, in Verdant, Power, LLC, 111 FERC 

¶61,024, on reh’g, 112 FERC ¶61,143 (2005), the 

Continued 

TABLE 1.—AFFECTED 1ST STAGE FAN

BLADES—Continued 

P/Ns SNs 

804121 .......................................... PX4266 

For Engines Installed on an Airplane 

(1) For engines installed on an airplane 

with affected 1st stage fan blades installed, 

perform the actions in paragraphs (f)(3) 

through (f)(6)(ii) of this AD at the next 1st 

stage fan blade exposure. 

For Engines Not Installed on an Airplane, or, 

for Affected 1st Stage Fan Blades Not 

Installed in an Engine 

(2) For engines not installed on an airplane 

with affected 1st stage fan blades installed, 

or, for affected 1st stage fan blades not 

installed in an engine, paragraph (h) of this 

AD applies. 

1st Stage Fan Blade Check 

(3) Check the 1st stage fan blade for a 

circled, letter I, on the approved marking area 

of the outboard side of the blade platform. If 

the blade has this marking, no further action 

is required. 

(4) Remove 1st stage fan blades without a 

circled, letter I, on the approved marking area 

of the outboard side of the blade platform, if 

installed. 

(5) Inspect the 1st stage fan blade root 

thickness. You can find information on 

inspecting the blade root thickness in PW 

Engine Manual Section 72–31–02, Inspect-01, 

and Repair-23. 

(6) For 1st stage fan blades that pass the 

inspection referenced in paragraph (f)(5) of 

this AD: 

(i) Vibropeen the letter I and a circle 

around that letter, on the approved marking 

area of the outboard side of the blade 

platform. You can find information on 

approved blade marking in the JT9D–7R4 

Engine Manual, Section 72–31–02, Typical 

Repair–13, Mark Repair Codes. 

(ii) Return the 1st stage fan blades to 

service. 

Definition 

(g) For the purposes of paragraph (f)(1) of 

this AD, next 1st stage fan blade exposure is: 

(1) When any 1st stage fan blade is 

removed from the engine; or 

(2) When the 1st stage fan hub is removed 

from the engine. 

Prohibited Installation 

(h) After the effective date of this AD, do 

not install any 1st stage fan blades listed in 

Table 1 of this AD on any airplane, unless 

the actions of this AD have been done to the 

1st stage fan blades. 

Alternative Methods of Compliance 

(i) The Manager, Engine Certification 

Office, has the authority to approve 

alternative methods of compliance for this 

AD if requested using the procedures found 

in 14 CFR 39.19. 

Related Information 

(j) None. 

Issued in Burlington, Massachusetts, on 

February 23, 2007. 

Peter A. White, 

Acting Manager, Engine and Propeller 

Directorate, Aircraft Certification Service. 

[FR Doc. E7–3561 Filed 2–28–07; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Chapter I 

[Docket No. RM07–08–000] 

Preliminary Permits for Wave, Current, 

and Instream New Technology 

Hydropower Projects 

February 15, 2007. 

AGENCY: Federal Energy Regulatory 

Commission, DOE. 

ACTION: Notice of Inquiry (NOI) and 

Interim Statement of Policy. 

SUMMARY: The Federal Energy 

Regulatory Commission (Commission) is 

inviting comments on its procedures 

with respect to the treatment of 

preliminary permits under Part I of the 

Federal Power Act for wave, current, 

and instream new technology 

hydropower projects. 

DATES: Comments on this NOI are due 

on April 30, 2007. 

ADDRESSES: You may submit comments 

identified by Docket No. RM07–8–000, 

by one of the following methods: 

• Agency Web Site: http://ferc.gov. 

Follow the instructions for submitting 

comments via the eFiling link found in 

the Comment Procedures Section of the 

preamble. 

• Mail: Commenters unable to file 

comments electronically must mail or 

hand deliver an original and 14 copies 

of their comments to the Federal Energy 

Regulatory Commission, Office of the 

Secretary, 888 First Street, NE., 

Washington, DC 20426. Please refer to 

the Comment Procedures Section of the 

preamble for additional information on 

how to file paper comments. 

FOR FURTHER INFORMATION CONTACT: 

William Guey-Lee, Office of Energy 

Projects, Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426, (202) 502–

6064. 

Merrill Hathaway, (Legal Information), 

Office of General Counsel—Energy 

Projects, Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426, (202) 502- 

8825. 

SUPPLEMENTARY INFORMATION: 

Introduction 

1. The Federal Energy Regulatory 

Commission (Commission) is issuing 

this Notice of Inquiry to seek comments 

on how it should treat applications for 

preliminary permits to study 

hydropower projects involving 

proposals to utilize wave, current, and 

instream new technology methods to 

develop hydropower.1 The Commission 

is also seeking comments on how it 

should oversee any such permits during 

their terms. Finally, the Commission 

also sets an interim policy pending the 

outcome of this proceeding. 

2. The Commission has seen 

increasing interest in new hydroelectric 

technologies that would utilize ocean 

waves, tides, and currents from freeflowing rivers, as evidenced by a surge 

in applications for preliminary permits 

to study such projects. Commission staff 

has issued 11 preliminary permits for 

projects of this type; three are for 

proposed tidal energy projects (in New 

York, Washington, and California), and 

eight are for proposed ocean current 

energy projects (off the coast of Florida). 

Over 40 preliminary permit applications 

for ocean projects are currently pending 

before the Commission, all of which 

have been filed since March 2006. 

3. These new technologies have 

significant potential: it has been 

estimated that the potential for wave 

and current power could be over 350- 

terawatt hours per year, which would 

more than double current hydropower 

production.2 The Commission 

anticipates further exploration of how 

these technologies can fit within the 

national energy infrastructure in terms 

of the amount of potential energy that 

can be developed, its reliability, 

environmental and safety implications, 

and its commercial viability. The 

Commission wants to reduce regulatory 

barriers to the development of new 

technologies, where possible, and has 

exhibited the maximum flexibility 

permitted by law in regulating these 

projects.3


rmajette on PROD1PC67 with PROPOSALS
9282 Federal Register / Vol. 72, No. 40 / Thursday, March 1, 2007 / Proposed Rules 

Commission concluded that, under specified 

circumstances, the short-term testing of new 

hydropower technology would not require a 

Commission licensse. 

4 16 U.S.C. 791a, et seq. (2000). 

5See AquaEnergy Group, LTD., 102 FERC 

¶61,242 (2003). 

6 16 U.S.C. 797(f) (2000). 

7 16 U.S.C. 802 (2000). 

8 16 U.S.C. 798 (2000). 

9Nothing in the FPA requires the Commission to 

issue a preliminary permit; whether to do so is a 

matter solely within the Commission’s discretion. 

10See, e.g., Mt. Hope Waterpower Project LLP, 116 

FERC ¶ 61,232 at P 4 (2006) (‘‘The purpose of a 

preliminary permit is to encourage hydroelectric 

development by affording its holder priority of 

application (i.e., guaranteed first-to-file status) with 

respect to the filing of development applications for 

the affected site’’). 

11Thus, a permit holder can only enter lands it 

does not own with the permission of the 

landholder, and is required to obtain whatever 

environmental permits federal, state, and local 

authorities may require before conducting any 

studies. 

12See, e.g., Three Mile Falls Hydro, LLC, 102 

FERC ¶ 61,301 at P 6 (2003); see also Town of 

Summersville, W.Va. v. FERC, 780 F.2d 1034 (D.C. 

Cir. 1986) (discussing nature of preliminary 

permits). 

13See FPA section 21, 16 U.S.C. § 814 (2000). 

14Red Circle Systems Corporation, 110 FERC 

¶ 62,113 (2005); Red Circle Systems Corporation, 

110 FERC ¶ 62,114 (2005); Red Circle Systems 

Corporation, 110 FERC ¶ 62,115 (2005); Red Circle 

Systems Corporation, 110 FERC ¶ 62,116 (2005); 

Red Circle Systems Corporation, 110 FERC ¶ 62,117 

(2005); Florida Hydro, Inc., 110 FERC ¶ 62,270 

(2005); Red Circle Systems Corporation, 110 FERC 

¶ 62,271 (2005); Red Circle Systems Corporation, 

110 FERC ¶ 62,272 (2005). 

15 Golden Gate Energy Company, 113 FERC 

¶ 62,028 (2005). 

16 Verdant Power, LLC, 113 FERC ¶ 62,193 (2005). 

17Tacoma Power, 114 FERC ¶ 62,174 (2006). 

18Hydroelectric Infrastructure Technical 

Conference, Docket No. AD06–13–000. 

19See Comments of Oceania Energy Company 

(filed December 20, 2006). 

20See Comments of Ocean Renewable Energy 

Coalition (filed December 20, 2006). 

21See Comments of Gil Sperling, Verdant Power, 

LLC (technical conference transcript at 106–07). 

Background 

4. Under Part I of the Federal Power 

Act (FPA),4 the Commission regulates 

non-federal hydropower projects that 

are: located on navigable waters; located 

on nonnavigable waters over which 

Congress has Commerce Clause 

jurisdiction, were constructed after 

1935, and affect the interests of 

interstate or foreign commerce; located 

on public lands or reservations of the 

United States; or use surplus water or 

water power from a federal dam. The 

Commission has construed the term 

‘‘navigable water’’ to include waters off 

the U.S. coast.5

5. Section 4(f) of the FPA 6 authorizes 

the Commission to issue preliminary 

permits for the purpose of enabling 

prospective applicants for a hydropower 

license to secure the data and perform 

the acts required by FPA section 9,7

which in turn sets forth the material that 

must accompany an application for 

license. FPA section 5 8 states: 

Each preliminary permit issued under this 

part shall be for the sole purpose of 

maintaining priority of application for a 

license under the terms of this Act for such 

period or periods, not exceeding a total of 

three years, as in the discretion of the 

Commission may be necessary for making 

examinations and surveys, for preparing 

maps, plans, specifications, and estimates, 

and for making financial arrangements. Each 

permit shall set forth the conditions under 

which priority shall be maintained. Such 

permits shall not be transferable, and may be 

canceled by order of the Commission upon 

failure of permittees to comply with the 

conditions thereof or for other good cause 

shown after notice and opportunity for 

hearing.[9] 

Thus, the purpose of a preliminary 

permit is to preserve the right of the 

permit holder to have the first priority 

in applying for a license for the project 

that is being studied.10 Because a permit 

is issued only to allow the permit holder 

to investigate the feasibility of a project, 

and grants no land-disturbing or other 

property rights,11 the Commission 

historically has generally liberally 

granted such permits without requiring 

an extensive showing by the 

applicant.12

6. In contrast, a license issued by the 

Commission gives the licensee the 

authority to construct and operate a 

project. Standard license Article 5 

require licensees to acquire title in fee 

or the right to use in perpetuity all 

lands, other than lands of the United 

States, necessary or appropriate for the 

construction, maintenance, and 

operation of a project. Where licensees 

cannot obtain such rights through 

contract, they may use eminent domain 

to do so.13 In consequence, before 

issuing any license, the Commission 

conducts a full, searching public 

interest inquiry, and the licensing 

process is completely distinct from the 

permit process. 

7. A permit holder is not required to 

file a license application. Likewise, a 

developer may study a project without 

holding a preliminary permit. However, 

the holding of a permit does give a 

developer first-in-time preference over 

any competitors who file applications 

for projects at the same site, during the 

permit term. As noted above, it is only 

if and when a project license is issued 

that the licensee can, under the 

conditions imposed in the license, 

engage in ground-disturbing activities, 

and if necessary use eminent domain to 

acquire lands for the project. 

8. The Commission has begun to 

receive preliminary permit applications 

for proposed projects that would 

produce electric power through 

innovative technologies that would take 

advantage of various types of water 

movement, including ocean wave action 

and tides and currents both offshore and 

in rivers. In the last two years, the 

Commission has granted permits to 

study projects off the coast of Florida,14

in San Francisco Bay,15 in the East River 

of New York,16 and in Puget Sound, 

Washington.17 Approximately 45 

additional applications of this type are 

pending. 

9. On December 6, 2006, the 

Commission held a technical conference 

with respect to the new technologies.18

At the conference, and in comments 

subsequently filed by interested entities, 

the Commission heard a wide variety of 

ideas regarding the preliminary permit 

program, ranging from statements that 

the current program works well for new 

technologies,19 to suggestions that the 

Commission shorten the typical threeyear preliminary permit period to 18 

months,20 to comments that the 

Commission should adopt a much 

stricter policy with respect to the 

issuance of preliminary permits for new 

technology projects, in order to prevent 

site-banking (the reservation of potential 

sites without the current intent to 

develop a project).21 This diversity of 

opinion suggested that it would be 

useful for us to conduct a public inquiry 

into this subject, to determine if the 

Commission should in any way change 

the manner in which it treats 

preliminary permits for new technology 

projects. 

The Subject of the Notice of Inquiry 

10. The Commission seeks comment 

on the standard of review it should 

apply to applications for preliminary 

permits for ocean wave, tidal, and other 

non-traditional hydropower projects, 

and how it should regulate those 

permits during their terms. We outline 

below three alternatives, and encourage 

comments on these approaches, as well 

as the suggestion of any other methods 

that commenters believe would be 

fruitful in encouraging and 

appropriately regulating the initial 

exploration of new technology projects. 

11. We received comments at and 

following the technical conference 

concerning the possibility of creating 

new or modified procedures for the 

licensing process for new technology 

projects. We recognize that this issue is 

complex, given that there are many 

requirements governing hydropower 

licensing that are established by law and 


rmajette on PROD1PC67 with PROPOSALS
Federal Register / Vol. 72, No. 40 / Thursday, March 1, 2007 / Proposed Rules 9283 

22See F & B Wood Corporation, 117 FERC 

¶ 62,059 (2006); Birch Power Company, 116 FERC 

¶ 62,075 (2006); Birch Power Company, 116 FERC 

¶ 61,074 (2006); Wade Jacobson, 116 FERC ¶ 62,073 

(2006). 

23As a standard condition in all preliminary 

permits, the Commission requires the permit holder 

to file progress reports every six months. 

that an examination of this issue has 

implications extending to small 

traditional hydropower projects, as well 

as those involving new technology. 

Moreover, we are aware that our staff, 

with a view towards simplifying and 

shortening the licensing process where 

possible, has been able to recommend 

waiver of certain aspects of the process 

and to expeditiously process license 

applications where the applicant has: (a) 

Chosen a site that minimizes 

environmental impacts, (b) built 

consensus among stakeholders 

(including the local community and 

state and federal resource agencies) 

regarding project issues and appropriate 

environmental measures, and (c) 

provided the Commission with all 

necessary information.22 Such 

streamlined procedures may be 

applicable to some new technology 

projects. Given that we recently 

received the first license application for 

this type of project, we are not prepared 

at this time to decide if these or other 

procedures can be applied generally to 

new technology projects in a manner 

consistent with law and sound policy. 

However, we will be monitoring new 

technology proceedings, and as these 

proceedings evolve, we may consider 

whether alterations to our process may 

be appropriate generically or in 

individual cases. In addition, the 

Commission will hold a technical 

conference on this issue at a future date. 

A. Maintain Standard Preliminary 

Permit Approach 

12. As noted, traditionally, the 

Commission has not subjected most 

preliminary permit applications to 

extensive scrutiny. Further, the 

Commission has not often exercised the 

right it reserves in all preliminary 

permits to cancel the permit. 

13. Continuing to follow this 

approach could provide some regulatory 

protection for developing and testing 

new technology, could prevent ‘‘claim 

jumping,’’ that is, interference with a 

prospective applicant’s ability to 

investigate the feasibility of a project, 

and may provide some modest 

facilitation for financing new projects. 

On the other hand, this approach would 

do nothing to resolve the concern we 

have seen expressed that an entity could 

site-bank by filing for a number of new 

technology projects that it has no real 

intent of developing. It also would not 

resolve the question, raised in some 

pending permit proceedings, of how to 

properly set the boundaries of the area 

reserved for study by a preliminary 

permit holder. While it is typically easy 

to determine the boundaries of a 

traditional, riverine hydropower project, 

we have heard contrasting suggestions 

that establishing strict boundaries for a 

new technology project would 

artificially restrict the potential scope of 

such a project and that allowing too 

wide boundaries in such cases would 

encourage site-banking, to the possible 

detriment of competition in project 

development. 

B. Stricter Scrutiny Approach 

14. In the alternative, the Commission 

could process new technology 

preliminary permit applications with a 

view toward limiting the boundaries of 

the permits, to prevent site-banking and 

to promote competition. Further, to 

ensure that permit holders are actively 

pursuing project exploration, the 

Commission would carefully scrutinize 

the reports that permit holders are 

required to file on a semi-annual basis,23

and would, where sufficient progress 

was not shown, consider canceling the 

permit. Stricter scrutiny could entail 

requirements such as reports on public 

outreach and agency consultation, 

development of study plans, and 

deadlines for filing a notice of intent to 

file a license application and a 

preliminary application document. This 

approach could reduce site-banking, 

providing a disincentive for developers 

to seek permits for projects that they are 

not ready to pursue. By limiting the 

geographic scope of permits, we may 

encourage more thoughtful development 

of permit applications, as well as 

competition. On the negative side, this 

approach could, if not carefully 

administered, make it more difficult for 

even well-intentioned and prepared 

applicants to obtain multiple permits. It 

also could require additional 

Commission resources to be devoted to 

the permit program, both in more 

carefully examining applications, and in 

giving stricter scrutiny to progress 

reports. 

C. Decline To Issue Preliminary Permits 

for New Technology Projects 

15. As a third alternative, the 

Commission could decide, as a matter of 

policy, not to issue preliminary permits 

for new technology hydropower 

projects. In this case, all potential 

license applicants would have equal 

opportunities to explore the 

development of new technology 

projects, and the Commission would 

resolve any resultant competition 

during the licensing phase. This 

procedure would resolve concerns about 

site banking during the permit stage, 

because no entity would have priority 

with respect to a project site until an 

application was actually filed. 

Moreover, the Commission’s regulatory 

authority would not be invoked, and its 

resources not utilized, until an entity 

had demonstrated the seriousness of its 

interest in a project by filing an 

application. This would leave the 

market free to explore potential projects, 

without the possibly artificial 

constraints imposed by the existence of 

a preliminary permit held by an entity 

that lacks the capacity, or does not have 

a serious intent, to develop a project. On 

the negative side, potential applicants 

would not have the guarantee of first-tofile priority while they explored 

potential projects. To the extent that a 

preliminary permit provides some 

assistance in obtaining financing, this 

aid would no longer be available. 

Interim Statement of Policy 

16. On balance, the Commission has 

decided to follow the ‘‘strict scrutiny’’

approach during the pendency of this 

proceeding, because this appears to 

respond to a significant number of the 

issues that have been raised at the 

technical conference and in individual 

proceedings, particularly with respect to 

site-banking and the scope of proposed 

projects. However, we have not in any 

way decided whether we will ultimately 

select one of the three alternatives set 

forth in this notice of inquiry, and 

perhaps may choose some other 

approach. We will determine how to 

proceed only after the Commission has 

had the opportunity to review and 

consider the comments filed in response 

to this notice. 

Procedure for Comments 

17. The Commission invites interested 

persons to submit comments, and other 

information on the matters, issues and 

specific questions identified in this 

notice. Comments are due on or before 

April 30, 2007. Comments must refer to 

Docket No. RM07–8–000, and must 

include the commenters’ name, the 

organization they represent, if 

applicable, and their address. 

18. Commenters are requested to use 

appropriate headings and to double 

space their comments. 

19. Comments may be filed on paper 

or electronically via the eFiling link on 

the Commission’s Web site at http:// 

www.ferc.gov. The Commission accepts 

most standard word processing formats 

and commenters may attach additional 


rmajette on PROD1PC67 with PROPOSALS
9284 Federal Register / Vol. 72, No. 40 / Thursday, March 1, 2007 / Proposed Rules 

files with supporting information in 

certain other file formats. Commenters 

filing electronically do not need to make 

a paper filing. Commenters that are not 

able to file comments electronically 

must send an original and 14 copies of 

their comments to: Federal Energy 

Regulatory Commission, Office of the 

Secretary, 888 First Street, NE., 

Washington, DC 20426. 

20. All comments will be placed in 

the Commission’s public files and may 

be viewed, printed, or downloaded 

remotely as described in the Document 

Availability section below. Commenters 

are not required to serve copies of their 

comments on other commenters. 

Document Availability 

21. In addition to publishing the full 

text of this document in the Federal 

Register, the Commission provides all 

interested persons an opportunity to 

view and/or print the contents of this 

document via the Internet through the 

Commission’s Home Page (http:// 

www.ferc.gov) and in the Commission’s 

Public Reference Room during normal 

business hours (8:30 a.m. to 5 p.m. 

Eastern time) at 888 First Street, NE., 

Room 2A, Washington, DC 20426. 

22. From the Commission’s Home 

Page on the Internet, this information is 

available in the Commission’s document 

management system, eLibrary. The full 

text of this document is available on 

eLibrary in PDF and Microsoft Word 

format for viewing, printing, and/or 

downloading. To access this document 

in eLibrary, type the docket number 

(excluding the last three digits) in the 

docket number field. 

23. User assistance is available for 

eLibrary and the Commission’s Web site 

during normal business hours. For 

assistance, please contact the 

Commission’s Online Support at 1–866–

208–3676 (toll free) or 202–502–6652 (email at FERCOnlineSupport@ferc.gov) 

or the Public Reference Room at 202–

502–8371, TTY 202–502–8659 (e-mail at 

public.referenceroom@ferc.gov). 

By direction of the Commission. 

Magalie R. Salas, 

Secretary. 

[FR Doc. E7–3549 Filed 2–28–07; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–157834–06] 

RIN 1545–BG28 

Corporate Reorganizations; Additional 

Guidance on Distributions Under 

Sections 368(a)(1)(D) and 354(b)(1)(B) 

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 that amend § 1.368–2T(l), 

which provides guidance regarding the 

qualification of certain transactions as 

reorganizations described in section 

368(a)(1)(D) where no stock and/or 

securities of the acquiring corporation 

are issued and distributed in the 

transaction. These regulations clarify 

that the rules in § 1.368–2T(l) are not 

intended to affect the qualification of 

related party triangular asset 

acquisitions as reorganizations 

described in section 368. These 

regulations affect corporations engaging 

in such transactions and their 

shareholders. The text of those 

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 May 30, 2007. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–157834–06), 

Internal Revenue Service, P.O. Box 

7604, Ben Franklin Station, Washington, 

DC 20044. Submissions may be hand 

delivered to CC:PA:LPD:PR (REG–

157834–06), Courier Desk, Internal 

Revenue Service, 1111 Constitution 

Avenue, NW., Washington, DC, or sent 

electronically, via the IRS Internet site 

at http://www.irs.gov/regs or via the 

Federal eRulemaking Portal at http:// 

www.regulations.gov (IRS REG–157834–

06). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

Bruce A. Decker, (202) 622–7550; 

concerning submission of comments, 

requests for a public hearing, and/or a 

publication and regulations specialist, 

Kelly Banks, (202) 622–7180. 

SUPPLEMENTARY INFORMATION: 

Background 

Temporary regulations in the Rules 

and Regulations section of this issue of 

the Federal Register amend 26 CFR part 

1. The temporary regulations amend 

§ 1.368–2T(l), which provides guidance 

regarding the qualification of certain 

transactions as reorganizations 

described in section 368(a)(1)(D) where 

no stock and/or securities of the 

acquiring corporation are issued and 

distributed in the transaction. The text 

of those regulations also serves as the 

text of these proposed regulations. The 

preamble to the temporary regulations 

explains the amendments. 

Explanation of Provisions 

These regulations clarify that the rules 

in § 1.368–2T(l) are not intended to 

affect the qualification of related party 

triangular asset acquisitions as 

reorganizations described in section 

368. 

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 

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 Internal Revenue 

Code, this notice of proposed 

rulemaking will be submitted to the 

Chief Counsel for Advocacy of the Small 

Business Administration for comment 

on its impact on small business. 

Comments and Requests for a 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 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 will be 

scheduled if requested in writing by any 

person that timely submits written 

comments. If a public hearing is 

scheduled, notice of the date, time, and 

place for the public hearing will be 

published in the Federal Register. 

Drafting Information 

The principal author of these 

regulations is Bruce A. Decker, Office of 

Associate Chief Counsel (Corporate). 


rmajette on PROD1PC67 with PROPOSALS