Federal Register / Vol. 61, No. 1 / Tuesday, January 2, 1996 / Proposed Rules 33

real property, with a fair market value of

$100 and an adjusted tax basis of $10.

(ii) AB subsequently distributes Security X

with a fair market value and adjusted tax

basis of $40 to A in a current distribution

and, as part of the same distribution, AB

distributes Property Z to A with an adjusted

tax basis and fair market value of $40. At the

time of distribution, the basis in A’s interest

in the partnership is $10. A recognizes $30

of gain under section 731(a) on the

distribution (excess of $40 distribution of

money over $10 adjusted tax basis in A’s

partnership interest).

(iii) A’s adjusted tax basis in Security X is

$35 ($5 adjusted basis determined under

section 732(a)(2) plus $30 of gain recognized

by A by reason of section 731(c)). A’s basis

in Property Z is $5, as determined under

section 732(a)(2). The basis in A’s interest in

the partnership is $0 as determined under

section 733 ($10 pre-distribution basis minus

$10 basis allocated between Security X and

Property Z under section 732).

(iv) AB’s adjusted tax basis in the

remaining partnership assets is unchanged

unless the partnership has a section 754

election in effect. If AB made such an

election, the aggregate basis of AB’s assets

would be increased by $70 (the difference

between the $80 combined basis of Security

X and Property Z in the hands of the

partnership before the distribution and the

$10 combined basis of the distributed

property in the hands of A under section 732

after the distribution). Under section

731(c)(5), no adjustment is made to

partnership property under section 734 as a

result of any gain recognized by A by reason

of section 731(c) or as a result of any stepup in basis in the distributed marketable

securities in the hands of A by reason of

section 731(c).

Example 7. Coordination with section 737.

(i) A and B form partnership AB. A

contributes Property A, nondepreciable real

property with a fair market value of $200 and

an adjusted basis of $100 in exchange for a

25 percent interest in partnership capital and

profits. AB owns marketable Security X.

(ii) Within five years of the contribution of

Property A, AB subsequently distributes

Security X, with a fair market value of $120

and an adjusted tax basis of $100, to A in a

current distribution that is subject to section

737. As part of the same distribution, AB

distributes Property Y to A with a fair market

value of $20 and an adjusted tax basis of $0.

At the time of distribution, there has been no

change in the fair market value of Property

A or the adjusted tax basis in A’s interest in

the partnership.

(iii) If AB had sold Security X for fair

market value immediately before the

distribution to A, the partnership would have

recognized $20 of gain. A’s distributive share

of this gain would have been $5 (25 percent

of $20 gain). Because AB has no other

marketable securities, A’s distributive share

of gain in partnership securities after the

distribution would have been $0. As a result,

the distribution resulted in a decrease of $5

in A’s share of the net gain in AB’s securities

($5 net gain before distribution minus $0 net

gain after distribution). Under paragraph

(b)(2) of this section, the amount of the

distribution of Security X that is treated as

a distribution of money is reduced by $5. The

distribution of Security X is therefore treated

as a distribution of $115 of money to A ($120

fair market value of Security X minus $5

reduction). The portion of the distribution of

the marketable security that is not treated as

a distribution of money ($5) is treated as

other property for purposes of section 737.

(iv) A recognizes total gain of $40 on the

distribution. A recognizes $15 of gain under

section 731(a)(1) on the distribution of the

portion of Security X treated as money ($115

distribution of money less $100 adjusted tax

basis in A’s partnership interest). A

recognizes $25 of gain under section 737 on

the distribution of Property Y and the portion

of Security X that is not treated as money. A’s

section 737 gain is equal to the lesser of (i)

A’s precontribution gain ($100) or (ii) the

excess of the fair market value of property

received ($20 fair market value of Property Y

plus $5 portion of Security X not treated as

money) over the adjusted basis in A’s interest

in the partnership immediately before the

distribution ($100) reduced (but not below

zero) by the amount of money received in the

distribution ($115).

(v) A’s adjusted tax basis in Security X is

$115 ($100 basis of Security X determined

under section 732(a) plus $15 of gain

recognized by reason of section 731(c)). A’s

adjusted tax basis in Property Y is $0 under

section 732(a). The basis in A’s interest in the

partnership is $25 ($100 basis before

distribution minus $100 basis allocated to

Security X under section 732(a) plus $25 gain

recognized under section 737).

(k) Effective date. This section applies

to distributions of marketable securities

made on or after December 29, 1995.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

[FR Doc. 95–31457 Filed 12–29–95; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF DEFENSE

Department of the Army

33 CFR Part 207

St. Marys Falls Canal and Locks,

Michigan; Use, Administration, and

Navigation

AGENCY: Corps of Engineers, Department

of the Army, DOD.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Corps of Engineers

proposes to amend the regulations

which establish the operating schedule

for Soo Locks at the St. Marys Falls

Canal, Sault Ste. Marie, Michigan, to

change the annual opening date from

April 1 to March 25. The locks will not

open earlier than March 25, except in

case of emergency and are subject to

closure at any time in a national

emergency involving a vessel disaster or

other extraordinary circumstances as

currently provided in 33 CFR

207.440(u).

DATES: Written comments should be

received February 1, 1996.

ADDRESSES: Submit written comments,

in duplicate, to: Mr. William Willis,

Acting Chief, Construction-Operations

Division, Detroit District, U.S. Army

Corps of Engineers, P.O. Box 1027,

Detroit, Michigan 48231–1027, Phone:

(313) 226–6794, or deliver them to Mr.

Willis at the Detroit District office at 477

Michigan Avenue, Detroit, Michigan,

between the hours of 7:30 a.m. and 4:00

p.m. Monday through Friday.

Comments received and other materials

relevant to this proposed rulemaking

can be inspected at Mr. Willis’ office

during the same hours. An appointment

may be required for inspection, so

please call ahead to confirm availability

and to avoid any conflicts with

inspections by other interested persons.

A reasonable fee may be charged for

copying services.

FOR FURTHER INFORMATION CONTACT:

Mr. Michael Kidby at Corps of Engineers

Headquarters in Washington, D.C., by

telephone at (202) 761–8835.

SUPPLEMENTARY INFORMATION:

Legal Authority

The legal authority for the regulation

governing the use, administration, and

navigation of the St. Marys Falls Canal

and Locks is Section 4 of the River and

Harbor Act of August 18, 1894 (28 Stat.

362), as amended, which is codified at

33 U.S.C. Section 1. This statute

requires the Secretary of the Army to

‘‘prescribe such regulations for the use,

administration, and navigation of the

navigable waters of the United States’’

as the Secretary determines may be

required by public necessity.

Background

The regulation governing the

operation of the St. Marys Falls Canal

and Locks, in 33 CFR 207.440, was

adopted on November 27, 1945 (10 FR

14451), and has been the subject of nine

amendments. The legislation allows the

period of operation to be adjusted to

meet the reasonable demands of

commerce. The provision setting out the

current opening date for the locks was

adopted on October 30, 1956 (21 FR

8285). It establishes an opening date of

April 1, subject to annual modification

by the Division Engineer if the public

interest would be best served by the

modification or in the event of

emergency.

The opening date of the Soo Locks has

been modified on a number of occasions

and the length of the operating season

has been the subject of a number of
34 Federal Register / Vol. 61, No. 1 / Tuesday, January 2, 1996 / Proposed Rules

studies. Between 1970 and 1979, as

authorized by the River and Harbor Act

of 1970, the locks at Sault St. Marie

have remained open for as long as the

entire year in a demonstration program

on the practicability of winter

navigation in the Great Lakes. Since the

1979 navigation season, the Soo Locks

have opened on the following dates:

March 25, 1980; March 23, 1981; April

1, 1982; March 29, 1983; March 26,

1984; April 1, 1985; April 1, 1986;

March 22, 1987; March 22, 1988; March

15, 1989; March 21, 1990; March 21,

1991; March 22, 1992; March 21, 1993;

March 25, 1994; and March 25, 1995.

During periods of navigation in ice,

numerous environmental studies have

indicated no significant adverse

environmental effects.

In 1977, a Final Environmental

Impact Statement (FEIS) titled,

‘‘Operation, Maintenance, and Minor

Improvements to the Federal Facilities

at Sault Ste. Marie, Michigan’’ was

prepared. Subsequent to this, a Detroit

District staff report and supplemental

environmental impact statement

(Supplement I, EIS) completed in 1979

recommended operation of the locks

each year to January 8 ± 1 week. Based

on extensive environmental studies, a

second supplemental EIS (Supplement

II), dated September 1989, was

completed by the Detroit District,

concluding that no significant adverse

environmental effects would result form

annual operation of the locks as late as

January 31 ± 2 weeks, and

recommending that the closing date for

the locks be extended to January 31 ± 2

weeks. A Notice of Proposed

Rulemaking to change the closing date

to January 15 was published on April 3,

1991 (56 FR 13604) and subsequently

became effective March 24, 1992.

The proposal contained in this notice

will establish a fixed opening date of

March 25 for the Soo Locks. This fixed

opening date, in conjunction with the

January 15 closing date, will allow

nearly 10 months access to and from

Lake Superior so that industry may have

an adequate basis for planning and

management of their resources.

History of the Present Amendment

In March 1990, the Detroit District

Engineer sent a letter to interested

governmental, environmental, and

business interests, proposing a

comprehensive annual operating plan

for the locks. It proposed a fixed closing

date of January 15 and fixed opening

date no earlier than March 15. Because

the environmental studies of the

supplemental EIS’s in 1979 and 1989

focused specifically on the closing date,

further environmental studies focusing

on the effects of opening dates between

March 15 and April 1 would be

conducted in order to establish an

opening date that would address the

needs of both commerce and the

environment.

In 1991 and 1992, another series of

environmental studies concerning lock

opening were completed. Employing

these studies as well as the

environmental data from the prior

studies which examined possible

impacts for Supplements I and II,

potential impacts of commercial

navigation before April 1 were assessed.

The resulting February 1993 Draft EIS

(DEIS) identified no significant impacts

for opening the locks as early as March

15. Rather, the study found that even

significant vessel traffic, with ice cover,

would result in only insignificant

adverse environmental effects. Given

the favorable economic benefits, as set

forth in the DEIS, a March 21 opening

date was suggested in the DEIS.

However, to alleviate Michigan

Department of Natural Resources

(MDNR) concerns raised in response to

this document, the U.S. Coast Guard,

the U.S. Fish and Wildlife Service, the

MDNR, and the Detroit District signed a

Memorandum of Agreement (MOA) in

August of 1993 recommending a fixed

lock opening date of March 25. In this

MOA, the Federal and state agencies

agreed to perform joint monitoring

studies of the aquatic ecosystem and

biota. This recommendation and MOA

were included in the FEIS and

distributed for public review.

Proposed Amendments to the

Regulation

Based on consideration of the

responses to the March 1990 letter,

comments received on the Draft FEIS,

further review of the pertinent

background information in light of those

responses, and the rationale set forth in

the September 26, 1994 Record of

Decision, the Corps of Engineers has

determined that the overall public

interest would be best served by

implementing the March 25 fixed

opening alternative. As was concluded

by the District and Division Engineers,

the recommended operation of the locks

is engineeringly feasible and the overall

adverse environmental effect of the

March 25 opening date would not be

significant. From an economic

perspective, the establishment of a fixed

opening date will create an atmosphere

of stability and certainty within Great

Lakes shipping interests and industries

can plan and conduct their operations,

and is economically justifiable.

At present, the regulation provides

that at least one lock will be placed in

operation on April 1 and additional

locks will be opened as vessel traffic

increases. As a result of the regulation

proposed in this notice, the April 1

opening date under the current

regulations will be modified from April

1 to March 25.

The Corps of Engineers proposes that

the present authority of the Division

Engineer to modify opening and closing

dates in emergency conditions be

retained. By their very nature,

emergencies cannot be exhaustively

defined. The example given in the

current regulation is disaster to a vessel.

Under the fixed closing date proposal,

this type of emergency would remain a

basis for modifying the operating dates

of the locks. Similarly, national defense

emergencies, extraordinary

environmental circumstances, or

extraordinary national or regional

economic circumstances could also

invoke the exercise of the Division

Engineer’s authority. As noted above,

these examples are not intended to be

exhaustive or exclusive.

Classification

1. The undersigned has reviewed this

action and hereby certifies that it is not

subject to the requirements of the

Regulatory Flexibility Act, 5 U.S.C. 601–

612, since it will not exert a significant

economic impact on a substantial

number of small businesses or other

entities.

2. The Department of the Army has

determined that this regulation will not

affect the use or value of private

property and, therefore, does not require

a Takings Assessment under Executive

Order 12630.

3. This proposed rule has been

determined not to be a major rule under

Executive Order 12866. A Regulatory

Impact Analysis (RIA) Statement will

not be prepared since the proposed

changes will not result in significant

adverse economic effects identified in

the Executive Order as grounds for a

finding of major action.

Environmental Documentation

This action was the subject of a FEIS,

February 1994, which concluded that

there would not be significant adverse

environmental effects due to

commencing the opening season of the

locks on 21 March—earlier than the date

now proposed. The FEIS is available for

review upon request from the individual

listed under ADDRESSES.

List of Subjects in 33 CFR Part 207

Navigation (Water), Water

Transportation, Vessels.

For the reasons set out in the

preamble, Title 33, Chapter II of the
Federal Register / Vol. 61, No. 1 / Tuesday, January 2, 1996 / Proposed Rules 35

Code of Federal Regulations is proposed

to be amended as follows.

PART 207—[AMENDED]

1. The authority citation for part 207

continues to read as follows:

Authority: 40 Stat. 266; (33 U.S.C. 1).

2. Section 207.440 is amended by

revising paragraph (u) as follows:

§ 207.440 St. Marys Falls Canal and Locks,

Michigan; use, administration and

navigation.

* * * * *

(u) The locks will be opened and

closed to navigation each year as

provided in paragraphs (u) (1) and (2) of

this section except as may be authorized

by the Division Engineer. Consideration

will be given to change in these dates in

an emergency involving disaster to a

vessel or other extraordinary

circumstances.

(1) Opening date. At least one lock

will be placed in operation for the

passage of vessels on March 25.

Thereafter, additional locks will be

placed in operation as traffic density

demands.

(2) Closing date. The locks will be

maintained in operation only for the

passage of down bound vessels

departing from a Lake Superior port

before midnight (2400 hours) of January

14, and of upbound vessels passing

Detour before midnight (2400 hours) of

January 15. Vessel owners are requested

to report in advance to the Engineer in

charge at Sault Ste. Marie, the name of

vessel and time of departure from a Lake

Superior port on January 14 before

midnight, and of vessels passing Detour

on January 15 before midnight, which

may necessitate the continued operation

of a lock to permit passage of vessel.

* * * * *

Dated: December 21, 1995.

John H. Zirschky,

Acting Assistant Secretary of the Army (Civil

Works).

[FR Doc. 95–31543 Filed 12–29–95; 8:45 am]

BILLING CODE 3710–92–M

DEPARTMENT OF THE INTERIOR

Fish and Wildlife Service

50 CFR Part 17

RIN 1018–AD62

Endangered and Threatened Wildlife

and Plants: Proposed Establishment of

a Nonessential Experimental

Population of California Condors in

Northern Arizona

AGENCY: Fish and Wildlife Service,

Interior.

ACTION: Proposed rule.

SUMMARY: The U.S. Fish and Wildlife

Service, in cooperation with the Arizona

Game and Fish Department, and the

U.S. Bureau of Land Management,

proposes to reintroduce California

condors (Gymnogyps californianus) into

northern Arizona. This reintroduction

will achieve a primary recovery goal for

this endangered species, establishment

of a second non-captive population,

spatially disjunct from the non-captive

population in southern California. This

population is proposed to be designated

a nonessential experimental population

in accordance with Section 10(j) of the

Endangered Species Act of 1973, as

amended. Captive-reared condors will

be released in early 1996 (target date)

and additional releases will occur

annually thereafter until a selfsustaining wild population is

established. The reintroduction will use

tested release techniques developed in

previous releases in southern California

and will be managed in accordance with

the provisions of this special rule. The

potential impacts associated with this

proposed rule were assessed in an

Environmental Assessment completed

in November 1995. This California

condor reintroduction does not conflict

with existing or anticipated Federal or

State agency actions or traditional land

uses on public or private lands.

DATES: Comments from all interested

parties must be received by February 1,

1996. Public hearings will be held at

Flagstaff High School on Tuesday,

January 23, 1996, from 6:00 to 8:00 pm

and Kanab High School on Thursday,

January 25, 1996, from 6:00 to 8:00 pm.

ADDRESSES: Comments and materials

concerning this proposal should be sent

to State Supervisor, U.S. Fish and

Wildlife Service, Ecological Services,

Arizona State Office, 2321 W. Royal

Palm Road, Suite 103, Phoenix, Arizona.

Comments and materials received will

be available for public inspection, by

appointment, during normal business

hours at the above address. The public

hearings will be held at the Main

Auditorium, Flagstaff High School, 400

West Elm Street, Flagstaff, Arizona and

Kanab High School Auditorium, 59 East

Red Shadow Lane, Kanab, Utah.

FOR FURTHER INFORMATION CONTACT:

Robert Mesta, U.S. Fish and Wildlife

Service, Ecological Services, Ventura

Field Office, 2493 Portola Road, Suite B,

Ventura, California, 93003 (Telephone:

805/644–1766; Facsimile: 805/644–

3958).

SUPPLEMENTARY INFORMATION:

Background

1. Legislative. Section 10(j) of the

Endangered Species Act of 1973 (Act)

enables the U.S. Fish and Wildlife

Service (Service) to designate certain

populations of federally listed species

that are released into the wild as

‘‘experimental.’’ The circumstances

under which this designation can be

applied are—(1) The population is

geographically disjunct from

nonexperimental populations of the

same species (e.g., the population is

reintroduced outside the species’

current range but within its historical

range); and (2) the Service determines

the release will further the conservation

of the species. This designation can

increase the Service’s flexibility to

manage a reintroduced population,

because under section 10(j) an

experimental population is treated as a

threatened species regardless of its

designation elsewhere in its range and,

under section 4(d) of the Act, the

Service has greater discretion in

developing management programs for

threatened species than it has for

endangered species.

Section 10(j) of the Act requires that

when an experimental population is

designated, a determination be made by

the Service whether that population is

either ‘‘essential’’ or ‘‘nonessential’’ to

the continued existence of the species,

based on the best available information.

Nonessential experimental populations

located outside National Wildlife Refuge

(NWR) or National Park Service (NPS)

lands are treated, for the purposes of

section 7 of the Act, as if they are

proposed for listing. Thus, only two

provisions of section 7 would apply

outside NWR and NPS lands—section

7(a)(1), which requires all Federal

agencies to use their authorities to

conserve listed species, and section

7(a)(4), which requires Federal agencies

to informally confer with the Service on

actions that are likely to jeopardize the

continued existence of a proposed

species. Section 7(a)(2) of the Act,

which requires Federal agencies to

ensure that their activities are not likely

to jeopardize the continued existence of