[Federal Register Volume 85, Number 1 (Thursday, January 2, 2020)]
[Notices]
[Pages 149-154]
[FR Doc No: 2019-28276]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87858; File No. SR-NSCC-2019-004]

Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing of Proposed Rule Change To Enhance
National Securities Clearing Corporation's Haircut-Based Volatility
Charge Applicable to Municipal Bonds

December 26, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 13, 2019, National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the clearing
agency.\3\ The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On December 13, 2019, NSCC filed this proposed rule change
as an advance notice (SR-NSCC-2019-801) with the Commission pursuant
to Section 806(e)(1) of Title VIII of the Dodd-Frank Wall Street
Reform and Consumer Protection Act entitled the Payment, Clearing,
and Settlement Supervision Act of 2010, 12 U.S.C. 5465(e)(1), and
Rule 19b-4(n)(1)(i) under the Act, 17 CFR 240.19b-4(n)(1)(i). A copy
of the advance notice is available at http://www.dtcc.com/legal/sec-rule-filings.aspx.
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change

    The proposed rule change consists of amendments to NSCC's Rules &
Procedures (``Rules'') \4\ in order to enhance NSCC's haircut-based
volatility charge applicable to municipal bonds (the ``Bond Haircut'').
References to the Bond Haircut in this document refer only to that
charge as applied to municipal bonds. The proposed changes are
described in greater detail below.
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    \4\ Capitalized terms not defined herein are defined in the
Rules, available at http://dtcc.com/~/media/Files/Downloads/legal/
rules/nscc_rules.pdf.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

    In its filing with the Commission, the clearing agency included
statements concerning the purpose of and basis for the proposed rule
change and discussed any comments it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. The clearing agency has prepared summaries,
set forth in sections A, B, and C below, of the most significant
aspects of such statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

1. Purpose
    NSCC is proposing a number of enhancements to NSCC's Bond Haircut,
as described in greater detail below.
The Required Fund Deposit and the Bond Haircut
    As part of its market risk management strategy, NSCC manages its
credit exposure to Members by determining the appropriate Required Fund
Deposit for each Member and monitoring its sufficiency, as provided for
in the Rules.\5\ The Required Fund Deposit serves as each Member's
margin. The objective of a Member's Required Fund Deposit is to
mitigate potential losses to NSCC associated with liquidation of the
Member's portfolio in the event NSCC ceases to act for that Member
(hereinafter referred to as a ``default'').\6\ The aggregate of all
Members' Required Fund Deposits, together with certain other deposits
required under the Rules, constitute the Clearing Fund of NSCC, which
it would access should a defaulting Member's own Required Fund Deposit
be insufficient to satisfy losses to NSCC caused by the liquidation of
that Member's portfolio.
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    \5\ See Rule 4 (Clearing Fund) and Procedure XV (Clearing Fund
Formula and Other Matters) of the Rules (``Procedure XV''), supra
note 4. NSCC's market risk management strategy is designed to comply
with Rule 17Ad-22(e)(4) under the Act, where these risks are
referred to as ``credit risks.'' 17 CFR 240.17Ad-22(e)(4).
    \6\ The Rules identify when NSCC may cease to act for a Member
and the types of actions NSCC may take. For example, NSCC may
suspend a firm's membership with NSCC or prohibit or limit a
Member's access to NSCC's services in the event that Member defaults
on a financial or other obligation to NSCC. See Rule 46
(Restrictions on Access to Services) of the Rules, supra note 4.
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    Pursuant to the Rules, each Member's Required Fund Deposit amount
consists of a number of applicable components, each of which is
calculated to address specific risks faced by NSCC, as identified
within Procedure XV.\7\ Generally, the largest component of Members'
Required Fund Deposits is the volatility component. The volatility
component is designed to calculate the amount of money that could be
lost on a portfolio over a given period of time assumed necessary to
liquidate the portfolio, within a 99% confidence level.
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    \7\ Procedure XV, supra note 4.
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    NSCC has two methodologies for calculating the volatility
component. For the majority of Net Unsettled Positions,\8\ NSCC
calculates the volatility component as the greater of (1) the larger of
two separate calculations that utilize a parametric Value at Risk
(``VaR'') model, (2) a gap risk measure calculation based on the
largest non-index position in a portfolio that exceeds a concentration
threshold, and (3) a portfolio margin floor calculation based on the
market values of the long and short positions in the portfolio (``VaR
Charge'').\9\ Pursuant to Sections I(A)(1)(a)(ii) and I(A)(2)(a)(ii) of
Procedure XV, certain positions in certain classes of securities,
including municipal bonds, are excluded from the calculation of the VaR
Charge and are instead charged a haircut-based volatility component
that is calculated by multiplying the absolute value of such positions
by a percentage designated by NSCC which shall not be less than 2%.\10\
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    \8\ ``Net Unsettled Positions'' and ``Net Balance Order
Unsettled Positions'' refer to net positions that have not yet
passed their settlement date, or did not settle on their settlement
date, and are referred to collectively in this filing as Net
Unsettled Positions. NSCC does not take into account any offsets,
such as inventory held at other clearing agencies, when determining
Net Unsettled Positions for the purpose of calculating the
volatility component. See Procedure XV, supra note 4.
    \9\ Sections I(A)(1)(a)(i) and I(A)(2)(a)(i) of Procedure XV,
supra note 4.
    \10\ Sections I(A)(1)(a)(ii) and I(A)(2)(a)(ii) of Procedure XV,
supra note 4.
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Existing Municipal Bond Haircut Methodology
    The existing methodology for calculating the Bond Haircut is
described in Sections I(A)(1)(a)(iii)(B) and I(A)(2)(a)(iii)(B) of
Procedure XV.\11\ In order to determine the current Bond Haircut,
municipal bonds are categorized into tenor-based groups (i.e., based on
remaining time to maturity) and separately categorized by municipal
sector. Sections I(A)(1)(a)(iii)(B) and I(A)(2)(a)(iii)(B) of Procedure
XV provide that NSCC shall establish a percentage applicable to each
tenor-based group and pursuant to those sections NSCC has established a
percentage (which is not less than 2%) for each tenor-based group which
is used to calculate the haircut-based charge applicable to that
group.\12\ For municipal bonds rated higher than BBB+, NSCC has
established a tenor-based haircut for each tenor-based group. For
example, a municipal bond rated above BBB+ with 3 years to maturity and
$10MM short position, will be subject to the 2-5 years tenor-based
group haircut (5%) which will be applied to the absolute market value
of the positions resulting in $500K haircut-based charge.
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    \11\ Sections I(A)(1)(a)(iii)(B) and I(A)(2)(a)(iii)(B) of
Procedure XV, supra note 4.
    \12\ Id.
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    Sections I(A)(1)(a)(iii)(B) and I(A)(2)(a)(iii)(B) of Procedure XV
provide that NSCC shall assign each municipal sector a risk factor.\13\
For municipal bonds rated lower than a pre-determined threshold, which
shall be no lower than BBB+, and non-rated municipal bonds, NSCC has
established a percentage based on a sector-based risk factor which is
also applied to the tenor-based haircut. For example, a municipal bond
in the healthcare sector,

rated BBB+ or lower with 3 years to maturity and $10MM short position,
will be subject to the 2-5 years tenor-based group haircut (5%)
multiplied by the sector-based factor (1.2), resulting in 6% haircut-
based charge of $600K. This additional sector-based risk factor is
added because variable risk factors exist between municipal sectors
based on the various industries in which the bonds are issued and the
source of repayment for the bonds. For instance, general obligation
bonds are typically backed by the taxing power of their issuer and
repaid from general taxes whereas transportation or healthcare-related
bonds may be repaid from funds from a specific project based on the
revenues of the project. Such risk factor is based on the sector
index's spread to a benchmark index.\14\ NSCC uses a vendor to match
bonds to particular sectors. If a municipal bond does not fit within
any particular sector, the highest sector-based risk factor is applied
to such municipal bond. Currently, the highest sector-based risk factor
is 2.6 used for bonds in the housing sector.
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    \13\ Id.
    \14\ The ``spread'' is the difference in the yield curve of the
sector index to the yield curve of a benchmark index which is
indicative of the added risk presented by the sector.
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Enhancements to Municipal Bond Haircut Methodology
    NSCC regularly assesses its market and liquidity risks, as such
risks are related to its margining methodologies, to evaluate whether
margin levels are commensurate with the particular risk attributes of
each relevant product, portfolio, and market. In connection with such
regular reviews, NSCC has determined based on impact studies that,
under current market conditions, the current margin levels with respect
to municipal bonds using the current methodology exceed the levels
necessary to offset the risks with respect to these securities. Based
on impact studies, NSCC has determined that changes to its current
methodology for municipal bonds would result in margin levels that are
lower and more commensurate with the risk attributes of those
securities. In particular, as described below, NSCC is proposing to
replace the municipal sector-based risk factor for lower rated
municipal bonds with a percentage derived using the historical returns
of applicable benchmark indices.
    NSCC is proposing the following enhancements to the methodology
used for calculating the Bond Haircut.
    First, NSCC is proposing to re-calibrate the Bond Haircut not less
frequently than annually. Sections I(A)(1)(a)(iii)(B) and
I(A)(2)(a)(iii)(B) of Procedure XV currently provide that each
municipal sector is assigned a risk factor no less frequently than
annually.\15\ As discussed above and below, the enhanced methodology
for calculating Bond Haircuts would no longer include the straight risk
factor by sector. The re-calibration of the Bond Haircut not less
frequently than annually would replace the assignment of a straight
risk factor no less frequently than annually. NSCC believes that the
periodic re-calibration would help ensure that NSCC is reviewing the
Bond Haircut with enough regularity to ensure that the margin levels
are commensurate with the particular risk attributes of municipal
bonds.
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    \15\ Sections I(A)(1)(a)(iii)(B) and I(A)(2)(a)(iii)(B) of
Procedure XV, supra note 4.
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    While the proposed rule change would provide that NSCC would re-
calibrate not less frequently than annually, NSCC would initially re-
calibrate the Bond Haircut on a quarterly basis. NSCC could change how
often it recalibrates from time to time based on its regular review of
margining methodologies; provided, that it would recalibrate not less
frequently than annually pursuant to the proposed rule change. Changes
to the frequency of calibration would be subject to NSCC's risk
management practices which would require, among other things, approval
by the DTCC Model Risk Governance Committee (``MRGC'').\16\
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    \16\ See Securities Exchange Act Release No. 81485 (August 25,
2017), 82 FR 41433 (August 31, 2017) (File No. SR-NSCC-2017-008)
(describes the adoption of the Clearing Agency Model Risk Management
Framework (``Model Risk Management Framework'') of NSCC which sets
forth the model risk management practices of NSCC) and Securities
Exchange Act Release No. 84458 (October 19, 2018), 83 FR 53925
(October 25, 2018) (File No. SR-NSCC-2018-009) (amends the Model
Risk Management Framework). The Model Risk Management Framework
describes the model management practices adopted by NSCC, which have
been designed to assist NSCC in identifying, measuring, monitoring,
and managing the risks associated with the design, development,
implementation, use, and validation of ``models'' which would
include the methodology for the Bond Haircut. Id.
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    Second, municipal bonds would be grouped into tenor-based groups
and by credit rating, and municipal bonds that are rated BBB+ or lower,
or that are not rated, would also be separately categorized by
municipal sector. NSCC would then establish a percentage haircut for
each group based on the (1) the historical returns of applicable
benchmark indices, such as tenor-based indices (i.e., based on time to
maturity), municipal bond sector-based indices, and high-yield indices;
(2) a pre-determined look-back period, which shall not be shorter than
10 years; and (3) a pre-determined calibration percentile, which shall
not be less than 99%.
    For municipal bonds that are rated higher than BBB+, NSCC is
proposing to use a tenor-based index (i.e., based on time to maturity)
as the applicable benchmark index. While the proposed rule change would
provide that NSCC would base such percentage for bonds that are rated
higher than BBB+ on historical returns of applicable benchmark indices,
such as tenor-based indices (i.e., based on time to maturity),
municipal bond sector-based indices, and high-yield indices; NSCC would
initially base the percentage derived from a benchmark municipal tenor-
based index over a 3-day price return from the index. NSCC could change
which applicable benchmark indices it uses and the applicable period
for the price return used in the calculation from time to time based on
its regular review of margining methodologies. Changes to the frequency
of calibration would be subject to NSCC's risk management practices
which would require, among other things, approval by the MRGC.\17\
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    \17\ See note 16.
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    For municipal bonds that are rated BBB+ or lower, or are not rated,
NSCC is proposing to use a percentage derived from the maximum of the
applicable tenor-based index, municipal bond sector-based indices and a
high-yield index. Rather than multiply the tenor-based haircut by a
straight risk factor for each municipal sector, as is done under the
current methodology, the Bond Haircut for these lower rated or non-
rated municipal bonds would be determined by using the maximum percent
derived from either the applicable tenor-based index, the municipal
bond sector-based indices or a high yield index. The enhancement would
account for risks represented by the tenor, sector and high-yield
characteristics that may be presented by these municipal bonds by using
the maximum percent that is derived from either a tenor-based index,
sector-based indices or a high yield index, rather than addressing
these risks by multiplying the percent derived from a tenor-based index
by a straight sector-based risk factor. Based on analysis of the impact
studies, NSCC believes that the use of a risk factor based on the
tenor-based index, municipal bond sector-based indices and a high-yield
index would result in lower margins with respect to these securities
that are sufficient to offset the risks with respect to these
securities.
    While the proposed rule change would provide that NSCC would base

such percentage on historical returns of applicable benchmark indices,
such as tenor-based indices (i.e., based on time to maturity),
municipal bond sector-based indices, and high-yield indices; NSCC would
initially base the percentage derived from a tenor-based index,
municipal bond sector-based indices and a high-yield index over a 3-day
price return from the indices. NSCC could change which applicable
benchmark indices it uses and the applicable period for the price
return used in the calculation from time to time based on its regular
review of margining methodologies in accordance with its risk
management practices which would require, among other things, approval
by the MRGC.\18\
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    \18\ See note 16.
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    In extraordinary circumstances, a certain municipality or issuer
may present unique risks beyond the calibrated tenor, sector and high-
yield factors. For example, the market price risk for issues of a
municipality facing technical default following a natural disaster may
not be fully captured due to the liquidity profile of municipal
securities. Therefore, NSCC would reserve the right to apply the
highest haircut of all municipal bonds to a specific issuer in such
instances. NSCC would apply the highest haircut in accordance with its
risk management practices, including approval by an officer of NSCC in
the risk management department, following a review of the circumstances
facing the municipality and a finding that the market price movement
raises risks that are not accounted for by the Bond Haircut
methodology.
    Finally, the recalibration of the Bond Haircut would apply a pre-
determined look-back period. NSCC would initially apply a look-back
period of a 10-year rolling window plus a one calendar year ``worst
case scenario'' stress period. NSCC believes this look-back period is
appropriate because it would capture relevant data and is adequate to
cover enough market activity, while not diluting the ``tail'' with an
abundance of data.\19\
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    \19\ NSCC believes that a 10-year window with a one-year stress
period is typically long enough to capture at least two recent
market cycles. NSCC believes that data over a longer period will
``flatten'' out the results because recent volatile periods will be
offset by non-volatile periods, making the more recent volatility
appear less significant.
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    While the proposed rule change would provide that NSCC would apply
a pre-determined look-back period, which shall not be shorter than 10
years, NSCC would initially apply a look-back period of a 10-year
rolling window plus a one calendar year ``worst case scenario'' stress
period. NSCC could change the look-back period from time to time based
on its regular review of margining methodologies in accordance with its
risk management practices which would require, among other things,
approval by the MRGC.\20\
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    \20\ See note 16.
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Proposed Rule Changes to Procedure XV
    In order to implement the proposed enhancements to the Bond Haircut
methodology described above, Sections I(A)(1)(a)(iii)(B) and
I(A)(2)(a)(iii)(B) of Procedure XV would be revised to provide that:
(i) Municipal bonds would be grouped by both ``remaining time to
maturity'' and credit rating, and municipal bonds that are BBB+ or
lower, or that are not rated, would be separately categorized by
municipal sector, (ii) NSCC would establish the Bond Haircut
percentages no less frequently than annually, (iii) the Bond Haircut
percentage to be applied to municipal bonds would apply to each
grouping of municipal bonds and (iv) the Bond Haircut percentage to be
applied to municipal bonds would be based on (1) the historical returns
of applicable benchmark indices, such as tenor-based indices (i.e.,
based on time to maturity), municipal bond sector-based indices, and
high-yield indices; (2) a pre-determined look-back period; and (3) a
pre-determined calibration percentile, which shall not be less than
99%. In addition, Sections I(A)(1)(a)(iii)(B) and I(A)(2)(a)(iii)(B) of
Procedure XV would be revised to remove the references to the municipal
sector factor and the current application of the municipal sector
factor in the last four sentences in Sections I(A)(1)(a)(iii)(B) and
I(A)(2)(a)(iii)(B) of Procedure XV. A sentence would also be added to
Sections I(A)(1)(a)(iii)(B) and I(A)(2)(a)(iii)(B) of Procedure XV to
provide that in extraordinary circumstances where NSCC determines that
a certain municipality or issuer of municipal bonds presents unique
risks that are not captured by the grouping set forth in those
subsections, NSCC may, in its discretion, apply the highest percentage
being applied to any municipal bond group pursuant to those subsections
to municipal bonds issued by such municipality or issuer.
2. Statutory Basis
    NSCC believes that the proposed changes described above are
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a registered clearing agency. In
particular, NSCC believes that the proposed changes are consistent with
Section 17A(b)(3)(F) of the Act,\21\ and Rules 17Ad-22(e)(4)(i),
(e)(6)(i) and (e)(6)(v), each promulgated under the Act,\22\ for the
reasons described below.
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    \21\ 15 U.S.C. 78q-1(b)(3)(F).
    \22\ 17 CFR 240.17Ad-22(e)(4)(i), (e)(6)(i), (e)(6)(v).
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    Section 17A(b)(3)(F) of the Act \23\ requires that the Rules be
designed to, among other things, assure the safeguarding of securities
and funds which are in the custody or control of the clearing agency or
for which it is responsible. NSCC believes the proposed changes are
designed to assure the safeguarding of securities and funds which are
in its custody or control or for which it is responsible because they
are designed to enable NSCC to more accurately calculate the necessary
margin relating to Net Unsettled Positions in municipal bonds while
continuing to limit its exposure to Members in the event of a Member
default.
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    \23\ 15 U.S.C. 78q-1(b)(3)(F).
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    NSCC believes that the proposed changes to (i) re-calibrate the
Bond Haircut no less frequently than annually, (ii) apply a risk factor
based on multiple benchmark indices for lower rated or non-rated
municipal bonds rather than a straight sector-based risk factor, (iii)
calibrate the percent to a pre-determined percentile that would not be
less than 99% level and (iv) apply a pre-determined look-back period,
would help ensure that the margin levels with respect to municipal
bonds would be commensurate with the particular risk attributes of
municipal bonds. Backtesting results conducted by NSCC have shown that
the current methodology for calculating the Bond Haircut, using a
straight municipal sector factor by sector, at times, results in
coverage of 100%. NSCC has determined based on impact studies that,
under current market conditions, the current margin levels with respect
to municipal bonds using the current methodology exceed the levels
necessary to offset the risks with respect to these securities.
Backtesting results conducted by NSCC indicated that using the highest
percentage from applicable benchmark indices in the enhanced
methodology rather than the straight municipal sector factor as in the
current methodology would result in the desired margin coverages to
offset risk while reducing the average Required Fund Deposit for
Members. In addition, by reserving the right to apply the highest risk
factor in certain circumstances, NSCC would be protected from
extraordinary circumstances where NSCC determines that the percentage
to be applied to a

particular grouping of municipal bonds does not fully capture the risks
represented by that municipality or issuer. In this way, the haircut-
based volatility charge for Net Unsettled Positions in municipal bonds
would be calculated to help enable NSCC to collect margin at levels
that better reflect the risk presented by these Net Unsettled Positions
to help NSCC limit its exposure to Members.
    The Clearing Fund is composed of Members' Required Fund Deposits
that include the volatility component and is a key tool that NSCC uses
to mitigate potential losses to NSCC associated with liquidating a
Member's portfolio in the event of Member default. Therefore, NSCC
believes that each of the proposed changes listed above would help
enable NSCC to more accurately calculate the necessary margin relating
to Net Unsettled Positions in municipal bonds while continuing to limit
its exposure to Members such that, in the event of Member default,
NSCC's operations would not be disrupted and non-defaulting Members
would not be exposed to losses they cannot anticipate or control. In
this way, the proposed rules are designed to assure the safeguarding of
securities and funds which are in the custody or control of NSCC or for
which it is responsible and therefore consistent with Section
17A(b)(3)(F) of the Act.\24\
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    \24\ Id.
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    Rule 17Ad-22(e)(4)(i) under the Act \25\ requires that NSCC
establish, implement, maintain and enforce written policies and
procedures reasonably designed to effectively identify, measure,
monitor, and manage its credit exposures to participants and those
arising from its payment, clearing, and settlement processes, including
by maintaining sufficient financial resources to cover its credit
exposure to each participant fully with a high degree of confidence.
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    \25\ 17 CFR 240.17Ad-22(e)(4)(i).
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    As described above, NSCC believes that the proposed changes would
help enable it to better identify, measure, monitor, and, through the
collection of Members' Required Fund Deposits, manage its credit
exposures to Members by maintaining sufficient resources to cover those
credit exposures fully with a high degree of confidence. More
specifically, the proposed changes to the methodology for Bond Haircuts
to apply a risk factor based on multiple benchmark indices for lower
rated or non-rated municipal bonds rather than a straight risk factor
by sector would help allow NSCC to more accurately identify the credit
exposure relating to Net Unsettled Positions in municipal bonds for
purposes of applying an appropriate margin charge and to help provide
NSCC with a more effective measure of the risks that may be presented
to NSCC by positions in the securities. The proposed changes to (i) re-
calibrate the Bond Haircut no less frequently than annually, (ii)
calibrate the percent to a pre-determined percentile that would not be
less than 99% level, and (iii) apply a pre-determined look-back period
would enable NSCC to apply the proposed enhanced methodology discussed
above and to better monitor its credit exposure relating to Net
Unsettled Positions in municipal bonds. By providing that NSCC would be
required to re-calibrate the Bond Haircut no less frequently than
annually, the proposed rule change would help ensure that NSCC would
periodically review the Bond Haircut to ensure that it continued to
accurately reflect the risks presented by municipal bonds. Finally, by
reserving the right to apply the highest group factor in extraordinary
circumstances, NSCC would help protect itself in circumstances where
the assigned factor does not adequately account for risks presented by
extraordinary events, such as natural disasters.
    Based on backtesting results in which the proposed methodology was
applied, NSCC believes that the proposed changes would help allow it to
collect Required Fund Deposits that are more accurate to offset the
risks presented by municipal bonds and provide a better method of
managing risks presented by those securities. Therefore, NSCC believes
that the proposed changes would help enhance NSCC's ability to
effectively identify, measure, monitor and manage its credit exposures
and would help enhance its ability to maintain sufficient financial
resources to cover its credit exposure to each participant fully with a
high degree of confidence. As such, NSCC believes the proposed changes
are consistent with Rule 17Ad-22(e)(4)(i) under the Act.\26\
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    \26\ Id.
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    Rule 17Ad-22(e)(6)(i) under the Act \27\ requires that NSCC
establish, implement, maintain and enforce written policies and
procedures reasonably designed to cover its credit exposures to its
participants by establishing a risk-based margin system that, at a
minimum, considers, and produces margin levels commensurate with, the
risks and particular attributes of each relevant product, portfolio,
and market.
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    \27\ 17 CFR 240.17Ad-22(e)(6)(i).
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    The Required Fund Deposit is made up of risk-based components (as
margin) that are calculated and assessed daily to limit NSCC's credit
exposures to Members. NSCC is proposing changes that are designed to
more effectively address risk characteristics of Net Unsettled
Positions in municipal bonds by capturing risks more accurately by
applying multiple indices. Rather than multiply the tenor-based haircut
for lower rated bonds by a straight risk factor for each municipal
sector, the Bond Haircut for lower rated or non-rated municipal bonds
would be determined by using the maximum percent derived from either
the tenor-based index, the municipal bond sector-based indices or a
high yield index. Based on backtesting results, NSCC believes that
deriving the percent using a maximum of the indices more accurately
captures the risk of such municipal bonds that may be presented by
tenor, sector and the higher yield of these securities compared to the
present use of a straight sector-based risk factor. Based on such
results, NSCC believes that these changes would help enable NSCC to
produce margin levels that are more commensurate with the particular
risk attributes of these securities. These proposed changes are
designed to assist NSCC in maintaining a risk-based margin system that
considers, and produces margin levels commensurate with, the risks and
particular attributes of portfolios relating to municipal bonds,
including risks and attributes related to tenor, municipal sector and
higher yields. Therefore, NSCC believes the proposed change is
consistent with Rule 17Ad-22(e)(6)(i) under the Act.\28\
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    \28\ Id.
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    Rule 17Ad-22(e)(6)(v) under the Act \29\ requires that NSCC
establish, implement, maintain and enforce written policies and
procedures reasonably designed to cover its credit exposures to its
participants by establishing a risk-based margin system that, at a
minimum, uses an appropriate method for measuring credit exposure that
accounts for relevant product risk factors and portfolio effects across
products. NSCC is proposing to enhance the Bond Haircut because NSCC
believes that the proposed methodology would help provide NSCC with a
more effective measure of the credit exposure presented by municipal
bonds. In particular, as described above, NSCC believes that the
enhancements would result in a more effective measure of the tenor,
sector and higher yield risks presented by municipal bonds that are
rated BBB+ or lower, or are not rated.

Therefore, NSCC believes the proposed change is consistent with Rule
17Ad-22(e)(6)(v) under the Act.\30\
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    \29\ 17 CFR 240.17Ad-22(e)(6)(v).
    \30\ 17 CFR 240.17Ad-22(e)(6)(v).
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(B) Clearing Agency's Statement on Burden on Competition

    NSCC does not believe that the proposed changes to the Bond Haircut
would have an adverse impact, or impose any burden, on competition.
Based on impact studies, NSCC believes that the proposed changes to the
Bond Haircut would result in a reduction in the Required Fund Deposit
with respect to every Member with Net Unsettled Positions in municipal
bonds. NSCC believes that this impact would promote competition for
Members that have Net Unsettled Positions in municipal bonds by
reducing the amount of the Required Fund Deposit for such Members while
continuing to appropriately limit NSCC's exposure to Members in the
event of a Member default. In addition, NSCC does not believe that the
proposed rule changes would disproportionally impact any Members.

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others

    NSCC has not received or solicited any written comments relating to
this proposal. NSCC will notify the Commission of any written comments
received by NSCC.

III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.
    The proposal shall not take effect until all regulatory actions
required with respect to the proposal are completed.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NSCC-2019-004 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.

All submissions should refer to File Number SR-NSCC-2019-004. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of NSCC and on DTCC's website
(http://dtcc.com/legal/sec-rule-filings.aspx). All comments received
will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NSCC-2019-004 and should be submitted on
or before January 23, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
---------------------------------------------------------------------------

    \31\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2019-28276 Filed 12-31-19; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 80, Number 29 (Thursday, February 12, 2015)]
[Rules and Regulations]
[Page 7801]
[FR Doc No: 2015-02966]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 117

[Docket No. USCG-2015-0069]

Drawbridge Operation Regulation; Curtis Creek, Baltimore, MD

AGENCY: Coast Guard, DHS.

ACTION: Notice of deviation from drawbridge regulations.

-----------------------------------------------------------------------

SUMMARY: The Coast Guard has issued a temporary deviation from the
operating schedule that governs the draw of the CSX Railroad Bridge,
across Curtis Creek, mile 1.3, Baltimore, MD. This temporary deviation
allows the swing bridge to remain in the closed to navigation position
to facilitate railway tie replacement on the CSX Railroad swing bridge.

DATES: This deviation is effective from 7 a.m. on February 23, 2015 to
4 p.m. on March 20, 2015.

ADDRESSES: The docket for this deviation, [USCG-2015-0069] is available
at http://www.regulations.gov. Type the docket number in the ``SEARCH''
box and click ``SEARCH.'' Click on Open Docket Folder on the line
associated with this deviation. You may also visit the Docket
Management Facility in Room W12-140 on the ground floor of the
Department of Transportation West Building, 1200 New Jersey Avenue SE.,
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays.

FOR FURTHER INFORMATION CONTACT: If you have questions on this
temporary deviation, call or email Mr. Jim Rousseau, Bridge
Administration Branch Fifth District, Coast Guard; telephone (757) 398-
6557, email<EMAIL_ADDRESS>If you have questions on
reviewing the docket, call Cheryl Collins, Program Manager, Docket
Operations,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The CSX Corporation, who owns and operates
this swing bridge, has requested a temporary deviation from the current
operating regulations set out in 33 CFR 117.5 to facilitate railway tie
replacement.
    Under the regular operating schedule, the CSX Railroad Bridge, mile
1.3, in Baltimore, MD, the draw must open promptly and fully for the
passage of vessels when a request or signal to open is given. The draw
normally in the open to navigation position and only closes for train
crossings or periodic maintenance. The CSX Railroad Bridge, at mile
1.3, across Curtis Creek in Baltimore, MD, has a vertical clearance in
the closed position to vessels of 13 feet above mean high water.
    Under this temporary deviation, the drawbridge will be maintained
in the closed to navigation position but will be able to open for
navigation with a 15 to 20 minute advance notice by contacting (410)
916-5045 or utilizing VHF Channel 13 between 11 a.m. to 4 p.m., Monday
through Thursdays from February 23, 2015 until March 20, 2015. In
accordance with 33 CFR 117.41, the drawbridge will be tended during
that time. The bridge will operate under the normal operating schedule
at all other times. Emergency openings can be provided with advance
notice by contacting<PHONE_NUMBER> or utilizing VHF Channel 13 or 16.
There are no alternate routes for vessels transiting this section of
the Curtis Creek but vessels may pass before 11 a.m. and after 4 p.m.
without advance notice.
    Curtis Creek is used by a variety of vessels including military,
tugs, commercial, and recreational vessels. The Coast Guard has
carefully coordinated the restrictions with these waterway users. The
Coast Guard will also inform additional waterway users through our
Local and Broadcast Notice to Mariners of the closure periods for the
bridge so that vessels can arrange their transits to minimize any
impacts caused by the temporary deviation. Mariners able to pass under
the bridge in the closed position may do so at any time. Mariners are
advised to proceed with caution.
    In accordance with 33 CFR 117.35(e), the drawbridge must return to
its regular operating schedule immediately at the end of the designated
time period. This deviation from the operating regulations is
authorized under 33 CFR 117.35.

    Dated: February 3, 2015.
James L. Rousseau,
Bridge Program Manager, Fifth Coast Guard District.
[FR Doc. 2015-02966 Filed 2-11-15; 8:45 am]
BILLING CODE 9110-04-P


[Federal Register Volume 83, Number 92 (Friday, May 11, 2018)]
[Proposed Rules]
[Pages 21948-21951]
[FR Doc No: 2018-09978]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2018-0393; Product Identifier 2018-NM-010-AD]
RIN 2120-AA64

Airworthiness Directives; The Boeing Company Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

-----------------------------------------------------------------------

SUMMARY: We propose to adopt a new airworthiness directive (AD) for all
The Boeing Company Model 737-600, -700, -700C, -800, -900, and -900ER
series airplanes. This proposed AD was prompted by reports of loose,
worn, or missing attachment bolts for the main landing gear (MLG)
center door assemblies. This proposed AD would require repetitive
detailed inspections of the forward and aft MLG center door assembly
attachments for loose, missing, damaged, or bottomed out attachment
bolts; any wear to the retention clip assemblies as applicable; and
applicable on-condition actions. This proposed AD would also provide an
optional terminating action for the repetitive inspections. Since this
is a rotable parts issue, the applicability of this AD has been
expanded beyond the airplanes listed in the related service bulletin to
include all airplanes on which the MLG center door assemblies may be
installed. We are proposing this AD to address the unsafe condition on
these products.

DATES: We must receive comments on this proposed AD by June 25, 2018.

ADDRESSES: You may send comments, using the procedures found in 14 CFR
11.43 and 11.45, by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE, Washington, DC 20590.
     Hand Delivery: Deliver to Mail address above between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
    For service information identified in this NPRM, contact Boeing
Commercial Airplanes, Attention: Contractual & Data Services (C&DS),
2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740-5600;
telephone<PHONE_NUMBER>; internet https://www.myboeingfleet.com. You may
view this referenced service information at the FAA, Transport
Standards Branch, 2200 South 216th St., Des Moines, WA. For information
on the availability of this material at the FAA, call<PHONE_NUMBER>. It
is also available on the internet at http://www.regulations.gov by
searching for and locating Docket No. FAA-2018-0393.

Examining the AD Docket

    You may examine the AD docket on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2018-
0393; or in person at the Docket Management Facility between 9 a.m. and
5 p.m., Monday through Friday, except Federal holidays. The AD docket
contains this NPRM, the regulatory evaluation, any comments received,
and

other information. The street address for the Docket Office (phone:
800-647-5527) is in the ADDRESSES section. Comments will be available
in the AD docket shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Alan Pohl, Aerospace Engineer,
Airframe Section, FAA, Seattle ACO Branch, 2200 South 216th St., Des
Moines, WA 98198; phone and fax:<PHONE_NUMBER>; email:
[email protected].

SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to send any written relevant data, views, or
arguments about this proposal. Send your comments to an address listed
under the ADDRESSES section. Include ``Docket No. FAA-2018-0393;
Product Identifier 2018-NM-010-AD'' at the beginning of your comments.
We specifically invite comments on the overall regulatory, economic,
environmental, and energy aspects of this NPRM. We will consider all
comments received by the closing date and may amend this NPRM because
of those comments.
    We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact we
receive about this proposed AD.

Discussion

    We have received reports of loose, worn, or missing attachment
bolts of the MLG center door assemblies. One operator reported the
departure and loss of the center and inboard door assemblies from the
left MLG during flight on a Model 737-800 series airplane. The airplane
had accumulated 28,279 flight cycles when the incident occurred. There
have also been several reports of the two inboard bolts that attach the
MLG center door assembly to the shock strut cylinder being loose or
missing. One operator reported loose, worn, and missing attachment
bolts on several airplanes that had accumulated from 15,921 to 31,673
flight cycles. This condition, if not corrected, could result in
departure of the center and inboard door assemblies, subsequent damage
to the main flap and horizontal stabilizer, and loss of control of the
airplane.
    To support operations, many operators have put processes in place
that, given certain conditions, allow them to rotate or transfer parts
or equipment within their fleets to different aircraft than what is
defined in the manufacturer's type design. We have determined that the
parts or equipment subject to the unsafe condition addressed by this
proposed AD may have been rotated or transferred in this manner, due to
similarity with parts or equipment not subject to the unsafe condition
addressed by this proposed AD. Therefore, this proposed AD includes all
Model 737-600, -700, -700C, -800, -900, and -900ER series airplanes.

Related Service Information Under 1 CFR Part 51

    We reviewed Boeing Special Attention Service Bulletin 737-52-1170,
Revision 1, dated December 19, 2017 (``BSASB 737-52-1170, R1''). The
service information describes procedures for repetitive detailed
inspections of the forward and aft MLG center door assembly attachments
for loose, missing, damaged, or bottomed out attachment bolts; and any
wear to the retention clip assemblies as applicable; and applicable on-
condition actions. The service information also describes procedures
for modification of the MLG center door assembly retention clip
assemblies as an optional terminating action for the repetitive
inspections. This service information is reasonably available because
the interested parties have access to it through their normal course of
business or by the means identified in the ADDRESSES section.

FAA's Determination

    We are proposing this AD because we evaluated all the relevant
information and determined the unsafe condition described previously is
likely to exist or develop in other products of the same type design.

Proposed AD Requirements

    This proposed AD would require accomplishment of the actions
identified as ``RC'' (required for compliance) in the Accomplishment
Instructions of BSASB 737-52-1170, R1, described previously, except as
discussed under ``Differences Between this Proposed AD and the Service
Information,'' and except for any differences identified as exceptions
in the regulatory text of this proposed AD.
    For information on the procedures and compliance times, see this
service information at http://www.regulations.gov by searching for and
locating Docket No. FAA-2018-0393.

Differences Between This Proposed AD and the Service Information

    The effectivity of BSASB 737-52-1170, R1, is limited to Model 737-
600, -700, -700C, -800, -900, and -900ER series airplanes line numbers
1 through 6724 inclusive and 6736. The affected MLG center door
assemblies are rotable parts, and we have determined that these parts
could later be installed on airplanes that were initially delivered
with acceptable MLG center door assemblies, thereby subjecting those
airplanes to the unsafe condition. Therefore, the applicability of this
proposed AD includes all Model 737-600, -700, -700C, -800, -900, and -
900ER series airplanes to address the rotability of these parts. This
difference has been coordinated with Boeing.
    Where BSASB 737-52-1170, R1, specifies Group 3 airplanes as having
line numbers 4275 through 6724 inclusive, and 6736, this proposed AD
specifies Group 3 airplanes as line number 4275 through any airplane
with an original Certificate of Airworthiness or an original Export
Certificate of Airworthiness dated ``on or before the effective date of
this AD,'' as specified in paragraph (c)(3) of this proposed AD.
    For Model 737-600, -700, -700C, -800, -900, and -900ER series
airplanes with an original Certificate of Airworthiness or an original
Export Certificate of Airworthiness dated after the effective date of
the final rule, operators would not be required to complete the actions
described in paragraph (g) of this proposed AD, but would be required
to comply with the parts installation prohibition in paragraph (j) of
this proposed AD.

Costs of Compliance

    We estimate that this proposed AD affects 1,814 airplanes of U.S.
registry. We estimate the following costs to comply with this proposed
AD:

                                      Estimated Costs for Required Actions
----------------------------------------------------------------------------------------------------------------
                                                                                Cost on U.S.
             Action                     Labor cost          Parts cost     Cost per product        operators
----------------------------------------------------------------------------------------------------------------
Inspection.....................  2 work-hours x $85 per               $0  $170 per            $308,380 per
                                  hour = $170 per                          inspection cycle.   inspection cycle.
                                  inspection cycle.
----------------------------------------------------------------------------------------------------------------

                                 Estimated Costs for Optional Terminating Action
----------------------------------------------------------------------------------------------------------------
                Action                            Labor cost              Parts cost        Cost per product
----------------------------------------------------------------------------------------------------------------
Modification..........................  Up to 6 work-hours x $85 per            $2,900  Up to $3,410.
                                         hour = Up to $510.
----------------------------------------------------------------------------------------------------------------

    We have received no definitive data that would enable us to provide
cost estimates for the on-condition actions specified in this proposed
AD.
    According to the manufacturer some of the costs of this proposed AD
may be covered under warranty, thereby reducing the cost impact on
affected individuals. We do not control warranty coverage for affected
individuals. As a result, we have included all costs in our cost
estimate.

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, section 106, describes the
authority of the FAA Administrator. Subtitle VII: Aviation Programs,
describes in more detail the scope of the Agency's authority.
    We are issuing this rulemaking under the authority described in
Subtitle VII, Part A, Subpart III, Section 44701: ``General
requirements.'' Under that section, Congress charges the FAA with
promoting safe flight of civil aircraft in air commerce by prescribing
regulations for practices, methods, and procedures the Administrator
finds necessary for safety in air commerce. This regulation is within
the scope of that authority because it addresses an unsafe condition
that is likely to exist or develop on products identified in this
rulemaking action.
    This proposed AD is issued in accordance with authority delegated
by the Executive Director, Aircraft Certification Service, as
authorized by FAA Order 8000.51C. In accordance with that order,
issuance of ADs is normally a function of the Compliance and
Airworthiness Division, but during this transition period, the
Executive Director has delegated the authority to issue ADs applicable
to transport category airplanes to the Director of the System Oversight
Division.

Regulatory Findings

    We determined that this proposed AD would not have federalism
implications under Executive Order 13132. This proposed AD would not
have a substantial direct effect on the States, on the relationship
between the national Government and the States, or on the distribution
of power and responsibilities among the various levels of government.
    For the reasons discussed above, I certify this proposed
regulation:
    (1) Is not a ``significant regulatory action'' under Executive
Order 12866,
    (2) Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979),
    (3) Will not affect intrastate aviation in Alaska, and
    (4) Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.

The Proposed Amendment

    Accordingly, under the authority delegated to me by the
Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

0
1. The authority citation for part 39 continues to read as follows:

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

Sec.  39.13   [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new airworthiness
directive (AD):

The Boeing Company: Docket No. FAA-2018-0393; Product Identifier
2018-NM-010-AD.

(a) Comments Due Date

    We must receive comments by June 25, 2018.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to all The Boeing Company Model 737-600, -700, -
700C, -800, -900, and -900ER series airplanes, certificated in any
category, as specified in paragraphs (c)(1) through (c)(4) of this
AD.
    (1) Airplanes in Group 1, and in Group 2, Configuration 1, as
identified in Boeing Special Attention Service Bulletin 737-52-1170,
Revision 1, dated December 19, 2017 (``BSASB 737-52-1170, R1'').
    (2) Airplanes in Group 2, Configuration 2, as identified in
BSASB 737-52-1170, R1.
    (3) Airplanes in Group 3, as identified in BSASB 737-52-1170,
R1, except where this service bulletin specifies the groups as line
numbers 4275 through 6724 inclusive, and 6736, this AD specifies
those groups as line number 4275 through any line number of an
airplane with an original Certificate of Airworthiness or an
original Export Certificate of Airworthiness dated on or before the
effective date of this AD.
    (4) All Model 737-600, -700, -700C, -800, -900 and -900ER series
airplanes with an original Certificate of Airworthiness or an
original Export Certificate of Airworthiness dated after the
effective date of this AD.

(d) Subject

    Air Transport Association (ATA) of America Code 52, Doors.

(e) Unsafe Condition

    This AD was prompted by reports of loose, worn, or missing
attachment bolts for the main landing gear (MLG) center door
assemblies. We are issuing this AD to address loose, missing,
damaged, or bottomed out attachment bolts, and any wear to the
retention clip assemblies, which could result in departure of the
center and inboard door assemblies, subsequent damage to the main
flap and horizontal stabilizer, and loss of control of the airplane.

(f) Compliance

    Comply with this AD within the compliance times specified,
unless already done.

(g) Required Actions

    For airplanes identified in paragraphs (c)(1), (c)(2), or (c)(3)
of this AD: Except as required by paragraph (h) of this AD, at the
applicable time specified in Tables 1 through 6, as applicable, of
paragraph 1.E., Compliance, of BSASB 737-52-1170, R1, do all
applicable actions identified as ``RC'' (required for compliance)
in, and in accordance with, the Accomplishment Instructions of BSASB
737-52-1170, R1.

(h) Exceptions to Service Information Specifications

    For purposes of determining compliance with the requirements of
this AD: Where BSASB 737-52-1170, Revision 1, uses the phrase ``the
original issue date of this service bulletin,'' this AD requires
using ``the effective date of this AD.''

(i) Optional Terminating Action for Repetitive Inspections

    Accomplishment of the modification of the MLG center door
retention clip assemblies specified in Part 5 of the Accomplishment
Instructions of BSASB 737-52-1170, R1, terminates the repetitive
inspections required by paragraph (g) of this AD for that MLG center
door retention clip only. The requirements of paragraph (j) of this
AD continue to apply.

(j) Parts Installation Limitation

    As of the effective date of this AD, no person may install an
MLG center door assembly on any airplane unless all actions for
Group 3 airplanes identified as RC in, and in accordance with, the
Accomplishment Instructions of BSASB 737-52-1170, R1, have been
accomplished on that MLG center door assembly within the compliance
times specified in Tables 4, 5, and 6, as applicable, of paragraph
1.E., Compliance, of BSASB 737-52-1170, R1.

(k) Credit for Previous Actions

    This paragraph provides credit for the actions specified in
paragraph (g) of this AD, if those actions were performed before the
effective date of this AD using Boeing Special Attention Service
Bulletin 737-52-1170, dated July 29, 2014.

(l) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Seattle ACO Branch, FAA, has the authority to
approve AMOCs for this AD, if requested using the procedures found
in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request
to your principal inspector or local Flight Standards District
Office, as appropriate. If sending information directly to the
manager of the certification office, send it to the attention of the
person identified in paragraph (m)(1) of this AD. Information may be
emailed to: [email protected].
    (2) Before using any approved AMOC, notify your appropriate
principal inspector, or lacking a principal inspector, the manager
of the local flight standards district office/certificate holding
district office.
    (3) An AMOC that provides an acceptable level of safety may be
used for any repair, modification, or alteration required by this AD
if it is approved by the Boeing Commercial Airplanes Organization
Designation Authorization (ODA) that has been authorized by the
Manager, Seattle ACO Branch, to make those findings. To be approved,
the repair method, modification deviation, or alteration deviation
must meet the certification basis of the airplane, and the approval
must specifically refer to this AD.
    (4) Except as required by paragraph (h) of this AD: For service
information that contains steps that are labeled as RC, the
provisions of paragraphs (l)(4)(i) and (l)(4)(ii) of this AD apply.
    (i) The steps labeled as RC, including substeps under an RC step
and any figures identified in an RC step, must be done to comply
with the AD. If a step or substep is labeled ``RC Exempt,'' then the
RC requirement is removed from that step or substep. An AMOC is
required for any deviations to RC steps, including substeps and
identified figures.
    (ii) Steps not labeled as RC may be deviated from using accepted
methods in accordance with the operator's maintenance or inspection
program without obtaining approval of an AMOC, provided the RC
steps, including substeps and identified figures, can still be done
as specified, and the airplane can be put back in an airworthy
condition.

(m) Related Information

    (1) For more information about this AD, contact Alan Pohl,
Aerospace Engineer, Airframe Section, FAA, Seattle ACO Branch, 2200
South 216th St., Des Moines, WA 98198; phone and fax:<PHONE_NUMBER>;
email: [email protected].
    (2) For service information identified in this AD, contact
Boeing Commercial Airplanes, Attention: Contractual & Data Services
(C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740-
5600; telephone<PHONE_NUMBER>; internet https://www.myboeingfleet.com. You may view this referenced service
information at the FAA, Transport Standards Branch, 2200 South 216th
St., Des Moines, WA. For information on the availability of this
material at the FAA, call<PHONE_NUMBER>.

    Issued in Des Moines, Washington, on April 27, 2018.
Michael Kaszycki,
Acting Director, System Oversight Division, Aircraft Certification
Service.
[FR Doc. 2018-09978 Filed 5-10-18; 8:45 am]
 BILLING CODE 4910-13-P