[Federal Register Volume 81, Number 57 (Thursday, March 24, 2016)]
[Notices]
[Pages 15761-15765]
[FR Doc No: 2016-06604]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77402; File No. SR-Phlx-2016-21]

Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Rebates
and Fees for Adding and Removing Liquidity in SPY

DATE: March 18, 2016.

    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 March 10, 2016, NASDAQ PHLX LLC (``Exchange'') filed with the
Securities and Exchange Commission (``SEC'' or ``Commission'') the
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 proposes to amend the Phlx Pricing Schedule at Section
I, entitled ``Rebates and Fees for Adding and Removing Liquidity in
SPY,'' specifically related to PIXL \3\ executions in options overlying
SPY.\4\
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    \3\ PIXL\SM\ is the Exchange's price improvement mechanism known
as Price Improvement XL or PIXL. A member may electronically submit
for execution an order it represents as agent on behalf of a public
customer, broker-dealer, or any other entity (``PIXL Order'')
against principal interest or against any other order (except as
provided in Rule 1080(n)(i)(E)) it represents as agent (``Initiating
Order''), provided it submits the PIXL order for electronic
execution into the PIXL Auction pursuant to Rule 1080. See Exchange
Rule 1080(n).
    \4\ Options overlying Standard and Poor's Depositary Receipts/
SPDRs (``SPY'') are based on the SPDR exchange-traded fund, which is
designed to track the performance of the S&P 500 Index.
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    The text of the proposed rule change is available on the Exchange's
Web site

at http://nasdaqomxphlx.cchwallstreet.com/, at the principal office of
the Exchange, 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 language in the Pricing Schedule at
Section I, entitled ``Rebates and Fees for Adding and Removing
Liquidity in SPY,'' related to PIXL executions in SPY.
Background
SR-Phlx-2013-61
    Effective June 3, 2013, the Exchange filed a rule change \5\ to
adopt new pricing specific to options overlying Standard and Poor's
Depositary Receipts/SPDRs (``SPY'').\6\ The Exchange adopted ``Make/
Take'' pricing for SPY in both Simple and Complex Orders. The Exchange
adopted SPY PIXL Pricing at that time. The Exchange adopted the
following rule text concerning PIXL Orders:
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    \5\ See Securities Exchange Act Release No. 69768 (June 14,
2013), 78 FR 37250 (June 20, 2013) (SR-Phlx-2013-61) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Various Sections of the Exchange's Pricing Schedule).
    \6\ SPY options are based on the SPDR exchange-traded fund
(``ETF''), which is designed to track the performance of the S&P 500
Index.

    `When the PIXL Order is contra to other than the Initiating
Order, the PIXL Order will be assessed $0.00 per contract, unless
the order is a Customer, in which case the Customer will receive a
rebate of $0.38 per contract. All other contra parties to the PIXL
Order, other than the Initiating Order, will be assessed a Fee for
Removing Liquidity of $0.38 per contract or will receive the Rebate
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for Adding Liquidity.'

    In that rule change, the Exchange noted that it was adopting PIXL
Pricing to ``. . . assess Initiating Orders in SPY options $0.05 per
contract for all market participants. In addition, when the PIXL Order
is contra to the Initiating Order, a Customer PIXL Order will be
assessed $0.00 per contact and all non-Customer market participants
will be assessed a $0.38 per contract fee when contra to the Initiating
Order. Also, when a PIXL Order is contra to other than the Initiating
Order, the PIXL Order will be assessed $0.00 per contract, unless the
order is a Customer, in which case the Customer will receive a rebate
of $0.38 per contract. All other contra parties to the PIXL Order,
other than the Initiating Order, will be assessed a reduced Fee for
Removing Liquidity of $0.38 per contract or will receive the Rebate to
Add Liquidity.'' The Exchange added a footnote in that filing, footnote
21, to further describe the phrase ``other than an Initiating Order,''
as, for example, a PIXL Auction Responder or a resting order or quote
that was on the Phlx book prior to the auction. In that proposal, the
Exchange reasoned, ``The Exchange believes it is reasonable that all
other contra parties to the PIXL Order, other than the Initiating
Order, will be equally assessed a reduced Fee for Removing Liquidity of
$0.38 per contract when removing or they will receive the Rebate for
Adding Liquidity if adding because the Exchange desires to equally
provide all market participants the same incentivizes to encourage them
to transact a greater number of SPY PIXL Orders.''
    The Exchange also reasoned that ``[a]lso, the Exchange proposes to
uniformly assess all market participants a fee when a Customer rebate
would be paid to enable the Exchange to offer the rebate. The Exchange
believes that widening the differential as between the Initiating Order
Fee and the contra party to the PIXL Order ($0.05 vs. $0.38) as
compared to the cost to transact a PIXL Order today ($0.05 or $0.07 per
contract vs. $0.30) does not misalign the cost of these transactions
depending on the market participant because the Exchange would now not
assess a fee in the case that PIXL Order is contra to other than the
Initiating Order, which is not a Customer, and would pay the Customer a
rebate in the case where the contra party is a Customer.''
    The Exchange assessed all contra-parties to the SPY PIXL Order,
other than the Initiating Order, a fee of $0.38 per contract as a
result of this rule change.
SR-Phlx-2015-25
    On March 11, 2015, the Exchange filed a rule change to amend the
SPY PIXL pricing established by SR-Phlx-2013-61.\7\ In that filing, the
Exchange proposed to amend the following rule text, ``All other contra
parties to the PIXL Order, other than the Initiating Order, will be
assessed a Fee for Removing Liquidity of $0.38 per contract or will
receive the Rebate for Adding Liquidity'' \8\ to add the term ``Non-
Customer'' to the sentence and increase the Fee for Removing Liquidity
from $0.38 to $0.42 per contract. The term Non-Customer was being
introduced in this rule change into the Pricing Schedule.\9\ The
Exchange at that time stated in the purpose section to SR-Phlx-2015-25,
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    \7\ See Securities Exchange Act Release No. 74531 (March 19,
2015), 80 FR 15850 (March 25, 2015) (SR-Phlx-2015-25) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating
to the Pricing Schedule's Preface and Sections I, II and IV).
    \8\ The quoted text is the original text which was amended by
SR-Phlx-2015-25.
    \9\ The term ``Non-Customer'' applies to transactions for the
accounts of Specialists, Market Makers, Firms, Professionals,
Broker-Dealers and JBOs.

    `The Exchange also proposes to amend PIXL fees in SPY in Section
I of the Pricing Schedule. Today, when a PIXL Order is contra to
other than the Initiating Order, the PIXL Order will be assessed
$0.00 per contract, unless the order is a Customer, in which case
the Customer will receive a rebate of $0.38 per contract. All other
contra parties to the PIXL Order, other than the Initiating Order,
will be assessed a Fee for Removing Liquidity of $0.38 per contract
or will receive the Rebate for Adding Liquidity. The Exchange is
proposing to increase the amount that all other contra parties to
the PIXL Order, other than the Initiating Order, will be assessed to
remove liquidity from $0.38 to $0.42 per contract. These contra
parties will continue to be entitled to receive the Rebate for
Adding Liquidity, as is the case today. Despite, the increase [the
Exchange] believes that its current SPY PIXL fees remain
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competitive.'

    Footnote 13 in that rule change indicated that a member may
electronically submit for execution an order it represents as agent on
behalf of a public customer, broker-dealer, or any other entity (``PIXL
Order'') against principal interest or against any other order (except
as provided in Rule 1080(n)(i)(E)) it represents as agent (``Initiating
Order'') provided it submits the PIXL order for electronic execution
into the PIXL Auction (``Auction'') pursuant to Rule 1080. Non-
Initiating Order interest could be a PIXL Auction Responder or a
resting order or quote that was on the Phlx book prior to the auction.
    As a result of the amendments to SR-Phlx-2015-25, the Exchange's
current rule text does not address the amount a Customer would be
assessed if the

Customer was a contra-party responder to a SPY PIXL Order, other than
the Initiating Order. Today, no fee is assessed to the Customer contra
party to a SPY PIXL Order.
Proposal
    The Exchange proposes to assess a Customer contra party to a PIXL
Order a Fee for Removing Liquidity of $0.42 per contract, similar to
all other contra parties to a SPY PIXL Order. The Exchange's proposal
would increase the Customer Fee for Removing Liquidity, when the
Customer is a contra party to the PIXL Order, other than the Initiating
Order, from $0.00 to $0.42 per contract.
    The Exchange proposes to (i) add the word ``PIXL'' in the first
sentence to clarify the type of order being discussed; and (ii) remove
the reference to ``other Non-Customer'' in the second sentence, to
assess the $0.42 per contract Fee for Removing to Liquidity to all
participants, including a Customer and make the second sentence its own
paragraph. The proposed rule text would be as follows, ``When the PIXL
Order is contra to other than the Initiating Order, the PIXL Order will
be assessed $0.00 per contract, unless the PIXL Order is a Customer, in
which case the Customer will receive a rebate of $0.38 per contract.''
Separately, in another paragraph, the proposed rule text would be as
follows, ``All contra parties to the PIXL Order that are not the
Initiating Order will be assessed a Fee for Removing Liquidity of $0.42
per contract or will receive the Rebate for Adding Liquidity.'' The
Exchange is also adding some clarifying language in this sentence to
make clear that the contra parties are note [sic] the Initiating Order.
    To further explain this amendment and the role of the contra party,
during a PIXL Auction, a paired order may be entered into the auction
consisting of a PIXL Order and an Initiating Order. If during the
auction, non-Initiating Order interest \10\ executes against the PIXL
Order, the Exchange would assess a Fee for Removing Liquidity of $0.42
per contract or will receive the Rebate for Adding Liquidity,
regardless of the capacity of the contra party. The contra party in
this example may be a Customer order.\11\
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    \10\ Non-Initiating Order interest could be a PIXL Auction
Responder or a resting order or quote that was on the Phlx book
prior to the auction.
    \11\ This contra party Customer order would be different than
the original Customer PIXL Order.
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    The Exchange proposes to correct a typographical error in this
section to capitalize ``non-Customer'' to state ``Non-Customer'' to
properly refer to the defined term. The Exchange also proposes to
remove extraneous parentheticals from Section I in the Simple Order
Rebate for Adding Liquidity in the Specialist and Market Maker pricing.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act \12\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act \13\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility or system which the Exchange operates or controls, and is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
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    The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, for example, the Commission indicated that market forces should
generally determine the price of non-core market data because national
market system regulation ``has been remarkably successful in promoting
market competition in its broader forms that are most important to
investors and listed companies.'' \14\ Likewise, in NetCoalition v.
Securities and Exchange Commission \15\ (``NetCoalition'') the DC
Circuit upheld the Commission's use of a market-based approach in
evaluating the fairness of market data fees against a challenge
claiming that Congress mandated a cost-based approach.\16\ As the court
emphasized, the Commission ``intended in Regulation NMS that `market
forces, rather than regulatory requirements' play a role in determining
the market data . . . to be made available to investors and at what
cost.'' \17\
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    \14\ Securities Exchange Act Release No. 51808 at 37499 (June 9,
2005) (``Regulation NMS Adopting Release'').
    \15\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \16\ See NetCoalition, at 534.
    \17\ Id. at 537.
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    Further, ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers'. . . .'' \18\ Although the court and
the SEC were discussing the cash equities markets, the Exchange
believes that these views apply with equal force to the options
markets.
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    \18\ Id. at 539 (quoting ArcaBook Order, 73 FR at 74782-74783).
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    The Exchange's proposal to increase the amount that Customer contra
parties to a PIXL Order that were not the Initiating Order will be
assessed to remove liquidity from $0.00 to $0.42 per contract is
reasonable because despite the increase in the fee, the Exchange
believes this pricing will continue to incentivize market participants
to transact a greater number of SPY options. Customers will continue to
receive a rebate of $0.38 per contract when the PIXL Order is a
Customer order and is contra to other than the Initiating Order. The
Exchange's proposal to increase the Fee for Removing Liquidity for
Customer contra-parties to the PIXL Order in SPY that are not the
Initiating Order from $0.00 to $0.42 per contract remains lower than
the $0.43 per contract Simple Order Fee for Removing Liquidity that is
assessed for Simple Orders in SPY.\19\ Today, all other market
participants that are not the Initiating Order, other than a Customer,
who execute against the PIXL Order, are assessed a Fee for Removing
Liquidity of $0.42 per contract. The Exchange believes that it should
assess the Customer a fee similar to other market participants. The
Exchange notes that today, a Customer is assessed a $0.43 per contract
Simple Order Fee for Removing Liquidity in SPY. The proposed $0.42 per
contract Customer Fee for Removing Liquidity for Customer contra-
parties to the PIXL Order which are not the Initiating Order in SPY
would continue to be lower than the Simple Order Fee for Removing
Liquidity.
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    \19\ See Section I of the Pricing Schedule. Customers are
assessed a $0.43 per contract Simple Order Fee for Removing
Liquidity in SPY while Non-Customers are assessed a $0.47 per
contract Simple Order Fee for Removing Liquidity in SPY.
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    SPY options are currently the most actively traded options class
and therefore the Exchange believes that incentivizing Customers to
remove liquidity in SPY options by continuing to offer a lower rate as
compared to Simple Order Fees for Removing Liquidity in SPY will
benefit all market participants by providing incentives for price
improvement, such as this reduction in the Fee for Removing Liquidity.
Despite the increase, the Exchange believes the Fee for Removing

Liquidity will continue to encourage a greater number of market
participants to remove Customer liquidity in SPY on Phlx because the
proposed rate of $0.42 per contract is lower the $0.43 per contract
Simple Order Fee for Removing Liquidity that is assessed for Simple
Orders in SPY. Customer orders bring valuable liquidity to the market
which liquidity benefits other market participants.
    The Exchange's proposal to increase the amount that Customer contra
parties to the PIXL Order that are not the Initiating Order will be
assessed to remove liquidity from $0.00 to $0.42 per contract is
equitable and not unfairly discriminatory because the Exchange will be
assessing the same Fees for Removing Liquidity for SPY PIXL options to
all market participants that are contra parties to the PIXL Order in
SPY, other than the Initiating Order. Customer liquidity benefits all
market participants by providing more trading opportunities, which
attracts Specialists and Market Makers. A higher percentage of SPY
Orders in PIXL leads to increased auctions and better opportunities for
price improvement.
    The Exchange believes that it is reasonable, equitable and not
unfairly discriminatory to correct the typographical error to properly
refer to a defined term, remove extraneous parentheticals from Section
I and make other clarifying language. These rule changes are non-
substantive.

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 terms of inter-market
competition, 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, or rebate opportunities available at other venues to be more
favorable. In such an environment, the Exchange must continually adjust
its fees to remain competitive with other exchanges and with
alternative trading systems that have been exempted from compliance
with the statutory standards applicable to exchanges. Because
competitors are free to modify their own fees in response, and because
market participants may readily adjust their order routing practices,
the Exchange believes that the degree to which fee changes in this
market may impose any burden on competition is extremely limited.
    The proposed increase to the amount that Customer contra parties to
the PIXL Order that are not the Initiating Order will be assessed to
remove liquidity does not impose a burden on inter-market competition,
because the Exchange is competing with other options markets which
offer price improvement mechanisms. A higher percentage of SPY Orders
in PIXL leads to increased auctions and better opportunities for price
improvement for all market participants. In sum, if the changes
proposed herein are unattractive to market participants, it is likely
that the Exchange will lose market share as a result. Accordingly, the
Exchange does not believe that the proposed changes will impair the
ability of members or competing order execution venues to maintain
their competitive standing in the financial markets.
    The Exchange's proposal to amend the Fee for Removing Liquidity
applicable to Customers that are contra to a SPY PIXL Order, other than
the Initiating Order, does not impose any undue burden on intra-market
competition as all market participants will be assessed the same fee of
$0.42 per contract to remove liquidity as other contra party market
participants. Customer orders bring valuable liquidity to the market,
which liquidity benefits all market participants. This proposal also
corrects a discrepancy in the rule text which does not currently
address fees for Customer responders.
    The Exchange's proposal to correct a typographical error to
properly refer to a defined term, remove extraneous parentheticals from
Section I and make other clarifying language does not impose any undue
burden on intra-market competition as these rule changes are non-
substantive.

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

    No written comments were either solicited or 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.\20\
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    \20\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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.

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-Phlx-2016-21 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-Phlx-2016-21. 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 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; 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-Phlx-2016-21 and
should

be submitted on or before April 14, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-06604 Filed 3-23-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 234 (Friday, December 4, 2020)]
[Proposed Rules]
[Pages 78277-78279]
[FR Doc No: 2020-26672]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2020-1107; Project Identifier 2019-SW-049-AD]
RIN 2120-AA64

Airworthiness Directives; Airbus Helicopters

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: The FAA proposes to adopt a new airworthiness directive (AD)
for all Airbus Helicopters Model SA330J helicopters. This proposed AD
was prompted by a report of failure of a second stage planet gear of
the main gear box (MGB). This proposed AD would require replacement of
the MGB particle detector assembly with an improved, elongated MGB
particle detector assembly, as specified in a European Union Aviation
Safety Agency (EASA) AD, which is proposed for incorporation by
reference. The FAA is proposing this AD to address the unsafe condition
on these products.

DATES: The FAA must receive comments on this proposed AD by January 19,
2021.

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 https://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 material that will be incorporated by reference (IBR) in this
AD, contact the EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany;
phone: +49 221 8999 000; email<EMAIL_ADDRESS>internet:
www.easa.europa.eu. You may find this IBR material on the EASA website
at https://ad.easa.europa.eu. You may view this IBR material at the
FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood
Pkwy, Room 6N-321, Fort Worth, TX 76177. For information on the
availability of this material at the FAA,

call<PHONE_NUMBER>. It is also available in the AD docket on the
internet at https://www.regulations.gov by searching for and locating
Docket No. FAA-2020-1107.

Examining the AD Docket

    You may examine the AD docket on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2020-
1107; 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, any comments received, and other information. The street
address for Docket Operations is listed above. Comments will be
available in the AD docket shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Mahmood G. Shah, Aviation Safety
Engineer, Fort Worth ACO Branch, FAA, 10101 Hillwood Pkwy., Fort Worth,
TX 76177; phone:<PHONE_NUMBER>; email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Comments Invited

    The FAA invites you to send any written relevant data, views, or
arguments about this proposal. Send your comments to an address listed
under ADDRESSES. Include ``Docket No. FAA-2020-1107; Project Identifier
2019-SW-049-AD'' at the beginning of your comments. The most helpful
comments reference a specific portion of the proposal, explain the
reason for any recommended change, and include supporting data. The FAA
will consider all comments received by the closing date and may amend
this proposal because of those comments.
    Except for Confidential Business Information (CBI) as described in
the following paragraph, and other information as described in 14 CFR
11.35, the FAA will post all comments received, without change, to
https://www.regulations.gov, including any personal information you
provide. The agency will also post a report summarizing each
substantive verbal contact received about this proposal.

Confidential Business Information

    CBI is commercial or financial information that is both customarily
and actually treated as private by its owner. Under the Freedom of
Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public
disclosure. If your comments responsive to this NPRM contain commercial
or financial information that is customarily treated as private, that
you actually treat as private, and that is relevant or responsive to
this NPRM, it is important that you clearly designate the submitted
comments as CBI. Please mark each page of your submission containing
CBI as ``PROPIN.'' The FAA will treat such marked submissions as
confidential under the FOIA, and they will not be placed in the public
docket of this NPRM. Submissions containing CBI should be sent to
Mahmood G. Shah, Aviation Safety Engineer, Fort Worth ACO Branch, FAA,
10101 Hillwood Pkwy., Fort Worth, TX 76177; phone:<PHONE_NUMBER>; email:
<EMAIL_ADDRESS>Any commentary that the FAA receives that is
not specifically designated as CBI will be placed in the public docket
for this rulemaking.

Discussion

    The EASA, which is the Technical Agent for the Member States of the
European Union, has issued EASA AD 2019-0108, dated May 17, 2019 (EASA
AD 2019-0108) (also referred to as the Mandatory Continuing
Airworthiness Information, or the MCAI), to correct an unsafe condition
for all Airbus Helicopters Model SA330J helicopters.
    This proposed AD was prompted by a report of failure of a second
stage planet gear of the MGB on a Model EC225 helicopter. Following a
review of design similarities, it was determined that such an event
might also occur on Model SA330J helicopters. The FAA is proposing this
AD to address failure of a second stage planet gear of the MGB, which
could lead to loss of control of the helicopter. See the MCAI for
additional background information.

Related Service Information Under 1 CFR Part 51

    EASA AD 2019-0108 describes procedures for replacement of the MGB
particle detector assembly with an improved, elongated MGB particle
detector assembly.
    This material is reasonably available because the interested
parties have access to it through their normal course of business or by
the means identified in the ADDRESSES section.

FAA's Determination 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 the bilateral agreement with the State of Design Authority, the FAA
has been notified of the unsafe condition described in the MCAI
referenced above. The FAA is proposing this AD because the FAA
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 accomplishing the actions specified
in EASA AD 2019-0108, described previously, as incorporated by
reference, except for any differences identified as exceptions in the
regulatory text of this proposed AD.

Explanation of Required Compliance Information

    In the FAA's ongoing efforts to improve the efficiency of the AD
process, the FAA initially worked with Airbus and EASA to develop a
process to use certain EASA ADs as the primary source of information
for compliance with requirements for corresponding FAA ADs. The FAA has
since coordinated with other manufacturers and civil aviation
authorities (CAAs) to use this process. As a result, EASA AD 2019-0108
will be incorporated by reference in the FAA final rule. This proposed
AD would, therefore, require compliance with EASA AD 2019-0108 in its
entirety, through that incorporation, except for any differences
identified as exceptions in the regulatory text of this proposed AD.
Using common terms that are the same as the heading of a particular
section in the EASA AD does not mean that operators need comply only
with that section. For example, where the AD requirement refers to
``all required actions and compliance times,'' compliance with this AD
requirement is not limited to the section titled ``Required Action(s)
and Compliance Time(s)'' in the EASA AD. Service information specified
in EASA AD 2019-0108 that is required for compliance with EASA AD 2019-
0108 will be available on the internet at https://www.regulations.gov
by searching for and locating Docket No. FAA-2020-1107 after the FAA
final rule is published.

Costs of Compliance

    The FAA estimates that this proposed AD affects 15 helicopters of
U.S. registry. The FAA estimates the following costs to comply with
this proposed AD:

                                      Estimated Costs for Required Actions
----------------------------------------------------------------------------------------------------------------
                                                                                Cost per       Cost on U.S.
                          Labor cost                              Parts cost        product         operators
----------------------------------------------------------------------------------------------------------------
4 work-hours x $85 per hour = $340...........................          $6,795           $7,135         $107,025
----------------------------------------------------------------------------------------------------------------

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.
    The FAA is 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

    The FAA 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) Will not affect intrastate aviation in Alaska, and
    (3) 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:

Airbus Helicopters: Docket No. FAA-2020-1107; Project Identifier
2019-SW-049-AD.

(a) Comments Due Date

    The FAA must receive comments by January 19, 2021.

(b) Affected Airworthiness Directives (ADs)

    None.

(c) Applicability

    This AD applies to all Airbus Helicopters Model SA330J
helicopters, certificated in any category.

(d) Subject

    Joint Aircraft System Component (JASC) Code 6320, Main rotor
gearbox.

(e) Reason

    This AD was prompted by a report of failure of a second stage
planet gear of the main gear box (MGB). The FAA is issuing this AD
to address failure of a second stage planet gear of the MGB, which
could lead to loss of control of the helicopter.

(f) Compliance

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

(g) Requirements

    Except as specified in paragraph (h) of this AD: Comply with all
required actions and compliance times specified in, and in
accordance with, European Union Aviation Safety Agency (EASA) AD
2019-0108, dated May 17, 2019 (EASA AD 2019-0108).

(h) Exceptions to EASA AD 2019-0108

    (1) Where EASA AD 2019-0108 refers to its effective date, this
AD requires using the effective date of this AD.
    (2) The ``Remarks'' section of EASA AD 2019-0108 does not apply
to this AD.
    (3) Where EASA AD 2019-0108 refers to flight hours (FH), this AD
requires using hours time-in-service.
    (4) Although the service information referenced in EASA 2019-
0108 specifies to discard certain parts, this AD does not include
that requirement.

(i) Special Flight Permit

    Special flight permits may be issued in accordance with 14 CFR
21.197 and 21.199 to operate the helicopter to a location where the
helicopter can be modified (if the operator elects to do so),
provided that no passengers are onboard.

(j) Alternative Methods of Compliance (AMOCs)

    The Manager, Rotorcraft Standards Branch, FAA, may approve AMOCs
for this AD. Send your proposal to: Manager, Rotorcraft Standards
Branch, FAA, 10101 Hillwood Pkwy., Fort Worth, TX 76177; phone: 817-
222-5110; email<EMAIL_ADDRESS>
(k) Related Information

    (1) For EASA AD 2019-0108, contact the EASA, Konrad-Adenauer-
Ufer 3, 50668 Cologne, Germany; phone: +49 221 8999 000; email:
<EMAIL_ADDRESS>internet: www.easa.europa.eu. You may find this
EASA AD on the EASA website at https://ad.easa.europa.eu. You may
view this material at the FAA, Office of the Regional Counsel,
Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort Worth, TX
76177. For information on the availability of this material at the
FAA, call<PHONE_NUMBER>. This material may be found in the AD docket
on the internet at https://www.regulations.gov by searching for and
locating Docket No. FAA-2020-1107.
    (2) For more information about this AD, contact Mahmood G. Shah,
Aviation Safety Engineer, Fort Worth ACO Branch, FAA, 10101 Hillwood
Pkwy., Fort Worth, TX 76177; phone:<PHONE_NUMBER>; email:
<EMAIL_ADDRESS>
    Issued on November 30, 2020.
Lance T. Gant,
Director, Compliance & Airworthiness Division, Aircraft Certification
Service.
[FR Doc. 2020-26672 Filed 12-3-20; 8:45 am]
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[Federal Register: October 1, 2009 (Volume 74, Number 189)]
[Rules and Regulations]
[Page 50686-50688]
[DOCID:fr01oc09-4]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2009-0293; Directorate Identifier 2008-NM-221-AD;
Amendment 39-16035; AD 2009-20-12]
RIN 2120-AA64

Airworthiness Directives; Boeing Model 747-100, -100B, -100B SUD,
-200B, -200C, -200F, -300, -400, -400D, -400F, and 747SR Series
Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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

SUMMARY: We are adopting a new airworthiness directive (AD) for certain
Boeing Model 747 airplanes identified above. This AD requires replacing
the inboard trailing edge (TE) flap transmission carbon disk no-back
brakes with skewed roller no-back brakes at the TE flap transmission,
positions 4 and 5. This AD results from reports of the inboard TE flaps
blowing back due to the failure of a transmission carbon disk no-back
brake. The no-back brake did not hold the TE flaps in the commanded
position. We are issuing this AD to prevent a decrease of the
aerodynamic controllability of the airplane, which could adversely
affect the airplane's continued safe flight and landing.

DATES: This AD is effective November 5, 2009.
    The Director of the Federal Register approved the incorporation by
reference of a certain publication listed in the AD as of November 5,
2009.

ADDRESSES: For service information identified in this AD, contact
Boeing Commercial Airplanes, Attention: Data & Services Management,
P.O. Box 3707, MC 2H-65, Seattle, Washington 98124-2207; telephone 206-
544-5000, extension 1; fax<PHONE_NUMBER>; e-mail<EMAIL_ADDRESS>
Internet https://www.myboeingfleet.com.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://
www.regulations.gov; 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 AD, the regulatory evaluation,
any comments received, and other information. The address for the
Docket Office (telephone<PHONE_NUMBER>) is the Document Management
Facility, U.S. Department of Transportation, Docket Operations, M-30,
West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE.,
Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Douglas Tsuji, Aerospace Engineer,
Systems and Equipment Branch, ANM-130S, FAA, Seattle Aircraft
Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98057-
3356; telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR
part 39 to include an airworthiness directive (AD) that would apply to
certain Boeing Model 747 Airplanes. That NPRM was published in the
Federal Register on April 1, 2009 (74 FR 14750). That NPRM proposed to
require replacing the inboard trailing edge (TE) flap transmission
carbon disk no-back brakes with skewed roller no-back brakes at the TE
flap transmission, positions 4 and 5.

Comments

    We gave the public the opportunity to participate in developing
this AD. We considered the comments received from the three commenters.

Support for the NPRM

    Boeing concurs with the contents of the NPRM.

Clarification of Criteria for AD

    Lufthansa has doubts that all criteria for the issuance of an AD
are met. The commenter states that there is no comprehensible technical
background.
    We infer that the commenter is requesting that we withdraw the
NPRM. We disagree. Although Boeing Special Attention Service Bulletin
747-27-2422, dated October 30, 2008, states that ``since 1999, four
operators have reported that the inboard TE flaps blew back due to the
failure of a transmission carbon disk no-back brake,'' there have been
ten reports of failed inboard and outboard carbon disk no-back brakes
since 1973, and six reports since 1999. Nine of the reports were for
the inboard no-back, and one for an outboard no-back. All of the
failures (i.e., uncommanded blowbacks) occurred at a sufficient
altitude for the pilots to react and control the airplane. As a result
of these events, Boeing conducted extensive lab tests to check the wear
properties and friction characteristics of new and used carbon disk
brakes. The tests revealed a wide variation in friction capability but
no wear correlation between friction coefficient and the number of
cycles. Therefore, the carbon brake may be ineffective regardless of
wear. Because of the test results and the number of events that have
occurred in the fleet, we find it was necessary to proceed with issuing
this AD to ensure the safety of the fleet.

Request to Include an Optional Method of Compliance

    Lufthansa requests that we include a repetitive D-Check shop
overhaul (with updated procedures, if necessary) as an optional method
of compliance to the proposed modification. Lufthansa states that no-
back brakes are removed every 6 years during D-Check and are overhauled
in accordance with the latest Boeing overhaul manuals. Lufthansa states
that since 1995 there have been no failures of the brake system, or a
flap blow back event (which Lufthansa states is extremely improbable
due to the fact that a simultaneous double failure has to exist). With
the above-mentioned overhaul and an additional maintenance task,
Lufthansa states that it is reducing if not even excluding the risk of
a double failure. Lufthansa requests a compliance time of 8 years for
the first D-check, 8 years for the second D-check, and 6 years for
subsequent D-checks.
    We do not agree with the commenter's request to include an optional
method of compliance. Based on the results of Boeing's extensive
testing of carbon disk brakes, the carbon brakes may be ineffective
regardless of wear. Therefore, overhauling the carbon brakes at D-check
intervals would not adequately address the unsafe condition. In
addition, we do not consider that the brake system failure--which
involves a latent failure of the no-back brake, combined with an active
failure of the flap drive system--is extremely improbable. No change to
this AD is necessary.

Request to Delay Issuing Final Rule

    Japan Airlines (JAL) requests that we issue the AD after Revision 1
of Boeing Service Bulletin 747-27-2422 is available. The NPRM cited
Boeing Special Attention Service Bulletin 747-27-2422, dated October
30, 2008, as the appropriate source of service information for
installing the skewed roller no-back brakes at the trailing edge flap
transmission. JAL requests that Boeing amend Service Bulletin 747-27-
2422 to improve Figure 3 to show part

numbers and the assembly sequence. JAL adds that Boeing is considering
issuing Revision 1.
    We agree that adding part numbers and the assembly sequence to
Figure 3 in Boeing Service Bulletin 747-27-2422, dated October 30,
2008, may be beneficial. However, we do not consider that delaying the
final rule until after the release of a future service bulletin
revision is warranted. Boeing Service Bulletin 747-27-2422, dated
October 30, 2008, already includes sufficient information to install
the skewed roller no-back brakes at the trailing edge flap transmission
within the compliance time. However, paragraph (h) of the final rule
provides operators the opportunity to request an AMOC or an extension
of the compliance time if data are presented to justify such an
extension.

Conclusion

    We reviewed the relevant data, considered the comments received,
and determined that air safety and the public interest require adopting
the AD as proposed.

Costs of Compliance

    We estimate that this AD would affect 249 airplanes of U.S.
registry. The following table provides the estimated costs for U.S.
operators to comply with this AD.

                                                                 Table--Estimated Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Number of U.S.-
                      Action                           Work hours     Average labor        Parts             Cost          registered       Fleet cost
                                                                      rate per hour                                        airplanes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Replacement.......................................              25              $80          $60,670          $62,670              249      $15,604,830
--------------------------------------------------------------------------------------------------------------------------------------------------------

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

    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 DOT Regulatory Policies and
Procedures (44 FR 11034, February 26, 1979), and
    (3) 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.
    You can find our regulatory evaluation and the estimated costs of
compliance in the AD Docket.

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

0
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 AD:

2009-20-12 Boeing: Amendment 39-16035. Docket No. FAA-2009-0293;
Directorate Identifier 2008-NM-221-AD.

Effective Date

    (a) This airworthiness directive (AD) is effective November 5,
2009.

Affected ADs

    (b) None.

Applicability

    (c) This AD applies to Boeing Model 747-100, -100B, -100B SUD, -
200B, -200C, -200F, -300, -400, -400D, -400F, and 747SR series
airplanes, certificated in any category; as identified in Boeing
Special Attention Service Bulletin 747-27-2422, dated October 30,
2008.

Subject

    (d) Air Transport Association (ATA) of America Code 27: Flight
controls.

Unsafe Condition

    (e) This AD results from reports of the inboard trailing edge
(TE) flaps blowing back due to the failure of a transmission carbon
disk no-back brake. The no-back brake did not hold the flaps in the
commanded position. The Federal Aviation Administration is issuing
this AD to prevent a decrease of the aerodynamic controllability of
the airplane, which could adversely affect the airplane's continued
safe flight and landing.

Compliance

    (f) You are responsible for having the actions required by this
AD performed within the compliance times specified, unless the
actions have already been done.

Corrective Action

    (g) Within 5 years after the effective date of this AD, replace
the trailing edge flap transmission no-back brakes with skewed
roller no-back brakes at the trailing edge flap transmission,
positions 4 and 5, in accordance with Boeing Special Attention
Service Bulletin 747-27-2422, dated October 30, 2008.

Alternative Methods of Compliance (AMOCs)

    (h)(1) The Manager, Seattle Aircraft Certification Office (ACO),
FAA, has the authority to approve AMOCs for this AD, if requested
using the procedures found in 14 CFR 39.19. Send information to
ATTN: Douglas Tsuji, Aerospace Engineer, Systems and Equipment
Branch, ANM-130S, FAA, Seattle Aircraft Certification Office, 1601
Lind Avenue, SW., Renton, Washington 98057-3356; telephone (425)
917-6487; fax<PHONE_NUMBER>.
    (2) To request a different method of compliance or a different
compliance time for this AD, follow the procedures in 14 CFR 39.19.
Before using any approved AMOC on any airplane to which the AMOC
applies, notify your principal maintenance inspector

(PMI) or principal avionics inspector (PAI), as appropriate, or
lacking a principal inspector, your local Flight Standards District
Office. The AMOC approval letter must specifically reference this
AD.

Material Incorporated by Reference

    (i) You must use Boeing Special Attention Service Bulletin 747-
27-2422, dated October 30, 2008, to do the actions required by this
AD, unless the AD specifies otherwise.
    (1) The Director of the Federal Register approved the
incorporation by reference of this service information under 5
U.S.C. 552(a) and 1 CFR part 51.
    (2) For service information identified in this AD, contact
Boeing Commercial Airplanes, Attention: Data & Services Management,
P.O. Box 3707, MC 2H-65, Seattle, Washington 98124-2207; telephone
206-544-5000, extension 1; fax<PHONE_NUMBER>; e-mail
<EMAIL_ADDRESS>Internet https://www.myboeingfleet.com.
    (3) You may review copies of the service information at the FAA,
Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton,
Washington. For information on the availability of this material at
the FAA, call<PHONE_NUMBER> or<PHONE_NUMBER>.
    (4) You may also review copies of the service information that
is incorporated by reference at the National Archives and Records
Administration (NARA). For information on the availability of this
material at NARA, call<PHONE_NUMBER>, or go to: http://
www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.

    Issued in Renton, Washington, on September 18, 2009.
Ali Bahrami,
Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. E9-23555 Filed 9-30-09; 8:45 am]

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