7186 Federal Register / Vol. 62, No. 32 / Tuesday, February 18, 1997 / Proposed Rules

1The proposed rule would be codified at 17 CFR

230.146.

2 15 U.S.C. 77a et seq.

3 15 U.S.C. 77r.

4Public Law 104–290, 110 Stat. 3416 (1996).

5The term ‘‘covered security’’ is defined in new

section 18(b) [15 U.S.C. 77r(b)].

6The term ‘‘offering document’’ is defined in new

section 18(d)(1) [15 U.S.C. 77r(d)(1)], as follows:

(1) Offering Document.—The term ‘‘offering

document’’—

(A) has the meaning given the term ‘‘prospectus’’

in section 2(10), but without regard to the

provisions of subparagraphs (A) and (B) of that

section; and

(B) includes a communication that is not deemed

to offer a security pursuant to a rule of the

Commission.

7New Section 18(d)(2) requires the Commission

to adopt this definition not later than six months

after the section’s enactment.

engines are installed); or Airbus Service

Bulletin A310–72–2023, Revision 1, dated

December 22, 1993 (for airplanes on which

Pratt & Whitney PW4152 and PW4156A

engines are installed); as applicable.

Note 2: Flow checks accomplished prior to

the effective date of this AD in accordance

with the original issuance of Airbus Service

Bulletin A310–72–2023 are considered

acceptable for compliance with the

applicable action specified in this AD.

(2) For Model A300–600 series airplanes:

Perform the flow checks and correct

discrepancies in accordance with Airbus

Service Bulletin A300–72–6018, Revision 1,

dated December 22, 1993 (for airplanes on

which Pratt & Whitney JT9D–7R4H1 engines

are installed); or Airbus Service Bulletin

A300–72–6019, Revision 1, dated December

22, 1993 (for airplanes on which Pratt &

Whitney PW4158 engines are installed); as

applicable.

Note 3: Flow checks accomplished prior to

the effective date of this AD in accordance

with the original issuance of Airbus Service

Bulletin A300–72–6018 or Airbus Service

Bulletin A300–72–6019 are considered

acceptable for compliance with the

applicable action specified in this AD.

(b) Within 12 months after the effective

date of this AD, replace (on both engines) the

existing seal of the green hydraulic system

gearbox with a new, improved seal assembly

in accordance with either paragraph (b)(1) or

(b)(2) of this AD, as applicable.

Accomplishment of this replacement

terminates the repetitive flow check

requirements for this AD.

(1) For Model A310 series airplanes:

Accomplish the replacement in accordance

with Airbus Service Bulletin A310–72–2018,

Revision 2, dated December 22, 1993 (for

airplanes on which Pratt & Whitney PW

JT9D–7R4D1 and –7R4E1 engines are

installed); or Airbus Service Bulletin A310–

72–2019, Revision 2, dated December 22,

1993 (for airplanes on which Pratt & Whitney

PW4152 and PW4156A engines are

installed); as applicable.

Note 4: Replacement of the existing seal on

the green hydraulic system gearbox with a

new, improved seal assembly accomplished

prior to the effective date of this AD, in

accordance with the original issuance or

Revision 1 of Airbus Service Bulletin A310–

72–2019, or with the original issuance or

Revision 1 of Airbus Service A310–72–2018,

is considered acceptable for compliance with

the applicable action specified in this AD.

(2) Model A300–600 series airplanes:

Accomplish the replacement in accordance

with Airbus Service Bulletin A300–72–6014,

dated March 15, 1993 (for airplanes on which

Pratt & Whitney PW JT9D–7R4H1 engines are

installed); or Airbus Service Bulletin A300–

72–6015, dated March 15, 1993 (for airplanes

on which Pratt & Whitney PW4158 engines

are installed); as applicable.

(c) 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,

Standardization Branch, ANM–113, FAA,

Transport Airplane Directorate. Operators

shall submit their requests through an

appropriate FAA Principal Maintenance

Inspector, who may add comments and then

send it to the Manager, Standardization

Branch, ANM–113.

Note 5: Information concerning the

existence of approved alternative methods of

compliance with this AD, if any, may be

obtained from the Standardization Branch,

ANM–113.

(d) 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.

Issued in Renton, Washington, on February

10, 1997.

Darrell M. Pederson,

Acting Manager, Transport Airplane

Directorate, Aircraft Certification Service.

[FR Doc. 97–3840 Filed 2–14–97; 8:45 am]

BILLING CODE 4910–13–U

SECURITIES AND EXCHANGE

COMMISSION

17 CFR Part 230

[Release No. 33–7388; File Number S7–6–

97]

RIN 3235–AH14

Definition of ‘‘Prepared by or on Behalf

of the Issuer’’ for Purposes of

Determining if an Offering Document is

Subject to State Regulation.

AGENCY: Securities and Exchange

Commission.

ACTION: Proposed rule.

SUMMARY: The National Securities

Markets Improvements Act of 1996

mandates that the Securities and

Exchange Commission (‘‘Commission’’)

adopt a definition of the phrase

‘‘prepared by or on behalf of the issuer’’

found in newly revised Section 18 of the

Securities Act of 1933. Today, the

Commission proposes such a definition.

DATES: Comments should be received on

or before March 20, 1997.

ADDRESSES: Comments should be

submitted in triplicate to Jonathan G.

Katz, Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 20549. Comments also

may be submitted electronically at the

following E-mail address: rulecomments@sec.gov. All comment letters

should refer to File No. S7–6–96; this

file number should be included in the

subject line if E-mail is used. Comment

letters will be available for inspection

and copying in the Commission’s Public

Reference Room, 450 Fifth Street, NW.,

Washington, DC 20549. Electronically

submitted comment letters will be

posted on the Commission’s Internet

Web Site (http://www.sec.gov).

FOR FURTHER INFORMATION CONTACT:

James R. Budge, Division of Corporation

Finance, at (202) 942–2950, Securities

and Exchange Commission, 450 Fifth

Street, NW., Washington, DC 20549.

SUPPLEMENTARY INFORMATION: The

Commission proposes adding Rule 146 1

under the Securities Act of 1933

(‘‘Securities Act’’ or ‘‘the Act’’).2 The

Rule would define the term ‘‘prepared

by or on behalf of the issuer,’’ as that

term is used in newly revised Section 18

of the Act.3

I. Background and Proposed Definition

On October 11, 1996, President

Clinton signed into law the National

Securities Markets Improvement Act of

1996.4 One significant goal of this

legislation, embodied in revised Section

18 of the Act, is to reduce duplicative

and unnecessary regulatory

requirements resulting from the dual

system of federal and state securities

regulation. The statute reallocates

regulatory responsibility relating to

securities offerings between the federal

and state governments based on the

nature of the security or offering.

Among other things, it preempts state

laws requiring or with respect to

registration or qualification of ‘‘covered

securities’’ as defined in the Act.5 It also

prohibits states from directly or

indirectly prohibiting, limiting or

imposing any conditions on the use of

any offering document for a covered

security if the offering document is

‘‘prepared by or on behalf of the

issuer.’’ 6

The statute requires the Commission

to define by rule the phrase ‘‘prepared

by or on behalf of the issuer,’’ as used

in connection with the prohibition on

state regulation of offering documents

for covered securities.7 The Commission

today proposes a definition of this term.
Federal Register / Vol. 62, No. 32 / Tuesday, February 18, 1997 / Proposed Rules 7187

8 In the case of a registered investment company,

an agent of the issuer would generally include the

company’s investment adviser or any other agent

that performs administrative functions on behalf of

the company.

9As provided by statute, the proposed definition

would be applicable only to Section 18 of the

Securities Act.

The Commission believes that the

phrase is intended to cover offering

documents prepared with the issuer’s

knowledge and consent. Thus, the

proposed definition would cover

offering documents authorized by the

issuer and prepared by specified

persons. Conversely, documents that are

prepared and circulated without issuer

authorization would not be covered.

Specifically, as proposed, if the issuer

authorizes the offering document’s

production and the document is

prepared by a director, officer, general

partner, employee, affiliate,

underwriter, attorney, accountant or

agent of the issuer, it would be

‘‘prepared by or on behalf of the

issuer.’’ 8 The proposed definition also

would include authorized documents

prepared by representatives or agents of

these persons.9

Comment is requested as to whether

the definition should be broadened or

narrowed by adding persons to or

eliminating persons from the list;

specific justification for additions or

deletions should be provided. Should

the list include specific examples of

persons, such as employees or attorneys

as proposed, or is it sufficient to state

simply that the person be an agent or

representative of the issuer? The second

approach would eliminate the need for

paragraph (a) of the proposed definition.

As proposed, the definition does not

include offering documents prepared by

persons who do not have some formal

connection to the issuer. Should the

definition be expanded to include

offering documents approved by the

issuer but prepared by a person who

does not have a managerial,

employment or other agency

relationship with the issuer? The

proposed definition also would

encompass only those offering

documents prepared with the

authorization of the issuer. Should such

authorization be implied if the

document is prepared by certain

individuals, such as underwriters? If

implied authorization is believed

appropriate for some persons,

commenters are asked to identify the

specific parties and explain why it

would be appropriate to imply consent

in those cases.

II. Submission of Comments

Interested persons should submit

comment letters in triplicate to Jonathan

G. Katz, Secretary, U.S. Securities and

Exchange Commission, 450 Fifth Street,

NW., Washington, DC, 20549.

Comments also may be submitted

electronically at the following E-mail

address: rule-comments@sec.gov. All

comment letters should refer to File

Number S7–6–96. This file number

should be included on the subject line

if E-mail is used. Comments received

will be available for inspection and

copying in the Commission’s public

reference room, 450 Fifth Street, NW.,

Washington, DC 20549. Electronically

submitted comment letters will be

posted on the Commission’s Internet

web site (http://www.sec.gov).

III. Cost-Benefit Analysis

Commenters should address the costs

and benefits of the proposed definition

of ‘‘prepared by or on behalf of the

issuer,’’ and to provide any available

support for such views, in order to aid

the Commission in its own evaluation of

its costs and benefits. The Commission

believes that issuers will not experience

changes to their compliance costs as a

result of this rulemaking. For purposes

of 5 U.S.C. 804(2), the Commission also

requests information regarding the

potential impact of the proposed rule on

the economy on an annual basis.

Commenters should provide data

supporting their views.

IV. Summary of Initial Regulatory

Flexibility Analysis

An initial regulatory flexibility

analysis has been prepared in

accordance with 5 U.S.C. 603

concerning the proposed definition. The

analysis notes that the proposal relates

to a Congressional mandate to define the

term ‘‘prepared by or on behalf of the

issuer’’ for purposes of Section 18 of the

Act and describes the reasons for and

purposes of the proposed definition.

As discussed more fully in the

analysis, the proposals may affect

persons that are small entities, as

defined by the Commission’s rules. It is

not expected that significant changes to

reporting, recordkeeping and

compliance burdens would result from

the proposal, inasmuch as the

substantive effects of the changes to

Section 18 are controlled primarily by

the terms of the legislation, and not by

the terms of this proposed definition.

The purpose of the definition is to give

guidance with regard to the meaning of

a statutory term.

There are no current federal rules that

duplicate, overlap or conflict with the

proposed definition.

Several possible significant

alternatives to the proposal were

considered, including, among others,

establishing different requirements for

small entities or exempting them from

all or part of the proposed definition. As

discussed more fully in the analysis,

this rulemaking does not lend itself to

separate treatment for small businesses.

The definition is purposefully crafted in

broad terms to encompass small entities

together with other issuers. No public

interest would be served by a definition

that would exclude small entities from

enjoying the benefits of state

preemption.

Written comments are encouraged

with respect to any aspect of the

analysis. Such comments will be

considered in the preparation of the

Final Regulatory Flexibility Analysis if

the proposed amendments are adopted.

A copy of the analysis may be obtained

by contacting James R. Budge, Division

of Corporation Finance, Mail Stop 7–8,

450 Fifth Street, NW., Washington, DC

20549.

V. Statutory Basis

Rule 146 is being proposed pursuant

to Sections 18 and 19 of the Securities

Act.

List of Subjects in M CFR Part 230

Reporting and recordkeeping

requirements, Securities.

Text of the Proposal

In accordance with the foregoing,

Title 17, chapter II of the Code of

Federal Regulations is proposed to be

amended as follows:

PART 230—GENERAL RULES AND

REGULATIONS, SECURITIES ACT OF

1933

1. The authority citation for part 230

is revised to read in part as follows:

Authority: 15 U.S.C. 77b, 77f, 77g, 77h, 77j,

77r, 77s, 77sss, 78c, 78d, 78l, 78m, 78n, 78o,

78w, 78ll(d), 79t, 80a-8, 80a-29, 80a-30, and

80a-37, unless otherwise noted.

* * * * *

2. By adding § 230.146, to read as

follows:

§ 230.146 Definition of ‘‘prepared by or on

behalf of the issuer’’ for purposes of

Section 18 of the Act.

Prepared by or on behalf of the issuer.

An offering document (as defined in

Section 18(d)(1) of the Act [15 U.S.C.

77r(d)(1)]) shall be deemed ‘‘prepared

by or on behalf of the issuer’’ for

purposes of Section 18 of the Act, if the

issuer authorizes its production and if it

has been prepared by:

(a) A director, officer, general partner,

employee, affiliate, underwriter,
7188 Federal Register / Vol. 62, No. 32 / Tuesday, February 18, 1997 / Proposed Rules

attorney, accountant or agent of the

issuer; or

(b) An agent or representative of any

person specified in paragraph (a) of this

section.

Dated: February 11, 1997.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–3845 Filed 2–14–97; 8:45 am]

BILLING CODE 8010–01–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 20

[REG–209830–96]

RIN 1545–AU27

Estate and Gift Tax Marital Deduction

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice of proposed rulemaking

by cross-reference to temporary

regulations and notice of public hearing.

SUMMARY: In the Rules and Regulations

section of this issue of the Federal

Register, the IRS is issuing temporary

regulations relating to the estate tax

marital deduction to conform the Estate

Tax Regulations to recent court

decisions. The text of those temporary

regulations also serves as the text of

these proposed regulations. This

document also provides notice of a

public hearing on these proposed

regulations.

DATES: Comments must be received by

May 19, 1997. Outlines of topics to be

discussed at the public hearing

scheduled for June 3, 1997, at 10 a.m.

must be received by May 13, 1997.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (REG–209830–96),

room 5228, Internal Revenue Service,

POB 7604, Ben Franklin Station,

Washington, DC 20044. Submissions

may also be hand delivered between the

hours of 8 a.m. and 5 p.m. to:

CC:DOM:CORP:R (REG–209830–96),

Courier’s Desk, Internal Revenue

Service, 1111 Constitution Avenue NW.,

Washington, DC. 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.ustreas.gov/prod/

taxll regs/comments.html. The public

hearing will be held in the

Commissioner’s Conference Room, room

3313, Internal Revenue Building, 1111

Constitution Avenue NW., Washington,

DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the regulations, Susan B.

Hurwitz, (202) 622–3090; concerning

submissions and the hearing,

Evangelista Lee, (202) 622–7190 (not

toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

Temporary regulations in the Rules

and Regulations section of this issue of

the Federal Register amend the Estate

Tax Regulations (26 CFR part 20)

relating to sections 2044 and 2056. The

temporary regulations conform the

estate tax marital deduction regulations

to recent court decisions in Estate of

Clayton v. Commissioner, 976 F.2d 1486

(5th Cir. 1992), rev’g 97 T.C. 327 (1991);

Estate of Robertson v. Commissioner, 15

F.3d 779 (8th Cir. 1994), rev’g 98 T.C.

678 (1992); Estate of Spencer v.

Commissioner, 43 F.3d 226 (6th Cir.

1995), rev’g T.C. Memo. 1992-579; and

Estate of Clack v. Commissioner, 106

T.C. 131 (1996).

The text of those temporary

regulations also serves as the text of

these proposed regulations. The

preamble to the temporary regulations

explains the temporary regulations.

Special Analyses

It has been determined that this notice

of proposed rulemaking is not a

significant regulatory action as defined

in EO 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 these

regulations do not impose on small

entities a collection of information

requirement, the Regulatory Flexibility

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

Therefore, a Regulatory Flexibility

Analysis is not required. 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 Public Hearing

Before these proposed regulations are

adopted as final regulations,

consideration will be given to any

comments that are submitted timely (in

the manner described in ADDRESSES) to

the IRS. All comments will be available

for public inspection and copying.

A public hearing has been scheduled

for June 3, 1997, at 10 a.m. in the

Commissioner’s Conference Room, room

3313, Internal Revenue Building, 1111

Constitution Avenue NW., Washington,

DC. Because of access restrictions,

visitors will not be admitted beyond the

building lobby more than 15 minutes

before the hearing starts.

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

apply to the hearing. Persons that wish

to present oral comments at the hearing

must submit comments by May 19, 1997

and submit an outline of the topics to

be discussed and the time to be devoted

to each topic by May 13, 1997.

A period of 10 minutes will be

allotted to each person for making

comments.

An agenda showing the scheduling of

the speakers will be prepared after the

deadline for receiving outlines has

passed.

Copies of the agenda will be available

free of charge at the hearing.

Drafting Information

The principal author of the proposed

regulations is Susan B. Hurwitz, Office

of Assistant Chief Counsel

(Passthroughs and Special Industries).

However, other personnel from the IRS

and the Treasury Department

participated in their development.

List of Subjects in 26 CFR Part 20

Estate taxes, Reporting and

recordkeeping requirements.

Proposed Amendments to the

Regulations

Accordingly, 26 CFR part 20 is

proposed to be amended as follows:

PART 20—ESTATE TAX; ESTATES OF

DECEDENTS DYING AFTER AUGUST

16, 1954

Paragraph 1. The authority citation

for part 20 continues to read in part as

follows:

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

Par. 2. In § 20.2044–1, paragraph (e)

Example 8 is added to read as follows:

§ 20.2044–1 Certain property for which

marital deduction was previously allowed.

[The text of paragraph (e) Example 8

as proposed is the same as the text of

§ 20.2044–1T(e) Example 8 published

elsewhere in this issue of the Federal

Register].

Par. 3. Section 20.2056(b)–7 is

amended to read as follows:

§ 20.2056(b)–7 Election with respect to life

estate for surviving spouse.

[The text of paragraphs (d)(3), and (h)

Example 6 is the same as the text of

§ 20.2056(b)–7T(d)(3) (ii), and (h)

Example 6 published elsewhere in this

issue of the Federal Register].