[Federal Register: October 26, 2005 (Volume 70, Number 206)]
[Notices]
[Page 61864-61866]
[DOCID:fr26oc05-140]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52645; File No. SR-NASD-2005-116]

Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing of Proposed Rule Change To Modify
Nasdaq's Auditor Peer Review Requirement

October 20, 2005.
    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 September 29, 2005, the National Association of Securities Dealers,
Inc. (``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc.
(``Nasdaq''), filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by Nasdaq. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1)
    \2\ 17 CFR 240.19b-4
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Nasdaq proposes to modify NASD Rule 4350(k) to reflect changes to
the oversight of auditors mandated by the Sarbanes-Oxley Act of 2002
(the ``Sarbanes-Oxley Act'') \3\ and to make a conforming amendment to
NASD Rule 4200(a). Nasdaq will implement the proposed rule immediately
upon

Commission approval. The text of the proposed rule change is below.
Proposed new language is in italics; proposed deletions are in
[brackets].
---------------------------------------------------------------------------

    \3\ Pub. L. 107-204, 116 Stat. 745 (2002).
---------------------------------------------------------------------------

* * * * *

4200. Definitions

    (a) For purposes of the Rule 4000 Series, unless the context
requires otherwise:
    (1) No change.
    (2) Reserved. [``AICPA'' means the American Institute of Certified
Public Accountants.]
    (3)-(38) No change.
    (b) No change.
* * * * *

4350. Qualitative Listing Requirements for Nasdaq National Market and
Nasdaq SmallCap Market Issuers Except for Limited Partnerships

    (a)-(j) No change.
    (k) [Peer Review] Auditor Registration
    [(1)] Each listed issuer must be audited by an independent
accountant that[:] Is registered as a public accounting firm with the
Public Company Accounting Oversight Board, as provided for in Section
102 of the Sarbanes-Oxley Act of 2002 [15 U.S.C. 7212].
    [(A) has received an external quality control review by an
independent public accountant (``peer review'') that determines whether
the auditor's system of quality control is in place and operating
effectively and whether established policies and procedures and
applicable auditing standards are being followed; or]
    [(B) is enrolled in a peer review program and within 18 months
receives a peer review that meets acceptable guidelines.]
    [(2) The following guidelines are acceptable for purposes of this
paragraph:]
    [(A) The peer review should be comparable to AICPA standards
included in Standards for Performing on Peer Reviews, codified in the
AICPA's SEC Practice Section Reference Manual;]
    [(B) The peer review program should be subject to oversight by an
independent body comparable to the organizational structure of the
Public Oversight Board as codified in the AICPA's SEC Practice Section
Reference Manual; and]
    [(C) The administering entity and the independent oversight body of
the peer review program must, as part of their rules of procedure,
require the retention of the peer review working papers for 90 days
after acceptance of the peer review report and allow Nasdaq access to
those working papers.]
    (l)-(n) No change.
* * * * *

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

    In its filing with the Commission, Nasdaq 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. Nasdaq 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
    NASD Rule 4350(k) currently requires that issuers be audited by an
independent public accountant that has received an external quality
control review by another independent public accountant (a ``peer
review'') or is enrolled in a peer review program. However, as part of
the Sarbanes-Oxley Act, Congress created the Public Company Accounting
Oversight Board (the ``PCAOB'') and prohibited accounting firms that
are not registered with the PCAOB from preparing or issuing audit
reports on U.S. public companies and from participating in such
audits.\4\ The Sarbanes-Oxley Act also requires the PCAOB to conduct a
continuing program of inspections of registered public accounting
firms.\5\ Pursuant to these requirements, the PCAOB is required to
conduct inspections annually for firms that provide audit reports for
more than 100 issuers and at least triennially for firms that provide
audit reports for fewer issuers.\6\
---------------------------------------------------------------------------

    \4\ Section 102 of the Sarbanes-Oxley Act, 15 U.S.C. 7212.
    \5\ Section 104 of the Sarbanes-Oxley Act, 15 U.S.C. 7214.
    \6\ See Section 104 of the Sarbanes-Oxley Act, 15 U.S.C.
7214(b).
---------------------------------------------------------------------------

    In light of these new requirements, the American Institute of
Certified Public Accountants (``AICPA'') has modified its peer review
program. The new AICPA peer review program, which succeeds the SEC
Practice Section Peer Review Program currently referred to in NASD Rule
4350(k), is designed to review and evaluate only the non-SEC issuer
practice of the firm.\7\ As a result, this peer review program is no
longer relevant with respect to the audits of Nasdaq-listed issuers.
---------------------------------------------------------------------------

    \7\ See Web site for the AICPA's Center for Public Company Audit
Firms Peer Review Program at: http://www.aicpa.org/centerprp/index.htm
.

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

    Given these changes to the oversight and inspection of auditors,
the proposed rule change is designed to modify existing NASD Rule
4350(k) to reflect the new role of the PCAOB and change the existing
requirement to a requirement that each issuer's auditor be registered
as a public accounting firm with the PCAOB. As a result, auditors of
Nasdaq companies will be subject to the PCAOB's program of continuing
inspections.\8\
---------------------------------------------------------------------------

    \8\ See Sections 4000-4012 of the PCAOB Rules. Note that in the
case of non-U.S. auditors, where the PCAOB determines it
appropriate, the PCAOB may rely instead on non-U.S. inspections. See
Section 4012 of the PCAOB Rules.
---------------------------------------------------------------------------

    Under the proposed rule change, an issuer seeking to list on Nasdaq
would be permitted to continue to use historical financial statements
that were audited by a non-registered firm at a time when the applicant
was not a public company. Nasdaq believes that this view is consistent
with an interpretation adopted by the PCAOB, which provides that an
auditor does not have to register with the PCAOB merely because it
issues a consent to include an audit report for a prior period, if the
auditor does not have or expect to have an ongoing role in the auditing
engagement.\9\ Of course, if the issuer was a public company
immediately prior to listing on Nasdaq, the company's financial
statements must have been audited and/or reviewed by a public
accounting firm that was registered with the PCAOB, as required by the
Sarbanes-Oxley Act and the rules of the PCAOB.
---------------------------------------------------------------------------

    \9\ See PCAOB Rule 2100, Note 2.
---------------------------------------------------------------------------

    Finally, Nasdaq proposes to make a conforming amendment to the
language of NASD Rule 4200(a) to delete the definition of ``AICPA,''
which would no longer be necessary.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\10\ in general, and with
Section 15A(b)(6) of the Act,\11\ in particular, in that the proposal
is designed to remove impediments to a free and open market and a
national market system, prevent fraudulent and manipulative acts and
practices, and, in general, to protect investors and the public
interest. Specifically, the proposed rule change will remove a
redundant listing requirement, thereby removing an impediment to a free
and open market,

and will align Nasdaq's listing standards with the requirements of the
Sarbanes-Oxley Act, thereby allowing Nasdaq to further the investor
protection goals of that Act.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78o-3.
    \11\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

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

    Nasdaq does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.

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

    Written comments were neither solicited nor received.

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

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which Nasdaq consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule
change should be 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 e-mail to<EMAIL_ADDRESS>Please include

File Number SR-NASD-2005-116 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-NASD-2005-116. This
file number should be included on the subject line if e-mail 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 inspection
and copying in the Commission's Public Reference Room. Copies of the
filing also will be available for inspection and copying at the
principal office of the NASD. 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-NASD-2005-116 and should be submitted on or before
November 16, 2005.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

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

Jonathan G. Katz,
Secretary.
[FR Doc. E5-5942 Filed 10-25-05; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 84, Number 78 (Tuesday, April 23, 2019)]
[Notices]
[Pages 16911-16913]
[FR Doc No: 2019-08106]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85678; File No. SR-BOX-2019-11]

Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee
Schedule on the BOX Options Market LLC (``BOX'') Facility To Modify Its
Strategy QOO Order Fee Cap and Rebate

April 17, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on April 4, 2019, BOX Exchange LLC (the ``Exchange'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I, II, and III below, which Items
have been prepared by the Exchange. The Exchange filed the proposed
rule change pursuant to Section 19(b)(3)(A)(ii) of the Act,\3\ and Rule
19b-4(f)(2) thereunder,\4\ which renders the proposal effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

    The Exchange is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change to amend the Fee Schedule to
amend

the Fee Schedule [sic] on the BOX Options Market LLC (``BOX'') options
facility. While changes to the fee schedule pursuant to this proposal
will be effective upon filing, the changes will become operative on May
1, 2019. 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://boxexchange.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 Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.

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

1. Purpose
    The Exchange proposes to amend the Fee Schedule for trading on BOX
to amend Section II.D (Strategy QOO Order Fee Cap and Rebate).
Currently, the Exchange caps fees and offers rebates on all short stock
interest, reversal, conversion, jelly roll, and box spread strategies
on the BOX Trading Floor. The Exchange is now proposing to cap fees and
offer a Floor Broker rebate for dividend strategy transactions.
    A dividend strategy is defined as a transaction done to achieve a
dividend arbitrage involving the purchase, sale and exercise of in-the-
money options of the same class, executed the first business day prior
to the date on which the underlying stock goes ex-dividend. The
Exchange proposes to include this definition in a footnote in the BOX
Fee Schedule in Section II.D.
    The Exchange now proposes to offer a strategy cap for dividend
strategies. Today, Floor Participant transactions are capped at $1,000
for all short stock interest, reversal, conversion, jelly roll, and box
spread strategies executed on the same trading day.\5\ The Exchange
proposes to include dividend strategies in the daily Strategy QOO Order
Fee Cap and Rebate. As such, Floor Participant transactions will also
be capped at $1,000 for all dividend strategies executed on the same
trading day in the same options class. The Exchange notes that the
proposed fee cap is similar to a fee cap at another options exchange in
the industry.\6\
---------------------------------------------------------------------------

    \5\ Short stock interest, reversal, conversion, jelly roll and
box spread transactions are not included in the monthly fee cap for
Broker Dealers. The Exchange notes that dividend strategies will not
be included in the monthly fee cap for Broker Dealers.
    \6\ See Nasdaq Phlx LLC (``Phlx'') Fee Schedule. On Phlx,
Specialist, Market Makers, Professionals, Firms and Broker-Dealers
receive a fee cap of $1,500 for a [sic] dividend, merger and short
stock interest strategies executed on the same trading day in the
same options class when such members are trading in their own
proprietary account.
---------------------------------------------------------------------------

    Further, the Exchange proposes to include dividend strategies in
the Floor Broker Strategy QOO Rebate. As proposed, on each trading day,
Floor Brokers are eligible to receive a $500 rebate for presenting
certain Strategy QOO Orders on the Trading Floor. The rebate will be
applied once the $1,000 fee cap is met for dividend strategies executed
on the same trading day in the same options class.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act, in general, and Section
6(b)(4) and 6(b)(5)of the Act,\7\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees, and other
charges among BOX Participants and other persons using its facilities
and does not unfairly discriminate between customers, issuers, brokers
or dealers.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that including dividend strategies in Section
II.D of the BOX Fee Schedule is reasonable, as another exchange offers
fee caps for dividend strategies.\8\ On Phlx, Specialist, Market
Makers, Professionals, Firms and Broker-Dealers receive a fee cap of
$1,500 for a [sic] dividend, merger and short stock interest strategies
executed on the same trading day in the same options class when such
members are trading in their own proprietary account. The Exchange also
notes that the Phlx fee cap is broader in that it applies to dividend,
merger and short stock interest strategies collectively. As discussed
herein, the Exchange proposes a separate cap for dividend strategies.
The Exchange believes this difference is appropriate as dividend
strategies must execute in the same options class where the other
strategies in the BOX Fee Schedule are not subject to the same
requirement. As such, the Exchange believes it is reasonable and
appropriate to separate dividend strategies from the other strategies
in the BOX Fee Schedule. Further, the Exchange believes that including
dividend strategies in the Strategy QOO Order rebate is appropriate as
Floor Brokers are eligible to receive a $500 rebate for presenting all
other strategies to the BOX Trading Floor.
---------------------------------------------------------------------------

    \8\ See supra note 6. The Exchange notes that it is not
including the Phlx requirement that the Participant be trading in
their own proprietary account as this is not the BOX strategy fee
cap model and is not a requirement for the other strategies on the
BOX Fee Schedule.
---------------------------------------------------------------------------

    The Exchange believes the proposed fee cap for dividend strategies
is equitable and not unfairly discriminatory because it provides
incentives for all Participants to submit these types of strategy
orders to the BOX Trading Floor, which brings increased liquidity and
order flow to the floor for the benefit of all market participants.
Further, the Exchange believes that including dividend strategies in
the Strategy QOO Order rebate is equitable and not unfairly
discriminatory as the rebate is available to all Floor Brokers who
submit such orders to the BOX Trading Floor.

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 because the proposed change
applies uniformly to all Participants that incur transaction fees for
dividend strategies. Further, another options exchange today offers a
cap on dividend strategies; therefore, the Exchange believes that the
proposal is consistent with robust competition and does not provide any
unnecessary burden on competition. Further, because Floor Participants
pay Floor Brokers to execute trades on the Exchange Floor, the Exchange
believes that offering fee caps on dividend strategies to Participants
executing floor transactions and not electronic executions does not
create an unnecessary burden on competition because the fee cap defrays
brokerage costs associated with executing dividend strategy
transactions, similar to other strategies today.
    The Exchange operates in a highly competitive market in which
market participants can easily and readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or rebates to be inadequate. Accordingly, the fee cap and
Floor Broker rebate for dividend strategies proposed by the Exchange,
as described in the proposal, are influenced by these robust market
forces

and therefore must remain competitive with fee caps at other venues and
therefore must continue to be reasonable and equitably allocated to
those Participants that opt to direct orders to the Exchange rather
than competing venues.

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 Exchange Act \9\ and Rule 19b-4(f)(2)
thereunder,\10\ because it establishes or changes a due, or fee.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend the rule
change if it appears to the Commission that the action is necessary or
appropriate in the public interest, for the protection of investors, or
would otherwise further 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 protected]. Please include
File Number SR-BOX-2019-11 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-2019-11. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. 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-2019-11, and should be submitted on
or before May 14, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-08106 Filed 4-22-19; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 74, Number 79 (Monday, April 27, 2009)]
[Rules and Regulations]
[Pages 18978-18981]
[FR Doc No: E9-9321]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2009-0371; Directorate Identifier 2009-CE-021-AD;
Amendment 39-15890; AD 2009-09-04]
RIN 2120-AA64

Airworthiness Directives; EADS-PZL ``Warszawa-Ok[eogon]cie'' S.A.
Model PZL-104 WILGA 80 Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule; request for comments.

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

SUMMARY: We are adopting a new airworthiness directive (AD) for the
products listed above. This AD results from mandatory continuing
airworthiness information (MCAI) issued by the aviation authority of
another country to identify and correct an unsafe condition on an
aviation product. The MCAI describes the unsafe condition as:

    An inspection of a PZL-104 aeroplane that had a relatively long
operational background revealed a severe corrosion of the steel
front fuselage structural elements.
    It is likely that such corrosion can also be present on other
aeroplanes of similar design and operational history.
    If left uncorrected, this condition could lead to loss of
strength of the structural front posts elements and consequent
reduction of the structural strength of the aeroplane.

This AD requires actions that are intended to address the unsafe
condition described in the MCAI.

DATES: This AD becomes effective May 18, 2009.
    On May 18, 2009, the Director of the Federal Register approved the
incorporation by reference of certain publications listed in this AD.
    We must receive comments on this AD by May 27, 2009.

ADDRESSES: You may send comments 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 20590, 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; 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 street address for
the Docket Office (telephone<PHONE_NUMBER>) is in the ADDRESSES
section. Comments will be available in the AD docket shortly after
receipt.

FOR FURTHER INFORMATION CONTACT: Doug Rudolph, Aerospace Engineer, 901
Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329-
4059; fax:<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Discussion

    The European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Community, has issued AD
No. 2009-0072, dated March 31, 2009 (referred to after this as ``the
MCAI''), to correct an unsafe condition for the specified products. The
MCAI states:

    An inspection of a PZL-104 aeroplane that had a relatively long
operational background revealed a severe corrosion of the steel
front fuselage structural elements.
    It is likely that such corrosion can also be present on other
aeroplanes of similar design and operational history.
    If left uncorrected, this condition could lead to loss of
strength of the structural front posts elements and consequent
reduction of the structural strength of the aeroplane.
    For the reason stated above, this Airworthiness Directive (AD)
mandates inspecting the fuselage front posts, repairing any
corrosion found and replacing pads made of foam rubber by pads made
of Neoprene to prevent water ingression.

You may obtain further information by examining the MCAI in the AD
docket.

Relevant Service Information

    EADS-PZL ``Warszawa-Ok[eogon]cie'' S.A. has issued Mandatory
Bulletin No. 10409036, dated March 18, 2009. The actions described in
this service information are intended to correct the unsafe condition
identified in the MCAI.

FAA's Determination and Requirements of the 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 this State of Design Authority, they
have notified us of the unsafe condition described in the MCAI and
service information referenced above. We are issuing this AD because we
evaluated all information provided by the State of Design Authority and
determined the unsafe condition exists and is likely to exist or
develop on other products of the same type design.

Differences Between This AD and the MCAI or Service Information

    We have reviewed the MCAI and related service information and, in
general, agree with their substance. But we might have found it
necessary to use different words from those in the MCAI to ensure the
AD is clear for U.S. operators and is enforceable. In making these
changes, we do not intend to differ substantively from the information
provided in the MCAI and related service information.
    We might have also required different actions in this AD from those
in the MCAI in order to follow FAA policies. Any such differences are
described in a separate paragraph of the AD. These requirements take
precedence over those copied from the MCAI.

FAA's Determination of the Effective Date

    An unsafe condition exists that requires the immediate adoption of
this AD. The FAA has found that the risk to the flying public justifies
waiving notice and comment prior to adoption of this rule because if
left uncorrected, corrosion could lead to loss of structural strength
of the front posts elements and consequent reduction of structural
strength of the airplane. Therefore, we determined that notice and
opportunity for public comment before issuing this AD are impracticable
and that good cause exists for making this amendment effective in fewer
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-2009-15890; Directorate
Identifier 2009-CE-021-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 because of
those comments.
    We will post all comments we receive, without change, to http://www.regulations.gov, including any

personal information you provide. We will also post a report
summarizing each substantive verbal contact we receive about this 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 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.
    We prepared a regulatory evaluation of the estimated costs to
comply with this AD and placed it 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:

2009-09-04 EADS-PZL ``Warszawa-Ok[eogon]cie'' S.A.: Amendment 39-
15890; Docket No. FAA-2009-0371; Directorate Identifier 2009-CE-021-
AD.

Effective Date

    (a) This airworthiness directive (AD) becomes effective May 18,
2009.

Affected ADs

    (b) None.

Applicability

    (c) This AD applies to Model PZL-104 WILGA 80 airplanes, all
serial numbers, certificated in any category.

Subject

    (d) Air Transport Association of America (ATA) Code 53:
Fuselage.

Reason

    (e) The mandatory continuing airworthiness information (MCAI)
states:
    An inspection of a PZL-104 aeroplane that had a relatively long
operational background revealed a severe corrosion of the steel
front fuselage structural elements.
    It is likely that such corrosion can also be present on other
aeroplanes of similar design and operational history.
    If left uncorrected, this condition could lead to loss of
strength of the structural front posts elements and consequent
reduction of the structural strength of the aeroplane.
    For the reason stated above, this Airworthiness Directive (AD)
mandates inspecting the fuselage front posts, repairing any
corrosion found and replacing pads made of foam rubber by pads made
of Neoprene to prevent water ingression.

Actions and Compliance

    (f) Unless already done, do the following actions.
    (1) Within 12 years from date of manufacture or within the next
two months after May 18, 2009 (the effective date of this AD),
whichever occurs later, inspect the fuselage front posts for signs
of corrosion following paragraph 6.A. of EADS-PZL ``Warszawa-
Ok[eogon]cie'' S.A. Mandatory Bulletin No. 10409036, dated March 18,
2009.
    (2) If corrosion or any corrosion damage is found during the
inspection required in paragraph (f)(1) of this AD, before further
flight, repair or replace any parts where corrosion or corrosion
damage was found in accordance with an FAA-approved repair solution
obtained from EADS-PZL ``Warszawa-Ok[eogon]cie'' S.A.
    (3) Within 12 years from date of manufacture or within the next
two months after May 18, 2009 (the effective date of this AD),
whichever occurs later, replace the rear glass padding following
paragraph 6.C. of EADS-PZL ``Warszawa-Ok[eogon]cie'' S.A. Mandatory
Bulletin No. 10409036, dated March 18, 2009.

FAA AD Differences

    Note: This AD differs from the MCAI and/or service information
as follows:
    (1) The MCAI specifies revising the airplane maintenance program
to include a repetitive inspection of the fuselage front posts. We
are not including the maintenance program revision action in this
AD. The Administrative Procedure Act does not permit the FAA to
``bootstrap'' a long-term requirement into an urgent safety of
flight action where the rule becomes effective at the same time the
public has the opportunity to comment. The short-term action and the
long-term action are analyzed separately for justification to bypass
prior public notice.
    (2) After issuing this AD, we may initiate further AD action
(notice of proposed rulemaking followed by a final rule) to require
a maintenance program revision action to do a repetitive inspection
of the fuselage front posts. Credit will be given in any subsequent
action for the inspection done under this AD.

Other FAA AD Provisions

    (g) The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager,
Standards Office, 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: Doug Rudolph, Aerospace Engineer, FAA, Small
Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri
64106; telephone:<PHONE_NUMBER>; fax:<PHONE_NUMBER>. Before using
any approved AMOC on any airplane to which the AMOC applies, notify
your appropriate principal inspector (PI) in the FAA Flight
Standards District Office (FSDO), or lacking a PI, your local FSDO.
    (2) Airworthy Product: For any requirement in this AD to obtain
corrective actions from a manufacturer or other source, use these
actions if they are FAA-approved. Corrective actions are considered
FAA-approved if they are approved by the State of Design Authority
(or their delegated agent). You are required to assure the product
is airworthy before it is returned to service.
    (3) Reporting Requirements: For any reporting requirement in
this AD, under the provisions of the Paperwork Reduction Act (44
U.S.C. 3501 et seq.), the Office of Management and Budget (OMB) has
approved the information collection requirements and has assigned
OMB Control Number 2120-0056.

Related Information

    (h) Refer to MCAI European Aviation Safety Agency (EASA) AD No.:
2009-0072, dated March 31, 2009, and EADS-PZL ``Warszawa-
Ok[eogon]cie'' S.A. Mandatory Bulletin No. 10409036, dated March 18,
2009, for related information.

Material Incorporated by Reference

    (i) You must use EADS-PZL ``Warszawa-Ok[eogon]cie'' S.A.
Mandatory Bulletin No.

10409036, dated March 18, 2009, 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 EADS-
PZL ``Warszawa-Ok[eogon]cie'' S.A., Aleja Krakowska 110/114, 00-971
Warszawa, Poland; telephone: +48 22 577 22 11; fax: +48 22 577 22
03; e-mail<EMAIL_ADDRESS>Internet: http://www.eads.net/1024/en/businet/airbus/airbus_military/pzl/pzl.html.
    (3) You may review copies of the service information
incorporated by reference for this AD at the FAA, Central Region,
Office of the Regional Counsel, 901 Locust, Kansas City, Missouri
64106. For information on the availability of this material at the
Central Region, call<PHONE_NUMBER>.
    (4) You may also review copies of the service information
incorporated by reference for this AD 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 Kansas City, Missouri on April 15, 2009.
Kim Smith,
Manager, Small Airplane Directorate, Aircraft Certification Service.
[FR Doc. E9-9321 Filed 4-24-09; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 82, Number 165 (Monday, August 28, 2017)]
[Notices]
[Pages 40828-40831]
[FR Doc No: 2017-18183]

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

DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

[Docket No. FMCSA-2017-0226]

Fixing America's Surface Transportation Act Correlation Study

AGENCY: Federal Motor Carrier Safety Administration (FMCSA), DOT.

ACTION: Notice; request for comments.

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

SUMMARY: On June 27, 2017, the National Academy of Sciences (NAS)
published its report titled, ``Improving Motor Carrier Safety
Measurement.'' This report was commissioned by FMCSA consistent with
the requirements of Section 5221 of the Fixing America's Surface
Transportation (FAST) Act. The FAST Act also requires that the Agency
develop an action plan to address any identified deficiencies and
submit it to Congress and the U.S. Department of Transportation's (DOT)
Office of Inspector General (OIG). The purpose of this notice is to
announce a public meeting to discuss the NAS recommendations and to
solicit input to be considered by the Agency in the development and
implementation of the action plan.

DATES: The public meeting will take place on Friday, September 8, 2017,
from 1:00 p.m. to 4:00 p.m., Eastern Time. A copy of the agenda for the
meeting will be available in advance of the meeting at https://www.regonline.com/FMCSA_Correlation_Study_Action_PlanPublicMeeting. If
all interested participants have had an opportunity to comment, the
meeting may conclude early.
    Public Comments: Comments must be received by September 27, 2017.

ADDRESSES: The meeting will be held at the FMCSA National Training
Center, 1310 N. Courthouse Road, Suite 600, Arlington, VA 22201-2508.
Those interested in attending this public meeting must register at:
https://www.regonline.com/FMCSA_Correlation_Study_Action_PlanPublicMeeting. Participants have the
option of registering to attend in person, or via webinar.
    You may submit comments identified by Docket Number FMCSA-2017-0226
using any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments.
     Mail: Docket Management Facility, U.S. Department of
Transportation, Room W12-140, 1200 New Jersey Avenue SE., Washington,
DC 20590-0001.
     Hand Delivery or Courier: West Building, Ground Floor,
Room W12-140, 1200 New Jersey Avenue SE., Washington, DC, between 9
a.m. and 5 p.m. E.T., Monday through Friday, except Federal holidays.
     Fax: 1-202-493-2251.

FOR FURTHER INFORMATION CONTACT: For information about the public
meeting or for information on facilities or services for individuals
with disabilities or to request special assistance at the meeting,
contact Ms. Sharon Worthy, Director of External Affairs at (202) 366-
2309 or by email at<EMAIL_ADDRESS>by September 1, 2017.
    For information about the Correlation Study, please contact Ms.
Theresa Rowlett, Senior Policy Advisor, Office of Enforcement, FMCSA,
1200 New Jersey Avenue SE., Washington, DC

20590, Telephone<PHONE_NUMBER> or by email at<EMAIL_ADDRESS>    If you have questions regarding viewing or submitting material to
the docket, contact Docket Services, telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Submitting Comments

    If you submit a comment, please include the docket number for this
notice (FMCSA-2017-0226), indicate the specific section of this
document to which each comment applies, and provide a reason for each
suggestion or recommendation. You may submit your comments and material
online or by fax, mail, or hand delivery, but please use only one of
these means. FMCSA recommends that you include your name and mailing
address, an email address, or a phone number in the body of your
document so that FMCSA can contact you if there are questions regarding
your submission.
    To submit your comment online, go to http://www.regulations.gov,
put the docket number, FMCSA-2017-0226, in the keyword box, and click
``Search.'' When the new screen appears, click on the ``Comment Now!''
button and type your comment into the text box on the following screen.
Choose whether you are submitting your comment as an individual or on
behalf of a third party and then submit.
    If you submit your comments by mail or hand delivery, submit them
in an unbound format, no larger than 8\1/2\ by 11 inches, suitable for
copying and electronic filing. If you submit comments by mail and would
like to know that they reached the facility, please enclose a stamped,
self-addressed postcard or envelope.

Viewing Comments and Documents

    To view comments, as well as any documents mentioned in this
preamble as being available in the docket, to http://www.regulations.gov. Insert the docket number, FMCSA-2017-0226, in the
keyword box, and click ``Search.'' Next, click the ``Open Docket
Folder'' button and choose the document to review. If you do not have
access to the Internet, you may view the docket by visiting the Docket
Management Facility in Room W12-140 on the ground floor of the West
Building, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9
a.m. and 5 p.m., E.T., Monday through Friday, except Federal holidays.

Privacy Act

    The Department of Transportation (DOT) solicits comments from the
public to better inform its decision-making processes. DOT posts these
comments, without edit, including any personal information the
commenter provides, to www.regulations.gov, as described in the system
of records notice (DOT/ALL-14 FDMS), which can be reviewed at
www.dot.gov/privacy.

Background

    Section 5221 of the FAST Act, titled ``Correlation Study,''
required FMCSA to commission the National Research Council of the
National Academies to conduct a study of FMCSA's Compliance, Safety,
Accountability (CSA) program and Safety Measurement System (SMS). SMS
is FMCSA's algorithm for identifying patterns of non-compliance and
prioritizing motor carriers for interventions. FMCSA is prohibited from
publishing SMS percentiles and alerts on the SMS Web site for motor
carriers transporting property until the NAS Correlation Study is
complete and all reporting and certification requirements under the
FAST Act are satisfied.
    The FAST Act also required FMCSA to submit the results of this
study to both Congress and the DOT OIG. In addition, within 120 days of
the submission of the report to Congress and the OIG, FMCSA must submit
an action plan to the Senate Committee on Commerce, Science, and
Transportation; and the House of Representatives Transportation and
Infrastructure Committee. The OIG is required to review the action plan
and submit a report to Congress on the responsiveness of the FMCSA's
plan to the NAS report's recommendations.
    Under Section 5221 of the FAST Act, the purpose of this study is to
analyze:
    a. The accuracy with which the Behavior Analysis Safety Improvement
Categories (BASICs) used by SMS:
    i. Identify high risk carriers.
    ii. Predict or are correlated with future crash risk, crash
severity, or other safety indicators for motor carriers, including the
highest risk carriers.
    b. The methodology used to calculate BASIC percentiles and identify
carriers for enforcement, including the weights assigned to particular
violations and the tie between crash risk and specific regulatory
violations, with respect to accurately identifying and predicting
future crash risk for motor carriers.
    c. The relative value of inspection information and roadside
enforcement data.
    d. Any data collection gaps or data sufficiency problems that may
exist and the impact of those gaps and problems on the efficacy of the
CSA program.
    e. The accuracy of safety data, including the use of crash data
from crashes in which a motor carrier was free from fault.
    f. Whether BASIC percentiles for motor carriers of passengers
should be calculated separately from for motor carriers of freight.
    g. The differences in the rates at which safety violations are
reported to FMCSA for inclusion in the SMS by various enforcement
authorities, including States, territories, and Federal inspectors.
    h. How members of the public use the SMS and what effect making the
SMS information public has had on reducing crashes and eliminating
unsafe motor carriers from the industry.
    The FAST Act required the NAS also to consider:
    a. Whether the SMS provides comparable precision and confidence,
through SMS alerts and percentiles, for the relative crash risk of
individual large and small motor carriers.
    b. Whether alternatives to the SMS would identify high risk
carriers more accurately.
    c. The recommendations and findings of the Comptroller General of
the United States and the Inspector General of the Department of
Transportation, and independent review team reports, issued before the
date of the FAST Act.

NAS Report Recommendations and FMCSA Action Plan Overview

    On June 27, 2017, NAS published the report titled, ``Improving
Motor Carrier Safety Measurement.'' The report is available at https://www.nap.edu/catalog/24818/improving-motor-carrier-safety-measurement. A
copy of the report has been placed in the docket referenced at the
beginning of this notice. In preparing the report, NAS collected and
analyzed all the quantitative data available to FMCSA in its databases,
which contain information on the safety of commercial motor carriers
and drivers subject to the Federal Motor Carrier Safety Regulations and
the Hazardous Materials Regulations. In addition, NAS held three public
meetings to engage stakeholders from the truck and bus industry, safety
advocates, researchers, and other government organizations. The meeting
agendas are included in an appendix to the report.
    The NAS report concluded that SMS, in its current form, is
structured in a reasonable way and its method of identifying motor
carriers for alert status is defensible. In addition, NAS agreed that
FMCSA's overall approach, based on crash prevention rather than
prediction, is sound. NAS provided FMCSA with six recommendations to
improve the system.

    FMCSA accepts the NAS report's recommendations and outlines below
several high-level proposals to address each recommendation. The
proposals summarized below are intended to allow the public to provide
input into the development of the action plan but do not themselves
constitute the entirety of the action plan. FMCSA is still considering
and evaluating actions to address the recommendations. FMCSA is also
working with the NAS to establish a Standing Committee to oversee and
provide advice relating to the Agency's work addressing these
recommendations. In addition to reviewing and providing advice on the
Agency's technical work, such as the Item Response Theory (IRT)
modeling, NAS will advise on all recommendations, and establish a
process for gathering stakeholder input in the implementation of the
action plan as well.
    Recommendation 1--FMCSA should develop the suggested IRT model over
the next 2 years. If it is then demonstrated to perform well in
identifying motor carriers for alerts, FMCSA should use it to replace
SMS in a manner akin to the way SMS replaced SafeStat.
FMCSA Comment
    To address this recommendation, FMCSA is securing additional
expertise and resources to develop and test the proposed IRT
statistical model. The testing of an IRT model is consistent with
FMCSA's continuous improvement process of modifying and testing changes
to SMS by focusing on data quality, data collection, and transparency.
FMCSA will evaluate whether the new model performs well using existing
effectiveness testing methods and/or methodologies recommended by the
NAS, and based on that evaluation will determine the next steps in
using that model.
    FMCSA is seeking comments on the implementation of an IRT model and
its application to the SMS as well as the process for development and
testing of the model.
    Recommendation 2--FMCSA should continue to collaborate with states
and other agencies to improve the quality of the Motor Carrier
Management Information System (MCMIS) data in support of SMS, focusing
on carrier exposure and crash data. The current exposure data are
missing with high frequency, and data that are collected are likely of
unsatisfactory quality. To improve the exposure data collected involves
not only collecting higher-quality Vehicle Miles Traveled (VMT) data,
but also collecting this information by state and by month. This will
enable SMS to (partially) accommodate existing heterogeneity in the
environments where carriers travel. Crash data are also missing too
often. Also, there is information available from police reports
currently not represented on MCMIS that could be helpful in
understanding the contributing factors in a crash. Such information
could help to validate the assumptions linking violations to crash
frequency. To address these issues, FMCSA should support the states in
collecting more complete crash data, and in universal adoption of the
Model Minimum Uniform Crash Criteria (MMUCC), as well as developing and
supplying the code needed to automatically extract the data needed for
the MCMIS crash file.
FMCSA Comments on VMT
    Regarding exposure data, the Agency agrees that more VMT data from
motor carriers would reduce the need for FMCSA to use substitute values
and would improve the quality of the data in SMS. FMCSA is concerned
that access to monthly and by-State VMT is not currently feasible.
Currently, FMCSA rules require carriers to provide updated VMT data
only every two years. FMCSA previously considered using other sources
of VMT data such as the International Registration Plan data. However,
FMCSA does not currently have access to that data. And even if the
Agency had access to IRP data, that would not provide a complete data
set, as IRP carriers are not required to report information on vehicles
with a gross vehicle weight rating of less than 26,000 pounds.
    FMCSA seeks information, through this notice, on potential sources
of improved VMT data. Additionally, FMCSA requests input from industry
and other stakeholders about other available sources for this data and
the costs and benefits of voluntary submission of the data.
    FMCSA expects to consider the effect of monthly, voluntarily-
submitted, State-by-State VMT data from motor carriers, and the impact
on the system if this information were provided by only a portion of
the regulated community.

FMCSA Comments on Crash Data

    In accordance with Section 5306 of the FAST Act, FMCSA established
a Federal Advisory Committee to review Post-Accident Reports for tow-
away crashes involving FMCSA-regulated commercial motor vehicles. That
committee was charged with recommending changes to improve the quality
and consistency of Police Accident Reports (PARs) data. More than half
of the committee members represented States or State law enforcement
officials, with the remainder representing industry, labor, safety
advocates, and other interested parties. The FAST Act directed the
working group to review existing State PARs to recommend best practices
for the collection of PARs data by State and local law enforcement
agencies. The Post Accident Review Advisory Committee recommended that
all States use the National Highway Traffic Safety Administration's
MMUCC \i\ and that FMCSA modify its data systems to receive all MMUCC
data from the States. In January 2017, FMCSA's and NHTSA's senior
leadership agreed to establish a workgroup to carry out the Committee's
recommendations.
    FMCSA recognizes that implementation of this recommendation will
take additional resources for the States for training and information
technology system changes. We are partnering with NHTSA to encourage
States to participate in a USDOT national crash repository (that uses
the MMUCC guidance as a framework). In addition, FMCSA will be
examining the quality of the EDT data and comparing it to what we
receive in MCMIS.
---------------------------------------------------------------------------

    \i\ https://www.transportation.gov/government/traffic-records/model-minimum-uniform-crash-criteria-mmucc-0.
---------------------------------------------------------------------------

    As a result, FMCSA specifically asks for information on issues that
should be considered FMCSA determines how to best integrate MMUCC data.
    Recommendation 3--FMCSA should investigate ways of collecting data
that will likely benefit the recommended methodology for safety
assessment. This includes data on carrier characteristics--including
information on driver turnover rate, type of cargo, method and level of
compensation, and better information on exposure.

FMCSA Comments

    The Agency agrees that additional information about carrier
operations might improve the Agency's analysis and identification of
non-compliant motor carriers. To confirm this, FMCSA will use the IRT
model and simulate the impacts and value of driver turnover rates, type
of cargo, method and level of compensation, and exposure in identifying
unsafe motor carriers before proceeding with an information collection.
In addition, FMCSA would conduct a cost benefit analysis to determine
how much it would cost the industry to provide the Agency with this
additional information. Through this notice, FMCSA is specifically

seeking input on these and other data fields to be considered and
information on the costs associated with submitting this information.
    Recommendation 4--FMCSA should structure a user-friendly version of
the MCMIS data file used as input to SMS without any personally
identifiable information to facilitate its use by external parties,
such as researchers, and by carriers. In addition, FMCSA should make
user-friendly computer code used to compute SMS elements available to
individuals in accordance with reproducibility and transparency
guidelines.

FMCSA Comments

    FMCSA agrees that there could be benefits from making MCMIS data
available to researchers and carriers. Through this Federal Register
notice, FMCSA seeks input on how the MCMIS data would be used by
researchers and others to determine the best method(s) for providing
the data file.
    The Agency is considering developing the programming, screen shots,
and preview capacity so that changes from one month to another are
explained to motor carriers to help carriers understand the
implications of violations and crashes on their SMS data. Input on the
information that would be helpful in reviewing SMS data is requested
through this notice.
    Recommendation 5--FMCSA should undertake a study to better
understand the statistical operating characteristics of the percentile
ranks to support decisions regarding the usability of public scores.

FMCSA Comments

    Like NAS, FMCSA has been unable to quantify the impacts to motor
carriers of publicly displaying the SMS percentiles. The Agency has
only anecdotal information about the business impacts of the public
percentiles on the SMS Web site. Historically, insurance companies and
shippers have been reluctant to share data on how safety data is used
to determine rates. And, while the Agency has been contacted by
companies advising that they lost business because of SMS, these claims
have not been validated or assimilated into a usable analysis.
    Through this notice, FMCSA seeks data from motor carriers,
insurance companies, and shippers regarding the impacts of the public
display of SMS percentiles and alerts on businesses. This information
will be used to identify next steps for this recommendation.
    Recommendation 6--Given that there are good reasons for both an
absolute and a relative metric on safety performance, FMCSA should
decide on the carriers that receive SMS alerts using both the SMS
percentile ranks and the SMS measures, and the percentile ranks should
be computed both conditionally within safety event groups and over all
motor carriers.

FMCSA Comments

    The Agency has heard from motor carriers with increased measures or
percentiles due to an increase in vehicles or clean inspections.
Analysis of the number of carriers that received higher measures and
percentiles without a violation or crash indicates this happens to a
very small number of carriers. However, FMCSA agrees that the
methodology should be revised so that a safety event that is not a
violation or a crash is not the sole reason for an increased measure or
percentile.
    In addition, FMCSA anticipates investigating the use of a hybrid
measure that combines relative and absolute metrics as part of its
development of the IRT model. FMCSA seeks comment from stakeholders on
this issue, how it could be implemented, and when such changes would be
appropriate.

    Issued under the authority delegated in 49 CFR 1.87 on: August
21, 2017.
John Van Steenburg,
Assistant Administrator/Chief Safety Officer.
[FR Doc. 2017-18183 Filed 8-25-17; 8:45 am]
BILLING CODE 4910-EX-P


[Federal Register Volume 82, Number 195 (Wednesday, October 11, 2017)]
[Notices]
[Pages 47257-47262]
[FR Doc No: 2017-21775]

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

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32849; 812-14248]

OppenheimerFunds, Inc., et al.

October 4, 2017.
AGENCY: Securities and Exchange Commission (``Commission'')

ACTION: Notice.

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

    Notice of application for an order under sections 6(c) and 17(b) of
the

Investment Company Act of 1940 (``Act'') for exemptions from section
17(a) of the Act, and under section 17(d) of the Act and rule 17d-1
thereunder to permit certain joint transactions.

Summary of Application:  Applicants requests an order to permit certain
registered open-end management investment companies or series thereof
to invest in a private investment vehicle established by their
investment advisers for the purpose of investing in China A Shares and
certain other Chinese securities.

Applicants:  OppenheimerFunds, Inc. (``OFI''), OFI Global Asset
Management, Inc. (``OFI Global''), and OFI Global Institutional, Inc.
(``OFI Global Institutional,'' and together with OFI and OFI Global,
the ``Initial Advisers''); OFI Global China Fund, LLC (the ``OFI Global
China Fund''); and Oppenheimer Developing Markets Fund, Oppenheimer
Global Fund, Oppenheimer Global Opportunities Fund, Oppenheimer Global
Value Fund, Oppenheimer International Growth Fund, Oppenheimer
International Small-Mid Company Fund and Oppenheimer International
Equity Fund (together, the ``Trusts'').

Filing Dates:  The application was filed on December 12, 2013, and
amended on June 6, 2014, November 21, 2014, May 1, 2015, October 16,
2015, April 7, 2016, August 9, 2016, May 12, 2017, August 29, 2017, and
September 26, 2017.

Hearing or Notification of Hearing:  An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on October 30, 2017, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, the reason
for the request, and the issues contested. Persons who wish to be
notified of a hearing may request notification by writing to the
Commission's Secretary.

ADDRESSES:  Secretary, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090. Applicants: 225 Liberty Street,
New York, NY 10281.

FOR FURTHER INFORMATION CONTACT:  Kieran G. Brown, Senior Counsel, at
(202) 551-6773, or Robert H. Shapiro, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION:  The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at http://www.sec.gov/search/search.htm or
by calling<PHONE_NUMBER>.

Applicants' Representations

    1. Each Trust is a Delaware statutory trust and is registered under
Act as an open-end management investment company. One Trust, the
Oppenheimer Developing Markets Fund (the ``Initial Fund''), currently
invests in the OFI Global China Fund, LLC (the ``OFI Global China
Fund''), which relies on the exemptions from registration under the Act
provided by section 3(c)(1) and/or 3(c)(7) of the Act.\1\
---------------------------------------------------------------------------

    \1\ Each entity that currently intends to rely on the requested
relief has been named as an applicant. Any Trusts and their existing
or future series and any other existing or future registered open-
end management investment company or series thereof for which an
Initial Adviser, or an Initial Adviser's successor, or any person
controlling, controlled by, or under common control with an Initial
Adviser (an ``OFI Affiliate'') acts as investment adviser (such
Initial Adviser or OFI Affiliate acting as investment adviser, an
``Adviser'') that may rely on the requested relief in the future is
a ``Future Fund'' (together with the Initial Fund, the ``Funds'').
For purposes of the requested order, ``successor'' is limited to an
entity that results from a reorganization into another jurisdiction
or a change in the type of business organization. Each Fund or other
entity that may rely on the requested relief in the future will do
so only in accordance with the terms and conditions of the requested
order.
---------------------------------------------------------------------------

    2. Each Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 (``Advisers Act''), and OFI Global and
OFI Global Institutional are each a wholly-owned subsidiary of OFI. OFI
Global serves as investment adviser to the Initial Fund pursuant to an
investment advisory agreement between OFI Global and the Initial Fund
(the ``Advisory Agreement''). OFI serves as sub-adviser to the Initial
Fund pursuant to a subadvisory agreement between OFI Global and OFI. As
the Initial Fund's investment adviser and sub-adviser, OFI Global and
OFI are responsible for making investment decisions for the Initial
Fund and for administering the business and affairs of the Initial
Fund. OFI Global is entitled, under the terms of the Advisory
Agreement, to receive management fees from the Initial Fund at a
specified rate. OFI Global also serves as the investment adviser to the
other Trusts and their series and has entered into subadvisory
agreements with OFI whereby OFI also provides investment advisory
services to the other Trusts and their series. As investment adviser
and sub-adviser, OFI Global and OFI's activities are subject to the
oversight of the Boards of Trustees (the ``Board'' or ``Boards,'' as
applicable) of the Trusts, at least a majority of whose members are not
considered ``interested persons'' of the Trusts (as defined in section
2(a)(19) of the Act) (the ``Independent Trustees'').
    3. OFI and the other Advisers also manage or may manage collective
investment trusts, private pooled investment vehicles and investment
companies registered in other jurisdictions (together, ``Other
Vehicles''), as well as separately managed accounts (together with the
Other Vehicles, ``Other Accounts'').\2\ Applicants state that these
Other Accounts may have similar investment objectives and strategies as
the Funds and will invest in OFI Global China Fund Series (defined
below) along with one or more Funds.
---------------------------------------------------------------------------

    \2\ The Applicants acknowledge that they are not seeking nor
receiving relief with respect to the separately managed accounts.
---------------------------------------------------------------------------

    4. The Funds desire to purchase and redeem limited liability
company interests (``Interests'') of separately identified series of
the OFI Global China Fund (each separate series of the OFI Global China
Fund, an ``OFI Global China Fund Series''). The OFI Global China Fund
Series invests in class A Shares listed on People's Republic of China
(``PRC'') stock exchanges, rights to invest in such class A Shares,
corporate or government bonds listed on PRC stock exchanges or traded
in the over-the-counter markets of the PRC and warrants listed on PRC
stock exchanges (together, ``Chinese Securities'').\3\ Notwithstanding
the foregoing, a security will only be a ``Chinese Security'' if it is
subject to the quota systems described in the application (as such
quota systems may be amended or altered from time to time). Interests
in the OFI Global China Fund will be sold only to the Funds and the
Other Accounts.
---------------------------------------------------------------------------

    \3\ Applicants represent that the OFI Global China Fund will not
invest in derivatives or in other pooled investment vehicles.
---------------------------------------------------------------------------

    5. Applicants assert that, for a variety of reasons, it is not
practical or economical for the Funds to invest a significant amount of
assets directly in Chinese Securities. Applicants state that, until
2002, the Chinese government restricted investment in China A Shares
and other Chinese Securities to domestic (i.e., Chinese)

investors.\4\ According to Applicants, since 2002, the Chinese
Government has permitted certain non-Chinese investors to invest in
China A Shares and gradually has liberalized applicable rules to permit
non-Chinese investors to invest in other types of Chinese Securities.
However, subject to limited exceptions described in the application, to
do so, a foreign investor must receive a license from PRC regulators
and be allotted a quota, representing the amount in renminbi of Chinese
Securities that the investor may purchase. As described more fully in
the application, individual applications on behalf of each Fund or
Other Account would generally not be practical or feasible.
Accordingly, OFI has obtained a license under the Qualified Foreign
Institutional Investor (``QFII'') quota program, naming OFI Global
China Fund as the investing vehicle in its application, and was granted
a quota of US$200 million in late 2014, and has since obtained an
additional $1.3 billion of quota, so that it can invest in Chinese
Securities on behalf of the Funds and Other Accounts.
---------------------------------------------------------------------------

    \4\ Applicants assert that, for a variety of reasons, China A
Shares are a more attractive means to invest in Chinese companies
than are other categories of stock that are available on the
Shanghai, Shenzhen and Hong Kong Stock Exchanges (which is where a
significant majority of publicly traded Chinese companies list their
shares).
---------------------------------------------------------------------------

    6. Applicants state that the OFI Global China Fund would allow the
Funds, and Other Accounts, to gain dedicated exposure to Chinese
Securities and provide numerous additional investment opportunities for
the Funds that are consistent with their investment objectives and
policies. Applicants state that each OFI Global China Fund Series will
invest only in Chinese securities, cash and cash equivalents.
    7. The OFI Global China Fund is organized as a Delaware limited
liability company. OFI serves as, and in the future an OFI Affiliate
may serve as, the managing member of the OFI Global China Fund. The OFI
Global China Fund does not have a board of directors or trustees. A
Fund or Other Account may invest in some or all of the different OFI
Global China Fund Series.\5\ Each OFI Global China Fund Series will
have its own portfolio manager or portfolio management team at OFI who
will be responsible for selecting particular Chinese Securities for
investment by that OFI Global China Fund Series. Each Fund or Other
Account investing in an OFI Global China Fund Series will hold
Interests which will represent a proportionate share of the OFI Global
China Fund Series' net assets and a proportionate claim on the OFI
Global China Fund Series' net income. Interests in an OFI Global China
Fund Series used by the Funds will be valued daily in accordance with
the Funds' valuation procedures as approved by the Funds' Boards and in
accordance with section 2(a)(41) of the Act. Each Interest would have
the same rights as any other Interest, and the OFI Global China Fund
Series would not issue preferred interests.
---------------------------------------------------------------------------

    \5\ Applicants state that one OFI Global China Fund Series is
contemplated, but in the future additional OFI Global China Fund
Series may be established to invest in different issuers, or types,
of Chinese Securities based generally on the particular
characteristics of those issuers, or types, of Chinese Securities.
---------------------------------------------------------------------------

    8. OFI will not charge advisory fees to OFI Global China Fund
Series used by the Funds. OFI Global and the other Advisers will,
however, be entitled to receive applicable advisory fees from the Funds
or Other Accounts. Expenses of the OFI Global China Fund Series will be
charged to the OFI Global China Fund Series as a whole and accrue on a
daily basis.\6\ The OFI Global China Fund's books and those of the OFI
Global China Fund Series will be accounted for under standard
accounting principles and in accordance with U.S. Generally Accepted
Accounting Principles (``GAAP''), and they will be audited annually by
a nationally recognized and PCAOB-registered audit firm in accordance
with U.S. Generally Accepted Auditing Standards (``GAAS'').\7\ The OFI
Global China Fund Series in which a Fund invests will not borrow or
engage in leverage.
---------------------------------------------------------------------------

    \6\ Expenses of the OFI Global China Fund Series will include
basic fees and expenses of service providers, such as the
administrator, transfer agent, accountant, local custodian and legal
counsel. OFI will engage an OFI Affiliate as its transfer agent. No
fees will be paid by the OFI Global China Fund to a transfer agent
that is an OFI Affiliate except in accordance with condition 3.
    \7\ Applicants state that the GAAS standards applicable to the
audit of the OFI Global China Fund would be the same standards as
those applicable to a registered investment company. Further,
applicants state that GAAP would apply to both the OFI Global China
Fund audit and a registered investment company audit. Thus,
applicants assert that critical accounting policies governing
security valuation, accounting for investment transactions,
recognition of investment income and of expenses, and accrual of
expenses, which are often the critical policies applicable to
investment companies, would apply in substantially the same manner
for the audit of the OFI Global China Fund.
---------------------------------------------------------------------------

    9. A Fund's decision to invest in an OFI Global China Fund Series
will be made by a Fund's portfolio manager(s). Because the PRC
restricts repatriation of the proceeds from sales of Chinese
Securities, each Fund will treat its entire investment in the OFI
Global China Fund as an investment that is not liquid for purposes of
any applicable rules or guidance of the Commission or its staff
regarding the management of liquidity and will otherwise be subject to
the limits described in condition 4. Applicants state that access by
the Funds and Other Accounts to the quota (i.e., to Chinese Securities)
through the OFI Global China Fund Series is a limited opportunity and
will be allocated in accordance with the Advisers' trade order
aggregation and trade allocation policies and procedures (the
``Advisers' Trade Allocation Policy''). Under the Advisers' Trade
Allocation Policy, if fewer Interests are available than requested by
the portfolio managers of the Funds and Other Accounts, Interests will
generally be allocated across participating accounts on a pro rata
basis according to requested order size. Similarly, if more than one
Fund or Other Account seeks to repatriate proceeds at or about the same
time, and Chinese regulations limit the aggregate amount of proceeds
that may be repatriated at any given time to a level below the
aggregate amount sought to be repatriated, the requests by the
applicable portfolio manager(s) will be aggregated, if received at or
about the same time, and proceeds available for repatriation will be
allocated pro rata among requesting Funds and Other Accounts.\8\ The
Advisers will not consider the potential impact on the quota when
making investment decisions for the Funds or Other Accounts.\9\
---------------------------------------------------------------------------

    \8\ Applicants are not seeking comfort nor is the Commission
providing any opinion on whether the Advisers' Trade Allocation
Policy meets the standards applicable under the Act or the Advisers
Act.
    \9\ Applicants state that the Chinese authorities may reduce or
revoke a QFII's quota if the QFII does not invest the full amount of
its quota over a phase-in period, or if it repatriates its
investments below the quota amount.
---------------------------------------------------------------------------

    10. Applicants state that OFI contemplates making a nominal (i.e.,
not to exceed $1,000) investment in the OFI Global China Fund. OFI will
acquire Interests in the OFI Global China Fund (or series thereof)
having rights, duties and obligations that are identical in all
respects to Interests purchased by other investors in the OFI Global
China Fund (or series thereof). The sole purpose of the proposed
investment is to permit OFI to serve as the tax matters partner of the
OFI Global China Fund, which intends to be treated as a partnership for
U.S. federal tax purposes. Applicants state that in the absence of
OFI's investment, it is likely that the U.S. Internal Revenue Service
would appoint a non-managing member

partner of the OFI Global China Fund to serve as tax matters partner in
an audit proceeding. In addition, absent such an investment by the OFI
Global China Fund's managing member, the tax matters partner could
change from year-to-year, which may disrupt preparation of the OFI
Global China Fund's annual tax return.

Applicants' Legal Analysis

Section 17(a)--Purchase and Sale of Interests

    1. Section 17(a) generally provides, in part, that it is unlawful
for any affiliated person of a registered investment company (``first-
tier affiliate''), or any affiliated person of such person (``second
tier affiliate''), acting as principal, to sell or purchase any
security or other property to or from such investment company. Section
2(a)(3) of the Act defines an ``affiliated person'' of another person
to include (a) any person directly or indirectly owning, controlling,
or holding with power to vote, 5% or more of the outstanding voting
securities of the other person; (b) any person 5% or more of whose
outstanding voting securities are directly or indirectly owned,
controlled, or held with the power to vote by the other person; and (c)
any person directly or indirectly controlling, controlled by, or under
common control with the other person. Section 2(a)(9) defines
``control'' to mean ``the power to exercise a controlling influence
over the management or policies of a company, unless such power is
solely the result of an official position with such company.''
    2. Applicants state that the Funds and the OFI Global China Fund
are expected to be affiliated persons under section 2(a)(3) of the Act,
because it is expected that one or more Funds and Other Vehicles will
own at least 5%, and potentially, more than 25% of the Interests of the
OFI Global China Fund or an OFI Global China Fund Series. While
Interests of the OFI Global China Fund (and OFI Global China Fund
Series) will be non-voting interests, a Fund or Other Vehicle could
have power to exercise a controlling influence over the management or
policies of the OFI Global China Fund or Series and be deemed an
affiliated person of the OFI Global China Fund or OFI Global China Fund
Series under section 2(a)(3)(C). In addition, OFI Global is the
investment adviser to the Initial Fund, OFI serves as the initial sub-
adviser to the Initial Fund, and the Advisers will be investment
advisers and sub-advisers to any Future Funds. An Adviser or OFI
Affiliate will also be the managing member of the OFI Global China
Fund. As a result, the OFI Global China Fund or OFI Global China Fund
Series may be deemed to be under the Adviser's control under section
2(a)(3)(C), such that the OFI Global China Fund may be deemed an
affiliated person of an affiliated person of the Funds.
    3. If a Fund and the OFI Global China Fund are deemed affiliates of
each other, or even second-tier affiliates, the sale of Interests of
the OFI Global China Fund to the Fund, and the redemption of such
Interests by the Fund, would be prohibited under section 17(a) of the
Act.
    4. Section 17(b) of the Act authorizes the Commission to grant an
order permitting a transaction otherwise prohibited by section 17(a) if
the terms of the proposed transaction, including the consideration to
be paid or received, are fair and reasonable and do not involve
overreaching on the part of any person concerned, and the proposed
transaction is consistent with the policies of each registered
investment company involved and with the general purposes of the Act.
Section 6(c) of the Act permits the Commission to exempt any person or
transactions from any provisions of the Act if such exemption is
necessary or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the Act.
    5. Applicants submit that the proposed arrangement satisfies the
standards for relief under sections 17(b) and 6(c) of the Act. For the
reasons discussed below, Applicants submit that the terms of the
arrangement, including the consideration to be paid, are fair and
reasonable and do not involve overreaching on the part of any person
concerned, and that the proposed transactions are consistent with the
policy of each registered investment company concerned and with the
general purposes of the Act. Applicants further submit that the Funds'
participation in the OFI Global China Fund Series will be necessary or
appropriate in the public interest and consistent with the protection
of investors and the purposes fairly intended by the policies and
provisions of the Act.
    6. Applicants state that each Fund and Other Account will be
treated identically as a holder of Interest in the OFI Global China
Fund Series, and each Fund and Other Account will purchase and sell
Interests of an OFI Global China Fund Series on the same terms and on
the same basis as each other Fund and Other Account that invests in
that OFI Global China Fund Series. Applicants note that no Adviser or
OFI Affiliate will receive a fee for advising any OFI Global China Fund
Series used by a Fund. The Funds, as holders of Interests of the OFI
Global China Fund, will not be subject to any sales load, redemption
fee, distribution fee or service fee, except that the OFI Global China
Fund will have the discretion to impose a redemption fee in accordance
with applicable law or regulation for the purpose of offsetting
brokerage, tax or other costs. If a redemption fee is charged, it will
be charged only to the extent that such a fee may be charged by an
open-end fund registered under the Act. Each series of the OFI Global
China Fund will be audited. Moreover, administrative fees and transfer
agent fees will be paid by the OFI Global China Fund Series used by the
Funds to an Adviser or OFI Affiliate only upon the determination by
each Fund's Board, including a majority of Independent Trustees, that
the fees are (i) for services in addition to, rather than duplicative
of, services rendered to the Funds directly and (ii) fair and
reasonable in light of the usual and customary charges imposed by
others for services of the same nature and quality. Applicants argue
that the fees payable to the OFI Global China Fund's service providers
will be for distinct services, and the costs of such fees will be
outweighed by opportunity to invest in Chinese Securities.

Section 17(d)

    7. Section 17(d) of the Act and rule 17d-1 under the Act generally
prohibit joint transactions involving registered investment companies
and their affiliates unless the Commission has approved the
transaction. In considering whether to approve a joint transaction
under rule 17d-1, the Commission considers whether the proposed
transaction is consistent with the provisions, policies, and purposes
of the Act, and the extent to which the participation of the investment
companies is on a basis different from or less advantageous than that
of the other participants.
    8. Applicants state that the Funds (by purchasing Interests of the
OFI Global China Fund), OFI (by managing the portfolio securities of
the OFI Global China Fund and the Funds at the same time that the Funds
are invested in Interests of the OFI Global China Fund and/or by
providing a nominal tax matters partner investment in the OFI Global
China Fund), and the OFI Global China Fund (by selling its Interests
to, and redeeming its Interests from, the Funds), could be deemed to be

participants in a joint enterprise or arrangement within the meaning of
section 17(d) and rule 17d-1.
    9. Applicants request an order pursuant to section 17(d) and rule
17d-1 to permit the proposed transactions with the OFI Global China
Fund. Applicants submit that the investment by the Funds in the OFI
Global China Fund on the basis proposed is consistent with the
provisions, policies and purposes of the Act, and that each Fund will
invest in Interests of the OFI Global China Fund on the same basis as
any other shareholder (i.e., the other Funds and Other Accounts).
Applicants further state that the Advisers will take reasonable steps
to make sure that allocations among the Funds and Other Accounts are
fair and equitable. Allocations of Chinese Securities to different OFI
Global China Fund Series, and allocations of opportunities to invest in
the OFI Global China Fund Series, by Funds and Other Accounts, will be
subject to the Advisers' Trade Allocation Policy, under the supervision
of the Advisers' and the Funds' CCO, and compliance with the Advisers'
Trade Allocation Policy will be overseen by the Funds' Boards.
    10. Applicants do not believe that OFI's nominal investment as tax
matters partner in the OFI Global China Fund poses any potential
conflict of interest not addressed by the conditions contained in the
application. OFI will acquire Interests having rights, duties and
obligations that are identical in all respects to Interests purchased
by other investors in the OFI Global China Fund.

Section 17(a)--Cross Transactions

    11. Applicants propose that the Funds be permitted to continue to
engage in certain purchase and sale cross transactions in securities
(``Cross Transactions'') between a Fund seeking to implement a
portfolio strategy and an Other Vehicle seeking to raise or invest
cash. The Funds currently rely on rule 17a-7 to engage in such Cross
Transactions; however, if a Fund and an Other Vehicle were deemed to be
second-tier affiliates of each other by virtue of their ownership or
control affiliations with the OFI Global China Fund or an OFI Global
China Fund Series, the Funds may not be entitled to rely on rule 17a-7
because they would no longer be affiliated solely for the reasons
permitted by the rule.
    12. Applicants assert that the potential affiliations created by
the OFI Global China Fund Series structure do not affect the other
protections provided by the rule, including the integrity of the
pricing mechanism employed, and oversight by each Fund's Board.
Applicants represent that the Funds and Other Vehicles will comply with
the requirements set forth in rule 17a-(7)(a) through (g). Applicants
thus believe that Cross Transactions will be reasonable and fair, and
will not involve overreaching, and will be consistent with the purposes
of the Act and the investment policy of each Fund.

Applicants' Conditions

    Applicants agree that any order granting the requested relief shall
be subject to the following conditions:
    1. The Funds' investments in Interests of the OFI Global China Fund
will be undertaken only in accordance with the Funds' stated investment
restrictions and will be consistent with their stated investment
policies.
    2. The Advisers and their affiliated persons will receive no
advisory fee from the OFI Global China Fund in connection with the
Funds' investment in the OFI Global China Fund. The Advisers and their
affiliated persons will receive no commissions, fees, or other
compensation (except for transfer agent fees that are paid in
accordance with condition 3 as described in the application) from a
Fund or the OFI Global China Fund in connection with the purchase or
redemption by the Funds of Interests in the OFI Global China Fund.
Interests of the OFI Global China Fund will not be subject to a sales
load, redemption fee, distribution fee or service fee, except that the
OFI Global China Fund will have the discretion to impose a redemption
fee in accordance with applicable law or regulation for the purpose of
offsetting brokerage, tax or other costs. If a redemption fee is
charged, it will be charged only to the extent that such a fee may be
charged by an open-end fund registered under the Act.
    3. Administrative fees and transfer agent fees will be paid by the
OFI Global China Fund Series used by the Funds to an Adviser, or OFI
Affiliate, only upon a determination by each Fund's Board, including a
majority of its Independent Trustees, that the fees are (i) for
services in addition to, rather than duplicative of, services rendered
to the Funds directly and (ii) fair and reasonable in light of the
usual and customary charges imposed by others for services of the same
nature and quality. If such determination is not made by a Fund's
Board, the Fund's Adviser will reimburse to that Fund the amount of any
administrative fee and transfer agent fee borne by that Fund as an
investor in the OFI Global China Fund.
    4. Each Fund will treat its entire investment in the OFI Global
China Fund as an investment that is not liquid for purposes of any
applicable rules or guidance of the Commission or its staff regarding
the management of liquidity. For example, under current guidelines,
each Fund must limit its aggregate holdings of illiquid assets, which
for purposes of the requested relief include any investments in the OFI
Global China Fund, to 15% of its net assets. In addition, each Fund
will, at all times, limit its holdings in the OFI Global China Fund to
no more than 15% of its net assets.
    5. Each Fund's Board, including a majority of the Independent
Trustees, will determine initially and no less frequently than annually
that the Fund's investment in the OFI Global China Fund is, and
continues to be, in the best interests of the Fund and the Fund's
shareholders. As part of this determination, the Fund's Board will
consider the custody arrangements for the OFI Global China Fund's
foreign securities (under rule 17f-5) and the bonding arrangements in
place for certain of the OFI Global China Fund's officers and employees
(under rule 17g-1).
    6. The Advisers will make the accounts, books and other records of
the OFI Global China Fund available for inspection by the Commission
staff and, if requested, will furnish copies of those records to the
Commission staff.
    7. The OFI Global China Fund will comply with the following
sections of the Act as if the OFI Global China Fund were an open-end
management investment company registered under the Act, except as
noted: Section 9; section 12; section 13 (the Interests issued by OFI
Global China Fund will be regarded as voting securities under section
2(a) (42) of the Act for purposes of applying this condition and the
offering memorandum utilized by the OFI Global China Fund to offer and
sell Interests will be regarded as a registration statement for
purposes of applying this condition); section 17(a) (except as
described in the application); section 17(d) (except as described in
the application); section 17(e); section 17(f); section 17(h), section
18 (the Interests issued by the OFI Global China Fund will be regarded
as voting securities under section 2(a)(42) of the Act for purposes of
applying this condition); section 21; section 36; and sections 37-53.
In addition, the OFI Global China Fund will comply with the rules under
section 17(f) \10\ and section 17(g) of the

Act, and rule 22c-1 under the Act as if the OFI Global China Fund were
an open-end management investment company registered under the Act.
This condition 7 will apply only to OFI Global China Fund Series in
which a Fund has invested; this condition 7 will not apply to OFI
Global China Fund Series invested in exclusively by Other Accounts
except insofar as necessary for the OFI Global China Fund Series
invested in by a Fund to comply with this condition.
---------------------------------------------------------------------------

    \10\ Applicants note that they will operate the OFI Global China
Fund such that rule 17f-1, rule 17f-2, and rule 17f-3 will not be
applicable to it.
---------------------------------------------------------------------------

    OFI will adopt procedures designed to ensure that the OFI Global
China Fund complies with the aforementioned sections of the Act and
rules under the Act. OFI will periodically review and periodically
update as appropriate such procedures and will maintain books and
records describing such procedures, and maintain the records required
by rules 31a-1(b)(1), 31a-1(b)(2)(ii) and 31a-1(b)(9) under the Act.
All books and records required to be made pursuant to this condition
will be maintained and preserved for a period of not less than six
years from the end of the fiscal year in which any transaction
occurred, the first two years in an easily accessible place, and will
be subject to examination by the Commission and its staff.
    For purpose of implementing condition 7, any action that the above-
referenced statutory and regulatory provisions require to be taken by
the directors, officers and/or employees of a registered investment
company will be performed by OFI (or its successor) \11\ as the
managing member of the OFI Global China Fund, except to the extent that
the order requires the Funds' Boards to exercise oversight or take
action with respect to the OFI Global China Fund as an extension of
such Board's duties to the Funds.
---------------------------------------------------------------------------

    \11\ See supra, footnote 1.
---------------------------------------------------------------------------

    8. To engage in Cross Transactions, the Funds will comply with rule
17a-7 under the Act in all respects other than the requirement that the
parties to the transaction be affiliated persons (or affiliated persons
of affiliated persons) of each other solely by reason of having a
common investment adviser or investment advisers which are affiliated
persons of each other, common officers, and/or common directors, solely
because a Fund and Other Vehicle might become affiliated persons within
the meaning of section 2(a)(3)(A), (B) or (C) of the Act because of
their investments in the OFI Global China Fund.
    9. An OFI Global China Fund Series in which a Fund invests will not
borrow or engage in leverage.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21775 Filed 10-10-17; 8:45 am]
 BILLING CODE 8011-01-P