TD 9002, Agent for Consolidated Group

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Federal Register / Vol. 67, No. 125 / Friday, June 28, 2002 / Rules and Regulations

program experience we would
periodically review and update the
listings. The current listings for the
evaluation of respiratory system
impairments will no longer be effective
on July 2, 2002. Until we publish
revised language for the respiratory
system listings, the current listings
language remains valid for our program
purposes.

meets the plain language requirement of
E.O. 12866 as amended by E.O. 13258.

Internal Revenue Service

Regulatory Flexibility Act

Regulatory Procedures

We certify that this final rule will not
have a significant economic impact on
a substantial number of small entities
because it affects only individuals.
Thus, a regulatory flexibility analysis as
provided in the Regulatory Flexibility
Act, as amended, is not required.

Justification for Final Rule

Paperwork Reduction Act

Pursuant to section 702(a)(5) of the
Social Security Act, 42 U.S.C. 902(a)(5),
we follow the Administrative Procedure
Act (APA) rulemaking procedures
specified in 5 U.S.C. 553 in the
development of our regulations. The
APA provides exceptions to its notice
and public comment procedures when
an agency finds there is good cause for
dispensing with such procedures on the
basis that they are impracticable,
unnecessary, or contrary to the public
interest. We have determined that,
under 5 U.S.C. 553(b)(B), good cause
exists for dispensing with the notice and
public comment procedures for this
rule. Good cause exists because this
final rule only extends the date on
which the respiratory system listings
will no longer be effective. It makes no
substantive changes to those listings.
The current regulations expressly
provide that listings may be extended,
as well as revised and promulgated
again. Therefore, we have determined
that opportunity for prior comment is
unnecessary, and we are issuing this
regulation as a final rule.
In addition, we find good cause for
dispensing with the 30-day delay in the
effective date of a substantive rule
provided by 5 U.S.C. 553(d). As
explained above, we are not making any
substantive changes in the respiratory
system listings. However, without an
extension of the expiration dates for
these listings, we will lack regulatory
criteria for assessing respiratory
impairments at the third step of the
sequential evaluation process after the
current expiration date of these listings.
In order to ensure that we continue to
have regulatory criteria for assessing
respiratory impairments under these
listings, we find that it is in the public
interest to make this rule effective on
publication.

This final rule imposes no reporting/
recordkeeping requirements
necessitating clearance by OMB.
(Catalog of Federal Domestic Assistance
Program Nos. 96.001, Social SecurityDisability Insurance; 96.002, Social SecurityRetirement Insurance; 96.004, Social
Security-Survivors Insurance; 96.006,
Supplemental Security Income)

List of Subjects in 20 CFR Part 404
Administrative practice and
procedure, Blind, Disability benefits,
Old-Age, Survivors and Disability
Insurance, Reporting and recordkeeping
requirements, Social Security.
Dated: May 30, 2002.
JoAnne B. Barnhart,
Commissioner of Social Security.

For the reasons set forth in the
preamble, part 404, subpart P, chapter
III of title 20 of the Code of Federal
Regulations is amended as set forth
below.
PART 404—FEDERAL OLD-AGE,
SURVIVORS AND DISABILITY
INSURANCE (1950— )
Subpart P—[Amended]
1. The authority citation for subpart P
of part 404 continues to read as follows:
Authority: Secs. 202, 205(a), (b), and (d)–
(h), 216(i), 221(a) and (i), 222(c), 223, 225,
and 702(a)(5) of the Social Security Act (42
U.S.C. 402, 405(a), (b), and (d)–(h), 416(i),
421(a) and (i), 422(c), 423, 425, and
902(a)(5)); sec. 211(b), Pub. L. 104–193, 110
Stat. 2105, 2189.

2. Appendix 1 to subpart P of part 404
is amended by revising item 4 of the
introductory text before Part A to read
as follows:
Appendix 1 to Subpart P of Part 404—
Listing of Impairments

Executive Order 12866

*

The Office of Management and Budget
(OMB) has reviewed this final rule in
accordance with Executive Order (E.O.)
12866, as amended by E.O. 13258. We
have also determined that this final rule

4. Respiratory System (3.00 and 103.00):
July 2, 2003.

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*

*

*

*

*

*

*

*

*

[FR Doc. 02–16336 Filed 6–27–02; 8:45 am]
BILLING CODE 4191–02–P

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DEPARTMENT OF THE TREASURY

26 CFR Parts 1 and 602
[TD 9002]
RIN 1545–AX56

Agent for Consolidated Group
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
SUMMARY: This document contains final
regulations regarding the agent for
subsidiaries of an affiliated group that
files a consolidated return (agent for the
group). The regulations address certain
issues concerning the scope of the
common parent’s authority, as well as
questions concerning the agent for the
group when the common parent’s
existence terminates. These regulations
affect all consolidated groups.
DATES: Effective Date: These regulations
are effective June 28, 2002.
Applicability Date: For dates of
applicability, see §§ 1.1502–77(h) and
1.1502–78(f).
FOR FURTHER INFORMATION CONTACT:
Gerald B. Fleming, (202) 622–7770, or
George R. Johnson, (202) 622–7930 (not
toll-free numbers).
SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act
The collections of information
contained in these final regulations have
been reviewed and approved by the
Office of Management and Budget in
accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
3507(d)) under control number 1545–
1699. Responses to these collections of
information are required to obtain a
benefit (the approval by the IRS of the
common parent’s designation of a
substitute agent for the consolidated
group or recognition by the IRS of the
common parent’s successor as a default
substitute agent).
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a valid control
number assigned by the Office of
Management and Budget.
The estimated annual burden per
respondent is 2 hours.
Comments concerning the accuracy of
this burden estimate and suggestions for
reducing this burden should be sent to
the Internal Revenue Service, Attn: IRS
Reports Clearance Officer,
W:CAR:MP:FP:S, Washington, DC
20224, and to the Office of Management
and Budget, Attn: Desk Officer for the

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Federal Register / Vol. 67, No. 125 / Friday, June 28, 2002 / Rules and Regulations
Department of the Treasury, Office of
Information and Regulatory Affairs,
Washington, DC 20503.
Books or records relating to a
collection of information must be
retained as long as their contents may
become material in the administration
of any internal revenue law. Generally,
tax returns and tax return information
are confidential, as required by 26
U.S.C. 6103.
Background
On September 26, 2000, a notice of
proposed rulemaking (REG–103805–99)
relating to the agent for the group was
published in the Federal Register (65
FR 57755). No public hearing was
requested or held. Written comments
responding to the notice of proposed
rulemaking were received. After
consideration of all the comments, the
proposed regulations are adopted as
amended by this Treasury decision.
Explanation and Summary of
Comments
These final regulations are
substantially the same as the proposed
regulations but reflect certain revisions
based on various formal and informal
comments that were received from the
public and from IRS personnel. Many of
the revisions are minor changes made to
clarify certain aspects of the proposed
regulations. Certain of the more
significant revisions are discussed
below.
The final regulations reflect changes
that clarify the examples of matters for
which the common parent is the agent.
Specifically, the example on elections is
expanded to include other similar
options that are available to a member
in determining its separate taxable
income and any changes in such
options. The common parent should
make any necessary requests related to
those options or changes in such
options (for example, to request a
change in a subsidiary’s method or
period of accounting). In addition, an
example is added to clarify that the
common parent takes any action on
behalf of a member of the group with
respect to a foreign corporation. Finally,
an example is added to clarify that a
final partnership administrative
adjustment (FPAA) under section 6223
may be sent to the common parent and
that the mailing to the common parent
will be considered a mailing to each
group member that is a partner entitled
to receive the FPAA.
In light of statutory changes not
reflected in the proposed regulations,
the final regulations modify the
identification of matters reserved to
subsidiaries in paragraph (a)(3) of the

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proposed regulations. In particular, the
reference to a DISC’s change in annual
accounting period pursuant to § 1.991–
1(b)(3)(ii) has been removed because
such a change in accounting period is
generally automatic and, in any event, is
made by a DISC, which is not an
includible corporation pursuant to
section 1504(b)(7). In addition, the final
regulations add as a specific matter
reserved to subsidiaries any action by a
subsidiary acting as the tax matters
partner under the TEFRA partnership
provisions of sections 6221 through
6234 and the accompanying regulations.
The provisions requiring that a notice
of deficiency or notice and demand for
payment name each corporation that
was a member of the group for the
consolidated return year have been
eliminated. The IRS and Treasury have
determined that these provisions are
inconsistent with the general rule that
the common parent is agent for the
group with respect to the group’s
consolidated tax liability.
The final regulations have added a
provision for a default substitute agent
for the group under certain
circumstances. If the common parent
fails to designate a substitute agent
before its existence terminates and it has
a single successor that is a domestic
corporation, that successor becomes the
default substitute agent. Although the
Commissioner’s approval is not
required, any such default substitute
agent is advised to provide written
notification to the IRS in accordance
with procedures established by the
Commissioner. Until notification is
received, the Commissioner is not
required to recognize the successor’s
status as default substitute agent and
may continue to send communications
to the old common parent and the
Commissioner is not required to
respond to communications (including,
for example, a claim for refund)
submitted by the successor on behalf of
the consolidated group.
Where the Commissioner designates a
substitute agent for the group, the
proposed regulations provide for the
Commissioner and the designated agent
to give notice of the designation to all
members of the group. The final
regulations provide for the
Commissioner to give notice to the
designated agent, which is responsible
for giving notice to the remaining
members of the group.
One comment suggested that there
should be a mechanism for taxpayers to
request that the final regulations apply
to taxable years beginning before the
date of issuance of the final regulations.
Treasury and the IRS recognize that
some taxpayers may wish to have the

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43539

additional flexibility afforded by
paragraph (d)(1) of the final regulations
allowing the designation of a successor
of a member (including a successor of
the common parent) as the substitute
agent for the group. Accordingly, the
final regulations permit a common
parent to elect to apply paragraph (d)(1)
of the final regulations with respect to
designations for taxable years beginning
before the date of adoption. Once such
an election is made, the provisions of
paragraph (d)(1) of the final regulations
apply to any subsequent designation of
a substitute agent for the consolidated
return years subject to the election.
Effective Date
The final regulations under § 1.1502–
77 apply to taxable years beginning on
or after June 28, 2002. The current rules
of §§ 1.1502–77 and 1.1502–77T, which
are collectively retained in § 1.1502–
77A, continue to apply with respect to
taxable years beginning before June 28,
2002.
The final regulations under § 1.1502–
78 apply to taxable years to which a loss
or credit may be carried back and for
which the due date (without extensions)
of the original return is after June 28,
2002.
Special Analyses
It has been determined that these final
regulations are not a significant
regulatory action as defined in
Executive Order 12866. Therefore, a
regulatory assessment is not required. It
is hereby certified that these regulations
will not have a significant economic
impact on a substantial number of small
entities. This certification is based on
the fact that these regulations will
primarily affect affiliated groups of
corporations that have elected to file
consolidated returns, which tend to be
larger businesses, and, moreover, that
any burden on taxpayers is minimal.
Therefore, a Regulatory Flexibility
Analysis under the Regulatory
Flexibility Act (5 U.S.C. chapter 6) is
not required.
Drafting Information
The principal authors of these
proposed regulations are Gerald B.
Fleming and George R. Johnson, Office
of the Associate Chief Counsel
(Corporate). However, other personnel
from the IRS and Treasury Department
participated in their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.

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Federal Register / Vol. 67, No. 125 / Friday, June 28, 2002 / Rules and Regulations
Section 1.1502–77A also issued under 26
U.S.C. 1502 and 6402(j). * * *

26 CFR Part 602
Reporting and recordkeeping
requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and 602
are amended as follows:
PART 1—INCOME TAXES
1. The authority citation for part 1 is
amended by removing entries for
‘‘1.1502–77(e)’’ and ‘‘1.1502–78(b)’’ and
adding entries in numerical order to
read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.1502–77 also issued under 26
U.S.C. 1502 and 6402(j).
Section 1.1502–78 also issued under 26
U.S.C. 1502, 6402(j), and 6411(c). * * *

2. Section 1.338–1 is amended by
adding a sentence at the end of
paragraph (b)(2)(vii) to read as follows:
§ 1.338–1 General principles; status of old
target and new target.

*

*
*
*
*
(b) * * *
(2) * * *
(vii) * * * See also, for example,
§ 1.1502–77(e)(4), providing that an
election under section 338 does not
result in a deemed termination of
target’s existence for purposes of the
rules applicable to the agent for a
consolidated group.
*
*
*
*
*
3. In § 1.1502–6, paragraph (b) is
amended by removing the language

‘‘district director’’ and adding
‘‘Commissioner’’ in each place it
appears.
4. Immediately following § 1.1502–
41A, an undesignated center heading is
added to read as follows:
Regulations Applicable to Taxable
Years Beginning Before June 28, 2002
5. Section 1.1502–77 is redesignated
as § 1.1502–77A, transferred
immediately after the undesignated
center heading ‘‘Regulations Applicable
to Taxable Years Beginning Before June
28, 2002’’ and amended as follows:
1. The section heading is revised.
2. In the list below, for each paragraph
indicated in the left column, remove the
language in the middle column and add
the language in the right column:

Paragraph

Remove

(a), last sentence ..............................................................
(b), first sentence ..............................................................

district director .................................................................
district director with whom the consolidated return is
filed.
such district director ........................................................
such district director ........................................................
district director .................................................................
district director with whom the consolidated return is
filed.
such district director ........................................................
district director .................................................................
such district director ........................................................
such district director ........................................................

(b), first sentence ..............................................................
(b), second sentence ........................................................
(c) ......................................................................................
(d), first sentence ..............................................................
(d),
(d),
(d),
(d),

first sentence ..............................................................
second sentence ........................................................
second sentence (each place it appears) ..................
third sentence (each place it appears) ......................

3. Paragraph (e) is removed and
reserved.
4. Paragraphs (f) and (g) are added.
The revision and additions read as
follows:
§ 1.1502–77A Common parent agent for
subsidiaries applicable for consolidated
return years beginning before June 28,
2002.

*

*
*
*
*
(f) Cross-reference. For further rules
applicable to groups that include
insolvent financial institutions, see
§ 301.6402–7 of this chapter.
(g) Effective date. This section applies
to taxable years beginning before June
28, 2002, except paragraph (e) of this
section applies to statutory notices and
waivers of the statute of limitations for
taxable years for which the due date
(without extensions) of the consolidated
return is after September 7, 1988, and
which begin before June 28, 2002.
6. New § 1.1502–77 is added to read
as follows:
§ 1.1502–77

Agent for the group.

(a) Scope of agency—(1) In general—
(i) Common parent. Except as provided
in paragraphs (a)(3) and (6) of this
section, the common parent (or a
substitute agent described in paragraph

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(a)(1)(ii) of this section) for a
consolidated return year is the sole
agent (agent for the group) that is
authorized to act in its own name with
respect to all matters relating to the tax
liability for that consolidated return
year, for—
(A) Each member in the group; and
(B) Any successor (see paragraph
(a)(1)(iii) of this section) of a member.
(ii) Substitute agents. For purposes of
this section, any corporation designated
as a substitute agent pursuant to
paragraph (d) of this section to replace
the common parent or a previously
designated substitute agent acts as agent
for the group to the same extent and
subject to the same limitations as are
applicable to the common parent, and
any reference in this section to the
common parent includes any such
substitute agent.
(iii) Successor. For purposes of this
section only, the term successor means
an individual or entity (including a
disregarded entity) that is primarily
liable, pursuant to applicable law
(including, for example, by operation of
a state or Federal merger statute), for the
tax liability of a member of the group.
Such determination is made without
regard to § 1.1502–1(f)(4) or 1.1502–6(a).

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Add
Commissioner
Commissioner
the Commissioner
the Commissioner
Commissioner
Commissioner
the Commissioner
Commissioner
the Commissioner
the Commissioner

(For inclusion of a successor in
references to a subsidiary or member,
see paragraph (c)(2) of this section.)
(iv) Disregarded entity. If a subsidiary
of a group becomes, or its successor is
or becomes, a disregarded entity for
Federal tax purposes, the common
parent continues to serve as the agent
with respect to that subsidiary’s tax
liability under § 1.1502–6 for
consolidated return years during which
it was included in the group, even
though the entity generally is not treated
as a person separate from its owner for
Federal tax purposes.
(v) Transferee liability. For purposes
of assessing, paying and collecting
transferee liability, any exercise of or
reliance on the common parent’s agency
authority pursuant to this section is
binding on a transferee (or subsequent
transferees) of a member, regardless of
whether the member’s existence
terminates prior to such exercise or
reliance.
(vi) Purported common parent. If any
corporation files a consolidated return
purporting to be the common parent of
a consolidated group but is
subsequently determined not to have
been the common parent of the claimed
group, that corporation is treated, to the

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extent necessary to avoid prejudice to
the Commissioner, as if it were the
common parent.
(2) Examples of matters subject to
agency. With respect to any
consolidated return year for which it is
the common parent—
(i) The common parent makes any
election (or similar choice of a
permissible option) that is available to
a subsidiary in the computation of its
separate taxable income, and any
change in an election (or similar choice
of a permissible option) previously
made by or for a subsidiary, including,
for example, a request to change a
subsidiary’s method or period of
accounting;
(ii) All correspondence concerning
the income tax liability for the
consolidated return year is carried on
directly with the common parent;
(iii) The common parent files for all
extensions of time, including extensions
of time for payment of tax under section
6164, and any extension so filed is
considered as having been filed by each
member;
(iv) The common parent gives
waivers, gives bonds, and executes
closing agreements, offers in
compromise, and all other documents,
and any waiver or bond so given, or
agreement, offer in compromise, or any
other document so executed, is
considered as having also been given or
executed by each member;
(v) The common parent files claims
for refund, and any refund is made
directly to and in the name of the
common parent and discharges any
liability of the Government to any
member with respect to such refund;
(vi) The common parent takes any
action on behalf of a member of the
group with respect to a foreign
corporation, for example, elections by,
and changes to the method of
accounting of, a controlled foreign
corporation in accordance with § 1.964–
1(c)(3);
(vii) Notices of claim disallowance are
mailed only to the common parent, and
the mailing to the common parent is
considered as a mailing to each member;
(viii) Notices of deficiencies are
mailed only to the common parent
(except as provided in paragraph (b) of
this section), and the mailing to the
common parent is considered as a
mailing to each member;
(ix) Notices of final partnership
administrative adjustment under section
6223 with respect to any partnership in
which a member of the group is a
partner may be mailed to the common
parent, and, if so, the mailing to the
common parent is considered as a
mailing to each member that is a partner

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entitled to receive such notice (for other
rules regarding partnership proceedings,
see paragraphs (a)(3)(v) and (a)(6)(iii) of
this section);
(x) The common parent files petitions
and conducts proceedings before the
United States Tax Court, and any such
petition is considered as also having
been filed by each member;
(xi) Any assessment of tax may be
made in the name of the common
parent, and an assessment naming the
common parent is considered as an
assessment with respect to each
member; and
(xii) Notice and demand for payment
of taxes is given only to the common
parent, and such notice and demand is
considered as a notice and demand to
each member.
(3) Matters reserved to subsidiaries.
Except as provided in this paragraph
(a)(3) and paragraph (a)(6) of this
section, no subsidiary has authority to
act for or to represent itself in any
matter related to the tax liability for the
consolidated return year. The following
matters, however, are reserved
exclusively to each subsidiary—
(i) The making of the consent required
by § 1.1502–75(a)(1);
(ii) Any action with respect to the
subsidiary’s liability for a federal tax
other than the income tax imposed by
chapter 1 of the Internal Revenue Code
(including, for example, employment
taxes under chapters 21 through 25 of
the Internal Revenue Code, and
miscellaneous excise taxes under
chapters 31 through 47 of the Internal
Revenue Code);
(iii) The making of an election under
section 936(e);
(iv) The making of an election to be
treated as a DISC under § 1.992–2; and
(v) Any actions by a subsidiary acting
as tax matters partner under sections
6221 through 6234 and the
accompanying regulations (but see
paragraph (a)(2)(ix) of this section
regarding the mailing of a final
partnership administrative adjustment
to the common parent).
(4) Term of agency—(i) In general.
Except as provided in paragraph
(a)(4)(iii) of this section, the common
parent for the consolidated return year
remains the agent for the group with
respect to that year until the common
parent’s existence terminates, regardless
of whether one or more subsidiaries in
that year cease to be members of the
group, whether the group files a
consolidated return for any subsequent
year, whether the common parent ceases
to be the common parent or a member
of the group in any subsequent year, or
whether the group continues pursuant

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43541

to § 1.1502–75(d) with a new common
parent in any subsequent year.
(ii) Replacement of substitute agent
designated by Commissioner. If the
Commissioner replaces a previously
designated substitute agent pursuant to
paragraph (d)(3)(ii) of this section, the
replaced substitute agent ceases to be
the agent after the Commissioner
designates another substitute agent.
(iii) New common parent after a
group structure change. If the group
continues in existence with a new
common parent pursuant to § 1.1502–
75(d) during a consolidated return year,
the common parent at the beginning of
the year is the agent for the group
through the date of the § 1.1502–75(d)
transaction, and the new common
parent becomes the agent for the group
beginning the day after the transaction,
at which time it becomes the agent for
the group with respect to the entire
consolidated return year (including the
period through the date of the
transaction) and the former common
parent is no longer the agent for that
year.
(5) Identifying members in notice of a
lien. Notwithstanding any other
provisions of this paragraph (a), any
notice of a lien, any levy or any other
proceeding to collect the amount of any
assessment, after the assessment has
been made, must name the entity from
which such collection is to be made.
(6) Direct dealing with a member—(i)
Several liability. The Commissioner
may, upon issuing to the common
parent written notice that expressly
invokes the authority of this provision,
deal directly with any member of the
group with respect to its liability under
§ 1.1502–6 for the consolidated tax of
the group, in which event such member
has sole authority to act for itself with
respect to that liability. However, if the
Commissioner believes or has reason to
believe that the existence of the
common parent has terminated, he may,
if he deems it advisable, deal directly
with any member with respect to that
member’s liability under § 1.1502–6
without giving the notice required by
this provision.
(ii) Information requests. The
Commissioner may, upon informing the
common parent, request information
relevant to the consolidated tax liability
from any member of the group.
However, if the Commissioner believes
or has reason to believe that the
existence of the common parent has
terminated, he may request such
information from any member of the
group without informing the common
parent.
(iii) Members as partners in
partnerships. The Commissioner

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Federal Register / Vol. 67, No. 125 / Friday, June 28, 2002 / Rules and Regulations

generally will deal directly with any
member in its capacity as a partner of
a partnership that is subject to the
provisions of sections 6221 through
6234 and the accompanying regulations
(but see paragraph (a)(2)(ix) of this
section regarding the mailing of a final
partnership administrative adjustment
to the common parent). However, if
requested to do so in accordance with
the provisions of § 301.6223(c)–1(b) of
this chapter, the Commissioner may
deal with the common parent as agent
for such member on any matter related
to the partnership, except in regards to
a settlement under section 6224(c) and
except to the extent the member acts as
tax matters partner of the partnership.
(b) Copy of notice of deficiency to
entity that has ceased to be a member
of the group. An entity that ceases to be
a member of the group during or after
a consolidated return year may file a
written notice of that fact with the
Commissioner and request a copy of any
notice of deficiency with respect to the
tax for a consolidated return year during
which the entity was a member, or a
copy of any notice and demand for
payment of such deficiency, or both.
Such filing does not limit the scope of
the agency of the common parent
provided for in paragraph (a) of this
section. Any failure by the
Commissioner to comply with such
request does not limit an entity’s tax
liability under § 1.1502–6. For purposes
of this paragraph (b), references to an
entity include a successor of such
entity.
(c) References to member or
subsidiary. For purposes of this section,
all references to a member or subsidiary
for a consolidated return year include—
(1) Each corporation that was a
member of the group during any part of
such year (except that any reference to
a subsidiary does not include the
common parent);
(2) Except as indicated otherwise, a
successor (as defined in paragraph
(a)(1)(iii) of this section) of any
corporation described in paragraph
(c)(1) of this section; and
(3) Each corporation whose income
was included in the consolidated return
for such year, notwithstanding that the
tax liability of such corporation should
have been computed on the basis of a
separate return, or as a member of
another consolidated group, under the
provisions of § 1.1502–75.
(d) Termination of common parent—
(1) Designation of substitute agent by
common parent. (i) If the common
parent’s existence terminates, it may
designate a substitute agent for the
group and notify the Commissioner, as
provided in this paragraph (d)(1).

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(A) Subject to the Commissioner’s
approval under paragraph (d)(1)(ii) of
this section, before the common parent’s
existence terminates, the common
parent may designate, for each
consolidated return year for which it is
the common parent and for which the
period of limitations either for
assessment, for collection after
assessment, or for claiming a credit or
refund has not expired, one of the
following to act as substitute agent in its
place—
(1) Any corporation that was a
member of the group during any part of
the consolidated return year and, except
as provided in paragraph (e)(3)(ii) of this
section, has not subsequently been
disregarded as an entity separate from
its owner or reclassified as a partnership
for Federal tax purposes; or
(2) Any successor (as defined in
paragraph (a)(1)(iii) of this section) of
such a corporation or of the common
parent that is a domestic corporation
(and, except as provided in paragraph
(e)(3)(ii) of this section, is not
disregarded as an entity separate from
its owner or classified as a partnership
for Federal tax purposes), including a
corporation that will become a
successor at the time that the common
parent’s existence terminates.
(B) The common parent must notify
the Commissioner in writing (under
procedures prescribed by the
Commissioner) of the designation and
provide the following—
(1) An agreement executed by the
designated corporation agreeing to serve
as the group’s substitute agent; and
(2) If the designated corporation was
not itself a member of the group during
the consolidated return year (because
the designated corporation is a
successor of a member of the group for
the consolidated return year), a
statement by the designated corporation
acknowledging that it is or will be
primarily liable for the consolidated tax
as a successor of a member.
(ii) A designation under paragraph
(d)(1)(i)(A) of this section does not
apply unless and until it is approved by
the Commissioner. The Commissioner’s
approval of such a designation is not
effective before the existence of the
common parent terminates.
(2) Default substitute agent. If the
common parent fails to designate a
substitute agent for the group before its
existence terminates and if the common
parent has a single successor that is a
domestic corporation, such successor
becomes the substitute agent for the
group upon termination of the common
parent’s existence. However, see
paragraph (d)(4) of this section
regarding the consequences of the

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successor’s failure to notify the
Commissioner of its status as default
substitute agent in accordance with
procedures established by the
Commissioner.
(3) Designation by the Commissioner.
(i) In the event the common parent’s
existence terminates and no designation
is made and approved under paragraph
(d)(1) of this section and the
Commissioner believes or has reason to
believe that there is no successor of the
common parent that satisfies the
requirements of paragraph (d)(2) of this
section (or the Commissioner believes or
has reason to believe there is such a
successor but has no last known address
on file for such successor), the
Commissioner may, at any time, with or
without a request from any member of
the group, designate a corporation
described in paragraph (d)(1)(i)(A) of
this section to act as the substitute
agent. The Commissioner will notify the
designated substitute agent in writing of
its designation, and the designation is
effective upon receipt by the designated
substitute agent of such notice. The
designated substitute agent must give
notice of the designation to each
corporation that was a member of the
group during any part of the
consolidated return year, but a failure
by the designated substitute agent to
notify any such member of the group
does not invalidate the designation.
(ii) At the request of any member, the
Commissioner may, but is not required
to, replace a substitute agent previously
designated under paragraph (d)(3)(i) of
this section with another corporation
described in paragraph (d)(1)(i)(A) of
this section.
(4) Absence of designation or
notification of default substitute agent.
Until a designation of a substitute agent
for the group under paragraph (d)(1) of
this section has become effective, the
Commissioner has received notification
in accordance with procedures
established by the Commissioner that a
successor qualifying under paragraph
(d)(2) of this section has become the
substitute agent by default, or the
Commissioner has designated a
substitute agent under paragraph (d)(3)
of this section—
(i) Any notice of deficiency or other
communication mailed to the common
parent, even if no longer in existence, is
considered as having been properly
mailed to the agent for the group; and
(ii) The Commissioner is not required
to act on any communication
(including, for example, a claim for
refund) submitted on behalf of the group
by any person other than the common
parent (including a successor of the
common parent qualifying as a default

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Federal Register / Vol. 67, No. 125 / Friday, June 28, 2002 / Rules and Regulations
substitute agent under paragraph (d)(2)
of this section).
(e) Termination of a corporation’s
existence—(1) In general. For purposes
of paragraphs (a)(1)(v), (a)(4)(i), and (d)
of this section, the existence of a
corporation is deemed to terminate if—
(i) Its existence terminates under
applicable law; or
(ii) Except as provided in paragraph
(e)(3) of this section, it becomes, for
Federal tax purposes, either—
(A) An entity that is disregarded as an
entity separate from its owner; or
(B) An entity that is reclassified as a
partnership.
(2) Purported agency. If the existence
of the agent for the group terminates
under circumstances described in
paragraph (e)(1)(ii) of this section, until
the Commissioner has approved the
designation of a substitute agent for the
group pursuant to paragraph (d)(1) of
this section or the Commissioner
designates a substitute agent and
notifies the designated substitute agent
pursuant to paragraph (d)(3) of this
section, any post-termination action by
that purported agent on behalf of the
group has the same effect, to the extent
necessary to avoid prejudice to the
Commissioner, as if the agent’s
corporate existence had not terminated.
(3) Exceptions where no eligible
corporation exists. (i) For purposes of
the common parent’s term as agent
under paragraph (a)(4)(i) of this section
and the term as agent of the substitute
agent designated under paragraph (d) of
this section, if a corporation either
becomes disregarded as an entity
separate from its owner or is reclassified
as a partnership for Federal tax
purposes, its existence is not deemed to
terminate if the effect of such
termination would be that no
corporation remains eligible to serve as
the substitute agent for the group’s
consolidated return year.
(ii) Similarly, for purposes of
paragraph (d) of this section, an entity
that is either disregarded as an entity
separate from its owner or reclassified
as a partnership for Federal tax
purposes is not precluded from
designation as a substitute agent merely
because of such classification if the
effect of the inability to make such
designation would be that no
corporation remains eligible to serve as
the substitute agent for the group’s
consolidated return year.
(iii) Any entity described in
paragraphs (e)(3)(i) or (ii) of this section
that remains or becomes the agent for
the group is treated as a corporation for
purposes of this section.
(4) Exception for section 338
transactions. Notwithstanding section

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338(a)(2), a target corporation for which
an election is made under section 338
is not deemed to terminate for purposes
of this section.
(f) Examples. The following examples
illustrate the principles of this section.
Unless otherwise indicated, each
example addresses the question of
which corporation is the proper party to
execute a consent to waive the statute of
limitations for Years 1 and 2 or the more
general question of which corporation
may be designated as a substitute agent
for the group for Years 1 and 2. In each
example, as of January 1 of Year 1, the
P group consists of P and its two
subsidiaries, S and S–1. P, as the
common parent of the P group, files
consolidated returns for the P group in
Years 1 and 2. On January 1 of Year 1,
domestic corporations S–2, U, V, W, W–
1, X, Y, Z and Z–1 are not related to P
or the members of the P group. All
corporations are calendar year
taxpayers. For none of the tax years at
issue does the Commissioner exercise
the authority under paragraph (a)(6) of
this section to deal with any member
separately. Any surviving corporation in
a merger is a successor as described in
paragraph (a)(1)(iii) of this section. Any
notification to the Commissioner of the
designation of the P group’s substitute
agent also contains a statement signed
on behalf of the designated agent that it
agrees to act as the group’s substitute
agent and, in the case of a successor,
that it is primarily liable as a successor
of a member. The examples are as
follows:
Example 1. Disposition of all group
members. On December 31 of Year 1, P sells
all the stock of S–1 to X. On December 31 of
Year 2, P distributes all the stock of S to P’s
shareholders. P files a separate return for
Year 3. Although P is no longer a common
parent after Year 2, P remains the agent for
the P group for Years 1 and 2. For as long
as P remains in existence, only P may
execute a waiver of the period of limitations
on assessment on behalf of the group for
Years 1 and 2.
Example 2. Acquisition of common parent
by another group. The facts are the same as
in Example 1, except on January 1 of Year 3,
all of the outstanding stock of P is acquired
by Y. P thereafter joins in the Y group
consolidated return as a member of Y group.
Although P is a member of Y group in Year
3, P remains the agent for the P group for
Years 1 and 2. For as long as P remains in
existence, only P may execute a waiver of the
period of limitations on assessment on behalf
of the P group for Years 1 and 2.
Example 3. Merger of common parent—
designation of remaining member as
substitute agent. On December 31 of Year 1,
P sells all the stock of S–1 to X. On July 1
of Year 2, P acquires all the stock of S–2. On
November 30 of Year 2, P distributes all the
stock of S to P’s shareholders. On January 1

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43543

of Year 3, P merges into Y corporation. Just
before the merger, P notifies the
Commissioner in writing of the planned
merger and of its designation of S as the
substitute agent for the P group for Years 1
and 2. S is the only member that P can
designate as the substitute agent for both
Years 1 and 2 because it is the only
subsidiary that was a member of the P group
during part of both years. Although S–2 is the
only remaining subsidiary of the P group
when P merges into Y, S–2 was a member of
the P group only in Year 2. For that reason,
S–2 cannot be the substitute agent for the P
group for Year 1. Alternatively, P could
designate a different substitute agent for each
year, selecting S or S–1 as the substitute
agent for Year 1, and S or S–2 as the
substitute agent for Year 2. P could also
designate its successor Y as the substitute
agent for both Years 1 and 2.
Example 4. Forward triangular merger of
common parent. On January 1 of Year 3, P
merges with and into Z–1, a subsidiary of Z,
in a forward triangular merger described in
section 368(a)(1)(A) and (a)(2)(D). The
transaction constitutes a reverse acquisition
under § 1.1502–75(d)(3)(i) because P’s
shareholders receive more than 50% of Z’s
stock in exchange for all of P’s stock. Just
before the merger, P notifies the
Commissioner in writing of the planned
merger and its designation of Z–1, the
corporation that will survive the planned
merger, as the substitute agent of the P group
for Years 1 and 2. Because Z–1 will be P’s
successor (within the meaning of paragraph
(a)(1) of this section) after the planned
merger, P may designate Z–1 as the substitute
agent for the P group for Years 1 and 2,
pursuant to paragraph (d)(1) of this section.
Alternatively, P could have designated S or
S–1 as the substitute agent for the P group
for Years 1 and 2. Although Z is the new
common parent of the P group, which
continues pursuant to § 1.1502–75(d)(3)(i), P
may not designate Z as the substitute agent
for Years 1 and 2 because Z was not a
member of the group during any part of Years
1 or 2 and is not a successor of P or any other
member of P group.
Example 5. Reverse triangular merger of
common parent. On March 1 of Year 3, W–
1, a subsidiary of W, merges into P, in a
reverse triangular merger described in section
368(a)(1)(A) and (a)(2)(E). P survives the
merger with W–1. The transaction constitutes
a reverse acquisition under § 1.1502–
75(d)(3)(i) because P’s shareholders receive
more than 50% of W’s stock in exchange for
all of P’s stock. Under paragraph (a) of this
section, P remains the agent for the P group
for Years 1 and 2, even though the P group
continues with W as its new common parent
pursuant to § 1.1502–75(d)(3)(i). Because the
transaction constitutes a reverse acquisition,
the P group is treated as remaining in
existence with W as its common parent.
Before March 2 of Year 3, P is the agent for
the P group for Year 3. Beginning on March
2 of Year 3, W becomes the agent for the P
group with respect to all of Year 3 (including
the period through March 1) and subsequent
consolidated return years. For as long as P
remains in existence, P remains the agent of
the P group under paragraph (a) of this

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Federal Register / Vol. 67, No. 125 / Friday, June 28, 2002 / Rules and Regulations

section for Years 1 and 2, and therefore only
P may execute a waiver of the period of
limitations on assessment on behalf of the P
group for Years 1 and 2.
Example 6. Reverse triangular merger of
common parent-subsequent spinoff of
common parent. The facts are the same as in
Example 5, except that on April 1 of Year 4,
in a transaction unrelated to the Year 3
reverse acquisition, P distributes the stock of
its subsidiaries S and S–1 to W, and W then
distributes the stock of P to the W
shareholders. Beginning on March 2 of Year
3, W becomes the agent for the P group with
respect to Year 3 (including the period
through March 1) and subsequent
consolidated return years. Although P is no
longer a member of the P group after the Year
4 spinoff, P remains the agent for the P group
under paragraph (a) of this section for Years
1 and 2. Thus, for as long as P remains in
existence, only P may execute a waiver of the
period of limitations on assessment on behalf
of the P group for Years 1 and 2.
Example 7. Qualified stock purchase and
section 338 election. On March 31 of Year 2,
V purchases the stock of P in a qualified
stock purchase (within the meaning of
section 338(d)(3)), and V makes a timely
election pursuant to section 338(g) with
respect to P. Although section 338(a)(2)
provides that P is treated as a new
corporation as of the beginning of the day
after the acquisition date for purposes of
subtitle A, paragraph (e)(4) of this section
provides that P’s existence is not deemed to
terminate for purposes of this section
notwithstanding the general rule of section
338(a)(2). Therefore, the election under
section 338(g) does not result in a
termination of P under paragraph (e) of this
section, and new P remains the agent of the
P group for Year 1 and the period ending
March 31 of Year 2 (short Year 2). For as long
as new P remains in existence, only new P
may execute a waiver of the period of
limitations on assessment on behalf of the P
group for Year 1 and short Year 2.
Example 8. Fraudulent conveyance of
assets. On March 15 of Year 2, P files a
consolidated return that includes the income
of S and S–1 for Year 1. On December 1 of
Year 2, S–1 transfers assets having a fair
market value of $100x to U in exchange for
$10x. This transfer of assets for less than fair
market value constitutes a fraudulent
conveyance under applicable state law. On
March 1 of Year 5, P executes a waiver
extending to December 31 of Year 6 the
period of limitations on assessment with
respect to the group’s Year 1 consolidated
return. On February 1 of Year 6, the
Commissioner issues a notice of deficiency to
P asserting a deficiency of $30x for the P
group’s Year 1 consolidated tax liability. P
does not file a petition for redetermination in
the Tax Court, and the Commissioner makes
a timely assessment against the P group. P,
S and S–1 are all insolvent and are unable
to pay the deficiency. On February 1 of Year
8, the Commissioner sends a notice of
transferee liability to U, which does not file
a petition in the Tax Court. On August 1 of
Year 8, the Commissioner assesses the
amount of the P group’s deficiency against U.
Under section 6901(c), the Commissioner

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may assess U’s transferee liability within one
year after the expiration of the period of
limitations against the transferor S–1. By
operation of section 6213(a) and 6503(a), the
issuance of the notice of deficiency to P and
the expiration of the 90-day period for filing
a petition in the Tax Court have the effect of
further extending by 150 days the P group’s
limitations period on assessment from the
previously extended date of December 31 of
Year 6 to May 30 of Year 7. Pursuant to
paragraph (a)(1)(v) of this section, the waiver
executed by P on March 1 of Year 5 to extend
the period of limitations on assessment to
December 31 of Year 6 and the further
extension of the P group’s limitations period
to May 30 of Year 7 (by operation of sections
6213(a) and 6503(a)) have the derivative
effect of extending the period of limitations
on assessment of U’s transferee liability to
May 30 of Year 8. By operation of section
6901(f), the issuance of the notice of
transferee liability to U and the expiration of
the 90-day period for filing a petition in the
Tax Court have the effect of further extending
the limitations period on assessment of U’s
liability as a transferee by 150 days, from
May 30 of Year 8 to October 27 of Year 8.
Accordingly, the Commissioner may send a
notice of transferee liability to U at any time
on or before May 30 of Year 8 and assess the
unpaid liability against U at any time on or
before October 27 of Year 8. The result would
be the same even if S–1 ceased to exist before
March 1 of Year 5, the date P executed the
waiver.

(g) Cross-reference. For further rules
applicable to groups that include
insolvent financial institutions, see
§ 301.6402–7 of this chapter.
(h) Effective date—(1) Application—
(i) In general. This section applies with
respect to taxable years beginning on or
after June 28, 2002.
(ii) Election to apply for prior taxable
years. Notwithstanding paragraphs
(h)(1)(i) and (h)(2) of this section, the
common parent may elect to apply
paragraph (d)(1) of this section in lieu
of § 1.1502–77A(d) in designating a
substitute agent for taxable years
beginning before June 28, 2002. The
common parent makes such an election
by expressly referring to the election
under this paragraph (h)(1)(ii) in
notifying the Commissioner of the
designation of the substitute agent. Once
made, such election applies to any
subsequent designation of a substitute
agent for the consolidated return year(s)
subject to the election.
(2) Prior law. For taxable years
beginning before June 28, 2002, see
§ 1.1502–77A.
§ 1.1502–77T(a) [Redesignated as
§ 1.1502–77A(e) and Amended]

7. Section 1.1502–77T(a) is
redesignated as § 1.1502–77A(e) and is
amended by removing the language
‘‘district director’’ and adding
‘‘Commissioner’’ in each place it
appears.

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§ 1.1502–77T

[Removed]

8. Section 1.1502–77T is removed.
9. Section 1.1502–78 is amended as
follows:
1. Paragraph (a) is revised.
2. Paragraph (b)(1) is amended by
adding the language ‘‘for the carryback
year (or agent designated under
§ 1.1502–77(d) for the carryback year)’’
at the end of the first sentence.
3. Paragraph (b)(2) is amended by
removing the language ‘‘6213(b)(2)’’ and
adding ‘‘6213(b)(3)’’ in its place.
4. In paragraph (c), the last sentence
of Example (1) is amended by adding
the language ‘‘for the carryback year’’
after ‘‘parent.’’
5. In paragraph (c), the last sentence
of Example (2) is amended by removing
the language ‘‘S–1’’ and adding ‘‘P’’ in
its place.
6. In paragraph (c) Example (3), the
seventh sentence is amended by
removing the language ‘‘Z must’’ and
adding ‘‘X must’’ in its place.
7. In paragraph (c) Example (3), the
last sentence is amended by removing
the language ‘‘6213(b)(2)’’ and adding
‘‘6213(b)(3)’’ in its place.
8. Paragraph (e)(2)(v) is removed.
9. Paragraphs (f) is added.
The revision and addition read as
follows:
§ 1.1502–78 Tentative carryback
adjustments.

(a) General rule. If a group has a
consolidated net operating loss, a
consolidated net capital loss, or a
consolidated unused business credit for
any taxable year, then any application
under section 6411 for a tentative
carryback adjustment of the taxes for a
consolidated return year or years
preceding such year shall be made by
the common parent corporation for the
carryback year (or substitute agent
designated under § 1.1502–77(d) for the
carryback year) to the extent such loss
or unused business credit is not
apportioned to a corporation for a
separate return year pursuant to
§ 1.1502–21(b), 1.1502–22(b), or 1.1502–
79(c). In the case of the portion of a
consolidated net operating loss or
consolidated net capital loss or
consolidated unused business credit to
which the preceding sentence does not
apply and that is to be carried back to
a corporation that was not a member of
a consolidated group in the carryback
year, the corporation to which such loss
or credit is attributable shall make any
application under section 6411. In the
case of a net capital loss or net operating
loss or unused business credit arising in
a separate return year that may be
carried back to a consolidated return
year, after taking into account the

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Federal Register / Vol. 67, No. 125 / Friday, June 28, 2002 / Rules and Regulations
application of § 1.1502–21(b)(3)(ii)(B)
with respect to any net operating loss
arising in another consolidated group,
the common parent for the carryback
year (or substitute agent designated
under § 1.1502–77(d) for the carryback
year) shall make any application under
section 6411.
*
*
*
*
*
(f) Effective date—(1) In general. This
section applies to taxable years to which
a loss or credit may be carried back and
for which the due date (without
extensions) of the original return is after
June 28, 2002, except that the provisions
of paragraph (e)(2) apply for
applications by new members of
consolidated groups for tentative
carryback adjustments resulting from
net operating losses, net capital losses,
or unused business credits arising in
separate return years of new members
that begin on or after January 1, 2001.
(2) Prior law. For taxable years to
which a loss or credit may be carried
back and for which the due date
(without extensions) of the original
return is on or before June 28, 2002, see
§ 1.1502–78 in effect prior to June 28,
2002, as contained in 26 CFR part 1
revised April 1, 2002.
10. Immediately before § 1.1502–79A,
an undesignated center heading is
added to read as follows:
Regulations Applicable to Taxable
Years Before January 1, 1997
PART 602—OMB CONTROL NUMBERS
UNDER THE PAPERWORK
REDUCTION ACT
11. The authority citation for part 602
continues to read as follows:
Authority: 26 U.S.C. 7805.

12. The authority for part 602 is
amended by adding an entry in
numerical order to the table to read as
follows:
§ 602.101

*

OMB Control numbers.

*
*
(b) * * *

*

*

CFR part or section where
identified and described
*
*
*
1.1502–77 .............................
*

*

*

Current OMB
control No.
*

*
1545–1699

*

*

Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
Approved: May 20, 2002.
Pamela F. Olson,
Acting Assistant Secretary of the Treasury.
[FR Doc. 02–16399 Filed 6–27–02; 8:45 am]
BILLING CODE 4830–01–P

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ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 9
[FRL–7237–5]

OMB Approvals Under the Paperwork
Reduction Act; Technical Amendment
AGENCY: Environmental Protection
Agency (EPA).
ACTION: Final rule.
SUMMARY: In compliance with the
Paperwork Reduction Act (PRA), this
technical amendment amends the table
that lists the Office of Management and
Budget (OMB) control numbers issued
under the PRA for regulations for
Ambient Air Monitoring Reference and
Equivalent Methods.
EFFECTIVE DATE: This final rule is
effective June 28, 2002.
FOR FURTHER INFORMATION CONTACT:
Elizabeth T. Hunike, 919–541–3737;
facsimile number: 919–541–1153; EMail: [email protected].
SUPPLEMENTARY INFORMATION: EPA is
amending the table of currently
approved information collection request
(ICR) control numbers issued by OMB
for various regulations. The amendment
updates the table to list those
information collection requirements
promulgated under Part 53—Ambient
Air Monitoring Reference and
Equivalent Methods, which appeared in
the Federal Register on February 18,
1975 (40 FR 7049) and was amended on
April 25, 1975 (40 FR 18168), December
1, 1976 (41 FR 52694), July 1, 1987 (52
FR 24729), July 18, 1997 (62 FR 38784)
and February 17, 1998 (62 FR 7714).
The affected regulations are codified at
40 CFR part 53. EPA will continue to
present OMB control numbers in a
consolidated table format to be codified
in 40 CFR part 9 of the Agency’s
regulations. The table lists CFR citations
with reporting, recordkeeping, or other
information collection requirements,
and the current OMB control numbers.
This listing of the OMB control numbers
and their subsequent codification in the
CFR satisfies the requirements of the
Paperwork Reduction Act (44 U.S.C.
3501 et seq.) and OMB’s implementing
regulations at 5 CFR part 1320.
This ICR was previously subject to
public notice and comment prior to
OMB approval. Due to the technical
nature of the table, EPA finds that
further notice and comment is
unnecessary. As a result, EPA finds that
there is ‘‘good cause’’ under section
553(b)(B) of the Administrative
Procedure Act, 5 U.S.C. 553(b)(B), to
amend this table without prior notice
and comment.

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43545

I. Administrative Requirements
Under Executive Order 12866 (58 FR
51735, October 4, 1993), this action is
not a ‘‘significant regulatory action’’ and
is therefore not subject to review by the
Office of Management and Budget. In
addition, this action does not impose
any enforceable duty, contain any
unfunded mandate, or impose any
significant or unique impact on small
governments as described in the
Unfunded Mandates Reform Act of 1995
(Public Law 104–4). This rule also does
not require prior consultation with
State, local, and tribal government
officials as specified by Executive Order
12875 (58 FR 58093, October 28, 1993)
or Executive Order 13084 (63 FR 27655,
May 10, 1998), or involve special
consideration of environmental justice
related issues as required by Executive
Order 12898 (59 FR 7629, February 16,
1994). Because this action is not subject
to notice-and-comment requirements
under the Administrative Procedure Act
or any other statute, it is not subject to
the regulatory flexibility provisions of
the Regulatory Flexibility Act (5 U.S.C.
601 et seq.). This rule also is not subject
to Executive Order 13045 (62 FR 19885,
April 23, 1997) because EPA interprets
Executive Order 13045 as applying only
to those regulatory actions that are
based on health or safety risks, such that
the analysis required under section 5–
501 of the Order has the potential to
influence the regulation. This rule is not
subject to Executive Order 13045
because it does not establish an
environmental standard intended to
mitigate health or safety risks.
Congressional Review Act
The Congressional Review Act, 5
U.S.C. 801 et seq., as added by the Small
Business Regulatory Enforcement
Fairness Act of 1996, generally provides
that before a rule may take effect, the
agency promulgating the rule must
submit a rule report, which includes a
copy of the rule, to each House of the
Congress and to the Comptroller General
of the United States. Section 808 allows
the issuing agency to make a good cause
finding that notice and public procedure
is impracticable, unnecessary or
contrary to the public interest. This
determination must be supported by a
brief statement. 5 U.S.C. 808(2). As
stated previously, EPA has made such a
good cause finding, including the
reasons therefor, and established an
effective date of June 28, 2002. EPA will
submit a report containing this rule and
other required information to the U.S.
Senate, the U.S. House of
Representatives, and the Comptroller
General of the United States prior to

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