19546 Federal Register / Vol. 61, No. 86 / Thursday, May 2, 1996 / Rules and Regulations

(B) As resulting in diversification of

the transferors’ interests.

* * * * *

Margaret Milner Richardson,

Commissioner of Internal Revenue.

Approved: March 6, 1996.

Leslie Samuels,

Assistant Secretary of the Treasury.

[FR Doc. 96–10394 Filed 5–1–96; 8:45 am]

BILLING CODE 4830–01–U

26 CFR Part 1

[TD 8662]

RIN 1545–AQ64

Diversification of Common Trust

Funds

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final

regulations relating to the

diversification of common trust funds at

the time of a combination or division.

The final regulations affect common

trust funds and their participants.

EFFECTIVE DATE: May 2, 1996.

FOR FURTHER INFORMATION CONTACT:

Steven Schneider, (202) 622–3060 (not a

toll-free number).

SUPPLEMENTARY INFORMATION:

Background

On August 10, 1995, a notice of

proposed rulemaking (PS–29–92) was

published in the Federal Register (60

FR 40796) proposing amendments to the

Income Tax Regulations (26 CFR part 1)

under section 584 of the Internal

Revenue Code. Written comments

responding to this notice were received.

No public hearing was held because no

hearing was requested. After

consideration of all comments received,

the proposed regulations under section

584 are adopted as revised by this

Treasury decision.

Explanation of Provisions

The final regulations modify the

diversification test applied to

combining, dividing, and resulting

common trust funds at the time of a

combination or division. Under the

existing regulations, which incorporate

the diversification test of section

368(a)(2)(F)(ii), Government securities

are excluded in determining total assets.

These final regulations modify the

diversification test so that Government

securities are included in determining

total assets when applying section

368(a)(2)(F)(ii).

This modified diversification test is

the same as that in the final regulations

under section 351(e), which deals with

transfers to investment companies.

These corresponding modifications

ensure that a uniform diversification

test will be applied to common trust

funds and similar investment entities.

The final regulations also update the

regulations under section 584 to

conform to changes in the law.

Changes to the Proposed Regulations in

Response to Comments

I. Clarification That Government

Securities Are Not Treated as Securities

of an Issuer

Two commentators suggested that the

final regulations include specific

assurance that Government securities

are not treated as securities of an issuer

in applying the 25 and 50-percent tests

contained in section 368(a)(2)(F)(ii) to

mergers and divisions of common trust

funds. The proposed regulations

provide that Government securities are

included in total assets in applying the

25 and 50-percent tests to common trust

fund combinations and divisions, but do

not specifically state that Government

securities are not treated as securities of

an issuer. The final regulations clarify

that Government securities, while

included in total assets, are not treated

as securities of an issuer for purposes of

the numerator of the 25 and 50-percent

tests of section 368(a)(2)(F)(ii).

II. Clarification of the Definition of

Government Securities

One commentator suggested that the

regulations broaden the definition of the

term Government securities to include

state and local government obligations.

The final regulations do not adopt the

suggestion.

Effective Date

These regulations apply to

combinations and divisions of common

trust funds completed on or after May

2, 1996.

Special Analyses

It has been determined that this

Treasury decision is not a significant

regulatory action as defined in EO

12866. Therefore, a regulatory

assessment is not required. It has also

been determined that section 553(b) of

the Administrative Procedure Act (5

U.S.C. chapter 5) and the Regulatory

Flexibility Act (5 U.S.C. chapter 6) do

not apply to these regulations and,

therefore, a Regulatory Flexibility

Analysis is not required. Pursuant to

section 7805(f) of the Internal Revenue

Code, the notice of proposed rulemaking

preceding these regulations was

submitted to the Chief Counsel for

Advocacy of the Small Business

Administration for comment on its

impact on small business.

Drafting Information

The principal author of this regulation

is Brian J. O’Connor, formerly of the

Office of Assistant Chief Counsel

(Passthroughs and Special Industries).

However, other personnel from the IRS

and Treasury Department participated

in their development.

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 continues to read in part as

follows:

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

§ 1.584–2 [Amended]

Par. 2. Section 1.584–2 is amended

by:

1. Removing paragraph (b)(1).

2. Removing the paragraph

designation (b)(2).

Par. 3. Section 1.584–4 is amended

by:

1. Removing paragraphs (a)(1) and

(a)(2).

2. Removing the last sentence in

paragraph (a) and adding 6 sentences in

its place.

3. Adding paragraph (e).

The additions read as follows:

§ 1.584–4 Admission and withdrawal of

participants in the common trust fund.

(a) * * * When a participating interest

is transferred by a bank, or by two or

more banks that are members of the

same affiliated group (within the

meaning of section 1504), as a result of

the combination of two or more

common trust funds or the division of

a single common trust fund, the transfer

to the surviving or divided fund is not

considered to be an admission or a

withdrawal if the combining, dividing,

and resulting common trust funds have

diversified portfolios. For purposes of

this paragraph (a), a common trust fund

has a diversified portfolio if it satisfies

the 25 and 50-percent tests of section

368(a)(2)(F)(ii), applying the relevant

provisions of section 368(a)(2)(F).

However, Government securities are

included in total assets for purposes of

the denominator of the 25 and 50-

percent tests (unless the Government
Federal Register / Vol. 61, No. 86 / Thursday, May 2, 1996 / Rules and Regulations 19547

securities are acquired to meet the 25

and 50-percent tests), but are not treated

as securities of an issuer for purposes of

the numerator of the 25 and 50-percent

tests. In addition, for a transfer of a

participating interest in a division of a

common trust fund not to be considered

an admission or withdrawal, each

participant’s pro rata interest in each of

the resulting common trust funds must

be substantially the same as was the

participant’s pro rata interest in the

dividing fund. However, in the case of

the division of a common trust fund

maintained by two or more banks that

are members of the same affiliated group

resulting from the termination of such

affiliation, the division will be treated as

meeting the requirements of the

preceding sentence if the written plans

of operation of the resulting common

trust funds are substantially identical to

the plan of operation of the dividing

common trust fund, each of the assets of

the dividing common trust fund are

distributed substantially pro rata to each

of the resulting common trust funds,

and each participant’s aggregate interest

in the assets of the resulting common

trust funds of which he or she is a

participant in substantially the same as

was the participant’s pro rata interest in

the assets of the dividing common trust

fund. The plan of operation of a

resulting common trust fund will not be

considered to be substantially identical

to that of the dividing common trust

fund where, for example, the plan of

operation of the resulting common trust

fund contains restrictions as to the types

of participants that may invest in the

common trust fund where such

restrictions were not present in the plan

of operation of the dividing common

trust fund.

* * * * *

(e) Effective date. The eighth sentence

of paragraph (a) of this section is

effective for combinations and divisions

of common trust funds completed on or

after May 2, 1996.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

Approved: March 6, 1996.

Leslie Samuels,

Assistant Secretary of the Treasury.

[FR Doc. 96–10393 Filed 5–1–96; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF LABOR

Occupational Safety and Health

Administration

29 CFR Part 1910

[Docket No. S–060]

RIN 1218–AA71

Personal Protective Equipment for

General Industry

AGENCY: Occupational Safety and Health

Administration (OSHA); Labor.

ACTION: Final rule; technical

amendment.

SUMMARY: The final rule on personal

protective equipment for general

industry was published by OSHA on

April 6, 1994 (59 FR 16334). In that rule,

the introductory phrase ‘‘the employer

shall ensure’’ was removed from various

proposed requirements for employees to

wear different types of protective

equipment (final rule §§ 1910.133,

1910.135, and 1910.136). The general

requirement for the employer to select

and have the employees wear

appropriate PPE, including any PPE

described in these specific provisions,

was retained in § 1910.132. The

employer’s obligation to assure

compliance with the individual

requirements for particular types of PPE

was intended to remain the same as if

the words ‘‘the employer shall ensure’’

or similar language were affixed to each

substantive PPE provision in the final

rule. However, OSHA’s compliance staff

has encountered difficulties in using

§§ 1910.133, 1910.135, and 1910.136

because they do not explicitly assign the

employer the responsibility for assuring

that employees wear the designated

equipment. Therefore, this technical

amendment is necessary to restate that

obligation within the text of these

requirements.

DATES: This amendment is effective June

3, 1996.

FOR FURTHER INFORMATION CONTACT:

Anne C. Cyr, Acting Director, Office of

Information and Consumer Affairs,

Occupational Safety and Health

Administration, U. S. Department of

Labor, Room N–3647, 200 Constitution

Ave., N. W., Washington, DC 20210.

Telephone: (202) 219–8151.

SUPPLEMENTARY INFORMATION: OSHA’s

final rule on personal protective

equipment (PPE) for general industry

was published on April 6, 1994 (59 FR

16334), and became effective July 5,

1994. The PPE standards require the

employer to assure that each employee

wears appropriate equipment which

protects the eyes, head, feet, and hands,

from exposure to hazards in the

workplace. Section 1910.132 clearly

states that where such hazards are

present, or are likely to be present, the

employer has the obligation both to

select proper PPE and to require each

affected employee to wear it.

Sections 1910.133, 1910.135, and

1910.136 require that each affected

employee wear protective equipment for

the eyes and face, head, and feet,

respectively, when those parts of the

body are exposed to hazards. The

proposed version of each of those

sections was prefaced with the words

‘‘The employer shall ensure that’’ the

employees wear the equipment. In the

final rule, OSHA deleted the prefatory

language in response to various

comments. The preamble to the final

rule made clear that in making these

deletions, the Agency intended to make

no change in the substantive

requirements between the proposed and

final rules. That is, the employer was to

be obligated to require the employee to

wear eye, face, head and foot protection

under §§ 1910.133, 1910.135, and

1910.136, regardless of whether the

words ‘‘the employer shall ensure’’ were

included in those standards. (see final

rule preamble, 59 FR at 16335.)

The reason for the language change

from the proposal was concern by some

commenters that the proposed language

would result in their being held liable

for violations of these standards,

regardless of any exculpatory

considerations such as employee

misconduct. In making the changes,

OSHA emphasized two points: first, that

the proposed language would not have

affected an employer’s ability to raise

defenses to a citation; and second, that

it was the Agency’s intention that the

employer’s obligations for compliance

with standards issued under the OSH

Act be unaffected by the changes from

the proposed rule to the final rule.

Since the final rule was issued, the

revised language has caused difficulty

for OSHA’s compliance staff with regard

to the employer’s obligation to have

employees wear PPE. That obligation,

while specifically stated under

§ 1910.132 for all PPE, is not explicitly

spelled out in the specific provisions of

§§ 1910.133, 1910.135 and 1910.136, for

eye and head, face, and foot protection,

even though it was the Agency’s clearly

stated intention that the obligation

apply there, as well. Accordingly,

OSHA has determined that it is

necessary to make a technical

amendment to those three sections, to

bring them into line with the stated

intention of the Agency in the preamble

to the final rule.