Federal Register / Vol. 70, No. 164 / Thursday, August 25, 2005 / Proposed Rules 49891

minimum quality. The lot subsamples 

shall be of sufficient weight to comply 

with Tables 1 and 2 of § 983.38 and 

Table 4 of § 983.39: Provided, that lots 

of pistachios which are intended for 

dyeing or color-coating shall be sampled 

for minimum quality after the dyeing or 

color-coating process.

§ 983.143 Reinspection. 

(a) Any lot of inshell pistachios that 

is pin-picked, hand-sorted, color-sorted, 

and/or resized is considered to be 

‘‘materially changed.’’ Pistachios which 

are roasted, salted, flavored, air-legged, 

dyed, color-coated, cleaned, and 

otherwise subjected to similar processes 

are not considered to be materially 

changed. 

(b) Each handler who handles 

pistachios shall cause any lot or portion 

of a lot initially certified for aflatoxin, 

quality, and size requirements, and 

subsequently materially changed, to be 

reinspected for aflatoxin, quality, and 

size, and certified as new lots: Provided,

that: (1) Pursuant to § 983.41(b) handlers 

exempted from minimum quality testing 

shall pull or have pulled representative 

lot samples for aflatoxin testing of any 

materially changed lots intended to be 

shipped into the domestic channels of 

commerce. Such representative lot 

samples shall be divided into two parts, 

one part shall be retested for aflatoxin 

and the other part shall be maintained 

for 90 days at the handler’s facilities. 

Handlers shall make the samples 

maintained for 90 days available for 

auditing by the Administrative 

Committee for Pistachios; and (2) 

handlers exempted from order 

requirements under § 983.70 are 

exempted from all reinspection 

requirements.

Dated: August 22, 2005. 

Lloyd C. Day, 

Administrator, Agricultural Marketing 

Service.

[FR Doc. 05–16981 Filed 8–23–05; 11:52 am] 

BILLING CODE 3410–02–P

FEDERAL RESERVE SYSTEM

12 CFR Part 205

[Regulation E; Docket No. R–1234] 

Electronic Fund Transfers

AGENCY: Board of Governors of the 

Federal Reserve System.

ACTION: Proposed rule; official staff 

interpretation. 

SUMMARY: The Board is publishing for 

comment a proposal to amend 

Regulation E, which implements the 

Electronic Fund Transfer Act (EFTA). 

The proposal would also revise the 

official staff commentary to the 

regulation. The commentary interprets 

the requirements of Regulation E to 

facilitate compliance primarily by 

financial institutions that offer 

electronic fund transfer services to 

consumers. 

The proposed revisions would clarify 

the disclosure obligations of automated 

teller machine (ATM) operators with 

respect to fees imposed on a consumer 

for initiating an electronic fund transfer 

or a balance inquiry at an ATM. The 

Board is withdrawing previously 

proposed revisions to the Regulation E 

staff commentary that would have 

addressed this issue.

DATES: Comments must be received on 

or before October 7, 2005.

ADDRESSES: You may submit comments, 

identified by Docket No. R–1234, by any 

of the following methods: 

• Agency Web site: http://

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/

generalinfo/foia/ProposedRegs.cfm.

• Federal eRulemaking Portal: http://

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov.

Include docket number in the subject 

line of the message. 

• FAX: 202/452–3819 or 202/452–

3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at http://

www.federalreserve.gov/generalinfo/

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

paper in Room MP–500 of the Board’s 

Martin Building (20th and C Streets, 

NW.) between 9 a.m. and 5 p.m. on 

weekdays.

FOR FURTHER INFORMATION CONTACT: Ky 

Tran-Trong, Senior Attorney, or Daniel 

G. Lonergan, David A. Stein, Natalie E. 

Taylor or John C. Wood, Counsels, 

Division of Consumer and Community 

Affairs, Board of Governors of the 

Federal Reserve System, Washington, 

DC 20551, at (202) 452–2412 or (202) 

452–3667. For users of 

Telecommunications Device for the Deaf 

(TDD) only, contact (202) 263–4869.

SUPPLEMENTARY INFORMATION: 

I. Background 

The Electronic Fund Transfer Act 

(EFTA or Act) (15 U.S.C. 1693 et seq.), 

enacted in 1978, establishes the rights, 

liabilities, and responsibilities of 

participants in electronic fund transfer 

(EFT) systems. The Board’s Regulation E 

(12 CFR part 205) implements the 

EFTA. Examples of types of transfers 

covered by the Act and regulation 

include transfers initiated through an 

automated teller machine (ATM), pointof-sale (POS) terminal, automated 

clearinghouse (ACH), telephone billpayment plan, or remote banking 

service. The Act and regulation require 

disclosure of terms and conditions of an 

EFT service; documentation of 

electronic transfers by means of 

terminal receipts and periodic account 

activity statements; limitations on 

consumer liability for unauthorized 

transfers; procedures for error 

resolution; and certain rights related to 

preauthorized EFTs. 

The Official Staff Commentary (12 

CFR part 205 (Supp. I)) is designed to 

facilitate compliance and provide 

protection from liability under sections 

915 and 916 of the EFTA for financial 

institutions and persons subject to the 

Act. 15 U.S.C. 1593m(d)(1). The 

commentary is updated periodically, as 

necessary, to address significant 

questions that arise. 

II. Summary of Proposed Revisions 

Section 205.16 provides that an ATM 

operator that imposes a fee on a 

consumer for initiating an EFT or a 

balance inquiry must post notices at 

ATMs that a fee will be imposed. 

Section 205.16(b) would be revised to 

clarify the operation of the ATM signage 

rule when fees are not imposed by the 

ATM operator on all consumers. The 

revised language specifically clarifies 

the intent of the rule that ATM 

operators may provide a notice that a fee 

may be imposed if there are 

circumstances in which an ATM fee 

will not be charged for a particular 

transaction, such as where the card has 

been issued by a foreign bank or the 

card issuer has entered into a 

contractual relationship with the ATM 

operator regarding surcharges. 

Section 205.16 does not require that 

any sign be posted if no fee is charged 

to the consumer by the ATM operator. 

The rule is intended to allow consumers 

to identify immediately ATMs that 

generally charge a fee for use. It is not 

intended to represent a complete 

disclosure to the consumer regarding 

the fees associated with the particular 

type of transaction the consumer seeks 

to conduct. Rather, a more detailed 

49892 Federal Register / Vol. 70, No. 164 / Thursday, August 25, 2005 / Proposed Rules 

1Pub. L. 106–102, § 702, 113 Stat. 1338, 1463–64 

(1999).

2Banking Committee OKs Roukema ATM Fee 

Disclosure (March 10, 1999), http://

financialservices.house.gov/banking/31099rou.htm.

disclosure of whether in fact a fee will 

be charged for the type of transaction 

contemplated by the consumer and the 

amount of the fee is required to be made 

either on the ATM screen or on an ATM 

receipt before the transaction is 

completed. See § 205.16(c). 

III. Section-by-Section Analysis of the 

Proposed Revisions 

Section 205.16 Disclosures at 

Automated Teller Machines 

Under section 904(d) of the EFTA, as 

amended by the Gramm-Leach-Bliley 

Act of 1999 (GLB Act), an ATM operator 

that imposes a fee on any consumer for 

providing EFT services is required to 

provide notice of the fee to the 

consumer in a prominent and 

conspicuous location on or at the ATM 

on which the EFT is initiated.1 An ATM 

operator is any person who operates an 

ATM at which consumers initiate an 

EFT or a balance inquiry, and that does 

not hold the account to or from which 

the transfer is made, or about which an 

inquiry is made. See EFTA 

904(d)(3)(D)(i); § 205.16(a). In addition 

to posting notice of the fee on or at the 

ATM, the ATM operator must also 

disclose that a fee will be imposed and 

the amount of the fee, either on the 

screen of the ATM or on a paper notice, 

before the consumer is committed to 

completing the transaction. These 

requirements are implemented in 

§ 205.16 of Regulation E. See 66 FR 

13409 (March 6, 2001).

Several large institutions have asked 

whether it is permissible under § 205.16 

to provide notice on the ATM that a fee 

‘‘may be’’ charged for providing EFT 

services, because many ATM operators, 

in particular those owned or operated 

by banks, apply ATM surcharges to 

some categories of their ATM users, but 

not others. For example, an ATM 

operator might not charge a fee to 

cardholders of foreign banks, 

cardholders whose card issuer has 

entered into a special contractual 

relationship with the ATM operator 

with respect to surcharges, and persons 

who carry cards that are issued under 

electronic benefit transfer governmental 

programs. (While many financial 

institutions do not impose ATM 

surcharges on their own cardholders, 

they are not ATM operators with respect 

to those cardholders for purposes of 

§ 205.16 because the institutions hold 

the cardholders’ accounts.) Also, an 

ATM operator might charge a fee for 

cash withdrawals, but not for balance 

inquiries. As a result, a disclosure on 

the ATM that a fee ‘‘will’’ be imposed 

in all instances could be overly broad 

with respect to consumers who would 

not be assessed a fee for usage of the 

ATM. 

In September 2004, as part of an 

update to Regulation E, the Board 

proposed to revise comment 

205.16(b)(1)–1 to clarify that ATM 

operators may disclose on the ATM 

signage that a fee may be imposed or 

may specify the type of EFTs or 

consumers for which a fee is imposed, 

if there are circumstances in which an 

ATM surcharge will not be charged for 

a particular transaction. See 69 FR 

55996, 56005 (September 17, 2004). The 

Board’s proposal acknowledged that a 

strict requirement to post a notice that 

a fee will be imposed in all instances 

could result in an inaccurate disclosure 

of the ATM operators’ surcharge 

practices and is not mandated by the 

current language in § 205.16.

Industry commenters overwhelmingly 

agreed with the Board’s proposal, 

stating that the proposed staff 

commentary was consistent with 

sections 904(d)(3)(A) and (B) of the 

EFTA, and would help ATM operators 

more accurately disclose their 

surcharging practices. Industry 

commenters cited a press release issued 

by the original act’s sponsor, Rep. Marge 

Roukema, stating that the act ‘‘simply 

puts existing practice into law.’’ 2

According to these commenters, the 

common practice of many banks at the 

time of the ATM surcharge amendments 

was to state that a fee may be imposed.

Consumer groups believed that a 

general statement on ATM signage that 

a fee ‘‘may’’ be imposed could 

significantly weaken consumer notice, 

and that the current staff commentary 

permitting ATM operators to specify the 

type of EFTs for which a fee is imposed 

provides sufficient flexibility to address 

concerns about overbroad ATM signage 

disclosures. A consumer rights attorney 

stated that a disclosure that an ATM fee 

‘‘may’’ be imposed is too general to be 

useful, and further asserted that the 

Congress intended that ATM signs must 

state that a fee will be charged whenever 

there is a possibility that a surcharge 

will be imposed on any consumer. This 

commenter believed that section 904(d) 

of the EFTA did not provide a basis for 

ATM operators to avoid providing 

notice on ATM signage to consumers to 

whom a fee would be imposed even if 

some consumers would not have a fee 

imposed or if there are other 

transactions for which a fee would not 

be imposed. The commenter also 

challenged industry commenters’ 

characterizations regarding common 

industry practice at the time the 

amendments were adopted, stating that 

existing practice of many ATM 

operators at the time was to post signs 

on the machines stating that a fee will

be imposed for cash withdrawals. 

The Board continues to believe that a 

literal interpretation of the current rule 

could lead to overly broad disclosures of 

an ATM operator’s surcharge practices 

where some consumers would not be 

assessed a fee for usage of the ATM, and 

that a reasonable interpretation of the 

statute and regulation would allow 

ATM operators to provide an alternative 

disclosure that a fee ‘‘may’’ be imposed 

to avoid potential consumer confusion. 

Upon further analysis and after 

consideration of the comments received, 

however, the Board believes it would be 

appropriate to make this clarification in 

the regulation rather than in the 

commentary. Therefore, the Board is 

withdrawing its proposed commentary 

revisions addressing this issue and is 

instead proposing to exercise its 

authority under section 904(a) of the 

EFTA to amend both the regulation and 

the commentary. A re-proposal allows 

the Board to elicit additional comments 

to better understand ATM disclosure 

practices, both at the time of the passage 

of the GLB Act and currently. 

As proposed, § 205.16(b) would be 

revised to explicitly clarify that ATM 

operators may disclose in all cases that 

a fee will be imposed, or in the 

alternative, disclose that a fee may be 

imposed on consumers initiating an EFT 

or a balance inquiry if there are 

circumstances under which some 

consumers would not be charged for 

such services. Before an ATM operator 

may impose an ATM fee on a consumer 

for initiating an electronic fund transfer 

or a balance inquiry, the ATM operator 

must provide to the consumer notice, 

either on-screen or via paper receipt, 

that an ATM fee will be imposed and 

the amount of the fee, and the consumer 

must elect to continue the transaction or 

inquiry after receiving such notice. See

§ 205.16(e). Comment 16(b)(1)–1 would 

be revised to reflect the proposed rule, 

and to clarify that ATM operators that 

impose an ATM surcharge in all cases 

must provide notice on the ATM 

signage that a fee will be charged. 

Comment is solicited on the current 

disclosure practices of ATM operators 

that impose surcharges on some, but not 

all, consumers. Under what types of 

circumstances might an ATM operator 

not impose a surcharge for providing 

electronic transfer services or 

responding to balance inquiries? If 

Federal Register / Vol. 70, No. 164 / Thursday, August 25, 2005 / Proposed Rules 49893

surcharges are not imposed on all 

consumers, how do ATM operators 

disclose their surcharge practices? What 

adverse impact on consumers, if any, 

might result from a disclosure that states 

that an ATM surcharge will be imposed 

when the operator’s practice is not to 

impose a surcharge on certain 

consumers? Conversely, what adverse 

impact on consumers who are charged 

an ATM fee, if any, might result if ATM 

signage states that a fee may be 

imposed? In addition, comment is 

solicited on disclosure practices of ATM 

operators with respect to surcharges at 

the time the GLB Act was passed. 

IV. Form of Comment Letters 

Comment letters should refer to 

Docket No. R–1234 and, when possible, 

should use a standard typeface with a 

font size of 10 or 12; this will enable the 

Board to convert text submitted in paper 

form to machine-readable form through 

electronic scanning, and will facilitate 

automated retrieval of comments for 

review. Comments may be mailed 

electronically to 

regs.comments@federalreserve.gov.

V. Solicitation of Comments Regarding 

the Use of ‘‘Plain Language’’

Section 722 of the Gramm-LeachBliley Act of 1999 requires the Board to 

use ‘‘plain language’’ in all proposed 

and final rules published after January 

1, 2000. The Board invites comments on 

whether the proposed rules are clearly 

stated and effectively organized, and 

how the Board might make the proposed 

text easier to understand. 

VI. Initial Regulatory Flexibility 

Analysis 

In accordance with section 3(a) of the 

Regulatory Flexibility Act, the Board 

has reviewed the proposed amendments 

to Regulation E. A final regulatory 

flexibility analysis will be conducted 

after consideration of comments 

received during the public comment 

period. 

1. Statement of the objectives of the 

proposal. The Board is proposing 

revisions to Regulation E to allow ATM 

operators flexibility to disclose that 

ATM surcharges will or may be imposed 

on consumers initiating an EFT or a 

balance inquiry when there are 

circumstances under which such 

surcharges will not be charged. 

The EFTA was enacted to provide a 

basic framework establishing the rights, 

liabilities, and responsibilities of 

participants in electronic fund transfer 

systems. The primary objective of the 

EFTA is the provision of individual 

consumer rights. 15 U.S.C. 1693. The 

EFTA and Regulation E require 

disclosure of terms and conditions of an 

EFT service; documentation of 

electronic transfers by means of 

terminal receipts and periodic 

statements; limitations on consumer 

liability for unauthorized transfers; 

procedures for error resolution; and 

certain rights related to preauthorized 

EFTs. The Act and regulation also 

prescribe restrictions on the unsolicited 

issuance of ATM cards and other access 

devices. The EFTA authorizes the Board 

to prescribe regulations to carry out the 

purpose and provisions of the statute. 

15 U.S.C. 1693b(a). The Act expressly 

states that the Board’s regulations may 

contain ‘‘such classifications, 

differentiations, or other provisions, 

* * * as, in the judgment of the Board, 

are necessary or proper to carry out the 

purposes of [the Act], to prevent 

circumvention or evasion [of the act], or 

to facilitate compliance [with the Act].’’ 

15 U.S.C. 1693b(c). The Act also states 

that ‘‘[i]f electronic fund transfer 

services are made available to 

consumers by a person other than a 

financial institution holding a 

consumer’s account, the Board shall by 

regulation assure that the disclosures, 

protections, responsibilities, and 

remedies created by [the Act] are made 

applicable to such persons and 

services.’’ 15 U.S.C. 1693b(d). The 

Board believes that the proposed 

revisions to Regulation E discussed 

above are within the Congress’ broad 

grant of authority to the Board to adopt 

provisions that carry out the purposes of 

the statute. 

2. Small entities affected by the 

proposal. The number of small entities 

affected by this proposal is unknown. 

ATM operators that do not impose ATM 

surcharges in all instances would be 

permitted to disclose that surcharges 

may be disclosed on signage appearing 

on ATMs. ATM operators that choose to 

make the proposed alternative 

disclosure may have to revise their signs 

on their ATMs.

3. Other Federal rules. The Board 

believes no Federal rules duplicate, 

overlap, or conflict with the proposed 

revisions to Regulation E. 

4. Significant alternatives to the 

proposed revisions. The Board 

welcomes comment on any significant 

alternatives that would minimize the 

impact of the proposed rule on small 

entities. 

VII. Paperwork Reduction Act 

In accordance with the Paperwork 

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

3506; 5 CFR part 1320 Appendix A.1), 

the Board reviewed the proposed rule 

under the authority delegated to the 

Board by the Office of Management and 

Budget (OMB). The proposed rule 

contains requirements subject to the 

PRA. The collection of information that 

is required by this proposed rule is 

found in 12 CFR 205.16(c) and in 

Appendix A. The Federal Reserve may 

not conduct or sponsor, and an 

organization is not required to respond 

to, this information collection unless it 

displays a currently valid OMB control 

number. The OMB control number is 

7100–0200. This information is required 

to obtain a benefit for consumers and is 

mandatory (15 U.S.C. 1693 et seq.). The 

respondents/recordkeepers are for-profit 

financial institutions, including small 

businesses. Institutions are required to 

retain records for 24 months. 

All depository institutions, of which 

there are approximately 19,300, 

potentially are affected by this 

collection of information because all 

depository institutions are potential 

ATM operators subject to Regulation E 

and are required to provide notice to 

consumers of an ATM surcharge, and 

thus are respondents for purposes of the 

PRA. However, the extent to which this 

collection of information affects a 

particular depository institution 

depends on the number of ATMs an 

institution operates. 

The proposed revision is not expected 

to significantly increase the ongoing 

annual burden of Regulation E; rather 

this would be a one-time burden 

increase for those institutions that, 

although not required, decide to revise 

their ATM signage disclosures. For 

purposes of the PRA, the Federal 

Reserve estimates that it would take 

depository institutions, on average, 8 

hours (one business day) to revise and 

update ATM signage; therefore, the 

Federal Reserve estimates that the total 

annual burden for all depository 

institutions for this requirement would 

be 154,400 hours. With respect to the 

1,289 Federal Reserve-regulated 

institutions which must comply with 

Regulation E, it is estimated that the 

total annual burden for this requirement 

would be 10,312 hours. 

The preceding estimate represents an 

average across all respondents and 

reflect variations between institutions 

based on their size, complexity, and 

practices. The other federal agencies are 

responsible for estimating and reporting 

to OMB the total paperwork burden for 

the institutions for which they have 

administrative enforcement authority. 

They may, but are not required to, use 

the Federal Reserve’s burden estimates. 

Because the records would be 

maintained at state member banks and 

the notices are not provided to the 

Federal Reserve, no issue of 

49894 Federal Register / Vol. 70, No. 164 / Thursday, August 25, 2005 / Proposed Rules 

confidentiality arises under the 

Freedom of Information Act. 

Comments are invited on: (a) Whether 

the proposed collection of information 

is necessary for the proper performance 

of the Federal Reserve’s functions; 

including whether the information has 

practical utility; (b) the accuracy of the 

Federal Reserve’s estimate of the burden 

of the proposed information collection, 

including the cost of compliance; (c) 

ways to enhance the quality, utility, and 

clarity of the information to be 

collected; and (d) ways to minimize the 

burden of information collection on 

respondents, including through the use 

of automated collection techniques or 

other forms of information technology. 

Comments on the collection of 

information should be sent to Michelle 

Long, Federal Reserve Board Clearance 

Officer, Division of Research and 

Statistics, Mail Stop 41, Board of 

Governors of the Federal Reserve 

System, Washington, DC 20551, with 

copies of such comments sent to the 

Office of Management and Budget, 

Paperwork Reduction Project (7100–

0200), Washington, DC 20503. 

Text of Proposed Revisions 

Certain conventions have been used 

to highlight the proposed changes to the 

text of the regulation and staff 

commentary. New language is shown 

inside bold-faced arrows, while 

language that would be deleted is set off 

with bold-faced brackets. Comments are 

numbered to comply with Federal 

Register publication rules.

List of Subjects in 12 CFR Part 205

Consumer protection, Electronic fund 

transfers, Federal Reserve System, 

Reporting and recordkeeping 

requirements.

For the reasons set forth in the 

preamble, the Board proposes to amend 

12 CFR part 205 and the Official Staff 

Commentary, as follows:

PART 205—ELECTRONIC FUND 

TRANSFERS (REGULATION E) 

1. The authority citation for part 205 

would continue to read as follows:

Authority: 15 U.S.C. 1693b.

2. Section 205.16 would be amended 

by republishing paragraph (b) and 

revising paragraph (c)(1) as follows:

§ 205.16 Disclosures on automated teller 

machines.

* * * * *

(b) General. An automated teller 

machine operator that imposes a fee on 

a consumer for initiating an electronic 

fund transfer or a balance inquiry 

shall— 

(1) Provide notice that a fee will be 

imposed for providing electronic fund 

transfer services or a balance inquiry; 

and 

(2) Disclose the amount of the fee. 

(c) Notice requirement. An automated 

teller machine operator must comply 

with the following: 

(1) On the machine. Post øthe notice 

required by paragraph (b)(1) of this 

section¿ in a prominent and 

conspicuous location on or at the 

automated teller machine fl a notice 

that: 

(i) A fee will be imposed for providing 

electronic fund transfer services or a 

balance inquiry; or 

(ii) A fee may be imposed for 

providing electronic fund transfer 

services or a balance inquiry, but this 

notice may be substituted only if there 

are circumstances under which a fee 

will not be imposed for such servicesfi; 

and 

(2) Screen or paper notice. Provide 

the notice required by paragraphs (b)(1) 

and (b)(2) of this section either by 

showing it on the screen of the 

automated teller machine or by 

providing it on paper, before the 

consumer is committed to paying a fee. 

2. In Supplement I to part 205, under 

Section 205.16—Disclosures at 

Automated Teller Machines, under 

16(b) General, under Paragraph 16(b)(1), 

paragraph 1. would be revised. 

SUPPLEMENT I TO PART 205—

OFFICIAL STAFF INTERPRETATIONS

* * * * *

Section 205.16—Disclosures on 

Automated Teller Machines 

1. Specific notices. An ATM operator 

that imposes a fee for a specific type of 

transactionfl—fi such as flforfi a 

cash withdrawal, but not fl for fia 

balance inquiry, fl or for some cash 

withdrawals (such as where the card 

was issued by a foreign bank or by a 

card issuer that has entered into a 

special contractual relationship with the 

ATM operator regarding surcharges), but 

not for others—fi may provide a 

general østatement¿ fl notice fi on or 

at the ATM machine fi that a fee will

fl or may fi be imposed for providing 

EFT services or may specify the type of 

EFT for which a fee is imposed. fl If, 

however, a fee will be imposed in all 

instances, the notice must state that a 

fee will be imposed.fi

* * * * *

By order of the Board of Governors of the 

Federal Reserve System, August 19, 2005. 

Robert deV. Frierson, 

Deputy Secretary of the Board.

[FR Doc. 05–16801 Filed 8–24–05; 8:45 am] 

BILLING CODE 6210–01–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service 

26 CFR Part 1

[REG–129782–05] 

RIN 1545–BE71

Special Rule Regarding Certain 

Section 951 Pro Rata Share Allocations

AGENCY: Internal Revenue Service (IRS), 

Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains 

proposed amendments to regulations 

under section 951(a) of the Internal 

Revenue Code (Code) regarding a United 

States shareholder’s pro rata share of a 

controlled foreign corporation’s (CFC’s) 

subpart F income, previously excluded 

subpart F income withdrawn from 

investment in less developed countries, 

and previously excluded subpart F 

income withdrawn from foreign base 

country shipping operations. These 

proposed regulations are intended to 

ensure that a CFC’s earnings and profits 

for a taxable year attributable to a 

section 304 transaction will not be 

allocated in a manner that results in the 

avoidance of Federal income tax. These 

proposed regulations are also intended 

to ensure that earnings and profits of a 

CFC are not allocated to certain 

preferred stock in a manner inconsistent 

with the economic interest that such 

stock represents.

DATES: Written or electronic comments 

and requests for a public hearing must 

be received by October 24, 2005.

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–129782–05), room 

5203, Internal Revenue Service, POB 

7604, Ben Franklin Station, Washington, 

DC 20044. Submissions may be hand 

delivered Monday through Friday 

between the hours of 8 a.m. and 4 p.m. 

to: CC:PA:LPD:PR (REG–129782–05), 

Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC, or sent 

electronically, via the IRS Internet site 

at http://www.irs.gov/regs or via the 

Federal eRulemaking Portal athttp://

www.regulations.gov (IRS and REG–

129782–05).

FOR FURTHER INFORMATION CONTACT:

Concerning the proposed regulations,