45178 Federal Register / Vol. 73, No. 150 / Monday, August 4, 2008 / Proposed Rules 

actions if they are FAA-approved. Corrective 

actions are considered FAA-approved if they 

are approved by the State of Design Authority 

(or their delegated agent). You are required 

to assure the product is airworthy before it 

is returned to service. 

(3) Reporting Requirements: For any 

reporting requirement in this AD, under the 

provisions of the Paperwork Reduction Act, 

the Office of Management and Budget (OMB) 

has approved the information collection 

requirements and has assigned OMB Control 

Number 2120–0056. 

Related Information 

(i) Refer to MCAI European Aviation Safety 

Agency Airworthiness Directive 2007–0119, 

dated May 2, 2007, and Dassault Service 

Bulletin F2000EX–138, dated March 5, 2007, 

for related information. 

Issued in Renton, Washington, on July 23, 

2008. 

Ali Bahrami, 

Manager, Transport Airplane Directorate, 

Aircraft Certification Service. 

[FR Doc. E8–17792 Filed 8–1–08; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2008–0831; Directorate 

Identifier 2008–NM–051–AD] 

RIN 2120–AA64 

Airworthiness Directives; Empresa 

Brasileira de Aeronautica S.A. 

(EMBRAER) Model ERJ 170 Airplanes 

and Model ERJ 190 Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: We propose to adopt a new 

airworthiness directive (AD) for the 

products listed above. This proposed 

AD results from mandatory continuing 

airworthiness information (MCAI) 

originated by an aviation authority of 

another country to identify and correct 

an unsafe condition on an aviation 

product. The MCAI describes the unsafe 

condition as: 

It has been found the occurrence of failed 

bearings of the RAT [ram air turbine] 

generator, which may lead to a RAT 

generator failure. The RAT generator was 

designed to provide emergency electrical 

power to essential systems in case of loss of 

all other sources of aircraft AC electrical 

power. 

* * * * * 

Loss of emergency electrical power 

could result in reduced controllability 

of the airplane during in-flight 

emergencies. The proposed AD would 

require actions that are intended to 

address the unsafe condition described 

in the MCAI. 

DATES: We must receive comments on 

this proposed AD by September 3, 2008. 

ADDRESSES: You may send comments by 

any of the following methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

• Fax: (202) 493–2251. 

• Mail: U.S. Department of 

Transportation, Docket Operations, M–

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue, SE., 

Washington, DC 20590. 

• Hand Delivery: U.S. Department of 

Transportation, Docket Operations, M–

30, West Building Ground Floor, Room 

W12–40, 1200 New Jersey Avenue, SE., 

Washington, DC, between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http:// 

www.regulations.gov; or in person at the 

Docket Operations office between 9 a.m. 

and 5 p.m., Monday through Friday, 

except Federal holidays. The AD docket 

contains this proposed AD, the 

regulatory evaluation, any comments 

received, and other information. The 

street address for the Docket Operations 

office (telephone (800) 647–5527) is in 

the ADDRESSES section. Comments will 

be available in the AD docket shortly 

after receipt. 

FOR FURTHER INFORMATION CONTACT: 

Kenny Kaulia, Aerospace Engineer, 

International Branch, ANM–116, 

Transport Airplane Directorate, FAA, 

1601 Lind Avenue, SW., Renton, 

Washington 98057–3356; telephone 

(425) 227–2848; fax (425) 227–1149. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

We invite you to send any written 

relevant data, views, or arguments about 

this proposed AD. Send your comments 

to an address listed under the 

ADDRESSES section. Include ‘‘Docket No. 

FAA–2008–0831; Directorate Identifier 

2008–NM–051–AD’’ at the beginning of 

your comments. We specifically invite 

comments on the overall regulatory, 

economic, environmental, and energy 

aspects of this proposed AD. We will 

consider all comments received by the 

closing date and may amend this 

proposed AD based on those comments. 

We will post all comments we 

receive, without change, to http:// 

www.regulations.gov, including any 

personal information you provide. We 

will also post a report summarizing each 

substantive verbal contact we receive 

about this proposed AD. 

Discussion 

The Ageˆncia Nacional de Aviac ̧a ̃o 

Civil (ANAC), which is the aviation 

authority for Brazil, has issued Brazilian 

Airworthiness Directives 2007–12–01 

and 2007–12–02, both effective January 

24, 2008 (referred to after this as ‘‘the 

MCAI’’), to correct an unsafe condition 

for the specified products. The MCAI 

states: 

It has been found the occurrence of failed 

bearings of the RAT [ram air turbine] 

generator, which may lead to a RAT 

generator failure. The RAT generator was 

designed to provide emergency electrical 

power to essential systems in case of loss of 

all other sources of aircraft AC electrical 

power. 

Loss of emergency electrical power 

could result in reduced controllability 

of the airplane during in-flight 

emergencies. The corrective actions 

include determining the part number 

and serial number of the RAT, and reidentifying or replacing the RAT if 

necessary. You may obtain further 

information by examining the MCAI in 

the AD docket. 

Relevant Service Information 

EMBRAER has issued Service 

Bulletins 170–24–0041, Revision 01, 

dated August 28, 2007; and 190–24–

0012, Revision 01, dated August 21, 

2007. The actions described in this 

service information are intended to 

correct the unsafe condition identified 

in the MCAI. 

FAA’s Determination and Requirements 

of This Proposed AD 

This product has been approved by 

the aviation authority of another 

country, and is approved for operation 

in the United States. Pursuant to our 

bilateral agreement with the State of 

Design Authority, we have been notified 

of the unsafe condition described in the 

MCAI and service information 

referenced above. We are proposing this 

AD because we evaluated all pertinent 

information and determined an unsafe 

condition exists and is likely to exist or 

develop on other products of the same 

type design. 

Differences Between This AD and the 

MCAI or Service Information 

We have reviewed the MCAI and 

related service information and, in 

general, agree with their substance. But 

we might have found it necessary to use 

different words from those in the MCAI 

to ensure the AD is clear for U.S. 

operators and is enforceable. In making 


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Federal Register / Vol. 73, No. 150 / Monday, August 4, 2008 / Proposed Rules 45179 

these changes, we do not intend to differ 

substantively from the information 

provided in the MCAI and related 

service information. 

We might also have proposed 

different actions in this AD from those 

in the MCAI in order to follow FAA 

policies. Any such differences are 

highlighted in a Note within the 

proposed AD. 

Costs of Compliance 

Based on the service information, we 

estimate that this proposed AD would 

affect about 124 products of U.S. 

registry. We also estimate that it would 

take about 1 work-hour per product to 

comply with the basic requirements of 

this proposed AD. The average labor 

rate is $80 per work-hour. Based on 

these figures, we estimate the cost of the 

proposed AD on U.S. operators to be 

$9,920, or $80 per product. 

Authority for This Rulemaking 

Title 49 of the United States Code 

specifies the FAA’s authority to issue 

rules on aviation safety. Subtitle I, 

section 106, describes the authority of 

the FAA Administrator. ‘‘Subtitle VII: 

Aviation Programs,’’ describes in more 

detail the scope of the Agency’s 

authority. 

We are issuing this rulemaking under 

the authority described in ‘‘Subtitle VII, 

Part A, Subpart III, Section 44701: 

General requirements.’’ Under that 

section, Congress charges the FAA with 

promoting safe flight of civil aircraft in 

air commerce by prescribing regulations 

for practices, methods, and procedures 

the Administrator finds necessary for 

safety in air commerce. This regulation 

is within the scope of that authority 

because it addresses an unsafe condition 

that is likely to exist or develop on 

products identified in this rulemaking 

action. 

Regulatory Findings 

We determined that this proposed AD 

would not have federalism implications 

under Executive Order 13132. This 

proposed AD would not have a 

substantial direct effect on the States, on 

the relationship between the national 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government. 

For the reasons discussed above, I 

certify this proposed regulation: 

1. Is not a ‘‘significant regulatory 

action’’ under Executive Order 12866; 

2. Is not a ‘‘significant rule’’ under the 

DOT Regulatory Policies and Procedures 

(44 FR 11034, February 26, 1979); and 

3. Will not have a significant 

economic impact, positive or negative, 

on a substantial number of small entities 

under the criteria of the Regulatory 

Flexibility Act. 

We prepared a regulatory evaluation 

of the estimated costs to comply with 

this proposed AD and placed it in the 

AD docket. 

List of Subjects in 14 CFR Part 39 

Air transportation, Aircraft, Aviation 

safety, Safety. 

The Proposed Amendment 

Accordingly, under the authority 

delegated to me by the Administrator, 

the FAA proposes to amend 14 CFR part 

39 as follows: 

PART 39—AIRWORTHINESS 

DIRECTIVES 

1. The authority citation for part 39 

continues to read as follows: 

Authority: 49 U.S.C. 106(g), 40113, 44701. 

§ 39.13 [Amended] 

2. The FAA amends § 39.13 by adding 

the following new AD: 

Empresa Brasileira De Aeronautica S.A. 

(EMBRAER): Docket No. FAA–2008–

0831; Directorate Identifier 2008–NM–

051–AD. 

Comments Due Date 

(a) We must receive comments by 

September 3, 2008. 

Affected ADs 

(b) None. 

Applicability 

(c) This AD applies to all EMBRAER Model 

ERJ 170–100 LR, –100 SE, –100 STD, –100 

SU, –200 LR, –200 STD, and –200 SU 

airplanes; and Model ERJ 190–100 IGW, –100 

LR, –100 STD, –100 ECJ, –200 IGW, –200 LR, 

and –200 STD airplanes; certificated in any 

category. 

Subject 

(d) Air Transport Association (ATA) of 

America Code 24: Electrical power. 

Reason 

(e) The mandatory continuing 

airworthiness information (MCAI) states: 

It has been found the occurrence of failed 

bearings of the RAT [ram air turbine] 

generator, which may lead to a RAT 

generator failure. The RAT generator was 

designed to provide emergency electrical 

power to essential systems in case of loss of 

all other sources of aircraft AC electrical 

power. 

Loss of emergency electrical power could 

result in reduced controllability of the 

airplane during in-flight emergencies. The 

corrective actions include determining the 

part number (P/N) and serial number (S/N) 

of the RAT, and re-identifying or replacing 

the RAT if necessary. 

Actions and Compliance 

(f) Unless already done, do the following 

actions. 

(1) Within 1,300 flight hours or 6 months 

after the effective date of this AD, whichever 

occurs first, determine the P/N and S/N of 

the RAT. For airplanes on which a RAT 

having P/N 1703781 is installed, do the 

actions specified in paragraphs (f)(1)(i) and 

(f)(1)(ii) of this AD, as applicable, in 

accordance with the Accomplishment 

Instructions of EMBRAER Service Bulletin 

170–24–0041, Revision 01, dated August 28, 

2007; or 190–24–0012, Revision 01, dated 

August 21, 2007; as applicable. 

(i) For airplanes on which the S/N on the 

RAT is 0110, 0150, 0255, or 0354 through 

0419: Before further flight, re-identify RAT 

P/N 1703781 to P/N 1703781A. 

(ii) For airplanes on which the S/N on the 

RAT is 0005, 0101 through 0109, 0111 

through 0149, 0151 through 0254, or 0256 

through 0353: Within 6,000 flight hours or 26 

months after the effective date of this AD, 

whichever occurs first, replace the RAT with 

a RAT having P/N 1703781A. 

(2) Previous accomplishment of the reidentification or replacement of the RAT 

before the effective date of this AD in 

accordance with EMBRAER Service Bulletin 

170–24–0041 or 190–24–0012, both dated 

May 4, 2007, meets the requirements of 

(f)(1)(i) and (f)(1)(ii) of this AD, as applicable. 

FAA AD Differences 

Note: This AD differs from the MCAI and/ 

or service information as follows: No 

difference. 

Other FAA AD Provisions 

(g) The following provisions also apply to 

this AD: 

(1) Alternative Methods of Compliance 

(AMOCs): The Manager, International 

Branch, FAA, has the authority to approve 

AMOCs for this AD, if requested using the 

procedures found in 14 CFR 39.19. Send 

information to ATTN: Kenny Kaulia, 

Aerospace Engineer, International Branch, 

ANM–116, Transport Airplane Directorate, 

FAA, 1601 Lind Avenue, SW., Renton, 

Washington 98057–3356; telephone (425) 

227–2848; fax (425) 227–1149. Before using 

any approved AMOC on any airplane to 

which the AMOC applies, notify your 

appropriate principal inspector (PI) in the 

FAA Flight Standards District Office (FSDO), 

or lacking a PI, your local FSDO. 

(2) Airworthy Product: For any 

requirement in this AD to obtain corrective 

actions from a manufacturer or other source, 

use these actions if they are FAA-approved. 

Corrective actions are considered FAAapproved if they are approved by the State 

of Design Authority (or their delegated 

agent). You are required to assure the product 

is airworthy before it is returned to service. 

(3) Reporting Requirements: For any 

reporting requirement in this AD, under the 

provisions of the Paperwork Reduction Act, 

the Office of Management and Budget (OMB) 

has approved the information collection 

requirements and has assigned OMB Control 

Number 2120–0056. 


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45180 Federal Register / Vol. 73, No. 150 / Monday, August 4, 2008 / Proposed Rules 

Related Information 

(h) Refer to MCAI Brazilian Airworthiness 

Directives 2007–12–01 and 2007–12–02, both 

effective January 24, 2008, and EMBRAER 

Service Bulletins 170–24–0041, Revision 01, 

dated August 28, 2007; and 190–24–0012, 

Revision 01, dated August 21, 2007; for 

related information. 

Issued in Renton, Washington, on July 23, 

2008. 

Ali Bahrami, 

Manager, Transport Airplane Directorate, 

Aircraft Certification Service. 

[FR Doc. E8–17777 Filed 8–1–08; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–120844–07] 

RIN 1545–BG70 

Rules for Home Construction 

Contracts 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking 

and Notice of Public Hearing. 

SUMMARY: This document contains 

proposed regulations amending the 

regulations under § 1.460 to provide 

guidance to taxpayers in the home 

construction industry regarding 

accounting for certain long-term 

construction contracts that qualify as 

home construction contracts under 

section 460(e)(6) of the Internal Revenue 

Code (Code) and to provide guidance to 

taxpayers with long-term contracts 

under section 460(f) regarding certain 

changes in method of accounting for 

long-term contracts. This document also 

provides a notice of a public hearing on 

these proposed regulations. 

DATES: Written comments must be 

received by November 3, 2008. Outlines 

of topics to be discussed at the public 

hearing scheduled for December 5, 

2008, at 10 a.m. must be received by 

November 13, 2008. 

ADDRESSES: Send submissions to 

CC:PA:LPD:PR (REG–120844–07), room 

5203, Internal Revenue Service, POB 

7604 Ben Franklin Station, Washington, 

DC 20224. 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–120844–07), 

Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC. Alternatively, 

taxpayers may submit comments 

electronically via the Federal 

eRulemaking Portal at 

www.regulations.gov (IRS REG–120844–

07). The public hearing will be held in 

the auditorium, Internal Revenue 

Service Building, 1111 Constitution 

Avenue, NW., Washington, DC. 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

Brendan P. O’Hara, (202) 622–4920; 

concerning submission of comments, 

the hearing, or to be placed on the 

building access list to attend the 

hearing, Richard Hurst, (202) 622–7180 

(not toll-free numbers). 

SUPPLEMENTARY INFORMATION: 

Background and Explanation of 

Provisions 

This document contains a proposed 

amendment to the Income Tax 

Regulations, 26 CFR part 1, under 

section 460 and §§ 1.460–3, 1.460–4, 

1.460–5 and 1.460–6 of the Income Tax 

Regulations. In general, section 460(a) 

requires taxpayers to use the percentage 

of completion method (PCM) to account 

for taxable income from any long-term 

contract. Section 460(e) exempts home 

construction contracts from the general 

requirement to use the percentage of 

completion method of accounting. 

Section 460(e)(6) defines a home 

construction contract to be any 

construction contract if 80 percent or 

more of the total estimated contract 

costs are reasonably expected to be 

attributable to the construction of (i) 

dwelling units contained in buildings 

containing 4 or fewer dwelling units, 

and (ii) improvements to real property 

directly related to such dwelling units 

and located on the site of such dwelling 

units. Section 460(e)(4) defines a 

construction contract to be any contract 

for the building, construction, 

reconstruction, or rehabilitation of, or 

the installation of any integral 

component to, or improvement of, real 

property. 

These proposed regulations expand 

the types of contracts eligible for the 

home construction contract exemption 

and amend the rules for how taxpayerinitiated changes in methods of 

accounting to comply with the 

regulations under section 460 may be 

implemented. 

Definition of a Home Construction 

Contract 

Improvements to Real Property 

The definition of a construction 

contract under section 460(e) includes 

many transactions involving land 

developers and construction service 

providers in the home construction 

industry. For example, a construction 

contract under section 460(e) includes a 

contract for the provision of land by the 

taxpayer if the estimated total allocable 

contract costs attributable to the 

taxpayer’s construction activities (not 

including the cost of the land provided 

to the customer) are 10 percent or more 

of the contract’s total contract price. 

As noted, section 460(a) requires that 

the income from any long-term contract 

be recognized using the percentage of 

completion method. However, taxpayers 

with contracts that meet the definition 

of a ‘‘home construction contract’’ are 

not required to use the percentage of 

completion method for those contracts 

and may use an exempt method. Exempt 

methods commonly used to account for 

home construction contracts include the 

completed contract method (CCM) and 

the accrual method. 

Under section 460, a home 

construction contract includes any 

construction contract if 80 percent of 

the total estimated contract costs are 

reasonably expected to be attributable to 

the construction of improvements to 

real property directly related to 

qualifying dwelling units and located on 

the site of such dwelling units. 

Commentators have suggested that 

many contracts entered into by land 

developers in the home construction 

industry should fall within the 

definition of a home construction 

contract. 

The proposed regulations expand the 

scope of the home construction contract 

exemption by providing that a contract 

for the construction of common 

improvements is considered a contract 

for the construction of improvements to 

real property directly related to the 

dwelling unit(s) and located on the site 

of such dwelling unit(s), even if the 

contract is not for the construction of 

any dwelling unit. Therefore, under the 

proposed regulations, a land developer 

that is selling individual lots (and its 

contractors and subcontractors) may 

have long-term construction contracts 

that qualify for the home construction 

contract exemption. 

Townhouses, Rowhouses, and 

Condominiums 

Under section 460, a home 

construction contract also includes any 

construction contract if 80 percent of 

the total contract costs are reasonably 

expected to be attributable to the 

construction of dwelling units 

contained in buildings containing four 

or fewer dwelling units. Section 

460(e)(6) states that each townhouse or 

rowhouse shall be treated as a separate 

building, regardless of the number of 

townhouses or rowhouses physically 

attached to each other. In certain 

circumstances, the terms condominium 


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