Federal Register / Vol. 62, No. 197 / Friday, October 10, 1997 / Proposed Rules 52959

losses and other deductions, allocated

and apportioned to such gross income,

between gross income from sources

within and without the United States. In

the case of gross income from

Possession Production Sales determined

under the possessions 50/50 method or

gross income from Possession Purchase

Sales computed under the business

activity method, the amounts of

expenses, losses, and other deductions

allocated and apportioned to such gross

income must be apportioned between

sources within and without the United

States pro rata based on the relative

amounts of gross income from sources

within and without the United States

determined under those methods.

(5) Special rules for partnerships. In

applying the rules of this paragraph (f)

to transactions involving partners and

partnerships, the rules of paragraph (g)

of this section apply.

(6) Election and reporting rules—(i)

Elections under paragraph (f)(2) or (3) of

this section. If a taxpayer does not elect

one of the methods specified in

paragraph (f)(2) or (3) of this section, the

taxpayer must apply the possession 50/

50 method in the case of Possession

Production Sales or the business activity

method in the case of Possession

Purchase Sales. The taxpayer may elect

to apply a method specified in either

paragraph (f)(2) or (3) of this section by

using the method on a timely filed

original return (including extensions).

Once a method has been used, that

method must be used in later taxable

years unless the Commissioner consents

to a change. Permission to change

methods from one year to another year

will be granted unless the change would

result in a substantial distortion of the

source of the taxpayer’s income.

(ii) Disclosure on tax return. A

taxpayer who uses one of the methods

described in paragraph (f)(2) or (3) of

this section must fully explain in a

statement attached to the tax return the

methodology used, the circumstances

justifying use of that methodology, the

extent that sales are aggregated, and the

amount of income so allocated.

* * * * *

(h) Effective dates. * * * However,

the rules of paragraph (f) of this section

apply to taxable years beginning on or

after the date that is 30 days after the

date of publication of final regulations.

Par. 3. In § 1.936–6, paragraph (a)(5)

Q&A 7a is added to read as follows:

§ 1.936–6 Intangible property income when

an election out is made: Cost sharing and

profit split options; covered intangibles.

* * * * *

(a) * * *

(5) * * *

Q.7a: What is the source of the

taxpayer’s gross income derived from a

sale in the United States of a possession

product purchased by the taxpayer (or

an affiliate) from a corporation that has

an election in effect under section 936,

if the income from such sale is taken

into account to determine benefits

under cost sharing for the section 936

corporation? Is the result different if the

taxpayer (or an affiliate) derives gross

income from a sale in the United States

of an integrated product incorporating a

possession product purchased by the

taxpayer (or an affiliate) from the

section 936 corporation, if the taxpayer

(or an affiliate) processes the possession

product or an excluded component in

the United States?

A.7a: Under either scenario, the

income is U.S. source, without regard to

whether the possession product is a

component, end-product, or integrated

product. Section 863 does not apply in

determining the source of the taxpayer’s

income. This Q&A 7a is applicable for

taxable years beginning on or after the

date that is 30 days after the date of

publication of final regulations.

* * * * *

Michael P. Dolan,

Acting Commissioner of Internal Revenue.

[FR Doc. 97–26857 Filed 10–9–97; 8:45 am]

BILLING CODE 4830–01–P

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 52

[CA 198–0056; FRL–5907–3]

Approval and Promulgation of

Implementation Plans; California State

Implementation Plan Revision, San

Diego County Air Pollution Control

District

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: EPA is proposing to approve

revisions to the California State

Implementation Plan (SIP) which

concern the control of volatile organic

compound (VOC) emissions from kelp

processing and bio-polymer

manufacturing operations.

The intended effect of proposing

approval of this rule is to regulate

emissions of VOCs in accordance with

the requirements of the Clean Air Act,

as amended in 1990 (CAA or the Act).

EPA’s final action will incorporate this

rule into the federally approved SIP. In

addition, final action on this rule will

serve as a final determination that

deficiencies in the rule (identified by

EPA in a limited approval/limited

disapproval action on February 14,

1996) have been corrected and that any

sanctions or Federal Implementation

Plan (FIP) obligations are permanently

stopped. An Interim Final

Determination published in today’s

Federal Register will defer the

imposition of sanctions until EPA takes

final action. EPA has evaluated the rule

and is proposing to approve the rule

under provisions of the CAA regarding

EPA action on SIP submittals, SIPs for

national primary and secondary ambient

air quality standards, and plan

requirements for nonattainment areas.

DATES: Comments must be received on

or before November 10, 1997.

ADDRESSES: Comments may be mailed

to: Andrew Steckel, Rulemaking Office

(AIR–4), Air Division, U.S.

Environmental Protection Agency,

Region IX, 75 Hawthorne Street, San

Francisco, CA 94105–3901.

Copies of the rule and EPA’s

evaluation report of the rule are

available for public inspection at EPA’s

Region 9 office during normal business

hours. Copies of the submitted rule are

also available for inspection at the

following locations:

San Diego County Air Pollution Control

District, 9150 Chesapeake Drive, San

Diego, CA 92123–1096

California Air Resources Board,

Stationary Source Division, Rule

Evaluation Section, 2020 ‘‘L’’ Street,

Sacramento, CA 95814.

FOR FURTHER INFORMATION CONTACT:

Patricia A. Bowlin, Rulemaking Office

(AIR–4), Air Division, U.S.

Environmental Protection Agency,

Region IX, 75 Hawthorne Street, San

Francisco, CA 94105–3901, (415) 744–

1188.

SUPPLEMENTARY INFORMATION:

I. Applicability

The rule being proposed for approval

into the California SIP is San Diego

County Air Pollution Control District

(SDCAPCD) Rule 67.10, Kelp Processing

and Bio-Polymer Manufacturing

Operations. This rule was submitted by

the California Air Resources Board

(CARB) to EPA on August 1, 1997.

II. Background

On March 3, 1978, EPA promulgated

a list of ozone nonattainment areas

under the provisions of the Clean Air

Act, as amended in 1977 (1977 CAA or

pre-amended Act), that included the

San Diego Area. 43 FR 8964; 40 CFR

81.305. On May 26, 1988, EPA notified

the Governor of California, pursuant to

section 110(a)(2)(H) of the pre-amended
52960 Federal Register / Vol. 62, No. 197 / Friday, October 10, 1997 / Proposed Rules

1Among other things, the pre-amendment

guidance consists of those portions of the proposed

post-1987 ozone and carbon monoxide policy that

concern RACT, 52 FR 45044 (November 24, 1987);

‘‘Issues Relating to VOC Regulation Cutpoints,

Deficiencies, and Deviations, Clarification to

Appendix D of November 24, 1987 Federal Register

Notice’’ (Blue Book) (notice of availability was

published in the Federal Register on May 25, 1988);

and the existing control technique guidelines

(CTGs).

2The San Diego Area retained its designation of

nonattainment and was classified by operation of

law pursuant to sections 107(d) and 181(a) upon the

date of enactment of the CAA. See 56 FR 56694

(November 6, 1991). The San Diego Area was

reclassified from Severe-15 to Serious on January

19, 1995, 60 FR 3771.

3EPA adopted the completeness criteria on

February 16, 1990 (55 FR 5830) and, pursuant to

section 110(k)(1)(A) of the CAA, revised the criteria

on August 26, 1991 (56 FR 42216).

Act, that the SDCAPCD’s portion of the

California SIP was inadequate to attain

and maintain the ozone standard and

requested that deficiencies in the

existing SIP be corrected (EPA’s SIPCall). On November 15, 1990, the Clean

Air Act Amendments of 1990 were

enacted. Pub. L. 101–549, 104 Stat.

2399, codified at 42 U.S.C. 7401–7671q.

In amended section 182(a)(2)(A) of the

CAA, Congress statutorily adopted the

requirement that nonattainment areas

fix their deficient reasonably available

control technology (RACT) rules for

ozone and established a deadline of May

15, 1991 for states to submit corrections

of those deficiencies.

Section 182(a)(2)(A) applies to areas

designated as nonattainment prior to

enactment of the amendments and

classified as marginal or above as of the

date of enactment. It requires such areas

to adopt and correct RACT rules

pursuant to pre-amended section 172(b)

as interpreted in pre-amendment

guidance.1 EPA’s SIP-Call used that

guidance to indicate the necessary

corrections for specific nonattainment

areas. San Diego Area is classified as

Serious 2; therefore, this area was subject

to the RACT fix-up requirement and the

May 15, 1991 deadline.

The State of California submitted

many revised RACT rules for

incorporation into its SIP on August 1,

1997, including the rule being acted on

in this document. This document

addresses EPA’s proposed action for

SDCAPCD Rule 67.10, Kelp Processing

and Bio-Polymer Manufacturing

Operations. SDCAPCD adopted Rule

67.10 on June 25, 1997. This submitted

rule was found to be complete on

September 30, 1997 pursuant to EPA’s

completeness criteria that are set forth

in 40 CFR part 51 Appendix V 3 and is

being proposed for approval into the

SIP.

Rule 67.10 controls the emissions of

VOCs from kelp processing and biopolymer manufacturing operations.

VOCs contribute to the production of

ground-level ozone and smog. The rule

was adopted as part of SDCAPCD’s

efforts to achieve the National Ambient

Air Quality Standard (NAAQS) for

ozone and in response to EPA’s SIP-Call

and the section 182(a)(2)(A) CAA

requirement. The following is EPA’s

evaluation and proposed action for the

rule.

III. EPA Evaluation and Proposed

Action

In determining the approvability of a

VOC rule, EPA must evaluate the rule

for consistency with the requirements of

the CAA and EPA regulations, as found

in section 110 and part D of the CAA

and 40 CFR part 51 (Requirements for

Preparation, Adoption, and Submittal of

Implementation Plans). The EPA

interpretation of these requirements,

which forms the basis for today’s action,

appears in the various EPA policy

guidance documents listed in footnote

1. Among those provisions is the

requirement that a VOC rule must, at a

minimum, provide for the

implementation of RACT for stationary

sources of VOC emissions. This

requirement was carried forth from the

pre-amended Act.

For the purpose of assisting state and

local agencies in developing RACT

rules, EPA prepared a series of Control

Technique Guideline (CTG) documents.

The CTGs are based on the underlying

requirements of the Act and specify the

presumptive norms for what is RACT

for specific source categories. Under the

CAA, Congress ratified EPA’s use of

these documents, as well as other

Agency policy, for requiring States to

‘‘fix-up’’ their RACT rules. See section

182(a)(2)(A). For source categories that

do not have an applicable CTG (such as

kelp processing and bio-polymer

manufacturing operations), state and

local agencies may determine what

controls are required by reviewing the

operation of facilities subject to the

regulation and evaluating regulations for

similar sources in other areas. Within

the SDCAPCD there is only one facility

that performs kelp processing and biopolymer manufacturing operations. For

this source category, the RACT

determination required an evaluation of

the manufacturing process and the

emissions specific to this facility. The

evaluation also considered the

technological and economic feasibility

of proposed controls at individual

emission points.

Further interpretations of EPA policy

are found in the Blue Book, referred to

in footnote 1. In general, these guidance

documents have been set forth to ensure

that VOC rules are fully enforceable and

strengthen or maintain the SIP.

On February 14, 1996, EPA published

a limited approval and a limited

disapproval of a version of Rule 67.10

that had been adopted by SDCAPCD on

June 15, 1994. The limited approval

action incorporated this version of Rule

67.10 into the SIP. SDCAPCD’s

submitted Rule 67.10, Kelp Processing

and Bio-Polymer Manufacturing

Operations, includes the following

significant changes from the current SIP:

• Deletes the exemption for any VOC

with a normal boiling point of 185°C or

greater.

• Deletes provision allowing fugitive

liquid leaks from incorporators to

contain up to 50% VOC by weight.

• Increases records retention period

from two to five years.

• Deletes restriction that test periods

shorter than 16 hours cannot be used to

determine non-compliance.

• Requires 90% reduction VOC

emissions from dryers in kelp

processing lines where PG is being

emitted.

• Requires 80% reduction of VOC

emissions from incorporators.

• Adds EPA-approved capture

efficiency test method protocol.

• Requires monthly visual inspection

of system components to ensure absence

of fugitive liquid leaks.

EPA has evaluated the submitted rule

and has determined that it is consistent

with the CAA, EPA regulations, and

EPA policy. Therefore, SDCAPCD Rule

67.10, Kelp Processing and Bio-Polymer

Manufacturing Operations is being

proposed for approval under section

110(k)(3) of the CAA as meeting the

requirements of section 110(a) and part

D.

Nothing in this action should be

construed as permitting or allowing or

establishing a precedent for any future

request for revision to any state

implementation plan. Each request for

revision to the state implementation

plan shall be considered separately in

light of specific technical, economic,

and environmental factors and in

relation to relevant statutory and

regulatory requirements.

IV. Administrative Requirements

A. Executive Order 12866

The Office of Management and Budget

(OMB) has exempted this regulatory

action from E.O. 12866 review.

B. Regulatory Flexibility Act

Under the Regulatory Flexibility Act,

5 U.S.C. 600 et seq., EPA must prepare

a regulatory flexibility analysis

assessing the impact of any proposed or
Federal Register / Vol. 62, No. 197 / Friday, October 10, 1997 / Proposed Rules 52961

final rule on small entities. 5 U.S.C. 603

and 604. Alternatively, EPA may certify

that the rule will not have a significant

impact on a substantial number of small

entities. Small entities include small

businesses, small not-for-profit

enterprises, and government entities

with jurisdiction over populations of

less than 50,000.

SIP approvals under section 110 and

subchapter I, part D of the Clean Air Act

do not create any new requirements but

simply approve requirements that the

State is already imposing. Therefore,

because the Federal SIP approval does

not impose any new requirements, the

Administrator certifies that it does not

have a significant impact on any small

entities affected. Moreover, due to the

nature of the Federal-State relationship

under the CAA, preparation of a

flexibility analysis would constitute

Federal inquiry into the economic

reasonableness of state action. The

Clean Air Act forbids EPA to base its

actions concerning SIPs on such

grounds. Union Electric Co. v. U.S. EPA,

427 U.S. 246, 255–66 (1976); 42 U.S.C.

7410(a)(2).

C. Unfunded Mandates

Under section 202 of the Unfunded

Mandates Reform Act of 1995

(‘‘Unfunded Mandates Act’’), signed

into law on March 22, 1995, EPA must

prepare a budgetary impact statement to

accompany any proposed or final rule

that includes a Federal mandate that

may result in estimated costs to State,

local, or tribal governments in the

aggregate; or to private sector, of $100

million or more. Under section 205,

EPA must select the most cost-effective

and least burdensome alternative that

achieves the objectives of the rule and

is consistent with statutory

requirements. Section 203 requires EPA

to establish a plan for informing and

advising any small governments that

may be significantly or uniquely

impacted by the rule.

EPA has determined that the approval

action proposed does not include a

Federal mandate that may result in

estimated costs of $100 million or more

to either State, local, or tribal

governments in the aggregate, or to the

private sector. This Federal action

approves pre-existing requirements

under State or local law, and imposes

no new Federal requirements.

Accordingly, no additional costs to

State, local, or tribal governments, or to

the private sector, result from this

action.

D. Submission to Congress and the

General Accounting Office

Under section 801(a)(1)(A) of the

Administrative Procedures Act (APA) as

amended by the Small Business

Regulatory Enforcement Fairness Act of

1996, EPA submitted a report containing

this rule and other required information

to the U.S. Senate, the U.S. House of

Representatives, and the Comptroller

General of the General Accounting

Office prior to publication of the rule in

today’s Federal Register. This rule is

not a ‘‘major rule’’ as defined by section

804(2) of the APA as amended.

List of Subjects in 40 CFR Part 52

Environmental protection, Air

pollution control, Hydrocarbons,

Intergovernmental relations, Ozone,

Reporting and recordkeeping

requirements, Volatile organic

compounds.

Authority: 42 U.S.C. 7401–7671q.

Dated: October 1, 1997.

Harry Seraydarian,

Acting Regional Administrator.

[FR Doc. 97–26856 Filed 10–9–97; 8:45 am]

BILLING CODE 6560–50–P

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 300

[FRL–5906–7]

National Oil and Hazardous

Substances Pollution Contingency

Plan National Priorities List

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Notice of intent to delete North

Hollywood Dump Superfund Site,

Shelby County, Tennessee, from the

National Priorities List.

SUMMARY: The Environmental Protection

Agency, Region 4 (EPA) announces its

intent to delete the North Hollywood

Dump (the Site) from the National

Priorities List (NPL) and requests public

comment on this proposed action. The

NPL constitutes Appendix B of 40 CFR

part 300 which is the National Oil and

Hazardous Substances Pollution

Contingency Plan (NCP), which USEPA

promulgated pursuant to section 105 of

the Comprehensive Environmental

Response, Compensation, and Liability

Act (CERCLA) of 1980, as amended.

EPA and the State of Tennessee

Department of Environment and

Conservation (TDEC) have determined

that the Site poses no significant threat

to public health or the environment and,

therefore, further response measures

pursuant to CERCLA are not

appropriate.

DATES: Comments concerning this Site

may be submitted on or before

November 10, 1997.

ADDRESSES: Comments may be mailed

to: Robert P. Morris, North Site

Management Branch, Waste

Management Division, U.S.

Environmental Protection Agency,

Region 4, Atlanta Federal Center, 61

Forsyth Street, S.W., Atlanta, Georgia

30303–3104.

Comprehensive information on this

Site is available through the public

docket which is available for viewing at

the North Hollywood Dump information

repositories at the following locations:

Memphis-Shelby County Public Library,

1850 Peabody Avenue, Memphis,

Tennessee 38104.

U.S. EPA Record Center, 61 Forsyth

Street, S.W., Atlanta, Georgia 30303–

3104.

FOR FURTHER INFORMATION CONTACT:

Robert P. Morris, North Site

Management Branch, Waste

Management Division, U.S.

Environmental Protection Agency,

Region 4, Atlanta Federal Center, 61

Forsyth Street, S.W., Atlanta, Georgia

30303–3104, (404) 562–8794 or 1–800–

435–9233, ext. 28794.

SUPPLEMENTARY INFORMATION:

I. Introduction

The Environmental Protection Agency

(EPA), Region 4 announces its intent to

delete the North Hollywood Dump (the

Site) in Memphis, Shelby County,

Tennessee, from the National Priorities

List (NPL), Appendix B of the National

Oil and Hazardous Substances Pollution

Contingency Plan (NCP), 40 CFR part

300, and requests comments on its

deletion. EPA identifies sites that

appear to present a significant risk to

public health, welfare, or the

environment and maintains the NPL as

the list of these sites. As described in

§ 300.425(e)(3) of the NCP, sites deleted

from the NPL remain eligible for

remedial actions in the unlikely event

that conditions at the site warrant

action.

The EPA will accept comments on the

proposal to delete this Site for thirty

days after publication of this document

in the Federal Register.

Section II of this document explains

the criteria for deleting sites from the

NPL. Section III states the procedures

that EPA is using for this action. Section

IV discusses the North Hollywood

Dump Site and explains how the Site

meets the deletion criteria.