[Federal Register Volume 82, Number 45 (Thursday, March 9, 2017)]
[Notices]
[Pages 13157-13161]
[FR Doc No: 2017-04600]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80148; File No. SR-MIAX-2017-10]

Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule

March 3, 2017.
    Pursuant to the provisions of 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 February 24, 2017, Miami International
Securities Exchange LLC (``MIAX Options'' or ``Exchange'') filed with
the Securities and Exchange Commission (``Commission'') a proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Options Fee
Schedule (the ``Fee Schedule'').
    The text of the proposed rule change is available on the Exchange's
Web site at http://www.miaxoptions.com/rule-filings, at MIAX's
principal office, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange 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 Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Market Maker Sliding Scale
(defined

below) contained in its Fee Schedule to increase certain ``taker'' fees
for certain tiers assessed to MIAX Options Market Makers,\3\ as
described below.
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    \3\ The term ``Market Makers'' refers to Lead Market Makers
(``LMMs''), Primary Lead Market Makers (``PLMMs''), and Registered
Market Makers (``RMMs'') collectively. See Exchange Rule 100. A
Directed Order Lead Market Maker (``DLMM'') and Directed Primary
Lead Market Maker (``DPLMM'') is a party to a transaction being
allocated to the LMM or PLMM and is the result of an order that has
been directed to the LMM or PLMM. See Fee Schedule, note 2.
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    Section (1)(a)(i) of the Fee Schedule sets forth the Exchange's
Market Maker Sliding Scale for Market Maker Transaction Fees (the
``Sliding Scale''). The Sliding Scale assesses a per contract
transaction fee on a Market Maker for the execution of simple orders
and quotes (collectively, ``simple orders'') and complex orders and
quotes (collectively, ``complex orders''). The amount of the
transaction fee is based on the Market Maker's percentage of total
national market maker volume in all options classes that trade on the
Exchange during a particular calendar month, and the Exchange
aggregates the volume executed by Market Makers in both simple orders
and complex orders for purposes of determining the applicable tier and
corresponding per contract transaction fee amount.\4\ The Sliding Scale
applies to all MIAX Options Market Makers for transactions in all
products (except for mini-options, for which there are separate product
fees), with fees established for option classes in the Penny Pilot
Program \5\ (``penny option classes'') and separate fees for non-penny
option classes, and further based on whether the Market Maker is acting
as a ``maker'' or a ``taker'' \6\ in simple orders. Market Makers that
place resting liquidity, i.e., quotes or orders on the MIAX Options
System,\7\ are assessed the ``maker'' fee. Market Makers that execute
against (remove) resting liquidity are assessed a higher ``taker'' fee.
This is distinguished from traditional ``maker-taker'' models where
``makers'' typically receive a rebate and ``takers'' are assessed a
fee; the Exchange instead assesses lower transaction fees to ``makers''
as compared to ``takers,'' similar to the manner implemented at other
exchanges.\8\
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    \4\ The calculation of the volume thresholds does not include
QCC Orders, PRIME AOC Responses, and unrelated MIAX Market Maker
quotes or unrelated MIAX Market Maker orders that are received
during the Response Time Interval and executed against the PRIME
Order. See Fee Schedule, page 2. For a further discussion of these
exclusions, see Securities Exchange Act Release No. 78299 (July 12,
2016), 81 FR 46734 (July 18, 2016)(SR-MIAX-2016-20).
    \5\ See Securities Exchange Act Release No. 78080 (June 15,
2016), 81 FR 40377 (June 21, 2016) (SR-MIAX-2016-16).
    \6\ See Securities Exchange Act Release No. 78519 (August 9,
2016), 81 FR 54162 (August 15, 2016) (SR-MIAX-2016-21).
    \7\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
    \8\ The Exchange notes that similar maker-taker pricing is
implemented at International Securities Exchange, LLC (``ISE'').
ISE's Schedule of Fees, Section I, assesses maker fees to ISE market
makers in its select symbols that are lower than its taker fees.
ISE's fees are distinguished from the MIAX Options fees because the
ISE fees apply to ISE market maker orders sent to ISE by ISE
Electronic Access Members, whereas the Exchange's fees apply to
quotes and orders submitted by Market Maker.
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    Further, the Exchange provides discounted transaction fees for
Members \9\ and their qualified Affiliates \10\ that achieve certain
volume thresholds through the submission of Priority Customer \11\
orders under the Exchange's Priority Customer Rebate Program
(``PCRP''),\12\ which is set forth on two tables: One setting forth the
transaction fees applicable to Members and their Affiliates that are in
PCRP Volume Tier 3 or higher; and the other setting forth the
transaction fees applicable to Members and their Affiliates that are
not in PCRP Volume Tier 3 or higher. The Sliding Scale also includes
maker and taker fees in both tables in each tier for simple orders in
penny option classes and non-penny option classes.
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    \9\ The term ``Member'' means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
    \10\ For purposes of the MIAX Options Fee Schedule, the term
``Affiliate'' means an affiliate of a Member of at least 75% common
ownership between the firms as reflected on each firm's Form BD,
Schedule A (``Affiliate''). See Fee Schedule, note 1.
    \11\ The term ``Priority Customer'' means a person or entity
that (i) is not a broker or dealer in securities, and (ii) does not
place more than 390 orders in listed options per day on average
during a calendar month for its own beneficial account(s). A
``Priority Customer Order'' means an order for the account of a
Priority Customer. See Exchange Rule 100.
    \12\ Under the PCRP, MIAX Options credits each Member the per
contract amount resulting from each Priority Customer order
transmitted by that Member which is executed electronically on the
Exchange in all multiply-listed option classes (excluding QCC
Orders, mini-options, Priority Customer-to-Priority Customer Orders,
PRIME AOC Responses, PRIME Contra-side Orders, PRIME Orders for
which both the Agency and Contra-side Order are Priority Customers,
and executions related to contracts that are routed to one or more
exchanges in connection with the Options Order Protection and
Locked/Crossed Market Plan referenced in Exchange Rule 1400),
provided the Member meets certain percentage thresholds in a month
as described in the Priority Customer Rebate Program table. See Fee
Schedule, Section (1)(a)iii.
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    The current Sliding Scale tables are as follows:

                                Members and Their Affiliates in Priority Customer Rebate Program Volume Tier 3 or Higher
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                                                                    Simple                                                   Complex
                                       -----------------------------------------------------------------------------------------------------------------
                                          Per contract fee for penny    Per contract fee for non-penny                                    Per contract
                                                    classes                         classes                                               surcharge for
                                       ----------------------------------------------------------------                                     removing
                                                                                liquidity
                       Percentage                                                                                against a
      Tier             thresholds                                                                        Per contract    Per contract   resting priority
                                                                                fee for penny   fee for non-   customer complex
                                             Maker           Taker           Maker           Taker          classes      penny classes    order on the
                                                                                strategy book
                                                                                for penny and
                                                                                non-penny
                                                                                classes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 All MIAX Market Makers
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1...............  $0.00-0.075.........           $0.21           $0.23           $0.25           $0.30           $0.25           $0.29             $0.10
2...............  Above 0.075-0.60....            0.15            0.22            0.19            0.27            0.19            0.23              0.10
3...............  Above 0.60-1.00.....            0.08            0.15            0.12            0.20            0.12            0.16              0.10
4...............  Above 1.00-1.50.....            0.04            0.06            0.08            0.12            0.07            0.11              0.10
5...............  Above 1.50..........            0.02            0.04            0.06            0.10            0.05            0.09              0.10
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                              Members and Their Affiliates Not in Priority Customer Rebate Program Volume Tier 3 or Higher
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Simple                                                   Complex
                                       -----------------------------------------------------------------------------------------------------------------
                                          Per contract fee for penny    Per contract fee for non-penny                                    Per contract
                                                    classes                         classes                                               surcharge for
                                       ----------------------------------------------------------------                                     removing
                                                                                liquidity
                       Percentage                                                                                against a
      Tier             thresholds                                                                        Per contract    Per contract   resting priority
                                                                                fee for penny   fee for non-   customer complex
                                             Maker           Taker           Maker           Taker          classes      penny classes    order on the
                                                                                strategy book
                                                                                for penny and
                                                                                non-penny
                                                                                classes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 All MIAX Market Makers
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1...............  0.00-0.075..........           $0.23           $0.25           $0.27           $0.32           $0.25           $0.29             $0.10
2...............  Above 0.075-0.60....            0.17            0.24            0.21            0.29            0.19            0.23              0.10
3...............  Above 0.60-1.00.....            0.10            0.17            0.14            0.22            0.12            0.16              0.10
4...............  Above 1.00-1.50.....            0.06            0.08            0.10            0.14            0.07            0.11              0.10
5...............  Above 1.50..........            0.04            0.06            0.08            0.12            0.05            0.09              0.10
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    The Exchange proposes to increase the taker fees as set forth in
both tables below:

                                Members and Their Affiliates in Priority Customer Rebate Program Volume Tier 3 or Higher
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Simple                                                   Complex
                                       -----------------------------------------------------------------------------------------------------------------
                                          Per contract fee for penny    Per contract fee for non-penny                                    Per contract
                                                    classes                         classes                                               surcharge for
                                       ----------------------------------------------------------------                                     removing
                                                                                liquidity
                       Percentage                                                                                against a
      Tier             thresholds                                                                        Per contract    Per contract   resting priority
                                                                                fee for penny   fee for non-   customer complex
                                             Maker           Taker           Maker           Taker          classes      penny classes    order on the
                                                                                strategy book
                                                                                for penny and
                                                                                non-penny
                                                                                classes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 All MIAX Market Makers
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............  $0.00-0.075.........           $0.21           $0.23           $0.25           $0.30           $0.25           $0.29             $0.10
2...............  Above 0.075-0.60....            0.15            0.22            0.19            0.27            0.19            0.23              0.10
3...............  Above 0.60-1.00.....            0.08            0.19            0.12            0.23            0.12            0.16              0.10
4...............  Above 1.00-1.50.....            0.04            0.18            0.08            0.22            0.07            0.11              0.10
5...............  Above 1.50..........            0.02            0.17            0.06            0.21            0.05            0.09              0.10
--------------------------------------------------------------------------------------------------------------------------------------------------------

                              Members and Their Affiliates Not in Priority Customer Rebate Program Volume Tier 3 or Higher
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Simple                                                   Complex
                                       -----------------------------------------------------------------------------------------------------------------
                                          Per contract fee for penny    Per contract fee for non-penny                                    Per contract
                                                    classes                         classes                                               surcharge for
                                       ----------------------------------------------------------------                                     removing
                                                                                liquidity
                       Percentage                                                                                against a
      Tier             thresholds                                                                        Per contract    Per contract   resting priority
                                                                                fee for penny   fee for non-   customer complex
                                             Maker           Taker           Maker           Taker          classes      penny classes    order on the
                                                                                strategy book
                                                                                for penny and
                                                                                non-penny
                                                                                classes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 All MIAX Market Makers
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............  $0.00-0.075.........           $0.23           $0.25           $0.27           $0.32           $0.25           $0.29             $0.10
2...............  Above 0.075-0.60....            0.17            0.24            0.21            0.29            0.19            0.23              0.10
3...............  Above 0.60-1.00.....            0.10            0.21            0.14            0.25            0.12            0.16              0.10
4...............  Above 1.00-1.50.....            0.06            0.20            0.10            0.24            0.07            0.11              0.10
5...............  Above 1.50..........            0.04            0.19            0.08            0.23            0.05            0.09              0.10
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    The Exchange has determined to substantially reduce the magnitude
of volume discounts that Market Makers achieve in Tiers 3, 4, and 5, as
a taker for Members who are in the Priority Customer Rebate Program
Volume Tier 3 or Higher and for Members who are not in the Priority
Customer Rebate Program Volume Tier 3 or Higher. This significant,
volume-based discount was designed to incentivize Market Makers to act
as a taker on the Exchange.\13\ For business and competitive reasons,
the Exchange now believes it is appropriate to reduce the magnitude of
discounts. The Exchange is not eliminating the discounts entirely, but
narrowing the ranges between the highest fee (assessed for Tier 1) and
fees assessed in Tiers 3, 4, and 5) in each of the two tables. The
proposed Market Maker taker fees are

generally in line with the Market Maker taker fees charged by other
exchanges for executing simple orders at similar volume levels,
including Exchanges that don't offer a volume discount for market maker
taker volume.\14\
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    \13\ See Securities Exchange Act Release No. 78519 (August 9,
2016), 81 FR 54162 (August 15, 2016)(SR-MIAX-2016-21).
    \14\ See ISE Schedule of Fees, Section I (ISE assesses Market
Makers a taker fee of .44 per contract in Select Symbols); see also
ISE Gemini (``Gemini'') Schedule of Fees, Section I (Gemini assesses
Market Makers a taker fee of $.49 per contract in penny option
classes and SPY for Tiers 1 through 3, with Tier 1 being total
affiliated member ADV of up to 99,999 contracts, Tier 2 being total
affiliated member ADV of between 100,00 [sic] and 224,999 contracts
and Tier 3 being total affiliated member ADV of between 225,000 and
349,999 contracts and $.48 per contact in penny options classes and
SPY for Tier 4, which is total affiliated member ADV of 350,000
contracts or more); see further Bats BZX Options Exchange (``BATS'')
Fee Schedule, p. 1 (BATS assesses Market Maker a taker fee of $.50
per contract in penny option classes and 1.07 per contract in non-
penny option classes).
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    The proposed rule change is scheduled to become operative March 1,
2017.

2. Statutory Basis

    The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act \15\ in general, and furthers the
objectives of Sections 6(b)(4) of the Act,\16\ in that it is an
equitable allocation of reasonable fees and other charges among
Exchange Members and other persons using its facilities, and Section
6(b)(5) of the Act,\17\ in that it is designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and perfect the mechanisms of a free and open market and
a national market system and, in general, to protect investors and the
public interest.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(4).
    \17\ 15 U.S.C. 78f(b)(5).
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    The proposed taker fee increase for the various tiers is equitable
and not unfairly discriminatory because all similarly situated Market
Makers are subject to the same fees and access to the Exchange is
offered on terms that are not unfairly discriminatory. The Exchange
initially set its taker fees at the various volume levels based upon
business determinations and an analysis of current taker fees and
volume levels at other exchanges. When the Exchange initially adopted
taker fees,\18\ it set its higher tier taker fees much lower than other
exchanges in order to encourage its Market Makers to reach for higher
volume levels in order to achieve greater discounts. For competitive
and business reasons, the Exchange believes that it no longer needs to
offer such deep discounts in the higher tiers and desires to narrow the
range between the lower and higher tiers with respect to the taker
fees. The Exchange also believes that it is appropriate to increase
taker fees to be more in line with competing exchanges. The Exchange
notes that the increased taker fees are comparable to those assessed by
other exchanges and that even with the increase, the Exchange's taker
fees are still less than those assessed by such exchanges.\19\
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    \18\ See supra note 13.
    \19\ See supra note 14.
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    The Exchange's proposal to assess a higher fee to Market Makers
that take liquidity in penny option and non-penny option classes is
also reasonable, equitable and not unfairly discriminatory under the
Act. While distinguished from the traditional ``maker-taker'' fee model
under which an exchange pays a per-contract rebate to their members to
encourage them to place resting liquidity by providing quotes and
orders (``maker'') on their trading systems and assessing a fee that
executes against a resting order (``taker''), the Exchange assesses a
reduced fee for ``makers'' as compared to ``takers'' rather than giving
the ``maker'' a rebate.
    The Exchange believes that the maker-taker pricing model is an
important competitive tool for exchanges and directly or indirectly can
provide better prices for investors. Such pricing models may narrow the
MIAX Options Bid and Offer (``MBBO'') because the reduced fee for
``makers'' effectively subsidizes, and thus encourages, the posting of
liquidity, while the assessment of lower fees in higher tiers to
``takers'' encourages Market Makers to provide order flow. The Exchange
believes that this pricing model provides Market Makers with greater
incentive to either match or improve upon the best price displayed on
MIAX Options, all to the benefit of investors and the public in the
form of improved execution prices.
    Further, the Exchange's assessment of a higher fee to Market Makers
who remove liquidity is reasonable, equitable and not unfairly
discriminatory and follows a similar line of reasoning. It is common
practice among options exchanges to differentiate between fees for
adding liquidity and fees for removing liquidity, and such
differentiation has been accepted as not unfairly discriminatory under
the Act.\20\ The Exchange believes that the differentiation in pricing
between ``makers'' and ``takers'' is appropriate, because ``takers''
remove liquidity and benefit disproportionately from their executions
as compared to ``makers,'' without assuming the obligations that
``makers'' assume in making continuous, two-sided markets, and without
engaging in competitive price discovery and improvement in the same
manner as ``makers.'' Liquidity removers benefit from the price and
size discovery function that liquidity providers have performed in
posting their quotations and orders, and when executing against resting
liquidity, a ``taker'' is not taking the risk of an order or quote
sitting unexecuted on the Book. The Exchange believes for these reasons
that assessing a higher ``taker'' fee for the various tiers for simple
orders is equitable, reasonable and not unfairly discriminatory, and
thus consistent with the Act.
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    \20\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The proposed fee
structure is intended to promote narrower spreads and encourage the
posting of liquidity (instead of taking liquidity), and thus should
promote better prices. The proposed rule change should enable the
Exchange to attract, and compete for, order flow with other exchanges
and the higher fees for removing liquidity will encourage Market Makers
to submit order flow that adds liquidity, not removes it.
    The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues if they
deem fee levels at a particular venue to be excessive. In such an
environment, the Exchange must continually adjust its fees to remain
competitive with other exchanges and to attract order flow. The
Exchange believes that the proposed rule changes reflect this
competitive environment because they modify the Exchange's fees in a
manner that encourages market participants to provide liquidity and to
send order flow to the Exchange rather than remove liquidity from the
market place.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\21\ and Rule 19b-4(f)(2) \22\ thereunder.
At any time within 60 days of the filing of the proposed rule change,
the Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act. If the Commission takes such
action, the Commission shall institute proceedings to determine whether
the proposed rule should be approved or disapproved.
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    \21\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \22\ 17 CFR 240.19b-4(f)(2).
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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-MIAX-2017-10 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MIAX-2017-10. 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 Web site (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 Web site 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 such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-MIAX-2017-10, and should be
submitted on or before March 30, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-04600 Filed 3-8-17; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 83 (Monday, April 30, 2018)]
[Proposed Rules]
[Pages 18747-18749]
[FR Doc No: 2018-09010]

=======================================================================
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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2018-0224; Product Identifier 2018-NE-01-AD]

Airworthiness Directives; General Electric Company Turbofan
Engines

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: We propose to adopt a new airworthiness directive (AD) for all
General Electric Company (GE) GEnx-1B engines. This proposed AD was
prompted by a report of a center vent tube (CVT) failure leading to a
loss of oil pressure and subsequent in-flight engine shutdown. This
proposed AD would require removal of the Air/Oil Extension Ducts, part
numbers (P/N) 2332M85P01 or 2331M25G03. We are proposing this AD to
address the unsafe condition on these products.

DATES: We must receive comments on this proposed AD by June 14, 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 General
Electric Company, GE Aviation, Room 285, 1 Neumann Way, Cincinnati, OH
45215; phone:<PHONE_NUMBER>; email: [email protected]. You
may view this service information at the FAA, Engine and Propeller
Standards Branch, 1200 District Avenue, Burlington, MA. For information
on the availability of this material at the FAA, call<PHONE_NUMBER>.

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-
0224; or in person at Docket Operations 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 Docket Operations (phone: 800-647-
5527) is listed above. Comments will be available in the AD docket
shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Christopher McGuire, Aerospace
Engineer, ECO Branch, FAA, 1200 District Avenue, Burlington MA; phone:
781-238-7120; 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-2018-0224;
Product Identifier 2018-NE-01-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 NPRM.

Discussion

    We were prompted to issue this NPRM based upon a report of a CVT
failure leading to a loss of oil pressure and subsequent in-flight
engine shutdown. During the event, the CVT failed due to oil leaking
into the fan mid shaft, resulting in coking on the seal

assembly and overpressurization of the CVT. This condition, if not
addressed, could result in failure of one or more engines, loss of
thrust control, and loss of the airplane.

Related Service Information

    We reviewed GE GEnx-1B Service Bulletin (SB) 72-0331 R01, dated
August 21, 2017. The SB describes procedures for replacing air/oil
extension ducts, P/N 2332M85P01 or 2331M25G03, with an extension duct
eligible for installation.

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 removal of an affected extension
duct and replacing it with a part eligible for installation.

Costs of Compliance

    We estimate that this proposed AD affects 97 engines installed on
airplanes of U.S. registry.
    We estimate the following costs to comply with this proposed AD:

                                                 Estimated Costs
----------------------------------------------------------------------------------------------------------------
                                                                                Cost per      Cost on U.S.
                Action                         Labor cost           Parts cost        product        operators
----------------------------------------------------------------------------------------------------------------
Replacement of Extension Duct.........  4 work-hours x $85 per           $16,270         $16,610      $1,611,170
                                         hour = $340.
----------------------------------------------------------------------------------------------------------------

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 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 engines, propellers, and
associated appliances to the Manager, Engine and Propeller Standards
Branch, Policy and Innovation 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):

General Electric Company: Docket No. FAA-2018-0224; Product
Identifier 2018-NE-01-AD.

(a) Comments Due Date

    We must receive comments by June 14, 2018.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to General Electric Company (GE) GEnx-1B64, -
1B64/P1, -1B64/P2, -1B67, -1B67/P1, -1B67/P2, -1B70, -1B70/75/P1, -
1B70/75/P2, -1B70/P1, -1B70/P2, -1B70C/P1, -1B70C/P2, -1B74/75/P1, -
1B74/75/P2 engines with Air/Oil Extension Duct, part number (P/N)
2332M85P01 or 2331M25G03, installed.

(d) Subject

    Joint Aircraft System Component (JASC) Code 7250, Turbine
Section.

(e) Unsafe Condition

    This AD was prompted by reports of a center vent tube (CVT)
failure. We are issuing this AD to prevent failure of the CVT. The
unsafe condition, if not addressed, could result in failure of one
or more engines, loss of thrust control, and loss of the airplane.

(f) Compliance

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

(g) Required Actions

    At the next engine shop visit after the effective date of this
AD, remove air/oil extension ducts, P/N 2332M85P01 or 2331M25G03,
and replace with a part eligible for installation.

(h) Definition

    For the purpose of this AD, an ``engine shop visit'' is the
induction of an engine into the shop for maintenance involving the
separation of pairs of major mating engine case flanges, except for
the following situations, which do not constitute an engine shop
visit:
    (1) Separation of engine flanges solely for the purposes of
transportation of the engine without subsequent maintenance.
    (2) Separation of engine flanges solely for the purpose of
replacing the fan or propulsor without subsequent maintenance.

(i) Installation Prohibition

    After the effective date of this AD, do not install an Air/Oil
Extension Duct, P/N 2332M85P01 or 2331M25G03, into a fan mid shaft
Assembly.

(j) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, ECO 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 (k)(1) of this AD.
    (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.

(k) Related Information

    (1) For more information about this AD, contact Christopher
McGuire, Aerospace Engineer, ECO Branch, FAA, 1200 District Avenue,
Burlington MA; phone:<PHONE_NUMBER>; fax:<PHONE_NUMBER>; email:
[email protected].
    (2) For service information identified in this AD, contact
General Electric Company, GE Aviation, Room 285, 1 Neumann Way,
Cincinnati, OH 45215; phone:<PHONE_NUMBER>; email:
[email protected]. You may view this service information
at the FAA, Engine and Propeller Standards Branch, 1200 District
Avenue, Burlington, MA. For information on the availability of this
material at the FAA, call<PHONE_NUMBER>.

    Issued in Burlington, MA, on April 25, 2018.
Robert J. Ganley,
Manager, Engine and Propeller Standards Branch, Aircraft Certification
Service.
[FR Doc. 2018-09010 Filed 4-27-18; 8:45 am]
 BILLING CODE 4910-13-P