57732 Federal Register / Vol. 65, No. 187 / Tuesday, September 26, 2000 / Rules and Regulations

26, 2000, for any implanted mechanical/

hydraulic urinary continence device

that was in commercial distribution

before May 28, 1976, or that has, on or

before December 26, 2000, been found

to be substantially equivalent to an

implanted mechanical/hydraulic

urinary continence device that was in

commercial distribution before May 28,

1976. Any other implanted mechanical/

hydraulic urinary continence device

shall have an approved PMA or a

declared completed PDP in effect before

being placed in commercial

distribution.

Dated: September 11, 2000.

Linda S. Kahan,

Deputy Director for Regulations Policy, Center

for Devices and Radiological Health.

[FR Doc. 00–24632 Filed 9–25–00; 8:45 am]

BILLING CODE 4160–01–F

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8903]

RIN 1545–AY01

Qualified Zone Academy Bonds;

Obligations of States and Political

Subdivisions

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final

regulations relating to the Federal

income tax treatment of qualified zone

academy bonds. These regulations

provide guidance to State and local

governments that issue qualified zone

academy bonds and to banks, insurance

companies and other taxpayers that

hold those bonds. These regulations

make final certain temporary

regulations.

DATES: Effective Date: These regulations

are effective September 26, 2000.

Applicability Date: For dates of

applicability, see § 1.1397E–1(k).

FOR FURTHER INFORMATION CONTACT:

Timothy L. Jones or Allan B. Seller at

202–622–3980 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

Section 226(a) of the Taxpayer Relief

Act of 1997, Public Law 105–34 (111

Stat. 788), amended the Internal

Revenue Code (Code) by redesignating

section 1397E as section 1397F and

adding a new section 1397E. Section

1397E authorizes a type of debt

instrument known as a qualified zone

academy bond.

Explanation of Provisions

In General

A qualified zone academy bond is a

taxable bond issued by a State or local

government, the proceeds of which are

used to enhance certain eligible public

schools. In lieu of receiving periodic

interest payments from the issuer, an

eligible holder of a qualified zone

academy bond is generally allowed

annual federal income tax credits while

the bond is outstanding. These credits

compensate the holder for lending

money to the issuer and function as

payments of interest on the bond.

Temporary regulations (REG–119449–

97) interpreting section 1397E were

published on January 7, 1998 (63 FR

671), and amended on July 1, 1999 (64

FR 35573). The temporary regulations

generally treat the allowance of the

credit as if it were a payment of interest

on the bond.

Code section 1397E(e), as amended by

section 509 of the Ticket to Work and

Work Incentives Improvement Act of

1999, Public Law 106–170 (113 Stat.

1860), imposes a national limitation on

the amount of qualified zone academy

bonds that can be issued. For each

applicable year, the IRS publishes a

revenue procedure allocating the

national limitation among the States and

the possessions.

Bonds Issued by a State or Local

Government

Section 1397E(d)(1)(B) requires that a

qualified zone academy bond be issued

by a State or local government within

the jurisdiction of which a qualified

zone academy (as defined in section

1397E(d)(4)) is located. Commentators

requested clarification that, for these

purposes, a State or local government

means a State or political subdivision as

defined for purposes of section 103(c).

Commentators also requested that the

final regulations include a provision for

the issuance of qualified zone academy

bonds on behalf of a State or local

government in a manner similar to the

issuance of obligations on behalf of a

State or political subdivision under

section 103.

The final regulations provide that, for

purposes of section 1397E(d)(1)(B), the

term State or local government means a

State or political subdivision as defined

for purposes of section 103(c). The final

regulations also specify that a qualified

zone academy bond may be issued on

behalf of a State or local government

under rules similar to those for

determining whether a bond issued on

behalf of a State or political subdivision

constitutes an obligation of that State or

political subdivision for purposes of

section 103.

Private Business Contribution

Requirement

Section 1397E(d)(1)(C)(ii) requires the

issuer of a qualified zone academy bond

to certify that it has written assurances

that the private business contribution

requirement of section 1397E(d)(2) will

be met with respect to the qualified

zone academy. For these purposes, the

private business contribution

requirement is met if the eligible local

education agency (as defined in section

1397E(d)(4)(B)) has written

commitments from private entities to

make qualified contributions having a

present value as of the issue date of 10

percent or more of the proceeds of the

issue.

The Code does not define private

entities for these purposes. Section

1397E(d)(2)(B) defines qualified

contribution as any contribution (of a

type and quality acceptable to the

eligible local education agency) of (i)

equipment for use in the qualified zone

academy, (ii) technical assistance in

developing curriculum or in training

teachers in order to promote appropriate

market driven technology in the

classroom, (iii) services of employees as

volunteer mentors, (iv) internships, field

trips, or other educational opportunities

outside the academy for students, or (v)

any other property or service specified

by the eligible local education agency.

Commentators requested clarification

of the meaning of private entities for

these purposes. For example,

commentators asked whether the term

may include an organization described

in section 501(c)(3) or a private

individual.

The final regulations provide that, for

purposes of section 1397E(d)(2)(A), the

term private entities includes any

person (as defined in section 7701(a))

other than the United States, a State or

local government, or any agency or

instrumentality thereof or related party

with respect thereto.

Commentators also sought

clarification regarding the meaning of

qualified contribution under section

1397E(d)(2)(B). The final regulations

provide that cash received with respect

to a qualified zone academy from a

private entity constitutes a qualified

contribution if it is to be used to

purchase any property or service

described in section 1397E(d)(2)(B)(i),

(ii), (iii), (iv) or (v). The final regulations

also indicate that services of employees

of the eligible local education agency do

not constitute qualified contributions.

Federal Register / Vol. 65, No. 187 / Tuesday, September 26, 2000 / Rules and Regulations 57733

Issuer Certifications

Section 1397E(d)(1)(C) requires the

issuer to certify (1) that it has written

assurances that the private business

contribution requirement will be met,

and (2) that it has the written approval

of the eligible local education agency for

the bond issuance. The Treasury and the

IRS intend that these certifications will

be respected and may be relied on by

taxpayers if the certifications are

reasonably made.

95 Percent Test

Section 1397E(d)(1)(A) requires that

95 percent or more of the proceeds of an

issue of qualified zone academy bonds

be used for a qualified purpose

described in section 1397E(d)(5) with

respect to a qualified zone academy.

The Treasury and the IRS intend that

the qualified purposes set forth in

section 1397E(d)(5) are to be broadly

interpreted. The Treasury and the IRS

also intend that issuers may apply

principles similar to the requirements of

§ 1.142–2 (without regard to the

requirement therein that the period

between the issue date and the first call

date not exceed 101⁄2 years) to cure an

unexpected failure to spend 95 percent

or more of the proceeds of an issue for

a qualified purpose. Further, the

Treasury and the IRS intend that

taxpayers may rely on an issuer’s

determination that a public school (or

academic program within a public

school) is a qualified zone academy for

purposes of section 1397E(d)(4) if the

determination has a reasonable basis.

Effective Dates

The final regulations apply to bonds

sold on or after September 26, 2000. In

addition, the final regulations permit

elective, retroactive application to

bonds sold before September 26, 2000 of

either of the following sections of the

regulations: § 1.1397E–1(c) (private

business contribution requirement) and

§ 1.1397E–1(i) (State or local

government).

Special Analyses

It has been determined that this

Treasury decision is not a significant

regulatory action as defined in

Executive Order 12866. Therefore, a

regulatory assessment is not required. It

has also been determined that section

553(b) of the Administrative Procedure

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

The Regulatory Flexibility Act (5 U.S.C.

chapter 6) does not apply because these

regulations do not impose a collection

of information on small entities.

Pursuant to section 7805(f) of the Code,

the notice of proposed rulemaking

preceding these regulations was sent to

the Chief Counsel for Advocacy of the

Small Business Administration for

comment on its impact on small

businesses.

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 is amended by removing the

entry for Section 1.1397E–1T and

adding a new entry in numerical order

to read in part as follows:

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

1.1397E–1 also issued under 26 U.S.C.

1397E(b) and (d).

§ 1.1397E–1T [Redesignated as

§ 1.1397E–1]

Par. 2. Section 1.1397E–1T is

redesignated as § 1.1397E–1.

Par. 3. Newly designated § 1.1397E–1

is amended as follows:

1. The section heading is revised.

2. Revising paragraphs (c), (f)(2), (i)

and (j).

3. Adding a new paragraph (k).

The revisions and addition read as

follows:

§ 1.1397E–1 Qualified zone academy

bonds.

* * * * *

(c) Private business contribution

requirement—(1) Reasonable discount

rate. To determine the present value (as

of the issue date) of qualified

contributions from private entities

under section 1397E(d)(2), the issuer

must use a reasonable discount rate. The

credit rate determined under paragraph

(b) of this section is a reasonable

discount rate.

(2) Definition of private entities. For

purposes of section 1397E(d)(2)(A), the

term private entities includes any

person (as defined in section 7701(a))

other than the United States, a State or

local government, or any agency or

instrumentality thereof or related party

with respect thereto. To determine

whether a person is related to the

United States or a State or local

government under this paragraph (c)(2),

rules similar to those for determining

whether a person is a related party

under § 1.150–1(b) shall apply (treating

the United States as a governmental unit

for purposes of § 1.150–1(b)).

(3) Qualified contribution. For

purposes of section 1397E(d)(2)(A), the

term qualified contribution means any

contribution (of a type and quality

acceptable to the eligible local

education agency) of any property or

service described in section

1397E(d)(2)(B)(i), (ii), (iii), (iv) or (v). In

addition, cash received with respect to

a qualified zone academy from a private

entity (other than cash received

indirectly from a person that is not a

private entity as part of a plan to avoid

the requirements of section 1397E)

constitutes a qualified contribution if it

is to be used to purchase any property

or service described in section

1397E(d)(2)(B)(i), (ii), (iii), (iv) or (v).

Services of employees of the eligible

local education agency do not constitute

qualified contributions.

* * * * *

(f) * * *

(2) Adjustment if the holder cannot

use the credit to offset a tax liability. If

a holder holds a qualified zone academy

bond on the credit allowance date but

cannot use all or a portion of the credit

to reduce its income tax liability (for

example, because the holder is not an

eligible taxpayer or because the

limitation in section 1397E(c) applies),

the holder is allowed a deduction for

the taxable year that includes the credit

allowance date (or, at the option of the

holder, the next succeeding taxable

year). The amount of the deduction is

equal to the amount of the unused credit

deemed paid on the credit allowance

date.

* * * * *

(i) State or local government—(1) In

general. For purposes of section

1397E(d)(1)(B), the term State or local

government means a State or political

subdivision as defined for purposes of

section 103(c).

(2) On behalf of issuer. A qualified

zone academy bond may be issued on

behalf of a State or local government

under rules similar to those for

determining whether a bond issued on

behalf of a State or political subdivision

constitutes an obligation of that State or

political subdivision for purposes of

section 103.

(j) Cross-references. See section 171

and the regulations thereunder for rules

relating to amortizable bond premium.

See § 1.61–7(d) for the seller’s treatment

of a bond sold between interest payment

dates (credit allowance dates) and

§ 1.61–7(c) for the buyer’s treatment of

a bond purchased between interest

payment dates (credit allowance dates).

(k) Effective dates. Except as provided

in this paragraph (k), this section

applies to bonds sold on or after

September 26, 2000. Each of paragraphs

(c) and (i) of this section may be applied

57734 Federal Register / Vol. 65, No. 187 / Tuesday, September 26, 2000 / Rules and Regulations

by issuers to bonds that are sold before

September 26, 2000.

Bob Wenzel,

Deputy Commissioner of Internal Revenue.

Approved: September 19, 2000.

Jonathan Talisman,

Acting Assistant Secretary of the Treasury.

[FR Doc. 00–24588 Filed 9–25–00; 8:45 am]

BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and

Firearms

27 CFR Parts 4 and 24

[T.D. ATF–430 Re: T.D. ATF–418 T.D. ATF–

398, Notice No. 859 and Notice No. 869]

RIN 1512–AB71

Hard Cider; Postponement of Labeling

Compliance Date (97–2523)

AGENCY: Bureau of Alcohol, Tobacco

and Firearms (ATF), Department of the

Treasury.

ACTION: Temporary rule (Treasury

decision).

SUMMARY: This temporary rule

postpones the mandatory compliance

date for the labeling of hard cider. We

are delaying the compliance date for the

temporary labeling rules so that we can

finalize the definition and the new

labeling rules in one document.

DATES: Effective date: This document is

effective September 26, 2000.

Compliance date: Compliance with

the hard cider labeling requirements in

27 CFR 4.21 and 24.257 is not

mandatory until January 31, 2001.

FOR FURTHER INFORMATION CONTACT:

Marjorie D. Ruhf, Regulations Division,

650 Massachusetts Avenue, NW,

Washington, DC 20226; (202) 927–8230;

or mdruhf@atfhq.atf.treas.gov.

SUPPLEMENTARY INFORMATION:

Background

On August 21, 1998, the Bureau of

Alcohol, Tobacco and Firearms (ATF)

issued a temporary rule to implement

various sections of the Taxpayer Relief

Act of 1997, Public Law 105–34 (’’the

Act’’). Section 908 of the Act amended

the Internal Revenue Code of 1986 (IRC)

to create a new excise tax category for

hard cider. The temporary rule, T.D.

ATF–398 (63 FR 44779) included rules

for labeling hard cider. On the same

day, ATF issued a notice of proposed

rulemaking, Notice No. 859 (63 FR

44819), inviting comments on this

temporary rule for a 60 day period. In

response to requests from the industry,

ATF reopened the comment period for

an additional 30 days on November 6,

1998, by Notice No. 869 (63 FR 59921).

Based on comments received in

response to Notice No. 859, ATF

identified one area, labeling of hard

cider, where comments indicated the

temporary rule as originally issued

imposed an unintended and

unnecessary burden. By T.D. ATF–418

(64 FR 51896], ATF postponed the

compliance date for the hard cider

labeling rules (originally February 17,

1999), so that we could develop

alternative labeling rules. At the same

time, we published Notice No. 881 (64

FR 51933) to request comments on

alternative labeling rules.

In response to Notice No. 881, we

received four generally supportive

comments on the proposed labeling

changes. However, Green Mountain

Cidery noted in its comment that we

should not place elements of the

temporary definition of hard cider in the

labeling rules, since there were many

suggested changes to that definition in

the original comments. We have not

completed the final rule related to the

definition of hard cider. Therefore, we

are delaying the compliance date for the

temporary labeling rules until January

31, 2001 so that we can finalize the

definition and the new labeling rules in

one document.

Regulatory Flexibility Act

The provisions of the Regulatory

Flexibility Act (5 U.S.C. 601 et seq.)

relating to a final regulatory flexibility

analysis do not apply to this rule

because the agency was not required to

publish a general notice of proposed

rulemaking under 5 U.S.C. 553 or any

other law. Pursuant to 26 U.S.C. 7805(f),

this temporary rule will be submitted to

the Chief Counsel for Advocacy of the

Small Business Administration for

comment on its impact on small

business.

Executive Order 12866

It has been determined that this rule

is not a significant regulatory action as

defined by Executive Order 12866.

Therefore, a regulatory assessment is not

required.

Paperwork Reduction Act

The provisions of the Paperwork

Reduction Act of 1995 (44 U.S.C. 3507)

and its implementing regulations, 5 CFR

part 1320, do not apply to this final rule

because no new collection of

information is contained in this

Treasury decision.

Administrative Procedure Act

This document merely defers a

compliance date for labeling rules for

hard cider while ATF considers

alternative labeling requirements. In

view of the immediate need to inform

the industry of this action, it is found to

be impracticable to issue this Treasury

decision with notice and public

procedure under 5 U.S.C. 553(b), or

subject to the effective date limitation in

section 553(d).

Drafting Information: Marjorie Ruhf,

of the Regulations Division, Bureau of

Alcohol, Tobacco and Firearms, drafted

this document.

List of Subjects

27 CFR Part 4

Advertising, Consumer protection,

Customs duties and inspection, Imports,

Labeling, Packaging and containers,

Wine.

27 CFR Part 24

Administrative practice and

procedure, Authority delegations,

Claims, Electronic fund transfers, Excise

taxes, Exports, Food additives, Fruit

juices, Labeling, Liquors, Packaging and

containers, Reporting and recordkeeping

requirements, Research, Scientific

equipment, Spices and flavoring, Surety

bonds, Taxpaid wine bottling house,

Transportation, Vinegar, Warehouses,

Wine.

Therefore, pursuant to the authority

set forth in 26 U.S.C. 5368 and 27 U.S.C.

205(e), ATF is postponing the

compliance date with respect to the use

of the term ‘‘hard cider’’ set forth in 27

CFR 4.21(e)(5) and 24.257(a)(3)(iii) and

(iv) to January 31, 2001.

Dated: August 7, 2000.

Bradley A. Buckles,

Director.

Dated: August 16, 2000

John P. Simpson,

Deputy Assistant Secretary, (Regulatory,

Tariff and Trade Enforcement).

[FR Doc. 00–24668 Filed 9–25–00; 8:45 am]

BILLING CODE 4810–31–U

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 271

[FRL–6875–3]

Pennsylvania: Final Authorization of

State Hazardous Waste Management

Program Revisions

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Immediate final rule.

SUMMARY: The Commonwealth of

Pennsylvania (Commonwealth) has