27460 Federal Register / Vol. 60, No. 100 / Wednesday, May 24, 1995 / Proposed Rules

expense of $200,000 on research to test a

product in response to requirements imposed

by the United States Food and Drug

Administration (FDA). X is able to show that,

even though country Y imposes certain

testing requirements on pharmaceutical

products, the research performed in the

United States is not accepted by country Y

for purposes of its own licensing

requirements, and the research has minimal

use abroad. X is further able to show that its

FSC sells goods to countries which do not

accept or do not require research performed

in the United States for purposes of their own

licensing standards.

(ii) Allocation. Since X’s research expense

of $200,000 is undertaken to meet the

requirements of the United States Food and

Drug Administration, and since it is

reasonable to expect that the expenditure

will not generate gross income (beyond de

minimis amounts) outside the United States,

the deduction is definitely related and thus

allocable to the residual grouping.

(iii) Apportionment. No apportionment is

necessary since the entire expense is

allocated to the residual grouping, general

limitation gross income from sales within the

United States.

Example 8—Research and

Experimentation—(i) Facts. X, a domestic

corporation, is engaged in continuous

research and experimentation to improve the

quality of the products that it manufactures

and sells, which are floodlights, flashlights,

fuse boxes, and solderless connectors. X

incurs and deducts $100,000 of expenditure

for research and experimentation in 1997

which was performed exclusively in the

United States. As a result of this research

activity, X acquires patents which it uses in

its own manufacturing activity. X licenses its

floodlight patent to Y and Z, uncontrolled

foreign corporations, for use in their own

territories, countries Y and Z, respectively.

Corporation Y pays X an arm’s length royalty

of $3,000 plus $0.20 for each floodlight sold.

Sales of floodlights by Y for the taxable year

are $135,000 (at $4.50 per unit) or 30,000

units, and the royalty is $9,000

($3,000+$0.20×30,000). Y has sales of other

products of $500,000. Z pays X an arm’s

length royalty of $3,000 plus $0.30 for each

unit sold. Z manufactures 30,000 floodlights

in the taxable year, and the royalty is $12,000

($3,000+$0.30×30,000). The dollar value of

Z’s floodlight sales is not known and cannot

be reasonably estimated because, in this case,

the floodlights are not sold separately by Z

but are instead used as a component in Z’s

manufacture of lighting equipment for

theaters. The sales of all Z’s products,

including the lighting equipment for theaters,

are $1,000,000. Y and Z each sell the

floodlights exclusively within their

respective countries. X’s sales of floodlights

for the taxable year are $500,000 and its sales

of its other products, flashlights, fuse boxes,

and solderless connectors, are $400,000. X

has gross income of $500,000, consisting of

gross income from domestic sources of

$479,000, and royalty income of $9,000 and

$12,000 from foreign corporations Y and Z

respectively.

(ii) Allocation. X’s research and

experimental expenses are definitely related

to all of the products that it produces, which

are floodlights, flashlights, fuse boxes, and

solderless connectors. All of these products

are in the same three digit SIC Code category,

Electric Lighting and Wiring Equipment (SIC

Industry Group 364). Thus, X’s research and

experimental expenses are allocable to all

items of income attributable to this product

category, domestic sales income and royalty

income from the foreign countries in which

corporations Y and Z operate.

(iii) Apportionment. (A) The statutory

grouping of gross income is general

limitation income from sources without the

United States. The residual grouping is

general limitation gross income from sources

within the United States. X’s deduction of

$100,000 for its research expenditures must

be apportioned between the groupings. For

apportionment on the basis of sales in

accordance with paragraph (e)(3)(ii) of this

section, X is entitled to an exclusive

apportionment of 50 percent of its research

and experimental expense to the residual

grouping, general limitation gross income

from sources within the United States, since

more than 50 percent of the research activity

was performed in the United States. The

remaining 50 percent of the deduction can

then be apportioned between the residual

and statutory groupings on the basis of sales.

Since Y and Z are unrelated licensees of X,

only their sales of the licensed product,

floodlights, are included for purposes of

apportionment. Floodlight sales of Z are

unknown, but are estimated at ten times

royalties from Z, or $120,000. All of X’s sales

from the entire product category are included

for purposes of apportionment on the basis

of sales. Alternatively, X may apportion its

deduction on the basis of gross income, in

accordance with paragraph (e)(3)(iii) of this

section. The apportionment is as follows:

(1) Tentative Apportionment on the basis

of sales.

(i) Research and experimental expense to

be apportioned between statutory and

residual groupings of gross income: $100,000.

(ii) Less: Exclusive apportionment of

research and experimental expense to the

residual groupings of gross income ($100,000

x 50 percent): $50,000.

(iii) Research and experimental expense to

be apportioned between the statutory and

residual groupings of gross income on the

basis of sales: $50,000.

(iv) Apportionment of research and

experimental expense to the residual

groupings of gross income

($50,000×$900,000/

($900,000+$135,000+$120,000)): $38,961.

(v) Apportionment of research and

experimental expense to the statutory

grouping, royalty income from countries Y

and Z ($50,000×$135,000+$120,000/

($900,000+$135,000+$120,000)): $11,039.

(vi) Total apportioned deduction for

research and experimentation: $100,000.

(vii) Amount apportioned to the residual

grouping ($50,000+$38,961): $88,961.

(viii) Apportioned to the statutory grouping

of sources within countries Y and Z: $11,039.

(2) Tentative apportionment on gross

income basis.

(i) Apportionment of research and

experimental expense to the residual

grouping of gross income

($100,000×$479,000/$500,000): $95,800.

(ii) Apportionment of research and

experimental expense to the statutory

grouping of gross income

($100,000×$9,000+$12,000/$500,000):

$4,200.

(iii) Amount apportioned to the residual

grouping: $95,800.

(iv) Amount apportioned to the statutory

grouping of general limitation income from

sources without the United States: $4,200.

(B) Since X’s apportionment on the basis

of gross income to the statutory grouping,

$4,200, is less than 50 percent of its

apportionment on the basis of sales to the

statutory grouping, $11,039 it may use

Option two of paragraph (e)(3)(iii)(B) of this

section and apportion $5,520 (50 percent of

$11,039) to the statutory grouping.

Examples (9) through (16)—[Reserved]

* * * * *

Example (23)—[Reserved]

* * * * *

Margaret Milner Richardson,

Commissioner of Internal Revenue.

[FR Doc. 95–12621 Filed 5–19–95; 9:25 am]

BILLING CODE 4830–01–U

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 203

Technical Assistance for Public

Participation

AGENCY: Department of Defense, Office

of the Deputy Under Secretary of

Defense for Environmental Security

(DUSD(ES)).

ACTION: Notice of request for comments.

SUMMARY: Consistent with section 326 of

The National Defense Authorization Act

for Fiscal Year 1995 (NDAA–95), the

Department of Defense intends to

publish interim rules for providing

technical assistance funding to citizens

affected by the environmental

restoration of Department of Defense

facilities. This request for comments

discusses and solicits comments on

several options the Department of

Defense is considering for providing

assistance to community members of

Technical Review Committee (TRCs)

and Restoration Advisory Boards (RABs)

to obtain technical advisors and

facilitate the participation of these

members and affected citizens in

environmental restoration activities at

their associated installations. The

Department of Defense will consider

these comments in formulating an

Interim Final Rule.

DATES: Written comments must be

received on or before July 24, 1995.
Federal Register / Vol. 60, No. 100 / Wednesday, May 24, 1995 / Proposed Rules 27461

ADDRESSES: Send written comments to

the Office of the Deputy Under

Secretary of Defense for Environmental

Security/Cleanup, 3400 Defense

Pentagon, Washington, DC 20301–3400.

FOR FURTHER INFORMATION CONTACT:

Patricia Ferrebee or Marcia Read,

telephone (703) 697–7475.

SUPPLEMENTARY INFORMATION: Today’s

request for comments has the following

sections:

I. Background

II. Options for Providing Assistance

III. Requests for Comments

I. Background

The Department of Defense is engaged

in environmental investigations,

removal actions, treatability studies,

community relations efforts, interim

remedial actions, cleanups, and

operation and maintenance activities at

approximately 1800 active installations,

70 closing installations, and 2200

formerly utilized defense properties in

the United States under the Defense

Environmental Restoration Program

(DERP, 10 USC Chapter 160).

The Department of Defense has issued

policy for establishing Restoration

Advisory Boards (RABs) at all

installations. On September 9, 1993, the

Department of Defense issued policy for

establishing RABs at installations

designated for closure or realignment

under Base Realignment and Closure

(BRAC) Acts of 1988 and 1990 where

property will be available for transfer

the community. On April 14, 1994, the

Department of Defense issued RAB

policy for non-closing installations as

part of Management Guidance for

Execution of the FY94/95 and

Development of the FY96 Defense

Environmental Restoration Program.

The policy called for the establishment

of RABs at Department of Defense

installations where there is sufficient,

sustained community interest. Criteria

for determining sufficient interest are:

(1) A government requests that a RAB be

formed; (2) fifty local residents sign a

petition requesting that a RAB be

formed; or (3) an installation determines

that a RAB is needed. On September 27,

1994, the Department of Defense and the

Environmental Protection Agency (EPA)

issued joint RAB guidelines on how to

develop and implement a RAB. The

guidelines are now in effect for all

installations.

The purpose of a RAB is to bring

together people who reflect the diverse

interests within the local community,

enabling the early and continual flow of

information between the affected

community, the military installation,

and environmental oversight agencies.

The Department of Defense has

established, or is in the process of

establishing, RABs to ensure that all

stakeholders have a voice and can

actively participate in a timely and

thorough manner in the review of

environmental restoration activities and

projects at an intallation. RAB

community members provide advice as

individuals to the decision-makers on

restoration issues. This forum is used

for the expression and careful

consideration of diverse points of view.

The RAB complements other

community involvement efforts, but

does not replace them.

On October 5, 1994, Congress passed

the National Defense Authorization Act

for Fiscal Year 1995 (NDAA–95, Public

Law 103–337), which contained specific

provisions for RABs (amending 10 USC

2705 which contains requirements for

Technical Review Committees (TRCs)

under the Superfund Amendments and

Reauthorization Act). Section 326(a)

[Section 2705(d)(2)] of the NDAA–95

requires the Secretary of Defense to

prescribe regulations on the

characteristics, composition, funding,

and establishment of RABs. Section

326(b) of the NDAA [Section

2705(e)(2)(C)] authorizes the

Department of Defense to make funds

available to community members of

TRCs and RABs to: (1) Obtain technical

assistance in interpreting scientific and

engineering issues with regard to the

nature of environmental hazards at an

installation and the restoration activities

proposed for or conducted at the

installation; and (2) assist such members

and affected citizens to participate more

effectively in environmental restoration

activities at the installation. Section

326(b) [Section 2705(e)(3)(A) and (B)]

specifies that funds for community

members of TRCs and RABs at closing

and non-closing installations be

provided from the BRAC and Defense

Environmental Restoration Account

(DERA), respectively, and that the total

amount of funds from these accounts

not exceed $7,500,000. This paragraph

[Section 2705(e)(2)(B) and (C)] further

states that funding can be given to TRC

and RAB members only if they reside in

the vicinity of the installation and are

not potentially responsible parties.

The Department of Defense has

developed a number of options for

providing technical and public

participation assistance to community

members of TRCs and RABs. The

Department of Defense is issuing this

request for comments to notify the

public of its efforts, and to solicit

comments on a number of promising

funding options. The Department of

Defense will publish an interim rule

specifying available funding

mechanisms after considering any

comments received.

II. Options for Providing Assistance

The Department of Defense is seeking

to provide technical and public

participation assistance to community

members of TRCs and RABs at its

facilities in the most efficient manner.

Technical assistance under this program

means the provision of technical

advisors, facilitators, mediators, and

educators. Public participation

assistance means the provision of

training and related expenses. Three

options are being considered for

providing expeditious assistance to

TRCs and RABs. These options are

described separately in the following

sections, but are not mutually exclusive.

Option A: Use EPA TAG and TOSC

Mechanisms

This option for providing assistance

to community members of TRCs and

RABs at Department of Defense facilities

involves the use of existing vehicles

under EPA’s Technical Assistance Grant

(TAG) and Technical Outreach Services

to Communities (TOSC) program. The

TAG program provides funds for

qualified citizens’ groups affected by a

site on EPA’s National Priorities List

(NPL) to hire independent technical

advisors to help interpret and comment

on site-related information. Under this

option, the Department of Defense and

EPA would sign a Memorandum of

Understanding (MOU) authorizing EPA

to provide additional assistance to

community organizations subject to

existing TAG regulations. EPA Regional

TAG specialists would provide outreach

to community members of TRCs, RABs,

or other members of the community

desiring technical assistance and would

assist them throughout the application

process and during the post-award

administration phase. The Department

of Defense would reimburse EPA for all

awarded TAGs at Department of Defense

facilities. Under this option, community

members at NPL installations would

obtain funds directly for technical

assistance. Under this option, the TAG

regulations published in the Federal

Register on October 1, 1992, page 45311

through 45321, and recorded in 40 CFR

Part 35, Subpart M, would be followed.

These regulations allow for one TAG

award per NPL facility but would not

preclude the same community group

from applying for additional technical

assistance.

The TOSC is a pilot program funded

by EPA to provide communities affected

by hazardous waste sites with a variety

of technical support services. The TOSC
27462 Federal Register / Vol. 60, No. 100 / Wednesday, May 24, 1995 / Proposed Rules

program complements EPA’s TAG

program by serving as a mechanism for

providing technical assistance to

communities near non-NPL hazardous

waste sites. The TOSC program provides

services to communities through five

geographically-based Hazardous

Substance Research Centers (HSRCs)

created in 1986. Each HSRC is a

consortium of universities which

supports two EPA Regions (i.e. Regions

1&2, 3&4, 5&6, 7&8, 9&10). Each HSRC

provides independent technical

resources and services that are flexible

and tailored to the identified needs of a

community. HSRC researchers and

professionals are available to conduct

technical and educational programs in a

community, assist in the review of

technical documents, provide comments

on proposed actions, and answer

questions. Under this option, the

Department of Defense and EPA would

sign an MOU that makes the TOSC

program available to community

members of TRCs, RABs, and other

community groups through EPA

Superfund Regional Community

Relations Staff. EPA Regional

Community Relations Staff would

provide outreach near a Department of

Defense facility to community members

desiring TOSC support, would review

proposals for assistance from

community members, and would work

with them throughout the approval and

post-approval process. The Department

of Defense would reimburse EPA for

TOSC service rendered. Under this

option, community members of TRCs

and RABs at non-NPL installations

would obtain technical advisors and

related services from designated HSRCs.

Option B: Procure One or More

Technical Assistance Providers

This option would involve the

competitive procurement of one or more

independent technical assistance

providers to provide technical and

public participation assistance to

community members of TRCs and RABs

at Department of Defense facilities. This

assistance would be above the

administrative support to TRCs and

RABs already provided by the

installations. One or more technical

assistance providers would provide this

assistance and would carry out many of

the administrative and financial

management requirements associated

with a technical and public

participation assistance program. An

announcement, a procurement for

technical assistance providers, would be

made via the Federal Register in

conjunction with the publication of the

Interim Final Rule mentioned in Section

I. Actual awards to one or more

qualified technical assistance providers

would be made via grants or cooperative

agreements based on the results of an

independent selection process. Recent

experience with a similar grants process

in the Department of Defense suggests

that this option will involve a five or six

month procurement process beginning

with a formal announcement of a

competition in the Federal Register and

ending with awards to technical

assistance providers.

At a later date, the Department of

Defense plans a Federal Register

announcement requesting expressions

of interest to serve as a technical

assistance provider. As indicated in that

announcement, the technical assistance

provider would provide technical

assistance and public participation

assistance to community members of

TRCs and RABs. The provider would be

responsible for receiving, evaluating,

and making recommendations on

applications from RABs for support and

for providing the applications to the

appropriate DoD approving official

based on DoD established criteria. Once

the approving official has selected the

applications, the technical assistance

provider would assume full

responsibility for ensuring that the

technical services and public

participation support provided are

delivered in a timely and effective

manner to community members of TRCs

and RABs, and that all funds are

managed and dispersed in full

compliance with appropriate

Department of Defense regulations. The

technical assistance provider would be

responsible for supporting TRC and

RAB requests nationwide or within a

particular geographic area. Minimum

qualifications for a technical assistance

provider are:

(1) Perceived as neutral and credible.

(2) Either have or be able to obtain an

interdisciplinary staff with

demonstrated expertise in hazardous

substance remediation, investigation,

management and/or research.

(3) Management capability, for both

financial and scientific management,

and a demonstrated skill in planning

and scheduling projects of comparable

magnitude to that discussed in this

Announcement.

(4) Ability to provide facilitation and

mediation services.

(5) Knowledge and experience in

environmental restoration activities

preferably at federal facilities.

(6) A demonstrated ability to

disseminate results of hazardous

substance information through an

interdisciplinary program to locally

affected and concerned citizens.

(7) The ability to perform the required

tasks either nationally or within a

defined geographic area.

(8) Not-for-profit.

Under this option, community

members of TRCs and RABs would be

responsible for making requests to the

community co-chair or designated

members of the TRC or RAB responsible

for applying to the designated technical

assistance provider for assistance and

for preparing facility specific statements

describing the type and level of support

requested. The technical assistance

provider would be responsible for

allocating available resources among

these competing requests using general

guidelines and established criteria

provided by Department of Defense.

Option C: Issue Purchase Orders to

Assistance Providers

This option would involve the

issuance of purchase orders to technical

and public participation assistance

providers up to the allowable

government purchase limit per purchase

order (now at $25,000). If multiple

purchase orders were needed to assist

community members of a particular

TRC or RAB, the combined sum of these

purchase orders could not exceed a

specified allotment. Qualified assistance

providers would be selected by the

community members of a TRC or RAB

at each Department of Defense facility

using guidelines provided by the

Department of Defense. Under this

option, community members of the TRC

or RAB would provide a description of

the services it is requesting to a

Department of Defense contracting

office, along with a cost estimate, and

would identify the assistance provider

and the provider’s statement of

qualifications. A minimum set of

organizational qualifications for

receiving a purchase order would be

specified under this option by the

Department of Defense. These

qualifications would be promulgated as

part of an Interim Final Rule.

Under all options described in the

preceding sections, the local

installations will continue to be

responsible for providing administrative

support in accordance with joint EPA

and Department of Defense Restoration

Advisory Board Implementation

Guidelines issued September 27, 1994.

III. Requests for Comments

Today the Department of Defense

solicits comments on the options for

providing technical and public

participation assistance to community

members of RABs or TRCs. Each of the

options described in Section II of this

notice have strengths and weaknesses.
Federal Register / Vol. 60, No. 100 / Wednesday, May 24, 1995 / Proposed Rules 27463

Option A is the most timely option with

the advantage of using existing EPA

mechanisms to provide support, but

also has the attached limitations of the

TAG and TOSC programs as to the type

of support which could be provided.

Option B would procure independent

technical assistance providers for the

program and would relieve community

members of TRCs and RABs of much of

the administrative burden associated

with managing government grants;

however, it requires the time needed for

a competitive procurement and does not

provide the funds directly to

community members of TRCs and

RABs. Option C allows greater control

and flexibility by community members,

but imposes greater administrative

burdens on community members of

TRCs and RABs and on the contracting

office issuing the purchase order. The

Department of Defense is interested in

determining the opinions of affected

citizens and groups on these options.

This would include preferences for

particular options over others. It would

also include comments on the

individual options and the components

of those options as described in Section

II. There also exists the possibility of

combining one or more of the Section II

options. The Department of Defense

solicits any comments or suggestions

regarding option combinations. The

Department of Defense also solicits

comments on specific aspects of each

option as well as on additional options

desired to provide for technical and

public participation assistance.

Within the options are specific items

for which the Department of Defense

solicits comments. These include the

qualifications given for the independent

technical assistance providers described

in Option B. Comments on either the list

of qualifications provided or on

additional qualifications which should

be added are encouraged. Both Options

A and B have provisions for the division

of the country into geographic areas

with different service providers for each

area. Do those commenting have

preferences regarding nationwide versus

regionalized coverage by service

providers for these options? All options

will be subject to an allotment cap. Do

those commenting have suggestions as

to the size of such a cap or the criteria

which should be use to establish a cap?

The Department of Defense has

developed a list of public participation

services it believes should be provided

under Options B and C in addition to

hiring technical advisors, facilitators,

mediators and educators. These services

are: translation and interpretation;

training; transportation to meetings; and

payment of approved travel. Comments

on these or other services to be included

under Options B and C are encouraged.

Dated: May 18, 1995.

L.M. Bynum,

Alternate OSD Federal Register Liaison

Officer, Department of Defense.

[FR Doc. 95–12628 Filed 5–23–95; 8:45 am]

BILLING CODE 5000–04–M

DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Part 165

[CGD13–90–028]

RIN 2115–AE06

Regulated Navigation Area: Puget

Sound and Strait of Juan de Fuca, WA;

Grays Harbor, WA; Columbia River &

Willamette River OR; Yaguina Bay, OR;

Umpqua River, OR; Coos Bay, OR

AGENCY: Coast Guard, DOT.

ACTION: Notice of termination.

SUMMARY: This rulemaking project was

initiated to adopt regulations requiring

an emergency tow-wire on tank barges

while transiting certain port areas of the

Pacific Northwest. The project is no

longer necessary because the Coast

Guard issued separate regulations on

December 22, 1993, which require an

emergency tow wire or tow line on all

offshore oil barges. The Coast Guard is

therefore terminating further rulemaking

under docket number CGD13–90–028.

FOR FURTHER INFORMATION CONTACT:

LCDR J. Bigley or LTJG M. L. Kammerer,

Thirteenth Coast Guard District, Port

Safety and Security Branch, (206) 220–

7210.

SUPPLEMENTARY INFORMATION: On May

22, 1990, the Coast Guard published a

‘‘Request for comments; notice of

hearing’’ at 55 FR 21044 seeking public

comment on six navigation safety

initiatives for port areas in the Pacific

Northwest. These six safety initiatives

involved the use of tug escorts,

emergency towing plans, speed criteria,

additional bridge personnel, emergency

tow-wire requirements for tank barges,

and requirements for extended pilotage.

A public hearing was held on June 22,

1990, in Seattle, Washington, to hear

comments on the six initiatives and

alternative courses of action. The

comments pertaining to emergency towwire requirements for tank barges were

addressed and incorporated in a notice

of proposed rulemaking (NPRM)

published on October 24, 1991 at 56 FR

55104.

The rule proposed by the October 24,

1991, NPRM would have required all

tank barges to carry an emergency towwire while transiting certain port areas

of the Pacific Northwest. This rule was

proposed in response to the growing

concerns of the citizens of Washington

and Oregon that regulatory action was

necessary to prevent the discharge of oil

or other hazardous substances during

transportation. The proposed rule was

intended to enhance navigation safety,

thereby reducing the risk of pollution

and environmental damage from

collisions and groundings.

Subsequent to publication of the

October 24, 1991 NPRM, the Coast

Guard issued regulations requiring that

all offshore oil barges carry an

emergency tow wire or tow line

(December 22, 1993, 58 FR 67988).

These separate regulations became

effective on January 21, 1994, and are

codified at 33 CFR 155.230. Because

these separate regulations adequately

addressed the same issue addressed by

the proposed rule, the proposed rule has

become unnecessary, and the Coast

Guard is terminating further rulemaking

under docket number CGD13–90–028.

Dated: May 16, 1995.

John A. Pierson,

Captain, U.S. Coast Guard, Commander,

Thirteenth Coast Guard District, Acting.

[FR Doc. 95–12735 Filed 5–23–95; 8:45 am]

BILLING CODE 4910–14–M

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 52

[KY–83–6927b; FRL–51848–8]

Approval and Promulgation of

Implementation Plans State: Kentucky

Approval of Revisions to State

Implementation Plan (SIP)

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: EPA is proposing to approve

a revision to the state implementation

plan (SIP) submitted by the

Commonwealth of Kentucky through

the Natural Resources and

Environmental Protection Cabinet

(Cabinet). This revision will incorporate

into the SIP an operating permit issued

to the Calgon Carbon Corporation

located in the Kentucky portion of the

Ashland/Huntington ozone (O3)

nonattainment area. This permit will

reduce the emissions of volatile organic

compounds (VOCs) by requiring

reasonably available control technology