Federal Register / Vol. 62, No. 145 / Tuesday, July 29, 1997 / Rules and Regulations 40447

of such tissue), the recipient of the

written order or prior possessor of such

tissue shall request a hearing on the

matter in accordance with part 16 of this

chapter. The order for destruction will

be held in abeyance pending resolution

of the hearing request.

Dated: July 7, 1997.

Michael A. Friedman,

Lead Deputy Commissioner for the Food and

Drug Administration.

Donna E. Shalala,

Secretary of Health and Human Services.

[FR Doc. 97–19819 Filed 7–28–97; 8:45 am]

BILLING CODE 4160–01–F

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Food and Drug Administration

21 CFR Part 211

[Docket No. 88N–0320]

Current Good Manufacturing Practice

in Manufacturing, Processing, Packing,

or Holding of Drugs; Revision of

Certain Labeling Controls; Partial

Extension of Compliance Date

AGENCY: Food and Drug Administration,

HHS.

ACTION: Final rule; partial extension of

compliance date.

SUMMARY: The Food and Drug

Administration (FDA) is announcing a

continuation of the partial extension of

the compliance date for a provision of

the final rule, published in the Federal

Register of August 3, 1993 (58 FR

41348), revising the packaging and

labeling control provisions of the

current good manufacturing practice

(CGMP) regulations for the use of cut

labeling. FDA is extending the date for

compliance with a specific provision, as

it applies to labeling other than

immediate container labels, until the

effective date of the regulation finalizing

the proposed rule on this subject

published elsewhere in this issue of the

Federal Register.

DATES: The date for compliance with the

cut labeling provision at § 211.122(g) (21

CFR 211.122(g)), as it applies to labeling

other than immediate container labels,

is extended until the effective date of

the regulation finalizing the proposed

rule on this subject published elsewhere

in this issue of the Federal Register. The

date for compliance with all other

provisions of the August 3, 1993, final

rule remains August 3, 1994.

FOR FURTHER INFORMATION CONTACT:

Thomas C. Kuchenberg, Center for

Drug Evaluation and Research

(HFD–7), Food and Drug

Administration, 5600 Fishers Lane,

Rockville, MD 20857, 301–594–

5621 (Internet electronic mail:

kuchenbergt@cder.fda.gov), or

Paul J. Motise, Center for Drug

Evaluation and Research (HFD–

325), Food and Drug

Administration, 7500 Standish Pl.,

Rockville, MD 20855, 301–594–

1089 (Internet electronic mail:

motise@cder.fda.gov).

SUPPLEMENTARY INFORMATION: In the

Federal Register of August 3, 1993 (58

FR 41348), FDA published a final rule

amending the current good

manufacturing practice (CGMP)

regulations to require that special

control procedures be instituted if cut

labeling is used in packaging and

labeling operations. One of these

procedures requires the use of

‘‘appropriate electronic or

electromechanical equipment to

conduct a 100-percent examination for

correct labeling during or after

completion of finishing operations’’

(§ 211.122(g)(2)). The rule applied to all

types of labeling, including product

inserts, multiunit containers packaged

in individual containers, and shipping

containers.

In May 1994, FDA received two

citizen petitions from several trade

associations requesting that the agency

extend the effective date of the rule and

reopen the administrative record to

receive additional comments on the

application of § 211.122(g) to items of

labeling other than the immediate

container label. The petitions stated that

additional time was needed to obtain,

install, or validate equipment necessary

to comply with the rule. The citizen

petitions also asserted that the final rule

inappropriately expanded the scope of

§ 211.122(g) from immediate container

labels to all drug product labeling.

In the Federal Register of August 2,

1994 (59 FR 39255), FDA extended the

compliance date for § 211.122(g) as it

applies to labeling other than immediate

container labels, and opened the

administrative record through October

4, 1994, for comments on the scope of

§ 211.122(g). All other provisions of the

final rule became effective on August 3,

1994. FDA further extended the

compliance date to August 2, 1996, in

the Federal Register of April 28, 1995

(60 FR 20897), and to August 1, 1997,

in the Federal Register of July 19, 1996

(61 FR 37679).

Elsewhere in this issue of the Federal

Register, FDA is publishing a proposed

rule that would limit the scope of

§ 211.122(g) to immediate container

labels, individual unit cartons, or

multiunit cartons when immediate

containers are not packaged in

individual cartons. The proposed rule

would also permit the use of any

automated technique, including

differentiation by labeling size and

shape, that physically prevents incorrect

labeling from being processed by

labeling and packaging equipment.

In this final rule, FDA is extending

the date for compliance with

§ 211.122(g), as it applies to labeling

other than immediate container labels,

until the effective date of the regulation

finalizing the proposed rule on this

subject published elsewhere in this

issue of the Federal Register. The date

for compliance with all other provisions

of the August 3, 1993, final rule remains

August 3, 1994.

Dated: July 22, 1997.

William K. Hubbard,

Associate Commissioner for Policy

Coordination.

[FR Doc. 97–19818 Filed 7–28–97; 8:45 am]

BILLING CODE 4160–01–F

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8726]

RIN 1545–AT95

Requirements for Tax Exempt Section

501(c)(5) Organizations

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final

regulations clarifying certain

requirements of section 501(c)(5). The

requirements are clarified to provide

needed guidance to organizations on the

requirements an organization must meet

in order to be exempt from tax as an

organization described in section

501(c)(5).

DATES: These regulations are effective

on December 21, 1995.

FOR FURTHER INFORMATION CONTACT:

Robin Ehrenberg, (202) 622–6080 (not a

toll-free number).

SUPPLEMENTARY INFORMATION:

Background

On December 21, 1995, the IRS

published in the Federal Register (60

FR 66228) a notice of proposed

rulemaking under section 501(c)(5). The

proposed regulations clarified that

organizations whose principal activity is

administering retirement plans are not

section 501(c)(5) organizations.
40448 Federal Register / Vol. 62, No. 145 / Tuesday, July 29, 1997 / Rules and Regulations

A public hearing was held on June 5,

1996. Written comments were received.

After consideration of all of the

comments, the proposed regulations

under section 501(c)(5) are adopted as

revised by this Treasury Decision. The

comments and revisions are discussed

below.

Explanation of Revisions and Summary

of Comments

Section 501(c)(5) describes certain

labor, agricultural and horticultural

organizations. Section 401(a) sets forth

the requirements for exemption for

qualified employee benefit pension

trusts. Section 501(a) exempts from

federal income taxes organizations

described in section 401(a) or section

501(c). Thus, section 401(a) and section

501(c)(5) should be read as enactments

of Congress in pari materia, taken

together as one consistent body of law.

Pacific Co. v. Johnson, 285 U.S. 480, 495

(1932).

The Treasury and IRS believe that

section 501(c)(5) should be interpreted

in a manner consistent with the

Employee Retirement Income Security

Act of 1974, Pub. L. No. 93–406, 88 Stat.

829 (1974) (ERISA), as amended. ERISA

was enacted as a ‘‘comprehensive and

reticulated statute’’ to regulate

retirement plans and trusts, ‘‘the

product of a decade of Congressional

study of the Nation’s private employee

benefit system.’’ Mertens versus Hewitt

Assoc., 508 U.S. 248, 251 (1993), citing

Nachman versus PBGC, 46 U.S. 359,

361 (1980). Congress intended that

pension trusts satisfy the

comprehensive requirements of section

401(a), as amended by ERISA, in order

to be tax exempt. See S. Rep. No. 383,

93d Cong., 1st Sess. at 33, reprinted in

1974–3 C.B. (Supp.) 112; H. Rep. No.

807, 93d Cong., 1st Sess. at 33, reprinted

in 1974–3 C.B. (Supp.) 236, 266.

Accordingly, Treasury and the IRS

continue to believe that an organization

whose principal purpose is managing

employer-sponsored retirement plans is

not an exempt labor organization

described in section 501(c)(5).

(However, an employer-sponsored

pension trust may nevertheless qualify

for exemption under section 501(a) if it

meets the requirements of section

401(a).) Morganbesser versus United

States, 984 F.2d 560 (2d Cir. 1993),

nonacq. 1995–2 C.B. 2.; In re

Morganbesser, AOD CC–1995–016 (Dec.

26, 1995).

Consistent with ERISA and

interpreting section 401(a) and section

501(c)(5) as part of a consistent whole,

these regulations provide a general rule

that an organization is not described in

section 501(c)(5) if its principal activity

is to receive, hold, invest, disburse or

otherwise manage funds associated with

savings or investment plans or

programs, including pension or other

retirement savings plans or programs.

However, to the extent that ERISA

provides special rules for certain types

of retirement savings plans, it is

appropriate to take those rules into

account in interpreting provisions of the

Code relating to such plans, including

section 501(c)(5).

As noted by one commentator, ERISA

excepts certain dues-financed plans

from Parts 2 and 3 of Title I of ERISA

(vesting, funding and certain other

qualification requirements). Those

pension trusts sponsored by labor

organizations for their members, which

accept no employer contributions, do

not qualify for exemption under section

401(a) because they are not maintained

by an employer. Section 401(a), Rev.

Rul. 80–306, 1980–2 C.B. 131.

Accordingly, the regulations provide

that an organization (including a

pension trust) may qualify as an

organization described in section

501(c)(5) if it meets all of the following

requirements:

(1) The organization is established

and maintained by another labor

organization described in section

501(c)(5) (determined without reference

to the tests in Treas. Reg. § 1.501(c)(5)–

1(b)(2));

(2) The organization is not directly or

indirectly established or maintained in

whole or in part by any employer or by

any government (or any agency,

instrumentality or controlled entity

thereof);

(3) The organization is funded by

membership dues paid to the labor

organization establishing and

maintaining the organization and

earnings thereon; and

(4) After September 2, 1974 (the date

of enactment of ERISA, 88 Stat. 829), the

organization’s governing documents

have not permitted or provided for nor

did the organization accept, any

contribution from any employer or from

any government (or any agency,

instrumentality or controlled entity

thereof). Treas. Reg. § 1.501(c)(5)–

1(b)(2).

Treas. Reg. § 1.892–2T(c) governs the

tax status of a pension trust that is

wholly owned and controlled by a

foreign sovereign.

Scope

These regulations solely address the

tax exempt status of organizations under

section 501(c)(5) whose principal

activity is to receive, hold, invest,

disburse, or otherwise manage funds

associated with savings or investment

plans or programs. Other Code sections

and tax principles apply to the tax

exempt status of these organizations and

the tax consequences of these

arrangements to employers and

participants in these arrangements.

One commentator requested that the

IRS clarify that the regulations do not

apply to health and welfare benefits not

specifically mentioned in the

regulations, such as retiree health

benefits, death benefits, and group legal

services. The regulations address only

savings or investment plans or

programs, (including pension or other

retirement savings plans or programs)

and do not address other types of

benefits. Cf. Rev. Rul. 62–17, 962–1 C.B.

87.

Special Analyses

It has been determined that this

Treasury Decision is not a significant

regulatory action as defined in EO

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 notice of

proposed rulemaking preceding the

regulations was issued prior to March

29, 1996, the Regulatory Flexibility Act,

(5 U.S.C. chapter 6) does not apply.

Pursuant to section 7805(f) of the

Internal Revenue Code, the notice of

proposed rulemaking preceding these

regulations was submitted to the Chief

Counsel for Advocacy of the Small

Business Administration for comment

on its impact on small business.

Drafting Information

The principal author of these

regulations is Robin Ehrenberg, Office of

Associate Chief Counsel (Employee

Benefits and Exempt Organizations).

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.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 1 is

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 1.501(c)(5)–1 is

amended by:
Federal Register / Vol. 62, No. 145 / Tuesday, July 29, 1997 / Rules and Regulations 40449

1. Redesignating paragraph (b) as

paragraph (c).

2. Adding a new paragraph (b).

The addition reads as follows:

§ 1.501(c)(5)–1 Labor, agricultural, and

horticultural organizations.

* * * * *

(b)(1) General rule. An organization is

not an organization described in section

501(c)(5) if the principal activity of the

organization is to receive, hold, invest,

disburse or otherwise manage funds

associated with savings or investment

plans or programs, including pension or

other retirement savings plans or

programs.

(2) Exception. Paragraph (b)(1) of this

section shall not apply to an

organization which—

(i) Is established and maintained by

another labor organization described in

section 501(c)(5) (determined without

regard to this paragraph (b)(2));

(ii) Is not directly or indirectly

established or maintained in whole or in

part by one or more—

(A) Employers;

(B) Governments or agencies or

instrumentalities thereof; or

(C) Government controlled entities;

(iii) Is funded by membership dues

from members of the labor organization

described in this paragraph (b)(2) and

earnings thereon; and

(iv) Has not at any time after

September 2, 1974 (the date of

enactment of the Employee Retirement

Income Security Act of 1974, Pub. L.

93–406, 88 Stat. 829) provided for,

permitted or accepted employer

contributions.

(3) Example. The principles of this

paragraph (b) are illustrated by the

following example:

Example. Trust A is organized in

accordance with a collective bargaining

agreement between labor union K and

multiple employers. Trust A forms part of a

plan that is established and maintained

pursuant to the agreement and which covers

employees of the signatory employers who

are members of K. Representatives of both the

employers and K serve as trustees. A receives

contributions from the employers who are

subject to the agreement. Retirement benefits

paid to K’s members as specified in the

agreement are funded exclusively by the

employers’ contributions and accumulated

earnings. A also provides information to

union members about their retirement

benefits and assists them with administrative

tasks associated with the benefits. Most of

A’s activities are devoted to these functions.

From time to time, A also participates in the

renegotiation of the collective bargaining

agreement. A’s principal activity is to

receive, hold, invest, disburse, or otherwise

manage funds associated with a retirement

savings plan. In addition, A does not satisfy

all the requirements of the exception

described in paragraph (b)(2) of this section.

(For example, A accepts contributions from

employers.) Therefore, A is not a labor

organization described in section 501(c)(5).

* * * * *

Michael P. Dolan,

Acting Commissioner of Internal Revenue.

Approved: July 8, 1997.

Donald C. Lubick,

Acting Assistant Secretary of the Treasury.

[FR Doc. 97–19814 Filed 7–28–97; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF DEFENSE

Department of the Navy

32 CFR Part 706

Certifications and Exemptions Under

the International Regulations for

Preventing Collisions at Sea, 1972

AGENCY: Department of the Navy, DOD.

ACTION: Final rule.

SUMMARY: The Department of the Navy

is amending its certifications and

exemptions under the International

Regulations for Preventing Collisions at

Sea, 1972 (72 COLREGS), to reflect that

the Deputy Assistant Judge Advocate

General (Admiralty) of the Navy has

determined that USS PEARL HARBOR

(LSD 52) is a vessel of the Navy which,

due to its special construction and

purpose, cannot fully comply with

certain provisions of the 72 COLREGS

without interfering with its special

function as a naval vessel. The intended

effect of this rule is to warn mariners in

waters where 72 COLREGS apply.

EFFECTIVE DATE: June 26, 1997.

FOR FURTHER INFORMATION CONTACT:

Captain R. R. Pixa, JAGC, U.S. Navy,

Admiralty Counsel, Office of the Judge

Advocate General, Navy Department,

200 Stovall Street, Alexandria, Virginia,

22332–2400, Telephone Number: (703)

325–9744.

SUPPLEMENTARY INFORMATION: Pursuant

to the authority granted in 33 U.S.C.

1605, the Department of the Navy

amends 32 CFR part 706. This

amendment provides notice that the

Deputy Assistant Judge Advocate

General (Admiralty) of the Navy, under

authority delegated by the Secretary of

the Navy, has certified that USS PEARL

HARBOR (LSD 52) is a vessel of the

Navy which, due to its special

construction and purpose, cannot fully

comply with the following specific

provisions of 72 COLREGS: Annex I,

section 3(a), pertaining to the horizontal

distance between the forward and after

masthead lights, without interfering

with its special function as a naval

vessel. The Deputy Assistant Judge

Advocate General (Admiralty) of the

Navy has also certified that the lights

involved are located in closest possible

compliance with the applicable 72

COLREGS requirements.

Moreover, it has been determined, in

accordance with 32 CFR parts 296 and

701, that publication of this amendment

for public comment prior to adoption is

impracticable, unnecessary, and

contrary to public interest since it is

based on technical findings that the

placement of lights on this vessel in a

manner differently from that prescribed

herein will adversely affect the vessel’s

ability to perform its military functions.

List of Subjects in 32 CFR Part 706

Marine safety, Navigation (water), and

Vessels.

Accordingly, 32 CFR Part 706 is

amended as follows:

PART 706—[AMENDED]

1. The authority citation for 32 CFR

Part 706 continues to read as follows:

Authority: 33 U.S.C. 1605.

2. Table Five of § 706.2 is amended by

adding, in numerical order, the

following entry for the USS PEARL

HARBOR:

§ 706.2 Certifications of the Secretary of

the Navy under Executive Order 11964 and

33 U.S.C. 1605.

* * * * *