        DEPARTMENT OF THE TREASURY
        Internal Revenue Service
        26 CFR Part 301
        [REG-159444-04]
        RIN 1545-BE35
        Release of Lien or Discharge of Property

          AGENCY:
          Internal Revenue Service (IRS), Treasury.

          ACTION:
          Notice of proposed rulemaking.

          SUMMARY:
          This document contains proposed regulations related to release of lien and discharge of property under sections 6325, 6503, and 7426 of the Internal Revenue Code (Code). The proposed regulations update existing regulations and contain procedures for processing a request made by a property owner for discharge of a Federal tax lien from his property, under section 6325(b)(4). The proposed regulations also clarify the impact of these procedures on sections 6503(f)(2) and 7426(a)(4) and (b)(5). The proposed regulations reflect the enactment of sections 6325(b)(4), 6503(f)(2), and 7426(a)(4) by the IRS Restructuring and Reform Act of 1998.

          DATES:
          Written or electronic comments and requests for a public hearing must be received by April 11, 2007.

          ADDRESSES:

          Send submissions to: CC:PA:LPD:PR (REG-159444-04), room 5203, Internal Revenue Service, P.O.B. 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-159444-04), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC 20224. Alternatively, taxpayers may submit comments electronically to the IRS Internet site at http://www.irs.gov/regs or via the Federal eRulemaking Portal at www.regulations.gov (IRS-REG-159444-04).

          FOR FURTHER INFORMATION CONTACT:

          Concerning the regulations, Debra A. Kohn, (202) 622-7985; concerning submissions of comments and the hearing, Richard A. Hurst, Publications and Regulations Specialist, at Richard.A.Hurst@irscounsel.treas.gov or (202) 622-7180 (not toll-free numbers).

        SUPPLEMENTARY INFORMATION:
        Background

        This document contains proposed amendments to the Procedure and Administration Regulations (26 CFR part 301) under sections 6325, 6503, and 7426 of the Code. Section 6325(b)(4) was enacted by section 3106(a) of the IRS Restructuring and Reform Act of 1998 (RRA 1998), Public Law 105-206 (112 Stat. 685). Section 6503(f)(2) was enacted by section 3106(b)(3) of RRA 1998. Sections 7426(a)(4) and (b)(5) were enacted by section 3106(b)(1) of RRA 1998. These provisions of RRA 1998 provide a statutory mechanism for a person other than the person against whom the underlying tax was assessed, upon furnishing a deposit or bond, to obtain a discharge of the Federal tax lien from property owned by him, and for the IRS or the courts to determine the disposition of the deposit or bond amount.

        The provisions added by RRA 1998 were enacted in response to United States v. Williams, 514 U.S. 527 (1995). In Williams, the Supreme Court held that a third party who paid another person's tax liability under protest had standing to bring a civil suit for refund pursuant to 28 U.S.C. 1346(a)(1), which waives the Government's sovereign immunity with respect to refund suits for Federal taxes alleged to have been erroneously or illegally assessed or collected. The Government argued in Williams that section 1346(a)(1) was intended to afford a remedy only to the person against whom a tax is assessed, and not a third party in this situation. In rejecting this argument, the Supreme Court reasoned that the plaintiff in Williams, who was not the taxpayer and who needed a discharge of the Federal tax lien in order to sell her property, had no effective remedy other than to pay the tax giving rise to the lien and to institute a refund suit. Sections 6325(b)(4), 6503(f)(2), and 7426(a)(4) and (b)(5) afford such a remedy to an owner of the property in this situation if the owner is not the person whose unsatisfied liability gave rise to the lien (a third-party owner). In light of the addition these provisions to the Code, the continuing applicability of Williams is extremely limited, as the IRS has noted in other published guidance. See Rev. Rul. 2005-50, 2005-30 I.R.B. 124 (2005).
        The current Code of Federal Regulations contains both temporary and final regulations under sections 6325, 6503, and 7426. Neither the temporary regulations nor the final regulations reflect the amendments to the Code made by RRA 1998. These proposed regulations, if adopted as final, would constitute permanent regulations that would incorporate the amendments made by RRA 1998 by replacing the existing temporary regulations and updating the existing final regulations under sections 6325, 6503, and 7426. In particular, these proposed regulations contain procedures for processing a request for a certificate of discharge of a Federal tax lien under section 6325(b)(4). In addition, these proposed regulations clarify the impact of these procedures on the collection limitations period tolling provisions of section 6503(f)(2) and on the judicial remedy provisions of sections 7426(a)(4) and (b)(5).
        The proposed regulations also incorporate, with updates, the language of the existing temporary regulations relating to release of lien under section 6325(a), while withdrawing the existing temporary regulations. Changes to the language of the existing temporary regulations have been made to account for the IRS's acceptance of additional forms of payment since the temporary regulations became effective in 1983. Although section 7805(e)(2) provides that temporary regulations expire after three years, this provision applies only to temporary regulations issued after November 20, 1988. Since the temporary regulations relevant here were issued prior to that date, they are not subject to the three-year statutory limit. The proposed regulations provide that the existing temporary regulations under section 6325(a) are removed as of the date the proposed regulations become effective as final regulations.
        The existing permanent and temporary regulations do not account for the current organizational structure of the IRS. The existing permanent regulations under sections 6325 and 6503(f) employ the title “district director,” in numerous instances, in indicating the highest official of a local office of the IRS. That title was used under an organizational structure of the IRS that no longer exists. In order to account for the IRS's current organizational structure and to allow for future reorganizations of the IRS, the proposed regulations remove the title “district director” throughout §§ 301.6325-1 and 301.6503(f)-1, and replace that title with the term “appropriate official.” Section 301.6325-1(h) and Section 301.6503(f)-1(c) of the proposed regulations state that as used throughout section 301.6325-1 and section 301.6503(f)-1, respectively, the term “appropriate official” means the official or office identified in the relevant IRS Publication, or if such official is not so identified, the Secretary or his delegate. In this context, the relevant publication is either IRS Publication 1450, “Instructions on How to Request a Certificate of Release of Federal Tax Lien,” or IRS Publication 783, “Instructions on How to Apply for a Certificate of Discharge of Property from Federal Tax Lien.”
        Explanation of Provisions
        I. In General
        Under section 6325(a), the Secretary shall issue a certificate of release of a Federal tax lien within 30 days of finding that the liability for the underlying tax either has been fully satisfied or has become legally unenforceable, or if an appropriate bond has been furnished to and accepted by the Secretary.
        Under section 6325(b)(4)(A), the Secretary shall issue a certificate of discharge of property from a Federal tax lien if the owner of the property requests the issuance of a certificate of discharge and either deposits an amount of money “equal to the value of the interest of the United States (as determined by the Secretary) in the property” or furnishes an acceptable bond in a like amount. Section 6325(b)(4)(D) renders section 6325(b)(4)(A) inapplicable “if the owner of the property is the person whose unsatisfied liability gave rise to the lien.” This means that if undivided interests in the property at issue are owned by both the taxpayer and another person, neither the taxpayer nor the other person may obtain a discharge of the property from the Federal tax lien under section 6325(b)(4).

        Under section 6325(b)(4)(B), the Secretary shall refund the amount deposited, with interest, or release the bond furnished, “to the extent that the Secretary determines that” either: (i) The unsatisfied liability giving rise to the lien “can be satisfied from a source other than such property”; or (ii) the value of the interest of the United States in the property “is less than the Secretary's prior determination of such value.” Section 7426(a)(4) allows a person who has obtained a certificate of discharge under section 6325(b)(4) to bring a civil action in Federal district court against the United States “for a determination of whether the value of the interest of the United States (if any) in such property is less than the value determined by the Secretary.” This action must be filed within 120 days after the date the certificate of discharge is issued. Section 7426(a)(4) states that “[n]o other action may be brought by such person for such a determination.” Section 7426(b)(5) provides that if the Federal district court determines that the Secretary's determination of the value of the interest of the United States in the property under section 6325(b)(4) exceeds the value of such interest, the court shall grant a judgment ordering a refund of the deposit amount, or a release of the bond, to the extent that the amount furnished exceeds the value determined by the court.
        Section 6325(b)(4)(C) states that if no action is filed under section 7426(a)(4) within the specified 120-day period, the Secretary shall, within 60 days after the expiration of that period: (i) Apply the deposit, or collect on the bond, to the extent necessary to satisfy the liability secured by the lien; and (ii) refund, with interest, any portion of the deposit not used to satisfy such liability.
        Section 6503(f)(2) suspends the running of the period provided in section 6502 for collecting an assessed tax liability from the time a person becomes entitled to a certificate of discharge under section 6325(b)(4) until 30 days after: (A) The earliest date on which the Secretary no longer holds any amount as a deposit or bond provided under section 6325(b)(4) because the deposit or bond either has been used to satisfy the unpaid tax liability or has been refunded or released; or (B) the date a judgment secured under section 7426(b)(5) becomes final. Suspension of the running of the collection limitations period under section 6503(f)(2) applies only with respect to the amount of the assessment equal to the value of the interest of the United States in the subject property, plus interest, penalties, and certain other additions to tax.
        II. Release of Lien
        Section 6325(a) provides that the Secretary shall issue a certificate of release of lien within 30 days of the satisfaction of certain conditions. Section 301.6325-1(a)(1) and (2) of the existing permanent regulations state that the Secretary “may” issue a certificate of release if such conditions are met. These proposed regulations change the word “may” to “shall” in the appropriate instances, and incorporate the 30-day requirement contained in the existing temporary regulations, consistent with section 6325(a).

        Much of the remainder of the language of § 401.6325-1(a) of the temporary regulations is essentially the same as the language of § 301.6325-1(a) of the existing permanent regulations. Therefore, the remaining language need not be incorporated into these proposed regulations. The language of § 401.6325-1(b), dealing with notices of Federal tax lien that also contain certificates of release that become effective as of a prescribed date, survives as an addition to § 301.6325-1(a). The language of § 401.6325-1(c), defining the phrase satisfaction of the tax liability for purposes of section 6325(a)(1), also survives as an addition to § 301.6325-1(a). The language of § 401.6325-1(d), defining the phrase proof of full payment for purposes of § 401.6325-1(a), survives as part of a new subsection of the permanent regulations addressing payment via credit and debit cards and electronic funds transfers, consistent with 26 CFR §§ 31.6302-1(h)(8) and 301.6311-2(a). The language of § 401.6325-1(e), dealing with Federal tax liens listing multiple tax liabilities, and the language of § 401.6325-1(f), dealing with the requirements of a valid request for a certificate of release, is incorporated into the permanent regulations.
        III. Discharge of Property Under Section 6325(b)(4)
        A. Issuance of the Certificate of Discharge
        Section 6325(b)(4)(A) requires the Secretary to issue a certificate of discharge of a third-party owner's property from a Federal tax lien if the third-party owner meets certain requirements. The proposed regulations state that a certificate of discharge must be issued under section 6325(b)(4) if the third-party owner submits a proper request and either deposits an appropriate amount or furnishes an acceptable bond.
        1. Request of Third-Party Owner
        Section 301.6325-1(b)(4) provides that a person seeking a certificate of discharge under section 6325(b) must submit an application in writing to the local IRS official responsible for collection of the tax at issue, and that the application must contain such information as the official may require. Section 301.6325-1(b)(4) as currently written applies to only certificates of discharge under section 6325(b)(1) through (3). The proposed regulations extend the applicability of the language of § 301.6325-1(b)(4) (redesignated as § 301.6325-1(b)(5)) to a request for a certificate of discharge under section 6325(b)(4) and indicate that the request should be submitted to the appropriate IRS official or office.
        New § 301.6325-1(b)(5) of the proposed regulations states that a request for a certificate of discharge made by a third-party owner will be viewed as a request under section 6325(b)(4), and not as a request made under section 6325(b)(2), unless the third-party owner expressly states otherwise in writing. Similarly, any amount the IRS receives from a third-party owner following a discharge request will be viewed as a deposit made under section 6325(b)(4)(A), rather than as a payment under section 6325(b)(2), unless the third-party owner in writing expressly states otherwise, and expressly waives the right to file a civil suit in Federal district court for a refund of the amount received in writing.
        The waiver provisions included in the proposed regulations generally protect the third-party owner in that a certificate of discharge granted under section 6325(b)(4), unlike one granted under section 6325(b)(2), affords a third-party owner the right to pursue a civil action under section 7426(a)(4) regarding the IRS's determination of the value of its lien. Amounts paid under section 6325(b)(2) do not constitute deposits and are immediately credited to the taxpayer's account once paid by the taxpayer or another person.
        2. Value of the Interest of the United States (as Determined by the Secretary) in the Property
        Section 6325(b)(4)(A) and (D) requires the Secretary to issue a certificate of discharge of a third-party owner's property from a Federal tax lien if the third-party owner either deposits with the Secretary an amount “equal to the value of the interest of the United States (as determined by the Secretary)” or furnishes a bond acceptable to the IRS in a like amount. The proposed regulations provide that the deposit should be made or the bond should be furnished to the appropriate IRS official or office.
        Section 301.6325-1(b)(2)(iii) indicates that in determining the value of the interest of the United States under section 6325(b)(2), the appropriate official “shall give consideration to the value of the property and the amount of all liens and encumbrances thereon having priority over the Federal tax lien. In determining the value of the property, the [appropriate official] may, in his discretion, give consideration to the forced sale value of the property in appropriate cases.”
        The proposed regulations state that this language applies to the determination of the value of the United States' interest in a third-party owner's property under section 6325(b)(4) and provide that the appropriate official shall make the determination.
        B. Processing the Deposit

        Section 6325(b)(4)(B) states that the Secretary shall refund the amount deposited, with interest at the overpayment rate determined under section 6621, and shall release the bond, to the extent that the Secretary determines that either: (i) The unsatisfied tax liability giving rise to the lien can be satisfied from a source other than the third-party owner's property; or (ii) the value of the United States' interest in the property is less than the Secretary's prior determination of such value.
        The proposed regulations specify that any request for a refund of deposit or release of bond under section 6325(b)(4)(B) must be made in writing and must contain the information required by the appropriate IRS Publication. The proposed regulations also clarify that the phrase “unsatisfied liability giving rise to the lien” contained in section 6325(b)(4)(B)(i) refers to the entire tax liability listed on the notice of Federal tax lien, not just the portion of the liability equal to the value of the United States' interest in the third-party owner's property. The proposed regulations, in addition, indicate that the Secretary is afforded discretion as to whether he should make a determination, and if he does so, in determining whether a deposit should be refunded or a bond released under section 6325(b)(4)(B).
        As discussed in part IV of this preamble, a third-party owner wishing to file a civil suit for disposition of his deposit or bond is required by section 7426(a)(4) to do so within 120 days of issuance of the certificate of discharge. Consistent with this limitation period for filing suit, the proposed regulations allow the same 120-day period for the IRS to make any administrative determination regarding refund of deposit or release of bond under section 6325(b)(4)(B). During that 120-day period, the third-party owner may request a refund of deposit or release of bond administratively under section 6325(b)(4)(B), file a civil suit in district court under section 7426(a)(4), or both.
        IV. Civil Action by Person Other Than Taxpayer for Substitution of Value
        Section 7426(a)(4) provides that a person to whom a certificate of discharge has been issued under section 6325(b)(4) with respect to any property may, within 120 days after the day the certificate is issued, bring a civil action in Federal district court for “a determination of whether the value of the interest of the United States (if any) in such property is less than the value determined by the Secretary.”
        A. Allowable Basis for Judicial Determination
        The existing permanent regulations under section 7426 do not address the cause of action afforded by section 7426(a)(4). The proposed regulations clarify that the only allowable basis for a judicial determination under section 7426(a)(4) is that the value of the interest of the United States in the third-party owner's property is less than the value as determined by the Secretary under section 6325(b)(4)(A)(i). This follows from the express language of section 7426(a)(2) and is the case despite the fact that an additional basis for reevaluation of the Secretary's original determination—that the tax liability underlying the lien can be satisfied from another source—is provided under section 6325(b)(4)(B)(i).
        B. Exclusivity of Remedy
        The proposed regulations emphasize that section 7426(a)(4) provides the only judicial remedy available to a third-party owner whose property is subject to a Federal tax lien to obtain a refund of the deposit or bond provided in exchange for a discharge of the lien from the property.
        Section 7426(a)(4) explicitly provides that: “No other action may be brought by such person [to whom a certificate of discharge is issued under section 6325(b)(4)] for such a determination.” Additionally, by the terms of section 7426(a)(4), a third-party owner must obtain a certificate of discharge under section 6325(b)(4) (and not under section 6325(b)(2)) to have standing to pursue the remedy offered by section 7426(a)(4).
        C. No Tolling of 120-Day Period
        The proposed regulations state that an administrative request for refund of deposit or release of bond made under section 6325(b)(4)(B) does not affect the running of the 120-day period for bringing a civil suit under section 7426(a)(4). The statutory scheme makes the standing of a third-party owner to bring suit under section 7426(a)(4) independent of, rather than related to, events that might occur under section 6325(b)(4)(B). Thus, an administrative request for refund of deposit or release of bond under section 6325(b)(4)(B) is not a prerequisite to filing an action under section 7426(a)(4), and the 120-day period of section 7426(a)(4) will not be tolled by an administrative request for refund of deposit or release of bond made under section 6325(b)(4)(B).
        D. Court's Authority To Issue Judgment
        The proposed regulations under section 7426 address section 7426(b)(5), which authorizes a Federal district court to decide whether the Secretary's determination of the value of the United States' interest in a third-party owner's property exceeds the actual value of its interest, and, if so, to grant a judgment ordering refund of all or part of the third-party owner's deposit accordingly.
        V. Secretary's Use of Deposit or Bond if Judicial Action Not Filed
        Section 6325(b)(4)(C) instructs the Secretary how to process the third-party owner's deposit or bond if the third-party owner does not institute suit under section 7426(a)(4) within the statutorily prescribed 120-day period. Under section 6325(b)(4)(C), the Secretary has 60 days after expiration of the 120-day period to: (i) Apply the amount deposited (or collect on the bond furnished) “to the extent necessary to satisfy the unsatisfied liability secured by the lien”; and (ii) refund, with interest at the overpayment rate, any portion of the amount deposited “which is not used to satisfy such liability.” Thus, the statute affords the Secretary a total of 180 days after issuing the certificate of discharge to complete processing of the third-party owner's deposit or bond.
        The proposed regulations specify that the IRS may take these actions even after 180 days have passed. Prohibiting the IRS from either applying or refunding the deposit once the 180-day period has elapsed would prevent the IRS from ever relinquishing a deposit thereafter, in effect requiring IRS personnel to retain amounts deposited despite, in many cases, being aware that the amounts should be applied to outstanding tax liabilities or returned to third-party owners.
        However, because section 6325(b)(4)(C) reflects Congress's intent that the deposit or bond be processed within 60 days after expiration of the 120-day period for bringing suit (or 180 days after the date a certificate of discharge is issued under section 6325(b)(4)(A)), the proposed regulations state that the deposit or bond will be deemed to have been processed as of the 60th day after expiration of the 120-day period for purposes of applying payments to the taxpayer's account. This means that if the IRS has not either applied or refunded any part of the deposit within the 180-day period, the IRS will be prohibited from charging the taxpayer interest and penalties on an outstanding liability to which the deposit should have been applied under section 6325(b)(4)(C)(i). On the other hand, the IRS will pay the third-party owner interest at the overpayment rate on any refund that should have been paid under section 6325(b)(4)(C)(ii) within the 60-day period until the refund is actually paid.
        VI. Suspension of Running of Period of Limitation

        Section 6503(f)(2) states that in the case of any assessment for which a lien was made on any property, the running of the period for collecting the assessed tax liability, under section 6502, shall be suspended from the date any person becomes entitled to a certificate of discharge with respect to the property under section 6325(b)(4) until the date which is 30 days after the earlier of: (A) The earliest date on which the Secretary no longer holds any amount as a deposit or bond provided under section 6325(b)(4) with respect to the property, because the deposit or bond either has been used to satisfy the unpaid tax or has been refunded; or (B) the date that a judgment secured under section 7426(b)(5) becomes final. Suspension of the running of the collection limitations period under section 6503(f)(2) applies only with respect to the amount of the assessment equal to the value of the interest of the United States in the subject property, plus interest, penalties and certain other additions to tax.
        The proposed regulations under section 6503 address the suspension of the running of the period for collecting a tax liability provided by section 6503(f)(2).
        Section 6325(b)(4)(A) provides that the Secretary shall issue a certificate of discharge when the third-party owner makes a request and deposits an appropriate amount or furnishes an acceptable bond. The proposed regulations state that the suspension of the running of the collection statute of limitations begins on the date a deposit or bond in the amount determined by the Secretary is received by the appropriate official under section 6325(b)(4)(A), as that is the date the third-party owner becomes entitled to a certificate of discharge under that provision.
        Assuming that no judgment is obtained under section 7426(b)(5), section 6503(f)(2)(A) ties the end of the period for suspension of the running of the collection statute to the ultimate disposition of the third-party owner's deposit or bond, which is addressed by section 6325(b)(4)(B) and (C). The proposed regulations state that the suspension ends 30 days after the date the appropriate official no longer holds the deposit or bond by reason of taking actions prescribed under section 6325(b)(4)(B) and (C).
        Because section 6325(b)(4)(C) contemplates that the deposit or bond will be processed within 60 days after the expiration of 120 days after the date the Secretary issues the certificate of discharge, as discussed in the previous section, the regulations state that the deposit or bond is deemed processed no later than that date for purposes of section 6503(f)(2)(A). This means that if the deposit or bond is not processed within the 180-day period, the running of the collection statute ceases to be suspended as of 90 days (60 days + the 30 days afforded by section 6503(f)(2)) after the 120-day period ends. Thus, the period for collection resumes running under section 6503(f)(2)(A) 31 days after the 180 days have passed.
        Section 6503(f)(2)(B) ties the end of the suspension period to the finality of a judgment obtained under section 7426(b)(5). The proposed regulations state that if a judgment is obtained under section 7426(b)(5), the suspension of the running of the collection statute ends 30 days after all appeals of that judgment, if any, have been exhausted.
        Proposed Effective Date

        These regulations are proposed to apply to any release of lien or discharge of property that is requested after the date that these regulations are published as final regulations in the Federal Register.
        Special Analyses
        It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because these regulations do not impose collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
        Comments and Requests for Public Hearing

        Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight (8) copies) or electronic comments that are timely submitted to the IRS. The IRS and Treasury Department request comments on the clarity of the proposed rules and how they may be made easier to understand. All comments will be available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Register.
        Drafting Information
        The principal author of these regulations is Debra A. Kohn of the Office of the Associate Chief Counsel (Procedure and Administration). However, other personnel from the IRS and Treasury Department participated in their development.

          List of Subjects in 26 CFR Part 301
          Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements.

        Proposed Amendments to the Regulations
        Accordingly, 26 CFR part 301 is proposed to be amended as follows:

          PART 301—PROCEDURE AND ADMINISTRATION

            Paragraph 1. The authority citation for part 301 continues to read, in part, as follows:

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

            Par. 2. Section 301.6325-1 is amended as follows:
          1. Paragraphs (a), (b)(1)(i), (b)(2)(i), and (b)(2)(ii) are revised.
          2. Paragraph (b)(2)(iii) is redesignated as paragraph (b)(6) and revised.
          3. Paragraph (b)(4) is redesignated as paragraph (b)(5) and revised.
          4. A new paragraph (b)(4) is added.
          5. Paragraphs (c)(1) and (c)(2) are amended by removing the language “district director” and adding the language “appropriate official” in its place, wherever it appears.
          6. The first sentence of paragraph (d)(1) is amended by removing the language “A district director” and adding the language “The appropriate official” in its place, by removing the word “Code” and adding the language “Internal Revenue Code” in its place, and by removing the language “the district director” and adding the language “the appropriate official” in its place. The third sentence is amended by removing the language “a district director” and adding the language “the appropriate official” in its place, and removing the language “the district director” and adding “the appropriate official” in its place.

          7. Paragraph (d)(2)(i) is amended by removing the language “A district director” and adding the language “The appropriate official” in its place, by removing the word “Code” and adding the language “Internal Revenue Code” in its place, and by removing the language “the district director” and adding the language “the appropriate official” in its place.

          8. Paragraph (d)(2)(ii), Examples 1 through 4, are amended by removing the language “district director” and adding the language “appropriate official” in its place, wherever it appears.
          9. Paragraphs (d)(3) and (d)(4) are amended by removing the language “district director” and adding the language “appropriate official” in its place, wherever it appears.
          10. The first sentence of paragraph (e) is amended by removing the language “a district director” and adding the language “the appropriate official” in its place, and by removing the language “the district director” and adding the language “the appropriate official” in its place. The third and fourth sentences are amended by removing the language “district director” and adding the language “appropriate official” in its place.

          11. Paragraphs (f)(1) and (f)(2)(i) are amended by removing the language “a district director” and adding the language “the appropriate official” in its place, paragraph (f)(2)(i)(b) is amended by removing the language “the district director” and adding the language “the appropriate official” in its place, and paragraph (f)(3) is amended by removing the word “Code” and adding the language “Internal Revenue Code” in its place.
          12. Paragraphs (h), (i), and (j) are added.
          The revisions and additions read as follows:

            § 301.6325-1
            Release of lien or discharge of property.
            (a) Release of lien—(1) Liability satisfied or unenforceable. The appropriate official shall issue a certificate of release for a filed notice of Federal tax lien, no later than 30 days after the date on which he finds that the entire tax liability listed in such notice of Federal tax lien either has been fully satisfied (as defined in paragraph (a)(4) of this section) or has become legally unenforceable. In all cases, the liability for the payment of the tax continues until satisfaction of the tax in full or until the expiration of the statutory period for collection, including such extension of the period for collection as is agreed to.
            (2) Bond accepted. The appropriate official shall issue a certificate of release of any tax lien if he is furnished and accepts a bond that is conditioned upon the payment of the amount assessed (together with all interest in respect thereof), within the time agreed upon in the bond, but not later than 6 months before the expiration of the statutory period for collection, including any agreed upon extensions. For provisions relating to bonds, see sections 7101 and 7102 and §§ 301.7101-1 and 301.7102-1.
            (3) Certificate of release for a lien which has become legally unenforceable. The appropriate official shall have the authority to file a notice of Federal tax lien which also contains a certificate of release pertaining to those liens which become legally unenforceable. Such release will become effective as a release as of a date prescribed in the document containing the notice of Federal tax lien and certificate of release.
            (4) Satisfaction of tax liability. For purposes of paragraph (a)(1) of this section, satisfaction of the tax liability occurs when—
            (i) The appropriate official determines that the entire tax liability listed in a notice of Federal tax lien has been fully satisfied. Such determination will be made as soon as practicable after tender of payment; or
            (ii) The taxpayer provides the appropriate official with proof of full payment (as defined in paragraph (a)(5) of this section) with respect to the entire tax liability listed in a notice of Federal tax lien together with the information and documents set forth in paragraph (a)(7) of this section. See paragraph (a)(6) of this section if more than one tax liability is listed in a notice of Federal tax lien.
            (5) Proof of full payment. As used in paragraph (a)(4)(ii) of this section, the term proof of full payment means—
            (i) An internal revenue cashier's receipt reflecting full payment of the tax liability in question;
            (ii) A canceled check in an amount sufficient to satisfy the tax liability for which the release is being sought;
            (iii) A record, made in accordance with procedures prescribed by the Commissioner, of proper payment of the tax liability by credit or debit card or by electronic funds transfer; or
            (iv) Any other manner of proof acceptable to the appropriate official.
            (6) Notice of a Federal tax lien which lists multiple liabilities. When a notice of Federal tax lien lists multiple tax liabilities, the appropriate official shall issue a certificate of release when all of the tax liabilities listed in the notice of Federal tax lien have been fully satisfied or have become legally unenforceable. In addition, if the taxpayer requests that a certificate of release be issued with respect to one or more tax liabilities listed in the notice of Federal tax lien and such liability has been fully satisfied or has become legally unenforceable, the appropriate official shall issue a certificate of release. For example, if a notice of Federal tax lien lists two separate liabilities and one of the liabilities is satisfied, the taxpayer may request the issuance of a certificate of release with respect to the satisfied tax liability and the appropriate official shall issue a release.
            (7) Taxpayer requests. A request for a certificate of release with respect to a notice of Federal tax lien shall be submitted in writing to the appropriate official. The request shall contain the information required in the appropriate IRS Publication.
            (b) Discharge of specific property from the lien—(1) Property double the amount of the liability. (i) The appropriate official may, in his discretion, issue a certificate of discharge of any part of the property subject to a Federal tax lien imposed under chapter 64 of the Internal Revenue Code if he determines that the fair market value of that part of the property remaining subject to the Federal tax lien is at least double the sum of the amount of the unsatisfied liability secured by the Federal tax lien and of the amount of all other liens upon the property which have priority over the Federal tax lien. In general, fair market value is that amount which one ready and willing but not compelled to buy would pay to another ready and willing but not compelled to sell the property.

            (2) Part payment; interest of United States valueless—(i) Part payment. The appropriate official may, in his discretion, issue a certificate of discharge of any part of the property subject to a Federal tax lien imposed under chapter 64 of the Internal Revenue Code if there is paid over to him in partial satisfaction of the liability secured by the Federal tax lien an amount determined by him to be not less than the value of the interest of the United States in the property to be so discharged. In determining the amount to be paid, the appropriate official will take into consideration all the facts and circumstances of the case, including the expenses to which the Government has been put into the matter. In no case shall the amount to be paid be less than the value of the interest of the United States in the property with respect to which the certificate of discharge is to be issued.
            (ii) Interest of the United States valueless. The appropriate official may, in his discretion, issue a certificate of discharge of any part of the property subject to the Federal tax lien if he determines that the interest of the United States in the property to be so discharged has no value.

            (3) Discharge of property by substitution of proceeds of sale. The appropriate official may, in his discretion, issue a certificate of discharge of any part of the property subject to a Federal tax lien imposed under chapter 64 of the Internal Revenue Code if such part of the property is sold and, pursuant to a written agreement with the appropriate official, the proceeds of the sale are held, as a fund subject to the Federal tax liens and claims of the United States, in the same manner and with the same priority as the Federal tax liens or claims had with respect to the discharged property. This paragraph does not apply unless the sale divests the taxpayer of all right, title, and interest in the property sought to be discharged. Any reasonable and necessary expenses incurred in connection with the sale of the property and the administration of the sale proceeds shall be paid by the applicant or from the proceeds of the sale before satisfaction of any Federal tax liens or claims of the United States.
            (4) Right of substitution of value—(i) Issuance of certificate of discharge to property owner who is not the taxpayer. If an owner of property subject to a Federal tax lien imposed under chapter 64 of the Internal Revenue Code submits an application for a certificate of discharge pursuant to paragraph (b)(5) of this section, the appropriate official shall issue a certificate of discharge of such property after the owner either deposits with the appropriate official an amount equal to the value of the interest of the United States in the property, as determined by the appropriate official pursuant to paragraph (b)(6) of this section, or furnishes an acceptable bond in a like amount. This paragraph does not apply if any owner of the property is the person whose unsatisfied liability gave rise to the Federal tax lien. Thus, if the property is owned by both the taxpayer and another person, neither the taxpayer nor the other person may obtain a certificate of discharge of the property under this paragraph.
            (ii) Refund of deposit and release of bond. The appropriate official may, in his discretion, determine that either the entire unsatisfied tax liability listed on the notice of Federal tax lien can be satisfied from a source other than the property sought to be discharged, or the value of the interest in the United States is less than the prior determination of such value. The appropriate official shall refund the amount deposited with interest at the overpayment rate determined under section 6621 or release the bond furnished to the extent that he makes this determination.
            (iii) Refund request. If a property owner desires an administrative refund of his deposit or release of the bond, the owner shall file a request in writing with the appropriate official. The request shall contain such information as the appropriate IRS Publication may require. The request must be filed within 120 days after the date the certificate of discharge is issued. A refund request made under this paragraph neither is required nor is effective to extend the period for filing an action in court under section 7426(a)(4).
            (iv) Internal Revenue Service's use of deposit if court action not filed. If no action is filed under section 7426(a)(4) for refund of the deposit or release of the bond within the 120-day period specified therein, the appropriate official shall, within 60 days after the expiration of the 120-day period, apply the amount deposited or collect on such bond to the extent necessary to satisfy the liability listed on the notice of Federal tax lien, and shall refund, with interest at the overpayment rate determined under section 6621, any portion of the amount deposited that is not used to satisfy the liability. If the appropriate official has not completed the application of the deposit to the unsatisfied liability before the end of the 60-day period, the deposit will be deemed to have been applied to the unsatisfied liability as of the 60th day.
            (5) Application for certificate of discharge. Any person desiring a certificate of discharge under this paragraph (b) shall submit an application in writing to the appropriate official. The application shall contain the information required by the appropriate IRS Publication. For purposes of this paragraph (b), any application for certificate of discharge made by a property owner who is not the taxpayer, and any amount submitted pursuant to the application, will be treated as an application for discharge and a deposit under section 6325(b)(4) unless the owner of the property submits a statement, in writing, that the application is being submitted under another paragraph of section 6325 and not under section 6325(b)(4), and the owner in writing waives the rights afforded under paragraph (b)(4), including the right to seek judicial review.
            (6) Valuation of interest of United States. For purposes of paragraphs (b)(2) and (b)(4) of this section, in determining the value of the interest of the United States in the property, or any part thereof, with respect to which the certificate of discharge is to be issued, the appropriate official shall give consideration to the value of the property and the amount of all liens and encumbrances thereon having priority over the Federal tax lien. In determining the value of the property, the appropriate official may, in his discretion, give consideration to the forced sale value of the property in appropriate cases.

            (h) As used in this section, the term appropriate official means either the official or office identified in the relevant IRS Publication or, if such official or office is not so identified, the Secretary or his delegate.
            (i) Temporary regulations removed. The provisions of § 401.6325-1 of this chapter are removed on the date these regulations are published as final regulations in the Federal Register.
            (j) Effective date. This section applies to any release of lien or discharge of property that is requested after these regulations are published as final regulations in the Federal Register.

              Par. 3. Section 301.6503(f)-1 is amended as follows:
            1. The section heading is revised.
            2. The undesignated paragraph is designated as paragraph (a) and a paragraph heading is added.

            3. In newly designated paragraph (a), the language “a district director” is removed and the language “the appropriate official” is added in its place, the language “the district director” is removed and the language “the appropriate official” is added in its place, and in the Example the language “district director” is removed and the language “appropriate official” is added in its place, wherever it appears.
            4. Paragraphs (b), (c), and (d) are added.
            The revisions and additions read as follows:

            § 301.6503(f)-1
            Suspension of running of period of limitation; wrongful seizure of property of third-party owner and discharge of wrongful lien for substitution of value.
            (a) Wrongful seizure. * * *
            (b) Discharge of wrongful lien for substitution of value. If a person other than the taxpayer submits a request in writing for a certificate of discharge for a filed Federal tax lien under section 6325(b)(4), the running of the period of limitations on collection after assessment under section 6502 for any liability listed in such notice of Federal tax lien shall be suspended for a period equal to the period beginning on the date the appropriate official receives a deposit or bond in the amount specified in § 301.6325-1(b)(4)(i) and ending on the date that is 30 days after the earlier of—

            (1) The date the appropriate official no longer holds, or is deemed to no longer hold, within the meaning of paragraph (b)(4)(iv) of this section, any amount as a deposit or bond by reason of taking such actions as prescribed in sections 6325(b)(4)(B) and (C); or
            (2) The date the judgment secured under section 7426(b)(5) becomes final.
            (c) As used in this section, the term appropriate official means either the official or office identified in the relevant IRS Publication or, if such official or office is not so identified, the Secretary or his delegate.
            (d) Effective date. This section applies to any request for a certificate of discharge made after these regulations are published as final regulations in the Federal Register.

              Par. 4. In § 301.7426-1, paragraphs (a)(4), (b)(5), and (d) are added.

            § 301.7426-1
            Civil actions by persons other than taxpayers.
            (a) * * *
            (4) Substitution of value. A person who obtains a certificate of discharge under section 6325(b)(4) with respect to any property may, within 120 days after the day on which the certificate is issued, bring a civil action against the United States in a district court of the United States for a determination of whether the value of the interest of the United States (if any) in such property is less than the value determined by the appropriate official. A civil action under this provision shall be the exclusive judicial remedy for a person other than the taxpayer who obtains a certificate of discharge for a filed notice of Federal tax lien.
            (b) * * *
            (5) Substitution of value. If the court determines that the determination by the appropriate official of the value of the interest of the United States in the property exceeds the actual value of such interest, the court may grant a judgment ordering a refund of the amount deposited, or a release of the bond, to the extent that the aggregate of those amounts exceeds the value as determined by the court.

            (d) Paragraphs (a)(4) and (b)(5) of this section apply to any request for a certificate of discharge made after these regulations are published as final regulations in the Federal Register.

            Mark E. Matthews,
            Deputy Commissioner for Services and Enforcement.

      [FR Doc. E7-219 Filed 1-10-07; 8:45 am]
      BILLING CODE 4830-01-P


        DEPARTMENT OF THE INTERIOR
        Fish and Wildlife Service
        50 CFR Parts 13, 17, and 402
        [Docket No. FWS-R9-ES-2011-0099: FXES11150900000A2123]
        RIN 1018-AY29
        Endangered and Threatened Wildlife and Plants; Expanding Incentives for Voluntary Conservation Actions Under the Endangered Species Act

          AGENCY:
          Fish and Wildlife Service, Interior.

          ACTION:
          Advance notice of proposed rulemaking.

          SUMMARY:
          We, the U.S. Fish and Wildlife Service (Service), are considering proposals to amend the regulations that implement parts of the Endangered Species Act. By this notice, we are inviting public comment to help us identify potential changes to our regulations that would create incentives for landowners and others to take voluntary conservation actions to benefit species that may be likely to become threatened or endangered species. In particular, we seek comment on whether and how the Service can assure those who take such voluntary actions that the benefits of such voluntary conservation actions will be recognized as offsetting the adverse effects of activities carried out after listing by that landowner or others. This practice sometimes referred to as “advance mitigation” or “pre-listing mitigation,” is intended to encourage early conservation efforts that could reduce or eliminate the need to list species as endangered or threatened.

          DATES:
          We will consider comments received or postmarked on or before May 14, 2012.

          ADDRESSES:
          You may submit comments by one of the following methods:

            Electronically: Go to the Federal eRulemaking Portal: http://www.regulations.gov. In the Enter Keyword or ID box, enter FWS-R9-ES-2011-0099, which is the docket number for this notice. You may submit a comment by clicking on “Submit a Comment.”

            By hard copy: Submit by U.S. mail or hand-delivery to: Public Comments Processing, Attn: FWS-R9-ES-2011-0099; Division of Policy and Directives Management; U.S. Fish and Wildlife Service; 4401 N. Fairfax Drive, MS 2042-PDM; Arlington, VA 22203.
          We will post all information received on http://www.regulations.gov. This generally means that we will post any personal information you provide us (see the Public Comments below for more details).

          FOR FURTHER INFORMATION CONTACT:
          Jim Serfis, Chief, Office of Communications and Candidate Conservation, U.S. Fish and Wildlife Service, 4401 N. Fairfax Drive, Room 420, Arlington, VA 22203 (telephone 703-358-2171). If you use a telecommunications device for the deaf (TDD), call the Federal Information Relay Service (FIRS) at 800-877-8339.

        SUPPLEMENTARY INFORMATION:

        Public Comments

        We are considering whether and how we could revise our regulations to create incentives for landowners and others to take voluntary conservation actions to benefit species that may be likely to become threatened or endangered species, including revisions that could recognize the benefits of such conservation actions as offsetting the adverse effects of actions carried out after listing by that landowner or others. We request comments, information, and suggestions from the public, other concerned governmental agencies, the scientific community, industry, private landowners, or any other interested parties to help us formulate any proposed regulation.

        You may submit your comments and materials concerning this notice by one of the methods listed in ADDRESSES. We will not accept comments sent by email or fax or to an address not listed in ADDRESSES.
        If you submit a comment via http://www.regulations.gov, your entire comment—including your personal identifying information—will be posted on the Web site. If you submit a hard copy comment that includes personal identifying information, you may request at the top of your document that we withhold this information from public review. However, we cannot guarantee that we will be able to do so. We will post all hardcopy comments on http://www.regulations.gov.

        Comments and materials we receive, as well as supporting documentation we used in preparing this notice, will be available for public inspection on http://www.regulations.gov, or by appointment, during normal business hours, at the U.S. Fish and Wildlife Service (see FOR FURTHER INFORMATION CONTACT).
        Background
        On January 18, 2011, President Obama issued Executive Order 13563, which called for improvements in the nation's regulatory system to promote predictability and reduce uncertainty and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. Pursuant to the Executive Order, the Department of the Interior published notices on February 25, 2011, and July 11, 2011, asking the public for suggestions as it prepared a plan for retrospective regulatory review. Representatives from State government, non-governmental groups and industries ranging from residential construction to wind energy, and to electric utilities recommended that the Department of the Interior update ESA regulations. Subsequently, the Department of the Interior published its final Plan for Retrospective Regulatory Review. That Plan identified a number of areas where changes in the ESA regulations could improve conservation effectiveness, reduce administrative burdens, create clarity and consistency for affected interests, and encourage partnerships, innovation, and cooperation. To achieve these goals, the Plan identified a need to clarify, expedite, and improve procedures for the development and approval of conservation agreements with landowners.
        Currently, landowner agreements that provide regulatory assurances under the ESA take three principal forms: Habitat Conservation Plans (HCPs), Safe Harbor Agreements (SHAs), and Candidate Conservation Agreements with Assurances (CCAAs). Habitat Conservation Plans, which are required in order to secure a permit to take listed wildlife species incidental to otherwise lawful activities, set forth measures to be taken to mitigate the impacts of such authorized taking. Although HCPs must always cover one or more listed wildlife species, they may also cover unlisted species. Safe Harbor Agreements are voluntary agreements under which a property owner agrees to carry out conservation measures to benefit listed species without incurring any new or additional regulatory liability as a result of their voluntary action. Candidate Conservation Agreements with Assurances are voluntary agreements under which a property owner agrees to implement conservation measures for candidate or other unlisted species. In exchange, the Service issues an enhancement of survival permit that becomes active when the species covered by the CCAA is listed and allows a prescribed level of incidental take by the landowner for the duration of the agreement. While CCAAs enable a landowner to secure assurances as to what their post-listing responsibilities will be in advance of listing, these agreements do not explicitly address whether and how pre-listing conservation measures might serve as mitigation for post-listing activities that could negatively affect species, such as land clearing, construction activities, or water diversion.
        Related to these efforts, at present, Service policy pertaining to conservation banking allows landowners or others to earn credits that can be used to offset the negative impacts of proposed actions on listed species. Under that policy, a credit represents a standardized way of quantifying the impact of beneficial actions on the well being of a particular listed species. Credits can be used to offset the negative effects of detrimental actions, with the magnitude of those negative effects quantified in the same manner. We seek any ideas to improve these forms of landowner agreements.
        It is possible that voluntary conservation actions for unlisted species might lead to a determination that a particular species does not need to be listed. If the need to list a species under the ESA can be avoided, everyone benefits. The species benefit from early action to address threats to their survival. Landowners and other regulated interests avoid the imposition of potentially costly restrictions on their activities. The Service avoids the need to dedicate scarce conservation dollars to additional species. The States maintain their primary management authority over non-listed species, ensuring that local authorities respond to local problems with input from their residents.
        Although everyone benefits from avoiding the need to list a species, there are often inadequate incentives for many people to undertake conservation action for species prior to listing. Voluntary conservation actions undertaken by one or a few persons are unlikely to be sufficient to affect the need to list the species. Thus, those who do undertake such actions in the hope that doing so will avert the need to list the species are often disappointed or frustrated by the fact that listing nevertheless occurs. Moreover, such voluntary actions prior to listing may actually result in those persons being subject to greater restrictions after listing than they would have been had they done nothing at all (because, for example, their voluntary actions make the species more numerous or more widespread on their property than it otherwise would have been).
        Avoiding the potential for voluntary conservation actions to result in such unintended restrictions is a key purpose of a CCAA. Through a CCAA, the Service provides the assurance that if the conditions of the agreement are met, the landowner will not be asked to do more, commit more resources, or be subject to further land use restrictions than agreed upon if the species is listed. However, the development of such Agreements has often been time-consuming and difficult. Accordingly, the Service seeks suggestions to reduce the time and difficulty associated with CCAAs so as to further the goals of greater efficiency and flexibility in ESA regulatory programs.
        We also give advance notice of our intent to propose a rule to encourage landowners and other potentially regulated interests to fund or carry out voluntary conservation actions beneficial to candidate and other at-risk species by providing a new type of assurance that, in the event the species is listed, the benefits of appropriate voluntary conservation actions will be recognized as offsetting the adverse effects of activities carried out by that landowner or others after listing.

        Once a species is listed as endangered or threatened, actions that adversely affect it may need permits under section 10 of the ESA or approval under the interagency consultation provisions of section 7 of the ESA. For actions reviewed under the interagency consultation provisions of section 7, measures that offset the adverse effects of those actions may be incorporated into and made a part of the proposed action as a way of reducing its net effects and meeting the approval standards of section 7.
        Although existing regulations at 50 CFR 402.14(g)(8) require the Service to consider certain beneficial actions taken “prior to the initiation of consultation,” there is no clear mechanism for acknowledging the benefits to a species of actions voluntarily taken by a landowner or other person prior to its listing, or for recognizing those benefits as mitigation or other requirements needed to secure approval for an action carried out after listing.
        An exception to the foregoing is any HCP that covers both listed and unlisted species, as many large-scale HCPs do. These plans, and the permits issued in association with them, acknowledge or verify the conservation commitments contained in the plans as fulfilling the requirements of the ESA with respect to all covered species even when required conservation actions are carried out before some covered species are actually listed, and the development activities for which they serve as mitigation may be carried out after the species is listed. Implicitly, at least, these plans are accepted as mitigation for actions undertaken after some covered species are listed. Thus, there is precedent for the conceptual idea examined here, but no clear mechanism for accomplishing mitigation prior to listing outside the context of multispecies HCPs.
        We request suggestions and input from the public on how best to establish clear mechanisms to encourage landowners and other potentially regulated interests to fund or carry out voluntary conservation actions beneficial to candidate and other at-risk species by providing assurances that, in the event the species is listed, the benefits of appropriate voluntary conservation actions will be recognized as offsetting the adverse effects of activities carried out after listing by that landowner or others. In addition to the requests above, we specifically request input from the public on the following questions:

          (1) How can the Service allow for the recognition of conservation credits for voluntary action taken in advance of listing in a manner that is efficient, readily understood, and faster? How can this be accomplished in an expeditious manner?
          (2) Should credits recognized for voluntary conservation actions taken prior to listing be available for use solely by the person who created them or should they be transferable to third parties?
          (3) If voluntary conservation actions undertaken prior to listing generate conservation credits that can be used to offset impacts of post-listing activities, should they be based solely on the beneficial actions of the person undertaking them, or should they be based on the net impacts of both beneficial and detrimental actions?
          (5) What role should the States play in recognizing and overseeing the development of credits from voluntary conservation actions taken for species not yet listed?
          (6) How can or should the Service specify in advance of listing the manner in which it will quantify the value of voluntarily undertaken conservation actions?
          (7) How the Service's conservation banking policy could be revised to allow for the use of conservation credits accrued from voluntary actions taken prior to listing?

          (8) What changes, if any, are needed to the following regulations, policies and guidance (The handbooks and policy are available at http://www.fws.gov/endangered/esa-library/index.html.) to clarify mechanisms by which the Service can give “credit” for beneficial actions for unlisted species:
          a. 50 CFR part 13
          b. 50 CFR part 17
          c. 50 CFR part 402
          d. The Service's section 7 Handbook
          e. The Service's HCP Handbook
          f. The Service's Conservation Banking Policy
          (9) How could the Service use pilot projects to demonstrate that the ESA can provide landowners with credits and regulatory assurances for actions intended to benefit candidate species? Are there existing situations where such pilot projects could facilitate conservation for candidate species?
          (10) How can a landowner use such voluntary “prelisting mitigation” activities to satisfy requirements arising from any future section 7 consultation (such as “conservation measures,” “reasonable and prudent measure” or “reasonable and prudent alternatives”)?

        In considering these and other potential changes to the ESA's implementing regulations, we intend to be guided by the following objectives:
        • To improve the effectiveness of the ESA at conserving endangered, threatened, and candidate species;
        • To eliminate unnecessary process requirements and to make as efficient as possible the remaining process requirements;
        • To improve the clarity of, and eliminate the inconsistencies among, our regulations;
        • To engage the States, conservation organizations, and private landowners more effectively as conservation partners;
        • To encourage greater experimentation and creativity in the implementation of the Act; and
        • To reduce the frequency and intensity of conflicts as much as possible.
        Accordingly, we invite recommendations for changes to our regulations or policy that would further these objectives.
        Authority

        This notice is published under the authority of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq.).

          Dated: March 6, 2012.
          Daniel M. Ashe,
          Director, Fish and Wildlife Service.

      [FR Doc. 2012-6221 Filed 3-14-12; 8:45 am]
      BILLING CODE 4310-55-P


        DEPARTMENT OF THE INTERIOR
        Fish and Wildlife Service
        50 CFR Part 17
        RIN 1018-AJ07

        Endangered and Threatened Wildlife and Plants; Designation of Critical Habitat for Gaura neomexicana ssp. coloradensis (Colorado Butterfly Plant)

          AGENCY:
          Fish and Wildlife Service, Interior.

          ACTION:
          Proposed rule; extension of comment period and notice of availability of draft economic analysis and draft environmental assessment.

          SUMMARY:

          We, the U.S. Fish and Wildlife Service (Service) announce the availability of a draft economic analysis and draft environmental assessment for the proposed designation of critical habitat for Gaura neomexicana ssp. coloradensis (hereafter referred to as “Colorado butterfly plant”) under the Endangered Species Act of 1973, as amended (Act). In addition, we announce the extension of the comment period on the proposed rule to designate critical habitat for the Colorado butterfly plant.

          DATES:
          We will accept all comments received on or before October 25, 2004. Any comments that we receive after the closing date may not be considered in the final decision on this proposal.

          ADDRESSES:
          If you wish to comment, you may submit your comments and materials concerning this proposed rule, the draft economic analysis, and the draft environmental assessment by any one of several methods:
          (1) You may submit written comments and information to the Field Supervisor, U.S. Fish and Wildlife Service, Wyoming Field Office, 4000 Airport Parkway, Cheyenne, Wyoming 82001, or by facsimile (307) 772-2358.
          (2) You may hand-deliver written comments to our office, at the address given above.
          (3) You may send comments by electronic mail (e-mail) to fw6_cobutterflyplant@fws.gov. Please see the Public Comments Solicited section below for file format and other information about electronic filing. In the event that our Internet connection is not functional, please submit your comments by the alternate methods mentioned above.

          Comments and materials received, as well as supporting documentation used in preparation of the proposed critical habitat rule, will be available for public inspection, by appointment, during normal business hours at the above address. You may obtain copies of the draft economic analysis and draft environmental assessment for the Colorado butterfly plant by contacting the Wyoming Field Office at the above address. The draft economic analysis, draft environmental assessment, and the proposed rule for critical habitat designation also are available on the Internet at http://www.r6.fws.gov/species/plants/cobutterfly/. In the event that our Internet connection is not functional, please obtain copies of documents directly from the Wyoming Fish and Wildlife Office.

          FOR FURTHER INFORMATION CONTACT:
          Brian T. Kelly, Field Supervisor (telephone (307) 772-2374; facsimile (307) 772-2358), Wyoming Field Office, at the address listed above.

        SUPPLEMENTARY INFORMATION:
        Public Comments Solicited

        We intend any final action resulting from the proposed rule to be as accurate and as effective as possible. Therefore, we solicit comments or suggestions from the public, other concerned governmental agencies, the scientific community, industry, or any other interested party concerning the economic analysis, the environmental analysis, or the proposed rule. We particularly seek comments concerning:
        (1) The reasons why any habitat should or should not be determined to be critical habitat as provided by section 4 of the Act, including whether the benefits of excluding outweigh benefits of including any area as critical habitat;
        (2) Specific information on the amount and distribution of Colorado butterfly plant habitat and what habitat is essential to the conservation of this species and why;
        (3) Land use designations and current or planned activities in the subject area and their possible impacts on proposed critical habitat;
        (4) Any foreseeable economic or other impacts resulting from the proposed designation of critical habitat, in particular, any impacts on small entities or families;
        (5) Whether the economic analysis identifies all State and local costs. If not, what costs are overlooked;
        (6) Whether the economic analysis makes appropriate assumptions regarding current practices and likely regulatory changes imposed as a result of the designation of critical habitat;
        (7) Whether the economic analysis correctly assesses the effect on regional costs associated with land use controls that derive from the designation;
        (8) Whether the designation will result in disproportionate economic impacts to specific areas that should be evaluated for possible exclusion from the final designation;
        (9) Whether the economic analysis appropriately identifies all costs that could result from the designation;
        (10) Whether the environmental analysis accurately reports the environmental impact of designating critical habitat; and
        (11) Whether our approach to critical habitat designation could be improved or modified in any way to provide for greater public participation and understanding, or to assist us in accommodating public concern and comments.

        All comments and information submitted during the previous comment period on the proposed rule need not be resubmitted. If you wish to comment, you may submit your comments and materials concerning this rule by any one of several methods (see ADDRESSES section). Please submit Internet comments to fw6_cobutterflyplant@fws.gov and include “Attn: Colorado Butterfly Plant Critical Habitat” in your e-mail subject header, and your name and return address in the body of your message. If you do not receive a confirmation from the system that we have received your Internet message, contact us directly by calling our Wyoming Field Office (see FOR FURTHER INFORMATION CONTACT section).
        Our practice is to make comments, including names and home addresses of respondents, available to the public. Individual respondents may request that we withhold their home addresses from the administrative record, which we will honor to the extent allowable by law. There also may be circumstances in which we would withhold from the administrative record a respondent's identity, as allowable by law. If you wish us to withhold your name and/or address, you must state this prominently at the beginning of your comment. However, we will not consider anonymous comments. We will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public inspection in their entirety. Comments and materials received will be available for public inspection, by appointment, during normal business hours at the above address.
        Background
        Colorado butterfly plant is a member of the evening primrose family and is a short-lived perennial herb with one to several reddish, pubescent stems. It is a regional endemic restricted to Laramie and Platte Counties in Wyoming, western Kimball County in Nebraska, and Weld County in Colorado. Of the known populations of the Colorado butterfly plant, the vast majority occur on private lands managed primarily for agriculture and livestock. Haying and mowing at certain times of the year, water development, land conversion for cultivation, competition with exotic plants, non-selective use of herbicides, and loss of habitat to urban development are the main threats to these populations (Mountain West Environmental Services 1985, Marriott 1987, Fertig 1994).

        On October 18, 2000, the Colorado butterfly plant was designated as threatened throughout its entire range under the Act (65 FR 62302). On October 4, 2000, the Center for Biological Diversity and the Biodiversity Legal Foundation filed a complaint in the Federal District Court for the District of Colorado concerning our failure to designate critical habitat for the Colorado butterfly plant (Center for Biological Diversity, et al. v. Norton, et al. (Civ. Action No. 00-D-1980)). On March 19, 2001, the Court approved a settlement agreement requiring us to submit a final critical habitat designation for the Colorado butterfly plant to the Federal Register on or before December 31, 2004. For more information on previous Federal actions concerning the Colorado butterfly plant, refer to the final listing rule (65 FR 62302). On August 6, 2004 (69 FR 47834), we published a proposed critical habitat designation for the Colorado butterfly plant.
        Critical habitat identifies specific areas, both occupied and unoccupied, that are essential to the conservation of a listed species and that may require special management considerations or protection. If the proposed rule is made final, section 7 of the Act will prohibit destruction or adverse modification of critical habitat by any activity funded, authorized, or carried out by any Federal agency. Federal agencies proposing actions affecting areas designated as critical habitat must consult with us on the effects of their proposed actions, pursuant to section 7(a)(2) of the Act.
        Section 4 of the Act requires that we consider economic impacts, impacts to National security, and other relevant impacts prior to making a final decision on what areas to designate as critical habitat. We have prepared a draft economic analysis for the proposal to designate certain areas as critical habitat for the Colorado butterfly plant. This analysis considers the potential economic effects of our proposed designation. It also considers the economic effects of protective measures taken as a result of listing the species under the Act, and other Federal, State, and local laws that aid habitat conservation in areas proposed for designation.

        The majority of these areas occur on privately owned land. We know of no Federal, tribal, or military lands within proposed critical habitat. A small portion of land within Unit 7 is owned by the City of Cheyenne, Wyoming, and Unit 8 is owned by the City of Fort Collins, Colorado. The economic analysis and environmental assessment address the impacts of Colorado butterfly plant conservation efforts on activities occurring on lands proposed for designation. The economic analysis measures lost economic efficiency associated with conservation agreements, oil and gas development, real estate development, agriculture, road and bridge construction and maintenance projects, as well as other State law requirements, uncertainty, and project delay.

        There is a great deal of uncertainty in estimating the impact of Colorado butterfly plant conservation activities in the future. For some activities the analysis estimates an upper-bound cost estimate, for others a conservative approach is taken to reach a best estimate. The implicit lower-bound cost estimate predicts very low impact.
        Total efficiency costs (e.g., lost economic opportunities associated with restrictions on land use) for the upper-bound scenario of the preferred alternative are estimated to be $286,700 from 2005 to 2024. The efficiency costs for the lower-bound scenario of the preferred alternative are estimated to be $7,000 from 2005 to 2024. In both cases, the Service is estimated to experience the highest cost overall, followed by agriculture and natural gas pipeline construction projects.
        The environmental analysis discusses four alternatives, including the “no action” alternative, and analyzes the following “impact areas”—physical environment; fish, wildlife, and plants; human environment; archaeological and cultural resources; environmental justice, and cumulative effects. The environmental analysis refers to and incorporates the economic analysis.
        Regulatory Planning and Review

        In accordance with Executive Order 12866, this document is a significant rule because it may raise novel legal and policy issues. However, it is not anticipated to have an annual effect on the economy of $100 million or more or affect the economy in a material way. Due to the tight timeline for publication in the Federal Register, the Office of Management and Budget (OMB) has not formally reviewed this rule.
        Regulatory Flexibility Act (5 U.S.C. 601 et seq.)
        Under the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq., as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996), whenever an agency is required to publish a notice of rulemaking for any proposed or final rule, it must prepare and make available for public comment a regulatory flexibility analysis that describes the effect of the rule on small entities. However, no regulatory flexibility analysis is required if the head of an agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.
        According to the Small Business Administration (SBA), small entities include small organizations, such as independent nonprofit organizations, and small governmental jurisdictions, including school boards and city and town governments that serve fewer than 50,000 residents, as well as small businesses (13 CFR 121.201). Small businesses include manufacturing and mining concerns with fewer than 500 employees, wholesale trade entities with fewer than 100 employees, retail and service businesses with less than $5 million in annual sales, general and heavy construction businesses with less than $27.5 million in annual business, special trade contractors doing less than $11.5 million in annual business, and agricultural businesses with annual sales less than $750,000. To determine if potential economic impacts to these small entities are significant, we considered the types of activities that might trigger regulatory impacts under this proposed rule as well as types of project modifications that may result. In general, the term significant economic impact is meant to apply to a typical small business firm's business operations.

        To determine if the proposed rule would affect a substantial number of small entities, we considered the number of small entities affected within particular types of economic activities (e.g., housing development, oil and gas production, timber harvesting). We considered each industry individually to determine if certification is appropriate. In estimating the numbers of small entities potentially affected, we also considered whether their activities have any Federal involvement; some kinds of activities are unlikely to have any Federal involvement and so will not be affected by the designation of critical habitat. Designation of critical habitat affects only activities conducted, funded, permitted or authorized by Federal agencies; non-Federal activities are not affected by the designation.
        If this critical habitat designation is made final, Federal agencies must consult with us if their activities may affect designated critical habitat. Consultations to avoid the destruction or adverse modification of critical habitat would be incorporated into the existing consultation process. In areas where occupancy by Colorado butterfly plant is unknown, the designation of critical habitat could trigger additional review of Federal agencies pursuant to section 7 of the Act and may result in additional requirements on Federal activities to avoid destruction or adverse modification of critical habitat.
        In reviewing past formal consultations under section 7 of the Act and the activities they involved in the context of the proposed critical habitat, we do not believe the outcomes would have been different in areas designated as critical habitat.
        An analysis of the effects of the voluntary conservation agreements for Colorado butterfly plant on small entities is conducted pursuant to the RFA as amended by the SBREFA in 1996, while the energy analysis is required by Executive Order No. 13211.
        The draft economic analysis considers the extent to which the analytic results reflect impacts to small businesses. The small business analysis presented in this section is based on information gathered from the SBA, U.S. Census Bureau, U.S. Department of Agriculture, and Dun and Bradstreet, and comparisons with the results of the economic analysis. The following summarizes the sources of potential future impacts on small businesses attributable specifically to the rulemaking.
        Based on the draft economic analysis results, activities undertaken by small businesses that are potentially affected by the rulemaking include agricultural production. The SBA small business size standard for farming and ranching is annual sales of $750,000. Recent county-level farm sales data from the National Agricultural Statistics Service 2002 Agriculture Census was used to determine the number of small agri-businesses operating within the proposed critical habitat designation. The 2002 Agriculture Census data indicate that 95 percent of the farmers operating within the five counties encompassed by the proposed designation have annual sales less than $500,000. In Laramie County, Wyoming, where more than 85 percent of the critical habitat is located, 736 of 755 farmers reported annual farm sales less than $500,000. These data indicate that ranching operations in the area surrounding the proposed designation tend to be small. For the purpose of this small business analysis, because of the high percentage of farming operations with annual sales below $500,000, all agriculture operations forecast to be impacted by the proposed designation of critical habitat for the Colorado butterfly plant are considered small.

        Assuming all landowners within the proposed designation participate in the voluntary conservation agreement program with the Service, up to 37 agriculture operations could be impacted by conservation measures for the Colorado butterfly plant. Assuming an operation is required to implement all of the activities recommended to protect the species and its habitat, the annualized cost of the conservation measures to the operator ($263) represents 0.1 of a percent of the average annual farm's sales in the five counties surrounding the proposed designation. The annualized impact ranges between 0.1 of a percent of an average farm's sales in Weld County in Colorado, to 0.4 of a percent in Larimer County in Colorado, and Kimball County in Nebraska. In Laramie County, Wyoming, the annualized impact represents 0.3 of a percent of the average farmer's annual sales. Note that, we do not know the finances of the individual people that may be affected. Thus, the draft economic analysis used averaged industry data (see Exhibit 4-10) to estimate costs of ranching operations, and this table reflects the variability of this data. It is important to note that these costs will only be incurred by ranching operations to the extent that they agree to participate in the voluntary conservation agreement program with the Service.
        In summary, we have considered whether this proposed rule would result in a significant economic impact on a substantial number of small entities, and we have concluded that it would not. We have no indication that the types of activities we review under section 7 of the Act will change significantly in the future. Therefore, we are certifying that this proposed designation of critical habitat for the Colorado butterfly plant is not expected to have a significant adverse impact on a substantial number of small entities, and an initial regulatory flexibility analysis is not required.

        The preceding discussion is based on information regarding potential economic impacts that is currently available to us. This assessment of economic effect may be modified prior to publication of a final rule due to public comments received during the public comment period. This analysis is for the purposes of compliance with the Regulatory Flexibility Act and does not reflect our position on the type of economic analysis required by New Mexico Cattle Growers Assn. v. U.S. Fish & Wildlife Service 248 F. 3d 1277 (10th Cir. 2001).
        Author

        The primary author of this notice is the Tyler Abbott, Wyoming Fish and Wildlife Office staff (see ADDRESSES section).

        The authority for this action is the Endangered Species Act of 1973 (16 U.S.C. 1531 et seq.).

          Dated: September 17, 2004.
          Craig Manson,
          Assistant Secretary for Fish and Wildlife and Parks.

      [FR Doc. 04-21480 Filed 9-23-04; 8:45 am]
      BILLING CODE 4310-55-P