[Federal Register Volume 87, Number 84 (Monday, May 2, 2022)]
[Notices]
[Pages 25683-25689]
[FR Doc No: 2022-09312]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94794; File No. SR-BOX-2022-16]

Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend IM-2040-
3, IM-2040-5 and Establish BOX Rule 2130 (Continuing Education Program
for Persons Maintaining Their Qualification Following the Termination
of a Registration Category) and IM-2130-1

April 26, 2022.
    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 April 13, 2022, BOX Exchange LLC (the ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II below, which Items have been
prepared by the self-regulatory organization. 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 proposes to amend BOX IM-2040-5 and establish BOX Rule
2130 (Continuing Education Program for Persons Maintaining Their
Qualification Following the Termination of a Registration Category) and
IM-2130-1 to require that the Regulatory Element of continuing
education be completed annually rather than every three years and
provide a path through continuing education for individuals to maintain
their qualification following the termination of a registration. The
Exchange also proposes to amend its manual signature requirement in IM-
2040-3. The text of the proposed rule change is available from the
principal office of the Exchange, at the Commission's Public Reference
Room and also on the Exchange's internet website at http://boxoptions.com.

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 self-regulatory organization
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 self-regulatory organization
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 IM-2040-5 and establish BOX Rule
2130 (Continuing Education Program for Persons Maintaining Their
Qualification Following the Termination of a Registration Category) to
amend its continuing education requirements. This is a conforming
filing that is based on a filing submitted by the Financial Industry
Regulatory Authority, Inc. (``FINRA''), and is intended to harmonize
the Exchange's continuing education rules with those of FINRA so as to
promote uniform standards across the securities industry.\3\ The
Exchange also proposes to amend its manual signature requirements in
IM-2040-3 to align with changes FINRA has made to similar rules.\4\
Each change is discussed in detail below.
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    \3\ See Securities Exchange Act Release No. 93097 (September 21,
2021), 86 FR 53358 (September 27, 2021) (SR-FINRA-2021-015) (``FINRA
Continuing Education Rule Change'').
    \4\ See Securities Exchange Release No. 91262 (March 5, 2021),
86 FR 13935 (March 11, 2021) (SR-FINRA-2021-003).
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    The proposed changes are based on the changes approved by the
Commission in the approval order for SR-FINRA-2021-015 and as noticed
in SR-FINRA-2021-003.\5\ The Exchange is proposing to adopt such
changes substantially in the same form as proposed by FINRA, with the
exception of differences necessary to conform to the Exchange's
existing rules. The Exchange has excluded changes in 1240(b) (Firm
Element) \6\ as the

Exchange does not currently have provisions analogous within its Rule
Book. The Exchange has also omitted cross-references and rules that are
applicable to FINRA members but not to Exchange members.
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    \5\ See supra notes 3 and 4.
    \6\ The Firm Element of the FINRA Continuing Education (``CE'')
Program was adopted in 1995 and requires broker-dealers to establish
a formal training program to keep covered registered persons up to
date on job and product-related subjects. Each broker-dealer must
administer its Firm Element CE Program in accordance with its annual
Needs Analysis and Written Training Plan and maintain records
documenting the content and completion of the program. Each firm is
required to analyze and evaluate its training needs in light of the
firm's size, organizational structure, scope of business, types of
products and services it offers, as well as regulatory developments
and the performance of its registered persons in the Regulatory
Element. When the Exchange was approved in May 2012 there was no
requirement for the Exchange to adopt the Firm Element portion of
FINRA's CE Program and therefore the Firm Element was not included
in the Exchange's Rulebook. However, the Exchange believes that all
BOX Participants are currently complying with the Firm Element
requirements due to their memberships at other options exchanges.
Specifically, BOX Participants who are FINRA Members are meeting
FINRA's Continuing Education requirements under Rule 1240 which
includes both a Regulatory Element and a Firm Element. BOX
Participants who are CBOE Members are meeting CBOE's Continuing
Education Requirements under Rule 3.33 which includes both a
Regulatory Element and a Firm Element. Finally, BOX Participants who
are NASDAQ-OMX-PHLX Members are meeting NASDAQ-OMX-PHLX's
requirements of Continuing Education under General 4, Rules 1210 and
1240 which includes both a Regulatory Element and a Firm Element.
BOX is in discussions with FINRA to include the Firm Element as part
of its examination program and anticipates adding this requirement
to the BOX rulebook in the near future.
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Continuing Education Rules
(i) Background
    The continuing education program for registered persons of broker-
dealers (``CE Program'') currently requires registered persons to
complete continuing education consisting of a Regulatory Element. The
Regulatory Element, which is administered by FINRA, focuses on
regulatory requirements and industry standards. The CE Program is
codified under the rules of the self-regulatory organizations
(``SROs''). The CE Program for registered persons of Exchange members
is codified under IM-2040-5.\7\
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    \7\ See also IM-2040-5(b) (Continuing Education Requirements).
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a. Regulatory Element
    IM-2040-5 currently requires a registered person to complete the
applicable Regulatory Element initially within 120 days after the
person's second registration anniversary date and, thereafter, within
120 days after every third registration anniversary date.\8\ The
Exchange may extend these time frames for good cause shown.\9\
Registered persons who have not completed the Regulatory Element within
the prescribed time frames will have their Exchange registrations
deemed inactive and will be designated as ``CE inactive'' in the CRD
system until the requirements of the Regulatory Element have been
satisfied.\10\ A CE inactive person is prohibited from performing, or
being compensated for, any activities requiring FINRA registration,
including supervision. Moreover, if registered persons remain CE
inactive for two consecutive years, they must requalify by retaking
required examinations (or obtain a waiver of the applicable
qualification examinations).\11\
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    \8\ See IM-2040-5(b) (Continuing Education Requirements) and (f)
(Reassociation in a Registered Capacity). An individual's
registration anniversary date is generally the date they initially
registered with the Exchange in the Central Registration Depository
(``CRD[supreg]'') system. However, an individual's registration
anniversary date would be reset if the individual has been out of
the industry for two or more years and is required to requalify by
examination, or obtain an examination waiver, in order to
reregister. See also IM-2040-5(g) (Definition of Covered Person). In
BOX's proposed rule change all references to the Financial Services
Affiliate Waiver Program (``FSAWP'') have been omitted as BOX has
never included the FSAWP rules within the BOX Rule Book. Registered
persons who become subject to a significant disciplinary action, as
specified in IM-2040-5(e) (Disciplinary Actions), may be required to
retake the Regulatory Element within 120 days of the effective date
of the disciplinary action, if they remain registered. Further,
their cycle for participation in the Regulatory Element may be
adjusted to reflect the effective date of the disciplinary action
rather than their registration anniversary date.
    \9\ See IM-2040-5(c) (Failure to Complete), and IM-2040-5(d)
(Requirements of the applicable provisions of these Rules).
    \10\ See supra note 8. Individuals must complete the entire
Regulatory Element session to be considered to have ``completed''
the Regulatory Element; partial completion is the same as non-
completion.
    \11\ This CE inactive two-year period is calculated from the
date such persons become CE inactive, and it continues to run
regardless of whether they terminate their registrations before the
end of the two-year period. Therefore, if registered persons
terminate their registrations while in a CE inactive status, they
must satisfy all outstanding Regulatory Element prior to the end of
the CE inactive two-year period in order to reregister with a member
without having to requalify by examination or having to obtain an
examination waiver.
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    The Regulatory Element consists of a subprogram for registered
persons generally, and a subprogram for principals and supervisors.\12\
While some of the current Regulatory Element content is unique to
particular registration categories, most of the content has broad
application to both representatives and principals.\13\
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    \12\ The S101 (General Program for Registered Persons) and the
S201 (Registered Principals and Supervisors).
    \13\ The current content is presented in a single format leading
individuals through a case that provides a story depicting
situations that they may encounter in the course of their work.
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    The Regulatory Element was originally designed at a time when most
individuals had to complete the Regulatory Element at a test center,
and its design was shaped by the limitations of the test center-based
delivery model. In 2015, FINRA transitioned the delivery of the
Regulatory Element to an online platform (``CE Online''), which allows
individuals to complete the content online at a location of their
choosing, including their private residence. This online delivery
provides FINRA with much greater flexibility in updating content in a
timelier fashion, developing content tailored to each registration
category and presenting the material in an optimal learning format.
b. Termination of a Registration
    Currently, individuals whose registrations as representatives or
principals have been terminated for two or more years may reregister as
representatives or principals only if they requalify by retaking and
passing the applicable representative or principal-level examination or
if they obtain a waiver of such examination(s) (the ``two-year
qualification period'').\14\ The two-year qualification period was
adopted prior to the creation of the CE Program and was intended to
ensure that individuals who reregister are relatively current on their
regulatory and securities knowledge.
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    \14\ See IM-2040-5(k) (Lapse of Registration and Expiration of
SIE). The two-year qualification period is calculated from the date
individuals terminate their registration and the date the Exchange
receives a new application for registration. The two-year
qualification period does not apply to individuals who terminate a
limited registration category that is a subset of a broader
registration category for which they remain qualified. For instance,
it would not apply to an individual who maintains his registration
as a General Securities Representative but who terminates his
registration as an Investment Company and Variable Contracts
Products Representative. Such individuals have the option of
reregistering in the more limited registration category without
having to requalify by examination or obtain an examination waiver
so long as they continue to remain qualified for the broader
registration category. Further, the two-year qualification period
only applies to the representative- and principal-level
examinations; it does not extend to the Securities Industry
Essentials (``SIE'') examination. The SIE examination is valid for
four years, but having a valid SIE examination alone does not
qualify an individual for registration as a representative or
principal. Individuals whose registrations as representatives or
principals have been revoked pursuant to BOX Rule 12110 (Judgment
and Sanctions) may only requalify by retaking the applicable
representative- or principal-level examination in order to
reregister as representatives or principals, in addition to
satisfying the eligibility conditions for association with a firm.
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(ii) Proposed Rule Change
    After extensive work with the Securities Industry/Regulatory
Council on Continuing Education (``CE Council'') and discussions with
stakeholders, including industry participants and the North American
Securities Administrators Association (``NASAA''), FINRA adopted the
following changes to the CE Program under its rules.\15\ In order to
promote

uniform standards across the securities industry, the Exchange now
proposes to adopt changes to its continuing education rules
substantially in the same form as proposed by FINRA, with the exception
of differences necessary to conform to the Exchange's existing rules.
The Exchange has excluded changes in 1240(b) (Firm Element) as the
Exchange does not currently have provisions analogous within its Rule
Book. The Exchange has also omitted cross-references and rules that are
applicable to FINRA members but not to Exchange members.
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    \15\ See supra note 3. FINRA's changes are based on the CE
Council's September 2019 recommendations to enhance the CE Program.
See Recommended Enhancements for the Securities Industry Continuing
Education Program, available at http://cecouncil.org/media/266634/council-recommendations-final-.pdf. The CE Council is composed of
securities industry representatives and representatives of SROs. The
CE Council was formed in 1995 upon a recommendation from the
Securities Industry Task Force on Continuing Education and was
tasked with facilitating the development of uniform continuing
education requirements for registered persons of broker-dealers.
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a. Transition to Annual Regulatory Element for Each Registration
Category
    As noted above, currently, the Regulatory Element generally must be
completed every three years, and the content is broad in nature. Based
on changes in technology and learning theory, the Regulatory Element
content can be updated and delivered in a timelier fashion and tailored
to each registration category, which would further the goals of the
Regulatory Element.\16\ Therefore, to provide registered persons with
more timely and relevant training on significant regulatory
developments, the Exchange proposes amending IM-2040-5(b) to require
registered persons to complete the Regulatory Element annually by
December 31.\17\ The proposed amendment would also require registered
persons to complete Regulatory Element content for each representative
or principal registration category that they hold, which would also
further the goals of the Regulatory Element.\18\
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    \16\ When the CE Program was originally adopted in 1995,
registered persons were required to complete the Regulatory Element
on their second, fifth and 10th registration anniversary dates. See
Securities Exchange Act Release No. 35341 (February 8, 1995), 60 FR
8426 (February 14, 1995) (Order Approving File Nos. SR-AMEX-94-59;
SR-CBOE-94-49; SR-CHX-94-27; SR-MSRB-94-17; SR-NASD-94-72; SR-NYSE-
94-43; SR-PSE-94-35; and SR-PHLX-94-52). The change to the current
three-year cycle was made in 1998 to provide registered persons more
timely and effective training, consistent with the overall purpose
of the Regulatory Element. See Securities Exchange Act Release No.
39712 (March 3, 1998), 63 FR 11939 (March 11, 1998) (Order Approving
File Nos. SR-CBOE-97-68; SR-MSRB-98-02; SR-NASD-98-03; and SR-NYSE-
97-33).
    \17\ See proposed IM-2040-5(b)(1), and (f).
    \18\ See proposed IM-2040-5(b)(1).
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    Under the proposed rule change, firms would have the flexibility to
require their registered persons to complete the Regulatory Element
sooner than December 31, which would allow firms to coordinate the
timing of the Regulatory Element with other training requirements.\19\
For example, a firm could require its registered persons to complete
their Regulatory Element by October 1 of each year.
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    \19\ See proposed IM-2040-5(b)(1), and (f).
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    Individuals who would be registering as a representative or
principal for the first time on or after the implementation date of the
proposed rule change would be required to complete their initial
Regulatory Element for that registration category in the next calendar
year following their registration.\20\ In addition, subject to
specified conditions, individuals who would be reregistering as a
representative or principal on or after the implementation date of the
proposed rule change would also be required to complete their initial
Regulatory Element for that registration category in the next calendar
year following their reregistration.\21\
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    \20\ See proposed IM-2040-5(b)(1).
    \21\ See proposed IM-2040-5(f).
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    Consistent with current requirements, individuals who fail to
complete their Regulatory Element within the prescribed period would be
automatically designated as CE inactive.\22\ However, the proposed rule
change preserves the Exchange's ability to extend the time by which a
registered person must complete the Regulatory Element for good cause
shown.\23\
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    \22\ See proposed IM-2040-5(c), and (d).
    \23\ See supra note 21. The proposed rule change clarifies that
the request for an extension of time must be in writing and include
supporting documentation, which is consistent with current practice.
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    The Exchange also proposes amending IM-2040-5 to clarify that: (1)
Individuals who are designated as CE inactive would be required to
complete all of their pending and upcoming annual Regulatory Element,
including any annual Regulatory Element that becomes due during their
CE inactive period, to return to active status; \24\ (2) the two-year
CE inactive period is calculated from the date individuals become CE
inactive, and it continues to run regardless of whether individuals
terminate their registrations; \25\ (3) individuals who become subject
to a significant disciplinary action may be required to complete
assigned continuing education content as prescribed by the Exchange;
\26\ (4) individuals who have not completed any Regulatory Element
content for a registration category in the calendar year(s) prior to
reregistering would not be approved for registration for that category
until they complete that Regulatory Element content, pass an
examination for that registration category or obtain an unconditional
examination waiver for that registration category, whichever is
applicable; \27\ and (5) the Regulatory Element requirements apply to
individuals who are registered, or in the process of registering, as a
representative or principal.\28\ In addition, the Exchange proposes
making conforming amendments to IM-2040-5.
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    \24\ See supra note 21.
    \25\ See supra note 21.
    \26\ See proposed IM-2040-5(e). As previously noted, IM-2040-
5(e) currently provides that such individuals may be required to
retake the Regulatory Element. See supra note 8.
    \27\ See proposed IM-2040-5(f).
    \28\ See proposed IM-2040-5(g).
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    Under the proposed rule change, the amount of content that
registered persons would be required to complete in a three-year,
annual cycle for a particular registration category is expected to be
comparable to what most registered persons are currently completing
every three years. In some years, there may be more required content
for some registration categories depending on the volume of rule
changes and regulatory issues. In addition, an individual who holds
multiple registrations may be required to complete additional content
compared to an individual who holds a single registration because, as
noted above, individuals would be required to complete content specific
to each registration category that they hold.\29\ However, individuals
with multiple registrations would not be subject to duplicative
regulatory content in any given year. The more common registration
combinations would likely share much of their relevant regulatory
content each year. For example, individuals registered as General
Securities Representatives and General Securities Principals would
receive the same content as individuals solely registered as General
Securities Representatives, supplemented with a likely smaller amount
of supervisory-specific content on the same topics. The less common
registration combinations may result in less topic overlap and more
content overall.
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    \29\ As discussed in the economic impact assessment in the FINRA
Continuing Education Rule Change, individuals with multiple
registrations represent a smaller percentage of the population of
registered persons.
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b. Maintenance of Qualification After Termination of Registration
    The Exchange proposes adopting BOX Rule 2130 (Continuing Education

Program for Persons Maintaining Their Qualification Following the
Termination of a Registration Category) and IM-2130-1 to provide
eligible individuals who terminate any of their representative or
principal registrations the option of maintaining their qualification
for any of the terminated registrations by completing continuing
education.\30\ The proposed rule change would not eliminate the two-
year qualification period. Rather, it would provide such individuals an
alternative means of staying current on their regulatory and securities
knowledge following the termination of a registration(s). Eligible
individuals who elect not to participate in the proposed continuing
education program would continue to be subject to the current two-year
qualification period. The proposed rule change is generally aligned
with other professional continuing education programs that allow
individuals to maintain their qualification to work in their respective
fields during a period of absence from their careers (including an
absence of more than two years) by satisfying continuing education
requirements for their credential.
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    \30\ The proposed option would also be available to individuals
who terminate any permissive registrations as provided under BOX
Rule 2070. However, the proposed option would not be available to
individuals who terminate a limited registration category that is a
subset of a broader registration category for which they remain
qualified. As previously noted, such individuals currently have the
option of reregistering in the more limited registration category
without having to requalify by examination or obtain an examination
waiver so long as they continue to remain qualified for the broader
registration category. In addition, the proposed option would not be
available to individuals who are maintaining an eliminated
registration category, such as the category for Corporate Securities
Representative, or individuals who have solely passed the Securities
Industry Essentials examination, which does not, in and of itself,
confer registration.
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    The proposed rule change would impose the following conditions and
limitations:
     Individuals would be required to be registered in the
terminated registration category for at least one year immediately
prior to the termination of that category; \31\
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    \31\ See proposed BOX Rule 2130(a).
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     individuals could elect to participate when they terminate
a registration or within two years from the termination of a
registration; \32\
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    \32\ See proposed BOX Rule 2130(b). Individuals who elect to
participate at the later date would be required to complete, within
two years from the termination of their registration, any continuing
education that becomes due between the time of their Form U5
(Uniform Termination Notice for Securities Industry Registration)
submission and the date that they commence their participation. In
addition, FINRA would enhance its systems to notify individuals of
their eligibility to participate, enable them to affirmatively opt
in, and notify them of their annual continuing education requirement
if they opt in.
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     individuals would be required to complete annually all
prescribed continuing education; \33\
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    \33\ See proposed BOX Rule 2130(c). However, upon a
participant's request and for good cause shown, the Exchange would
have the ability to grant an extension of time for the participant
to complete the prescribed continuing education. A participant who
is also a registered person must directly request an extension of
the prescribed continuing education from the Exchange. The
continuing education content for participants would consist of the
Regulatory Element content discussed below. The content would
correspond to the registration category for which individuals wish
to maintain their qualifications. Participants who are maintaining
their qualification status for a principal registration category
that includes one or more corequisite representative registrations
must also complete required annual continuing education for the
corequisite registrations in order to maintain their qualification
status for the principal registration category. The proposed rule
change clarifies that the prescribed continuing education must be
completed by December 31 of the calendar year, which is consistent
with the timing for the proposed annual Regulatory Element. The
Exchange does not currently have provisions analogous to FINRA Rule
1240(b) (Firm Element) and thus has omitted language referring to
such provisions in its proposed Rules.
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     individuals would have a maximum of five years in which to
reregister; \34\
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    \34\ See proposed Rule 2130. In addition, individuals applying
for reregistration must satisfy all other requirements relating to
the registration process (e.g., submit a Form U4 (Uniform
Application for Securities Industry Registration or Transfer) and
undergo a background check).
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     individuals who have been CE inactive for two consecutive
years, or who become CE inactive for two consecutive years during their
participation, would not be eligible to participate or continue; \35\
and
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    \35\ See proposed Rules 2130(d) and (e).
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     individuals who are subject to a statutory
disqualification, or who become subject to a statutory disqualification
following the termination of their registration or during their
participation, would not be eligible to participate or continue.\36\
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    \36\ See proposed Rules 2130(a) and (f). Further, any content
completed by participants would be retroactively nullified upon
disclosure of the statutory disqualification. The following example
illustrates the application of the proposed rule change to
individuals who become subject to a statutory disqualification while
participating in the proposed continuing education program.
Individual A participates in the proposed continuing education
program for four years and completes the prescribed content for each
of those years. During year five of his participation, he becomes
subject to a statutory disqualification resulting from a foreign
regulatory action. In that same year, the Exchange receives a Form
U4 submitted by a member on behalf of Individual A requesting
registration with the Exchange. The Form U4 discloses the statutory
disqualification event. The Exchange would then retroactively
nullify any content that Individual A completed while participating
in the proposed continuing education program. Therefore, in this
example, in order to become registered with the Exchange, he would
be required to requalify by examination. This would be in addition
to satisfying the eligibility conditions for association with an
Exchange member firm. See Exchange Act Sections 3(a)(39) and
15(b)(4) and BOX Rule 2020.
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    The proposed rule change also includes a look-back provision that
would, subject to specified conditions, extend the proposed option to
individuals who have been registered as a representative or principal
within two years immediately prior to the effective date of the
proposed rule change.\37\
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    \37\ See proposed IM-2130-1. Such individuals would be required
to elect whether to participate by the effective date of the
proposed rule change. If such individuals elect to participate, they
would be required to complete their initial annual content by the
end of the calendar year in which the proposed rule change is
effective. In addition, if such individuals elect to participate,
their initial participation period would be adjusted based on the
date that their registration was terminated. As discussed above, the
proposed rule change provides a five-year participation period for
participants in the proposed continuing education program.
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    In addition, the proposed rule change includes a re-eligibility
provision that would allow individuals to regain eligibility to
participate each time they reregister with a firm for a period of at
least one year and subsequently terminate their registration, provided
that they satisfy the other participation conditions and
limitations.\38\ Finally, the Exchange proposes to adopt new paragraph
(k) to IM-2040-5, entitled Lapse of Registration and Expiration of SIE
based on FINRA Rule 1210.08. Currently, IM-2040-3 states that any
person who last passed the Securities Industry Essentials Examination
(``SIE'') or who was last registered as a representative, whichever
occurred last, four or more years immediately preceding the date of
receipt by the Exchange of a new application for registration as a
representative shall be required to pass the SIE in addition to a
representative qualification examination appropriate to his or her
category of registration. This same language is contained in FINRA Rule
1210.08 but with additional detail. The Exchange proposes adopting new
paragraph (k) in IM-2040-5 to more closely align with FINRA Rule
1210.08.
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    \38\ See proposed IM-2130-1(b).
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    As proposed, any person who was last registered in a representative
registration category two or more years immediately preceding the date
of receipt by FINRA of a new application for registration in that
registration category shall be required to pass a representative
qualification examination appropriate to that registration category as
specified in IM-2040-3 unless the person has maintained his or her
qualification status for that registration category in accordance with
proposed

BOX Rule 2130 or as otherwise permitted by the Exchange. Any person who
was last registered in a principal registration category two or more
years immediately preceding the date of a new application for
registration in that registration category shall be required to pass a
principal qualification examination appropriate to that registration
category as specified in IM-2040-5, unless the person has maintained
his or her qualification status for that registration category in
accordance with proposed BOX Rule 2130 or as otherwise permitted by the
Exchange. Any person whose registration has been revoked pursuant to
BOX Rule 12110 and any person who has a continuing education deficiency
for a period of two years as provided under proposed BOX Rule 2130
shall be required to pass a representative or principal qualification
examination appropriate to his or her category of registration as
specified in IM-2040-5, to be eligible for registration. Lastly, for
purposes of proposed paragraph (k), an application shall not be
considered as a new application for registration if that application
does not result in a registration.
    The proposed rule change will have several important benefits. It
will provide individuals with flexibility to address life and career
events and necessary absences from registered functions without having
to requalify each time. It will also incentivize them to stay current
on their respective securities industry knowledge following the
termination of any of their registrations. The continuing education
under the proposed option will be as rigorous as the continuing
education of registered persons, which promotes investor protection.
Further, the proposed rule change will enhance diversity and inclusion
in the securities industry by attracting and retaining a broader and
diverse group of professionals.
    Significantly, the proposed rule change will be of particular value
to women, who continue to be the primary caregivers for children and
aging family members and, as a result, are likely to be absent from the
industry for longer periods.\39\ In addition, the proposed rule change
will provide longer-term relief for women, individuals with low incomes
and other populations, including older workers, who are at a higher
risk of a job loss during certain economic downturns and who are likely
to remain unemployed for longer periods.\40\
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    \39\ See The Female Face of Family Caregiving (November 2018),
available at https://www.nationalpartnership.org/our-work/resources/economic-justice/femaleface-family-caregiving.pdf.
    \40\ See The COVID-19 Recession is the Most Unequal in Modern
U.S. History (September 30, 2020), available at https://www.washingtonpost.com/graphics/2020/business/coronavirus-recessionequality/ and Unemployment's Toll on Older Workers Is Worst
in Half a Century (October 21, 2020), available at https://www.aarp.org/work/working-at-50-plus/info-2020/pandemic-unemployment-older-workers.
---------------------------------------------------------------------------

c. CE Program Implementation
    As stated in the FINRA Continuing Education Rule Change, FINRA and
the CE Council also plan to enhance the CE Program in other ways, and
these additional enhancements do not require any changes to the FINRA
rules.\41\ As it relates to the rule changes themselves, the changes
relating to the Maintaining Qualifications Program (BOX Rule 2130) will
become effective upon filing. All other changes related to the FINRA
Continuing Education Rule Change, including the changes relating to the
Regulatory Element and the two-year qualification period, will have an
implementation date of January 1, 2023.\42\
---------------------------------------------------------------------------

    \41\ See supra note 3. As described in more detail in the FINRA
Continuing Education Rule Change, FINRA will work with the CE
Council to develop and incorporate additional resources in
connection with the Regulatory and Firm Elements. Similar to FINRA,
these additional enhancements do not require any changes to the
Exchange rules.
    \42\ See FINRA Regulatory Notice 21-41 at https://www.finra.org/rulesguidance/notices/21-41.
---------------------------------------------------------------------------

Manual Signature
    IM-2040-3 currently provides that every initial and transfer
electronic Form U4 filing and any amendments to the disclosure
information on Form U4 must be based on a manually signed Form U4
provided to the member or applicant for membership by the person on
whose behalf the Form U4 is being filed, consistent with FINRA Rule
1010(c). Similarly, the Exchange's IM-2040-3 currently provides that in
the event a member is not able to obtain an associated person's manual
signature or written acknowledgement of amended disclosure information
on that person's Form U4 prior to filing of such amendment reflecting
the information pursuant to IM-2040-3 the member must enter
``Representative Refused to Sign/Acknowledge'' or ``Representative Not
Available'' or a substantially similar entry in the electronic Form U4
field for the associated person's signature. However, FINRA has since
amended their Rule 1010(c) to permit firms to choose to rely on
electronic signatures to satisfy the signature requirements when filing
Form U4.\43\ Cboe Exchange, Inc. (``CBOE'') has also updated its Rule
3.34 to reflect FINRA's updated Rule 1010(c).\44\
---------------------------------------------------------------------------

    \43\ See supra note 4.
    \44\ See Securities Exchange Release No. 92562 (August 4, 2021),
86 FR 143701 (August 10, 2021) (SR-CBOE-2021-043).
---------------------------------------------------------------------------

    The Exchange proposes to amend IM-2040-3 to similarly allow firms
to rely on electronic signatures when filing Form U4, consistent with
FINRA Rule 1010(c). Specifically, the Exchange proposes to remove the
term ``manual'' from ``manual signature'' and the term ``manually''
from ``manually signed''. The proposed rule change provides members,
and applicants for membership, with an opportunity to better manage
operational challenges. Particularly, the COVID-19 pandemic amplified
the need to better manage operational challenges like those that arose
during the pandemic and that may continue to arise in the future.
Additionally, the proposed rule change would not require the use of a
particular type of technology to obtain a valid electronic signature
from the associated person. The Exchange believes that some firms may
be unable to obtain the manual signature of applicants for registration
resulting in a significant operational backlog. By permitting these
firms to rely on electronic signatures to satisfy the signature
requirements of IM-2040-3, the proposed rule change may reduce or
eliminate this backlog. For purposes of the proposed rule change, a
valid electronic signature would be any electronic mark that clearly
identifies the signatory and is otherwise in compliance with the
Electronic Signatures in Global and National Commerce Act (``E-Sign
Act'') and the guidance issued by the SEC relating to the E-Sign
Act.\45\
---------------------------------------------------------------------------

    \45\ See accord Securities Exchange Act Release No. 85282 (March
11, 2019), 84 FR 9573 (March 15, 2019) (Order Approving File No. SR-
FINRA-2018-040) (discussing valid electronic signatures under
existing guidance).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Securities Exchange Act of 1934
(the ``Act''),\46\ in general, and Section 6(b)(5) of the Act,\47\ in
particular, 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 mechanism of a free and open market and
a national market system, and, in general to protect investors and the

public interest. In particular, the Exchange believes proposed changes
to the Regulatory Element will ensure that all registered persons
receive timely and relevant training, which will, in turn, enhance
compliance and investor protection. Further, the Exchange believes that
establishing a path for individuals to maintain their qualification
following the termination of a registration will reduce unnecessary
impediments to requalification and promote greater diversity and
inclusion in the securities industry without diminishing investor
protection. The Exchange is proposing to adopt such changes in similar
form proposed by FINRA with additional changes necessary to conform to
the Exchange's existing rules, such as excluding the changes to the
Firm Element and the removal of cross-references to rules that are
applicable to FINRA members but not Members of the Exchange.\48\
---------------------------------------------------------------------------

    \46\ 15 U.S.C. 78f(b).
    \47\ 15 U.S.C. 78f(b)(5).
    \48\ The proposed changes to IM-2040-5 is based on and
substantially similar to FINRA Rules 1240(a)(1)-(4). The proposed
BOX Rule 2130 is based on and is substantially similar to FINRA Rule
1240(c) and Supplementary Materials .01 and .02 to FINRA Rule 1240.
The Exchange does not currently have provisions analogous to FINRA
Rules 1210.02, 1210.09, or 1240(b) and thus has omitted language
referring to such provisions in its proposed Rules.
---------------------------------------------------------------------------

    As it relates to the proposed changes to IM-2040-3, the Exchange
believes the proposed rule change provides firms with the flexibility
to rely on electronic signatures to satisfy the signature requirements
of IM-2040-3. Specifically, the Exchange proposes to amend IM-2040-3,
similar to the amendments made by FINRA and CBOE, to provide the option
of filing an initial or a transfer Form U4 based on a manually or an
electronically signed copy of the form provided to the member, or
applicant for membership, by the individual on whose behalf the form is
being filed. Considering the technological advancements that provide
for enhanced authentication and security of electronic signatures, the
Exchange believes that it is appropriate to amend IM-2040-3 to provide
such flexibility. The proposed rule change also addresses the ongoing
public health risks stemming from the outbreak of COVID-19 and the
operational challenges that firms continue to face as a result of
pandemic repercussions. By permitting these firms to rely on electronic
signatures to satisfy the signature requirements of IM-2040-3, the
proposed rule change may reduce or eliminate an operational backlog due
to the difficulty firms may have faced in obtaining the manual
signature of applicants for registration as a result of the impact of
the pandemic on daily work environments.
    The Exchange believes the proposal is consistent with the Act for
the reasons described above and for the reasons outlined in the
approval order for SR-FINRA-2021-015 and as noticed in SR-FINRA-2021-
003.\49\
---------------------------------------------------------------------------

    \49\ See supra, notes 3 and 4.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. In this regard and as indicated
above, the Exchange notes that the rule change is being proposed as a
conforming response to a filing submitted by FINRA and is intended to
harmonize the Exchange's continuing education rules with those of FINRA
so as to promote uniform standards across the securities industry. All
members would be subject to the proposed rule change. The proposed rule
change relating to the Exchange's CE Program, which is similar to the
FINRA Continuing Education Rule Change, is designed to result in a more
efficient CE Program that addresses relevant regulatory requirements
and provides individuals with improved tools and resources to
understand and comply with such requirements, enhancing investor
protection. Moreover, the proposed rule change would provide new
channels for individuals to maintain their qualification status for a
terminated registration category and, in so doing, could increase the
likelihood that professionals who need to step away from the industry
for a period could return, subject to satisfying all other requirements
relating to the registration process.
    As it relates to the proposed amendments to IM-2040-3, the proposed
rule change relating to manual signatures is, in all material respects,
substantively identical to rule changes adopted by FINRA and CBOE. The
Exchange believes the proposed change will reduce a regulatory filing
burden for members by allowing them to rely on Form U4 copies with an
electronic signature. All members will have the option to rely on such
forms with an electronic signature (or continue to rely on forms with a
manual signature).

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

    The Exchange has neither solicited nor received comments on the
proposed rule change.

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \50\ and Rule 19b-
4(f)(6) thereunder.\51\
---------------------------------------------------------------------------

    \50\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \51\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
pursuant to Rule 19b-4(f)(6)(iii), the Commission may designate a
shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has asked the
Commission to waive the 30-day operative delay so that this proposed
rule change may become operative immediately upon filing. In addition,
Rule 19b-4(f)(6)(iii) \52\ requires a self-regulatory organization to
give the Commission written notice of its intent to file a proposed
rule change under that subsection at least five business days prior to
the date of filing, or such shorter time as designated by the
Commission. The Exchange has provided such notice.
---------------------------------------------------------------------------

    \52\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    Waiver of the 30-day operative delay would allow the Exchange to
implement proposed changes in a more timely fashion. The proposed rule
changes to IM-2040-3 address operational challenges facing firms due to
the ongoing public health risks stemming from the outbreak of COVID-19
and permit firms to rely on electronic signatures to satisfy the
signature requirements of IM-2040-3, which may reduce or eliminate an
operational backlog, ultimately benefiting the investing public.
Moreover, the proposed rule changes do not impose any significant
burden on competition because they will apply uniformly to all
similarly situated members and associated persons of members. Also, as
stated above, the proposed rule changes are substantively the same as
changes made to FINRA Rule 1010(c) and CBOE

Rule 3.34. Waiver of the 30-day operative delay would also allow the
Exchange to implement the proposed continuing education changes noted
above thereby reducing the possibility of a significant regulatory gap
between the FINRA and Exchange Rules. This is consistent with the
protection of investors and the public interest by providing more
uniform standards across the securities industry and helping to avoid
confusion for members of the Exchange that are also FINRA members.
Accordingly, the Commission hereby waives the 30-day operative delay
and designates the proposal operative upon filing.\53\
---------------------------------------------------------------------------

    \53\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f). We also note that the Exchange initially filed a proposed
rule change on the same subject matter on March 24, 2022 (``March 24
Filing''). See https://rules.boxexchange.com/rulefilings. The
Exchange withdrew the March 24 Filing on April 5, 2022 and filed an
updated proposed rule change as its replacement on the same day
(``April 5 Filing''). See id. The Exchange subsequently withdrew the
April 5 Filing on April 13, 2022 and filed this proposed rule change
as its replacement on the same day. See id. This filing is
substantially the same as both the March 24 Filing and the April 5
Filing, with only minor clarifying changes as compared to both the
March 24 Filing and April 5 Filing. Accordingly, given the waiver of
the 30-day operative delay, this proposal was operative upon the
initial March 24 Filing.
---------------------------------------------------------------------------

    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 change should be approved or
disapproved.

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 protected]. Please include
File Number SR-BOX-2022-16 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BOX-2022-16. 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, on official business days
between the hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street
NE, Washington, DC 20549. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. 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-BOX-2022-16 and should be
submitted on or before May 23, 2022.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\54\
---------------------------------------------------------------------------

    \54\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-09312 Filed 4-29-22; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 80, Number 229 (Monday, November 30, 2015)]
[Proposed Rules]
[Pages 74723-74726]
[FR Doc No: 2015-30216]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2015-6539; Directorate Identifier 2015-NM-036-AD]
RIN 2120-AA64

Airworthiness Directives; Airbus Airplanes

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
Airbus Model A318-111 and -112 airplanes; Model A319-111, -112, -113, -
114, and -115 airplanes; Model A320-211, -212, and -214 airplanes; and
Model A321-111, -112, -211, -212, and -213 airplanes. This proposed AD
was prompted by an evaluation by the design approval holder (DAH)
indicating that the forward engine mounts are subject to widespread
fatigue damage (WFD). This proposed AD would require repetitive
detailed inspections of the right and left forward engine mounts, and
corrective action if necessary. These inspections are required by AD
2015-05-02. This proposed AD would reduce the compliance times for
those inspections. We are proposing this AD to detect and correct
fatigue cracking in the forward engine mounts, which could result in
reduced structural integrity of the airplane and could lead to in-
flight loss of an engine, possibly resulting in reduced controllability
of the airplane.

DATES: We must receive comments on this proposed AD by January 14,
2016.

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: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
    For service information identified in this proposed AD, contact
Airbus, Airworthiness Office--EIAS, 1 Rond Point Maurice Bellonte,
31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61
93 44 51; email<EMAIL_ADDRESS>Internet http://www.airbus.com. You may view this referenced service information at the
FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA.
For information on the availability of this material at the FAA, call
425-227-1221.

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-2015-
6539; 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 proposed AD, the regulatory evaluation, any comments
received, and other information. The street address for the Docket
Operations office (telephone<PHONE_NUMBER>) is in the ADDRESSES section.
Comments will be available in the AD docket shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Sanjay Ralhan, Aerospace Engineer,
International Branch, ANM-116, Transport Airplane Directorate, FAA,
1601 Lind Avenue SW., Renton, WA 98057-3356; telephone<PHONE_NUMBER>;
fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to send any written relevant data, views, or
arguments about this proposed AD. Send your comments to an address
listed under the ADDRESSES section. Include ``Docket No. FAA-2015-6539;
Directorate Identifier 2015-NM-036-AD'' at the beginning of your
comments. We specifically invite comments on the overall regulatory,
economic, environmental, and energy aspects of this proposed AD. We
will consider all comments received by the closing date and may amend
this proposed AD based on those comments.
    We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact we
receive about this proposed AD.

Discussion

    Structural fatigue damage is progressive. It begins as minute
cracks, and those cracks grow under the action of repeated stresses.
This can happen because of normal operational conditions and design
attributes, or

because of isolated situations or incidents such as material defects,
poor fabrication quality, or corrosion pits, dings, or scratches.
Fatigue damage can occur locally, in small areas or structural design
details, or globally. Global fatigue damage is general degradation of
large areas of structure with similar structural details and stress
levels. Multiple-site damage is global damage that occurs in a large
structural element such as a single rivet line of a lap splice joining
two large skin panels. Global damage can also occur in multiple
elements such as adjacent frames or stringers. Multiple-site-damage and
multiple-element-damage cracks are typically too small initially to be
reliably detected with normal inspection methods. Without intervention,
these cracks will grow, and eventually compromise the structural
integrity of the airplane, in a condition known as widespread fatigue
damage (WFD). As an airplane ages, WFD will likely occur, and will
certainly occur if the airplane is operated long enough without any
intervention.
    The FAA's WFD final rule (75 FR 69746, November 15, 2010) became
effective on January 14, 2011. The WFD rule requires certain actions to
prevent structural failure due to WFD throughout the operational life
of certain existing transport category airplanes and all of these
airplanes that will be certificated in the future. For existing and
future airplanes subject to the WFD rule, the rule requires that DAHs
establish a limit of validity (LOV) of the engineering data that
support the structural maintenance program. Operators affected by the
WFD rule may not fly an airplane beyond its LOV, unless an extended LOV
is approved.
    The WFD rule (75 FR 69746, November 15, 2010) does not require
identifying and developing maintenance actions if the DAHs can show
that such actions are not necessary to prevent WFD before the airplane
reaches the LOV. Many LOVs, however, do depend on accomplishment of
future maintenance actions. As stated in the WFD rule, any maintenance
actions necessary to reach the LOV will be mandated by airworthiness
directives through separate rulemaking actions.
    In the context of WFD, this action is necessary to enable DAHs to
propose LOVs that allow operators the longest operational lives for
their airplanes, and still ensure that WFD will not occur. This
approach allows for an implementation strategy that provides
flexibility to DAHs in determining the timing of service information
development (with FAA approval), while providing operators with
certainty regarding the LOV applicable to their airplanes.
    Failure of a forward engine mount could lead to in-flight loss of
an engine, possibly resulting in reduced controllability of the
airplane.
    The European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Union, has issued EASA
Airworthiness Directive 2015-0038, dated March 4, 2015 (referred to
after this as the Mandatory Continuing Airworthiness Information, or
``the MCAI''), to correct an unsafe condition for all Airbus Model
A318-111 and -112 airplanes; Model A319-111, -112, -113, -114, and -115
airplanes; Model A320-211, -212, and -214 airplanes; and Model A321-
111, -112, -211, -212, and -213 airplanes. The MCAI states:

    During a A320 Extended Service Goal (ESG) residual fatigue test,
in which new loads were used, taking into account the results of the
2006 fleet survey, the CFM56-5A/5B forward engine mount experienced
a failure before reaching the threshold/interval for the detailed
inspection of that forward engine mount, as identified in Airbus
A318/A319/A320/A321 Airworthiness Limitations Section (ALS) Part 2
(hereafter referred to in this [EASA] AD as `the ALS') task 712111-
01. In case of total loss of the primary load path, the current
maintenance requirements do not ensure the design integrity of the
remaining structure.
    This condition, if not corrected, could lead to in-flight loss
of an engine, possibly resulting in reduced control of the aeroplane
and injury to persons on the ground.
    For the reasons described above, this [EASA] AD requires
implementation of a reduced threshold and interval for the detailed
inspections (DET) of the forward engine mount on both right hand
(RH) and left hand (LH) sides, as specified in the ALS, task 712111-
01.
    Once further investigations and test are completed, the
threshold and interval of the ALS task 712111-01 will likely be
modified accordingly.

    Required actions include repair of discrepancies (cracks) found
during the inspection. You may examine the MCAI in the AD docket on the
Internet at http://www.regulations.gov by searching for and locating
Docket No. FAA-2015-6539.

Related AD

    AD 2015-05-02, Amendment 39-18112 (80 FR 15152, March 23, 2015),
which is applicable to all Airbus Model A318, A319, A320, and A321
series airplanes, requires revising the maintenance or inspection
program, as applicable, to incorporate certain Airworthiness Limitation
Items. Paragraph (n)(2) of AD 2015-05-02 requires incorporating Part 2-
Damage-Tolerant Airworthiness Limitation Items (DT ALI), of the Airbus
A318/A319/A320/A321 ALS, Revision 02, dated May 28, 2013. AD 2015-05-02
corresponds to EASA AD 2013-0147, dated July 16, 2013. We considered
the fleet size that would be affected by superseding AD 2015-05-02, and
the consequent workload associated with revising maintenance record
entries, and determined that this proposed AD should not supersede AD
2015-05-02.
    Although this proposed AD would not supersede AD 2015-05-02,
paragraph (g) of this proposed AD would terminate the initial and
repetitive inspections for the corresponding inspections in paragraph
(n)(2) of AD 2015-05-02, Amendment 39-18112 (80 FR 15152, March 23,
2015), for Airbus Airworthiness Limitation Tasks 712111-01-1, 712111-
01-2, 712111-01-3, and 71211-01-4, ``Detailed Inspection of Forward
Engine Mount Installation.''

FAA's Determination and Requirements of This Proposed AD

    This product has been approved by the aviation authority of another
country, and is approved for operation in the United States. Pursuant
to our bilateral agreement with the State of Design Authority, we have
been notified of the unsafe condition described in the MCAI and service
information referenced above. We are proposing this AD because we
evaluated all pertinent information and determined an unsafe condition
exists and is likely to exist or develop on other products of these
same type designs.

Interim Action

    We consider this proposed AD interim action. Once further
investigations and tests are completed, the initial compliance time and
repetitive intervals for Airbus Airworthiness Limitation Tasks 712111-
01-1, 712111-01-2, 712111-01-3, and 712111-01-4, ``Detailed Inspection
of Forward Engine Mount Installation,'' could be revised and we might
consider further rulemaking at that time.

Costs of Compliance

    We estimate that this proposed AD affects 940 airplanes of U.S.
registry.
    We also estimate that it would take about 1 work-hour per product
to comply with the basic requirements of this proposed AD. The average
labor rate is $85 per work-hour. Based on these figures, we estimate
the cost of this proposed AD on U.S. operators to be $79,900, or $85
per product.

    We have received no definitive data that would enable us to provide
cost estimates for the on-condition parts cost specified in this AD.

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, section 106, describes the
authority of the FAA Administrator. ``Subtitle VII: Aviation
Programs,'' describes in more detail the scope of the Agency's
authority.
    We are issuing this rulemaking under the authority described in
``Subtitle VII, Part A, Subpart III, Section 44701: General
requirements.'' Under that section, Congress charges the FAA with
promoting safe flight of civil aircraft in air commerce by prescribing
regulations for practices, methods, and procedures the Administrator
finds necessary for safety in air commerce. This regulation is within
the scope of that authority because it addresses an unsafe condition
that is likely to exist or develop on products identified in this
rulemaking action.

Regulatory Findings

    We determined that this proposed AD would not have federalism
implications under Executive Order 13132. This proposed AD would not
have a substantial direct effect on the States, on the relationship
between the national Government and the States, or on the distribution
of power and responsibilities among the various levels of government.
    For the reasons discussed above, I certify this proposed
regulation:
    1. Is not a ``significant regulatory action'' under Executive Order
12866;
    2. Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979);
    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):

Airbus: Docket No. FAA-2015-6539; Directorate Identifier 2015-NM-
036-AD.

(a) Comments Due Date

    We must receive comments by January 14, 2016.

(b) Affected AD

    This AD affects AD 2015-05-02, Amendment 39-18112 (80 FR 15152,
March 23, 2015).

(c) Applicability

    This AD applies to the Airbus airplanes, certificated in any
category, identified in paragraphs (c)(1), (c)(2), (c)(3), and
(c)(4) of this AD.
    (1) Model A318-111 and -112 airplanes.
    (2) Model A319-111, -112, -113, -114, and -115 airplanes.
    (3) Model A320-211, -212, and -214 airplanes.
    (4) Model A321-111, -112, -211, -212, and -213 airplanes.

 (d) Subject

    Air Transport Association (ATA) of America Code 05, Periodic
Inspections.

(e) Reason

    This AD was prompted by an evaluation by the design approval
holder indicating that the forward engine mounts are subject to
widespread fatigue damage. We are issuing this AD to detect and
correct fatigue cracking in the forward engine mounts, which could
result in reduced structural integrity of the airplane and could
lead to in-flight loss of an engine, possibly resulting in reduced
controllability of the airplane.

(f) Compliance

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

(g) Repetitive Inspections

    At the latest of the times specified in paragraphs (g)(1),
(g)(2), and (g)(3) of this AD: Do a detailed inspection of the left
and right forward engine mounts for discrepancies (cracking), using
a method approved by the Manager, International Branch, ANM-116,
Transport Airplane Directorate, FAA. Repeat the inspection
thereafter at intervals not to exceed 800 flight cycles.
    Note 1 to paragraphs (g) and (h) of this AD: Guidance for the
inspection and engine mount replacement can be found in Task 712111-
210-040 of the Airbus A318/A319/A320/A321 Maintenance Manual.
    (1) Within 800 flight cycles since the first flight of the
airplane.
    (2) Within 800 flight cycles since the most recent detailed
inspection specified in Airbus Airworthiness Limitation Tasks
712111-01-1, 712111-01-2, 712111-01-3, or 712111-01-4, ``Detailed
Inspection of Forward Engine Mount Installation,'' as applicable.
    (3) Within 800 flight cycles after the effective date of this
AD.

(h) Corrective Action

    If any discrepancy (cracking) is found during any inspection
required by paragraph (g) of this AD: Before further flight, replace
the affected forward engine mount with a serviceable part, using a
method approved by the Manager, International Branch, ANM-116,
Transport Airplane Directorate, FAA; or the European Aviation Safety
Agency (EASA); or Airbus's EASA Design Organization Approval (DOA).

(i) No Terminating Action

    Replacement of a forward engine mount does not constitute
terminating action for the repetitive inspections required by
paragraph (g) of this AD.

(j) Termination of Certain Tasks Required by AD 2015-05-02, Amendment
39-18112 (80 FR 15152, March 23, 2015)

    Accomplishment of the inspections required by paragraph (g) of
this AD terminates the initial and repetitive inspections specified
in paragraph (n)(2) of AD 2015-05-02, Amendment 39-18112 (80 FR
15152, March 23, 2015), for Airbus Airworthiness Limitation Tasks
712111-01-1, 712111-01-2, 712111-01-3, and 712111-01-4, ``Detailed
Inspection of Forward Engine Mount Installation.''

(k) Other FAA AD Provisions

    The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager,
International Branch, ANM-116, Transport Airplane Directorate, 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 International Branch, send it to ATTN: Sanjay
Ralhan, Aerospace Engineer, International Branch, ANM-116, Transport
Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-
3356; telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>. Information may be
emailed to<EMAIL_ADDRESS>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. The
AMOC approval letter must specifically reference this AD.
    (2) Contacting the Manufacturer: For any requirement in this AD
to obtain corrective actions from a manufacturer, the action must be
accomplished using a method approved by the Manager, International
Branch, ANM-116, Transport Airplane Directorate, FAA; or the EASA;
or Airbus's EASA DOA. If approved by the DOA, the approval must
include the DOA-authorized signature.

(l) Special Flight Permits

    Special flight permits, as described in Section 21.197 and
Section 21.199 of the Federal Aviation Regulations (14 CFR 21.197
and 21.199), are not allowed.

(m) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information
(MCAI) EASA Airworthiness Directive 2015-0038, dated March 4, 2015,
for related information. This MCAI may be found in the AD docket on
the Internet at http://www.regulations.gov by searching for and
locating Docket No. FAA-2015-6539.
    (2) For service information identified in this AD contact
Airbus, Airworthiness Office--EIAS, 1 Rond Point Maurice Bellonte,
31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5
61 93 44 51; email<EMAIL_ADDRESS>Internet http://www.airbus.com. You may view this service information at the FAA,
Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA.
For information on the availability of this material at the FAA,
call<PHONE_NUMBER>.

    Issued in Renton, Washington, on November 20, 2015.
Jeffrey E. Duven,
Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 2015-30216 Filed 11-27-15; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 82, Number 233 (Wednesday, December 6, 2017)]
[Rules and Regulations]
[Pages 57537-57539]
[FR Doc No: 2017-26192]

========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents.

========================================================================

Federal Register / Vol. 82, No. 233 / Wednesday, December 6, 2017 /
Rules and Regulations

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2017-1097; Product Identifier 2013-NM-015-AD; Amendment
39-19117; AD 2017-25-03]
RIN 2120-AA64

Airworthiness Directives; Fokker Services B.V. Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule; request for comments.

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

SUMMARY: We are adopting a new airworthiness directive (AD) for all
Fokker Services B.V. Model F28 Mark 0070 and 0100 airplanes. This AD
requires contacting the FAA to obtain instructions for addressing the
unsafe condition on these products, and doing the actions specified in
those instructions. This AD was prompted by a report of sparks and an
electrical smell on the flight deck of a Model F28 Mark 0070 airplane.
We are issuing this AD to address the unsafe condition on these
products.

DATES: This AD becomes effective December 21, 2017.
    We must receive comments on this AD by January 22, 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: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2017-
1097; or in person at the Docket Operations office between 9 a.m. and 5
p.m., Monday through Friday, except Federal holidays. The AD docket
contains this AD, the regulatory evaluation, any comments received, and
other information. The street address for the Docket Operations office
(telephone:<PHONE_NUMBER>) is in the ADDRESSES section. Comments will be
available in the AD docket shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Tom Rodriguez, Aerospace Engineer,
International Section, Transport Standards Branch, FAA, 1601 Lind
Avenue SW., Renton, WA 98057-3356; telephone:<PHONE_NUMBER>; fax: 425-
227-1149.

SUPPLEMENTARY INFORMATION:

Discussion

    The European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Union, has issued EASA AD
2013-0003, dated January 7, 2013 (referred to after this as the
Mandatory Continuing Airworthiness Information, or ``the MCAI''), to
correct an unsafe condition for all Fokker Services B.V. Model F28 Mark
0070 and 0100. The MCAI states:

    Following a report of sparks and an electrical smell on the
flight deck of an F28 Mark 0070 aeroplane, the investigation results
revealed heat damage on several contacts of connector J 4222A/P
4222B, most likely caused by a degraded contact. An imbalance of the
resistance of two contacts, used in parallel in the left-hand (LH)
windshield heating system, resulted in a too high current. This
overheated the contacts and caused carbonising, thereby creating a
conductive path between the contacts of the LH windshield heating
system and the LH sliding window heating system. The conductive path
resulted in a too high voltage on the LH sliding window, causing
overheating of the LH sliding window heating element.
    This condition, if not detected and corrected, could lead to
further cases of electrical overload, possibly resulting in failure
of sliding window heating element(s) and consequent arcing, smoke
and fire in the cockpit area.
    Prompted by these findings, Fokker Services issued Service
Bulletin (SB) SBF100-30-027 which introduces a modification of
wiring distribution on the affected receptacles and plugs.
    To correct this potential unsafe condition, [Civil Aviation
Authority--The Netherlands] CAA-NL issued [Dutch] AD NL-2005-009
(EASA approval 2005-6043) [which corresponds to FAA AD 2006-15-17,
Amendment 39-14698 (71 FR 43033, July 31, 2006)] to require
modification of the wiring distribution of the AC Bus Transfer Power
System and the Windshield Anti-Icing Systems, as specified in Fokker
Services SBF100-30-027.
    Since that [Dutch] AD was issued, Fokker Services found that, as
the Accomplishment Instructions of SBF100-30-027 were divided in 5
blocks, an individual aeroplane (serial number) could be specified
in one or more blocks. This led to confusion for operators and may
have resulted in incomplete accomplishment of the modification as
required by [Dutch] AD NL-2005-009.
    Fokker Services SBF100-30-027 has now been revised to include a
one-to one relation between each aeroplane and the applicable blocks
in the Accomplishment Instructions.
    For the reasons described above, this [EASA] AD requires a one-
time check of the work accomplished through Fokker Services SBF100-
30-027, a visual inspection of the contacts of connectors and,
depending on findings, rework of the wiring.

    You may examine the MCAI on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2017-
1097.

FAA's Determination and Requirements of This AD

    This product has been approved by the aviation authority of another
country, and is approved for operation in the United States. Pursuant
to our bilateral agreement with the State of Design Authority, we have
been notified of the unsafe condition described in the MCAI. We are
issuing this AD because we evaluated all pertinent information and
determined the unsafe condition exists and is likely to exist or
develop on other products of the same type design.

FAA's Determination of the Effective Date

    There are currently no domestic operators of this product.
Therefore, we find that notice and opportunity for prior public comment
are unnecessary and that good cause exists for making

this amendment effective in less than 30 days.

Comments Invited

    This AD is a final rule that involves requirements affecting flight
safety, and we did not precede it by notice and opportunity for public
comment. We invite you to send any written relevant data, views, or
arguments about this AD. Send your comments to an address listed under
the ADDRESSES section. Include ``Docket No. FAA-2017-1097; Product
Identifier 2013-NM-015-AD'' at the beginning of your comments. We
specifically invite comments on the overall regulatory, economic,
environmental, and energy aspects of this AD. We will consider all
comments received by the closing date and may amend this AD based on
those comments.
    We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact we
receive about this AD.

Costs of Compliance

    Currently, there are no affected U.S.-registered airplanes. This AD
requires contacting the FAA to obtain instructions for addressing the
unsafe condition, and doing the actions specified in those
instructions. Based on the actions specified in the MCAI AD, we are
providing the following cost estimates for an affected airplane that is
placed on the U.S. Register in the future:

                                                 Estimated Costs
----------------------------------------------------------------------------------------------------------------
                Action                        Labor cost           Parts cost            Cost per product
----------------------------------------------------------------------------------------------------------------
Maintenance record review............  1 work-hour x $85 per                 $0  $85
                                        hour = $85.
Inspection...........................  Up to 76 work-hours x                 $0  Up to $6,460
                                        $85 per hour = $6,460.
----------------------------------------------------------------------------------------------------------------

    We estimate the following costs to do any necessary on-condition
modification that would be required based on the results of the
required actions:

                                               On-Condition Costs
----------------------------------------------------------------------------------------------------------------
                Action                        Labor cost           Parts cost            Cost per product
----------------------------------------------------------------------------------------------------------------
Modification.........................  Up to 16 work-hours x                 $0  Up to $1,360
                                        $85 per hour = $1,360.
----------------------------------------------------------------------------------------------------------------

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 transport category airplanes to
the Director of the System Oversight Division.

Regulatory Findings

    We determined that this AD will not have federalism implications
under Executive Order 13132. This AD will 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 that this AD:
    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.

Adoption of the Amendment

    Accordingly, under the authority delegated to me by the
Administrator, the FAA amends 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):

2017-25-03 Fokker Services B.V.: Amendment 39-19117; Docket No. FAA-
2017-1097; Product Identifier 2013-NM-015-AD.

(a) Effective Date

    This AD becomes effective December 21, 2017.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to Fokker Services B.V. Model F28 Mark 0070 and
0100 airplanes, certificated in any category, all manufacturer
serial numbers.

(d) Subject

    Air Transport Association (ATA) of America Code 30, Ice and rain
protection.

(e) Reason

    This AD was prompted by a report of sparks and an electrical
smell on the flight deck of a Model F28 Mark 0070 airplane. We are
issuing this AD to prevent an electrical overload in the windshield
heating system, which could result in failure of a sliding window
heating element and consequent arcing, smoke, and fire in the flight
deck.

(f) Compliance

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

(g) Required Action(s)

    Within 30 days after the effective date of this AD, request
instructions from the Manager, International Section, Transport
Standards Branch, FAA, to address the unsafe condition specified in
paragraph (e) of this AD; and accomplish the actions at the times
specified in, and in accordance with, those instructions. Guidance
can be found in Mandatory Continuing Airworthiness Information
(MCAI) European Aviation Safety Agency (EASA) AD 2013-0003, dated
January 7, 2013.

(h) Alternative Methods of Compliance (AMOCs)

    The Manager, International Section, Transport Standards 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 International Section, send it to the
attention of the person identified in paragraph (i)(2) of this AD.
Information may be emailed to: [email protected].
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.

(i) Related Information

    (1) Refer to MCAI EASA AD 2013-0003, dated January 7, 2013, for
related information. You may examine the MCAI on the Internet at
http://www.regulations.gov by searching for and locating Docket No.
FAA-2017-1097.
    (2) For more information about this AD, contact Tom Rodriguez,
Aerospace Engineer, International Section, Transport Standards
Branch, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone:
425-227-1137; fax:<PHONE_NUMBER>.

(j) Material Incorporated by Reference

    None.

    Issued in Renton, Washington, on November 21, 2017.
Jeffrey E. Duven,
Director, System Oversight Division, Aircraft Certification Service.
[FR Doc. 2017-26192 Filed 12-5-17; 8:45 am]
 BILLING CODE 4910-13-P