[Federal Register Volume 87, Number 211 (Wednesday, November 2, 2022)]
[Notices]
[Pages 66217-66220]
[FR Doc No: 2022-23842]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2022-0063]

Agency Information Collection Activities; Submission to the
Office of Management and Budget for Review and Approval; Request for
Comment; Drivers' Knowledge/Correct Use of New Technology Features in
Passenger Vehicles

AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).

ACTION: Notice and request for comments on a request for approval of a
new information collection.

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SUMMARY: In compliance with the Paperwork Reduction Act of 1995 (PRA),
this notice announces that the Information Collection Request (ICR)
abstracted below will be submitted to the Office of Management and
Budget (OMB) for review and approval. The ICR describes the nature of
the information collection and its expected burden. This ICR is for a
new collection of information for which NHTSA intends to seek OMB
approval for a one-time voluntary experiment on drivers' understanding
of and behaviors using vehicles equipped with adaptive cruise control
and lane centering technologies. A Federal Register notice with a 60-
day comment period soliciting comments on the following information
collection was published on July 20, 2022 (86 FR 43374-76). NHTSA
received comments from two organizations, which we address below.

DATES: Comments must be submitted on or before December 2, 2022.

ADDRESSES: Written comments and recommendations for the proposed
information collection, including suggestions for reducing burden,
should be submitted to the Office of Management and Budget at
www.reginfo.gov/public/do/PRAMain. To find this particular information
collection, select ``Currently under Review--Open for Public Comment''
or use the search function.

FOR FURTHER INFORMATION CONTACT: For additional information or access
to background documents, contact Kathy Sifrit, Ph.D., Office of
Behavioral Safety Research (NPD-320),<PHONE_NUMBER>, National Highway
Traffic Safety Administration, W46-472, U.S. Department of
Transportation, 1200 New Jersey Avenue SE, Washington, DC 20590.

SUPPLEMENTARY INFORMATION: Under the PRA (44 U.S.C. 3501 et seq.), a
Federal agency must receive approval from the Office of Management and
Budget (OMB) before it collects certain information from the public and
a person is not required to respond to a collection of information by a
Federal agency unless the collection displays a valid OMB control
number. In compliance with these requirements, this notice announces
that the following information collection request will be submitted
OMB.
    Title: Drivers' Knowledge/Correct Use of New Technology Features in
Passenger Vehicles.
    OMB Control Number: New.
    Form Numbers: NHTSA Forms 1627, 1628, 1629, and 1630.
    Type of Request: Approval of a new information collection.
    Type of Review Requested: Regular.
    Length of Approval Requested: Three years from date of approval.
    Summary of the Collection of Information: The National Highway
Traffic Safety Administration (NHTSA) of the U.S. Department of
Transportation is seeking approval for a one-time voluntary information
collection from 180 of licensed drivers of various ages for a research
study of drivers' interactions with Level 2 (L2) systems that can
provide longitudinal (adaptive cruise control) and lateral (lane
centering) control of the vehicle. NHTSA expects to provide screening
questionnaires to 1,000 potential participants to determine their
eligibility for the study. Recruiting participants for the study has an
estimated burden of 250 hours for the screening questions. An estimated
200 potential participants will be eligible and interested. This group
will receive the consent form with an estimated burden of 150 hours for
reviewing and completing the form. An estimated 180 participants are
expected to consent and enroll in the study. Participants' naturalistic
driving data will be collected using a data acquisition system (DAS)
installed in study-provided vehicles. The DAS includes video cameras
and sensors; data also will be collected from the vehicle. Naturalistic
driving data will be collected for two weeks with the L2 systems in
this study unavailable to the drivers to provide a baseline measure of
participants' driving habits, followed by four weeks driving with the
systems available to measure changes in driving patterns as well as
safety-related behaviors such as distracted driving and seat belt use.
While the naturalistic data collection does not create a burden to
participants, study tasks above and beyond the driving they would
normally complete include a 15-minute enrollment procedure, a one-hour
vehicle familiarization briefing, a two-hour training about the L2
systems, two two-hour planned drives (one at the beginning and one at
the end of the study), five 30-minute planned drives (during the
study), a five-minute usability questionnaire, and a 30-minute final
debriefing. As such, the naturalistic study has an expected burden of
1,860 hours. In addition, half the participants will complete a 15-
minute questionnaire that measures knowledge and opinions before
exposure to the L2 systems and the other half will complete after
exposure with an estimated burden of 45 hours. The total expected
burden for this collection is 2,305 hours. NHTSA will use the
information to produce a technical report containing summary statistics
and tables. No identifying information or individual responses will be
reported. The technical report will be made available to a variety of
audiences interested in improving highway safety through the agency
website and the National Transportation Library. This project involves
approval by an institutional review board, which the contractor will
obtain before contacting potential participants. This collection will
inform the development of behavioral safety countermeasures,
particularly in the areas of communications and training, intended to
improve drivers' ability to use L2 systems safely.
    Description of the Need for the Information and Proposed Use of the
Information: NHTSA's mission is to save lives, prevent injuries, and
reduce traffic-related health care and other economic costs. To further
this mission, NHTSA conducts research as a foundation for the
development of motor vehicle standards and traffic safety programs.
Older adults comprise an increasing proportion of the driving
population. Driving supports older adults' access to the goods and
services they need and enhances their ability to take part in community
and family activities that support quality of life. Vehicles equipped
with L2 systems can reduce the cognitive load imposed by driving, which
may make them appealing to older drivers who may find driving
cognitively taxing, and to younger adults who may find the systems
useful when navigating through heavy traffic or during long trips.
However, drivers must understand what they can and cannot expect from
L2 systems to use them safely and effectively. An increasing proportion
of

passenger vehicles are equipped with L2 systems which, under
appropriate conditions, keep the vehicle centered in the lane and
manage the vehicle's acceleration/braking to stay an appropriate
distance from the vehicle ahead while maintaining driving speed.
Research regarding driver understanding of L2 systems has been mixed.
NHTSA is concerned that drivers may over-rely on L2 systems, and engage
risky behaviors such as driving while distracted, drowsy, or under the
influence of alcohol or drugs. NHTSA desires to learn more about how
older and young adult drivers use these systems to better target
behavioral countermeasures such as communications and training to
ensure that drivers use the systems safely.
    60-Day Notice: A Federal Register notice with a 60-day comment
period soliciting public comments on the following information
collection was published on July 20, 2022. Two organizations submitted
comments: The Alliance for Automotive Innovation (the Alliance) and the
Texas Department of Transportation (TxDOT). The Alliance was generally
supportive of the agency's efforts to evaluate how Level 2 (L2) systems
that can provide longitudinal and lateral control of the vehicle are
being used by consumers in the field and noted the importance of
research in ensuring a data-driven approach to policy. They recommended
some changes in project design to enhance the quality, utility, and
clarity of the information to be collected. TxDOT also expressed
support for the project and noted that the findings will help State
departments of transportation to communicate and educate the public on
how to safely use L2 systems. They also asked some questions about the
study design. We appreciate the comments from Alliance and TxDOT and
thank them for thoughtfully considering the proposed collection.
    The Alliance provided comments about several aspects of the study
design. The first topic involved how the study familiarizes
participants with the L2 systems. We agree that is important to ensure
that participants understand the L2 systems and that the
familiarization should include information from the manufacturer.
However, the Alliance indicated that the amount of time planned for
familiarizing participants with the study vehicles and the two
technologies is far more than is provided to car buyers under real
world conditions. While we recognize that this protocol provides
substantially more information and training than people typically
receive or seek when buying a new vehicle, the study does not aim to
replicate the level of familiarization car buyers receive from a
dealership. The amount of time in this study is intended to familiarize
participants with the L2 systems to minimize drivers' errors due to
misunderstanding of the systems' capabilities and limitations that
could arise if they use the systems without understanding and operating
them appropriately. While the data collection plan (and the burden
calculation) includes up to 120 minutes to provide adequate time to
familiarize each participant with the vehicle, including the L2
systems, we expect the average time will be closer to 90 minutes.
During this time participants will watch a video about the L2 systems,
and a researcher will go over all the L2-related materials in the
owner's manual, including warnings, and explain when the system will
not work. A researcher will then sit in the vehicle with the
participant and review the systems including the location of buttons
and warnings. A researcher will then demonstrate the systems on the
roadway including examples and discussions of situations when the
systems may not work, and finally the participant will practice with
the systems on roadways until the participant and the researcher are
confident about basic system operation. The researchers are not
training participants to any performance or proficiency level beyond
basic understanding and operation to minimize potential errors in data
collection. The Alliance also noted the importance of correctly
classifying risky behaviors. The protocol described above helps
minimize misclassification of driver actions that stem from
misunderstanding of system capabilities as opposed to intentional risky
behavior. The Alliance also recommended that NHTSA consider examining
various levels of training, which would likely involve varying the
length of the familiarization and the burden per participant. We agree
that a study of the effects of various levels of training would be
useful in developing educational materials for drivers. However, we
also believe such a design would require a much larger study with
significantly more participants than this proposed study and should
build upon this proposed collection. NHTSA will make decisions about
future research based on the findings of this study and other ongoing
research.
    The second topic focused on the choice of technologies. The
Alliance noted that some L2 systems are limited to adaptive cruise
control and lane keeping assist while others monitor driver state and
support hands-free driving. They recommended that NHTSA include a
variety of makes and models in the study to create more variation in
the types of technologies. Since the behavioral safety research
questions in this proposed study do not involve system comparisons or
aim to examine system design, NHTSA plans to retain the design decision
to use one vehicle to control for differences in technologies. This
study design intentionally recruits participants who vary in age and
sex while it aims to control for the type of system, and it is
different from a design where one would include various makes and
models with different designs and try to control for differences among
participants. Varying both participant groups and systems would require
a much larger study to have sufficient statistical power. This
project's focus is drivers' behaviors while using the system. While we
acknowledge the growing variety of L2 systems, we selected adaptive
cruise control and lane centering for this study because they are
widely available to consumers and are designed to provide similar types
of driver support. We acknowledge, however, that restricting the study
to a particular model requires careful selection. The goal is to select
a ``typical'' or ``common'' vehicle and system and to avoid highly
unusual or novel interfaces. With this goal in mind, we will select a
study vehicle that provides adaptive cruise control and lane centering
and is moderately priced. As such, we believe that the basic principles
underlying these two systems are sufficiently similar across platforms
that lessons learned about behaviors under one would generalize to
others.
    Another topic involved how the study classifies behaviors as
``safety related'' in the context of systems that allow hands-free
operation under some conditions as well as strategies for re-engaging
the driver. The L2 system for this study will not support hands-free
driving, and participants will be advised to keep their hands on the
wheel and to continually monitor traffic. Instances of a participant's
eyes off road longer than 2 seconds or hands off the wheel will be
coded as safety related (risky) behaviors.\1\ The Alliance further
suggested that the study should evaluate differences in strategies for
re-engaging drivers based on the number of warnings and warning types
as well as

other factors that may impact drivers' responses to warnings or
potential misuses. Addressing these research questions would require
variation in system design and inclusion of vehicles that support some
hands-free operation. As discussed above, these questions are beyond
the scope of the project and would require a much larger study.
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    \1\ See ``Visual-Manual NHTSA Driver Distraction Guidelines for
Portable and Aftermarket Devices,'' 81 FR 87656 (December 5, 2016).
https://www.govinfo.gov/content/pkg/FR-2016-12-05/pdf/2016-29051.pdf.
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    Another topic raised by the Alliance expressed concern about
varying levels of driving experience, especially among the youngest age
group, and suggested that we gather information on prior driving
histories and experiences with systems in their personal vehicles. We
agree that participants with varying levels of driving experience and
experience with L2 systems could complicate the study and analysis. The
proposed study design addresses this issue through the questions in the
Screening Questionnaire (Form 1627). To qualify for the study, a person
must have a valid driver's license and have been fully licensed for at
least two years. The focus of this study is on drivers with little or
no experience with L2 systems, so the Screening Questionnaire helps
remove participants with experience driving a vehicle that comes with
an L2 system. Further, participants cannot have used any adaptive
cruise control, lane keeping assist, or lane centering systems five or
more times. These screening requirements should ensure that
participants have adequate driving experience and similar levels of L2
experience.
    The Alliance's final topic involved the knowledge and opinion
questionnaire (Form 1629). The Alliance recommended increasing the
burden by administering the questionnaire to all participants before
and after exposure to provide insights to inform communications with
the public. We believe administering the questionnaire before and after
L2 exposure to all participants risks carryover effects as completing
the pre-exposure questionnaire would make it more likely for
participants to note and remember the ``right'' responses during
familiarization. This effect could undermine the validity of the post-
exposure responses as a measure of what drivers learned through the
course of the study.
    TxDOT offered two comments regarding the design of the proposed
study. The first comment noted that the proposed study involves three
age groups (18 to 25, 35 to 55, and 70 and older), and they asked why
it excluded drivers between the ages of 26 and 34 and 56 to 69.
Recruiting in specific age groups and excluding others is a common
method for comparing the effects of age because it allows substantive
comparisons across age groups without potentially comparing
participants whose age is only different by one year. Further, given
that age is an important explanatory variable in this study, these age
groups provide substantive differences across groups and could add to
the statistical power to find an effect of age. Finally, TxDOT noted
that the proposed study design of four weeks of observation may be too
little time to measure changes in driving patterns as well as safety-
related behaviors and that we should consider increasing the burden to
collect more valid data over a longer period. While we agree that this
proposed study is a relatively limited amount of time to collect
observation data, this project focuses on drivers' behaviors during
their first weeks using the systems as they become familiar with them.
We believe the proposed length of time is sufficient given the findings
from this study will inform development of behavioral safety
countermeasures, particularly in the areas of communications and
training, to improve drivers' ability to use L2 systems safely.
Additionally, drivers are most likely to seek such information when
they first begin using, or even before using, L2 systems.
    Affected Public: Study volunteers in the Blacksburg, VA, area. The
study plans to recruit participants with little to no experience
driving a vehicle with L2 systems. Of the 180 selected drivers, 60 will
be age 70 and older, 60 will be between the ages of 35 and 55, and 60
will be between ages 18 and 25. Equal numbers of males and females will
be recruited within each age group.
    Estimated Number of Respondents: The study anticipates screening
1,000 potential participants to obtain 180 drivers who meet study
inclusion criteria. NHTSA expects to provide screening questionnaires
to 1,000 potential participants to determine their eligibility for the
study. Based upon previous research experience in the study area, an
estimated 200 potential participants (20% of those who respond to
screener questions) will be eligible and interested. An estimated 180
participants (90% of those who receive the consent form) are expected
to consent and enroll in the study.
    Frequency: This study is a one-time information collection, and
there will be no recurrence.
    Estimated Total Annual Burden Hours: 2,305.
    The annual estimated burden is 2,305 hours. This estimate includes
250 hours for 1,000 potential participants to complete the initial
screening and 150 hours for 200 potential participants to review and
complete the consent form. The burden estimate also includes 1,860
hours for the 180 consented and enrolled participants to complete all
study tasks above and beyond the driving they would normally complete
during the naturalistic driving observation periods. The study tasks
include a 15-minute process for study enrollment, a 1-hour vehicle
familiarization briefing, a 2-hour training about the L2 systems, two
2-hour planned drives (one at the beginning and one at the end of the
study), five 30-minute planned drivers (during the study), a five-
minute usability questionnaire, and a 30-minute final debriefing. In
addition, half the participants will complete a 15-minute questionnaire
that measures knowledge and opinions before exposure to L2 systems and
the other half will complete the questionnaire after exposure with an
estimated burden of 45 hours. The total burden is the sum of the burden
across screening, consenting, and completing the study for a total
estimate of 2,305 hours. The details are presented in Table 1 below.

                                     Table 1--Estimated Burden Hours by Form
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                                                                                Total
                                                                                Estimated       estimated
                Form                         Description           Participants     minutes per    burden hours
                                                                                participant      per form
----------------------------------------------------------------------------------------------------------------
Form 1627..........................  Screening Questionnaire....           1,000              15             250
Form 1628..........................  Informed Consent Briefing..             200              45             150
Form 1629..........................  Knowledge & Opinion                     180              15              45
                                      Questionnaire.
Form 1630..........................  Naturalistic Study.........             180             620           1,860
                                     Enrollment.................  ..............              15  ..............

                                     Vehicle Familiarization....  ..............              60  ..............
                                     Baseline Planned Drive.....  ..............             120  ..............
                                     L2 System Familiarization..  ..............             120  ..............
                                     Five Weekly Planned Drives.  ..............             150  ..............
                                     Post-Study Planned Drive...  ..............             120  ..............
                                     Usability Questionnaire....  ..............               5  ..............
                                     Debriefing.................  ..............              30  ..............
                                                                 -----------------------------------------------
    Total..........................  ...........................  ..............  ..............           2,305
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    Estimated Total Annual Burden Cost: NHTSA estimates the only cost
burdens to respondents beyond the time spent on data collection
activities are costs related to drives above and beyond their normal
driving required by the study, which impose additional fuel costs.
These cost burdens are expected to be offset by the monetary
compensation that will be provided to all research participants.
Participants will receive $100 after completion of the first session,
$150 after completion of the baseline naturalistic driving, and $200
upon completion of the study. This compensation offsets both the
participants time as well as the additional fuel costs, and the amount
is in line with past similar efforts given the activities it requires
of participants.
    Public Comments Invited: You are asked to comment on any aspects of
this information collection, including (a) whether the proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (b) the accuracy of the agency's estimate of
the burden of the proposed collection of information, including the
validity of the methodology and assumptions used; (c) ways to enhance
the quality, utility and clarity of the information to be collected;
and (d) ways to minimize the burden of the collection of information on
respondents, including the use of appropriate automated, electronic,
mechanical, or other technological collection techniques or other forms
of information technology, e.g., permitting electronic submission of
responses.
    Authority: The Paperwork Reduction Act of 1995; 44 U.S.C. Chapter
35, as amended; 49 CFR 1.49; and DOT Order 1351.29.

Nanda Narayanan Srinivasan,
Associate Administrator, Research and Program Development.
[FR Doc. 2022-23842 Filed 11-1-22; 8:45 am]
BILLING CODE 4910-59-P


[Federal Register Volume 83, Number 112 (Monday, June 11, 2018)]
[Proposed Rules]
[Pages 26884-26887]
[FR Doc No: 2018-12233]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2018-0508; Product Identifier 2018-NM-012-AD]
RIN 2120-AA64

Airworthiness Directives; Airbus Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: We propose to adopt a new airworthiness directive (AD) for
certain Airbus Model A350-941 airplanes. This proposed AD was prompted
by a determination that more restrictive maintenance requirements and
airworthiness limitations are necessary. This proposed AD would require
revising the maintenance or inspection program, as applicable, to
incorporate new or more restrictive maintenance requirements and
airworthiness limitations. We are proposing this AD to address the
unsafe condition on these products.

DATES: We must receive comments on this proposed AD by July 26, 2018.

ADDRESSES: You may send comments, using the procedures found in 14 CFR
11.43 and 11.45, by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE, Washington, DC 20590.
     Hand Delivery: Deliver to Mail address above between 9
a.m. and 5

p.m., Monday through Friday, except Federal holidays.
    For service information identified in this NPRM, contact Airbus
SAS, Airworthiness Office--EAL, 1 Rond Point Maurice Bellonte, 31707
Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 45
80; email [email protected]; internet http://www.airbus.com. You may view this service information at the FAA,
Transport Standards Branch, 2200 South 216th St., Des Moines, WA. For
information on the availability of this material at the FAA, call 206-
231-3195.

Examining the AD Docket

    You may examine the AD docket on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2018-
0508; or in person at the Docket Management Facility between 9 a.m. and
5 p.m., Monday through Friday, except Federal holidays. The AD docket
contains this NPRM, the regulatory evaluation, any comments received,
and other information. The street address for the Docket Operations
office (telephone<PHONE_NUMBER>) is in the ADDRESSES section. Comments
will be available in the AD docket shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Kathleen Arrigotti, Aerospace
Engineer, International Section, Transport Standards Branch, FAA, 2200
South 216th St., Des Moines, WA 98198; telephone and fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to send any written relevant data, views, or
arguments about this proposal. Send your comments to an address listed
under the ADDRESSES section. Include ``Docket No. FAA-2018-0508;
Product Identifier 2018-NM-012-AD'' at the beginning of your comments.
We specifically invite comments on the overall regulatory, economic,
environmental, and energy aspects of this NPRM. We will consider all
comments received by the closing date and may amend this NPRM based on
those comments.
    We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact we
receive about this NPRM.

Discussion

    The European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Union, has issued EASA AD
2018-0004, dated January 9, 2018 (referred to after this as the
Mandatory Continuing Airworthiness Information, or ``the MCAI''), to
correct an unsafe condition for all Airbus Model A350-941 airplanes.
The MCAI states:

    Certification Maintenance Requirements (CMR) for the Airbus
A350, which are approved by EASA, are currently defined and
published in the Airbus A350 ALS Part 3 document. These instructions
have been identified as mandatory for continued airworthiness.
    Failure to accomplish these instructions could result in an
unsafe condition [which is safety-significant latent failures that
would, in combination with one or more other specific failures or
events, result in a hazardous or catastrophic failure condition].
    EASA previously issued [EASA] AD 2017-0029 to require the
actions as specified in Airbus A350 ALS Part 3 Revision 03.
    Since this [EASA] AD was issued, Airbus published Revision 04 of
Airbus A350 ALS Part 3, to introduce new and more restrictive CMRs.
    For the reason described above, this [EASA] AD retains the
requirements of EASA AD 2017-0029, which is superseded, and requires
accomplishment of the actions specified in the ALS.

    You may examine the MCAI in the AD docket on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2018-
0508.

Related Service Information Under 1 CFR Part 51

    Airbus has issued A350 Airworthiness Limitations Section (ALS) Part
3, Certification Maintenance Requirements (CMR), Revision 04, dated
December 15, 2017. The service information describes mandatory
maintenance tasks that operators must perform at specified intervals.
This service information is reasonably available because the interested
parties have access to it through their normal course of business or by
the means identified in the ADDRESSES section.

FAA's Determination and Requirements of This Proposed AD

    This product has been approved by the aviation authority of another
country, and is approved for operation in the United States. Pursuant
to our bilateral agreement with the State of Design Authority, we have
been notified of the unsafe condition described in the MCAI and service
information referenced above. We are proposing this AD because we
evaluated all pertinent information and determined an unsafe condition
exists and is likely to exist or develop on other products of the same
type design.
    This AD requires revisions to certain operator maintenance
documents to include new actions (e.g., inspections). Compliance with
these actions is required by 14 CFR 91.403(c). For airplanes that have
been previously modified, altered, or repaired in the areas addressed
by this proposed AD, the operator may not be able to accomplish the
actions described in the revisions. In this situation, to comply with
14 CFR 91.403(c), the operator must request approval for an alternative
method of compliance according to paragraph (i) of this proposed AD.
The request should include a description of changes to the required
inspections that will ensure the continued operational safety of the
airplane.

Differences Between This Proposed AD and the MCAI

    The MCAI specifies that if there are findings from the
airworthiness limitations section (ALS) inspection tasks, corrective
actions must be accomplished in accordance with Airbus maintenance
documentation. However, this proposed AD does not include that
requirement. Operators of U.S.-registered airplanes are required by
general airworthiness and operational regulations to perform
maintenance using methods that are acceptable to the FAA. We consider
those methods to be adequate to address any corrective actions
necessitated by the findings of ALS inspections required by this
proposed AD.

Airworthiness Limitations Based on Type Design

    The FAA recently became aware of an issue related to the
applicability of ADs that require incorporation of an ALS revision into
an operator's maintenance or inspection program.
    Typically, when these types of ADs are issued by civil aviation
authorities of other countries, they apply to all airplanes covered
under an identified type certificate (TC). The corresponding FAA AD
typically retains applicability to all of those airplanes.
    In addition, U.S. operators must operate their airplanes in an
airworthy condition, in accordance with 14 CFR 91.7(a). Included in
this obligation is the requirement to perform any maintenance or
inspections specified in the ALS, and in accordance with the ALS as
specified in 14 CFR 43.16 and 91.403(c), unless an alternative has been
approved by the FAA.
    When a type certificate is issued for a type design, the specific
ALS, including revisions, is a part of that type design, as specified
in 14 CFR 21.31(c).
    The sum effect of these operational and maintenance requirements is
an obligation to comply with the ALS

defined in the type design referenced in the manufacturer's conformity
statement. This obligation may introduce a conflict with an AD that
requires a specific ALS revision if new airplanes are delivered with a
later revision as part of their type design.
    To address this conflict, the FAA has approved alternative methods
of compliance (AMOCs) that allow operators to incorporate the most
recent ALS revision into their maintenance/inspection programs, in lieu
of the ALS revision required by the AD. This eliminates the conflict
and enables the operator to comply with both the AD and the type
design.
    However, compliance with AMOCs is normally optional, and we
recently became aware that some operators choose to retain the AD-
mandated ALS revision in their fleet-wide maintenance/inspection
programs, including those for new airplanes delivered with later ALS
revisions, to help standardize the maintenance of the fleet. To ensure
that operators comply with the applicable ALS revision for newly
delivered airplanes containing a later revision than that specified in
an AD, we plan to limit the applicability of ADs that mandate ALS
revisions to those airplanes that are subject to an earlier revision of
the ALS, either as part of the type design or as mandated by an earlier
AD.
    This proposed AD therefore applies to all Airbus Model A350-941
airplanes with an original certificate of airworthiness or original
export certificate of airworthiness that was issued on or before the
date of approval of the ALS revision identified in this proposed AD.
Operators of airplanes with an original certificate of airworthiness or
original export certificate of airworthiness issued after that date
must comply with the airworthiness limitations specified as part of the
approved type design and referenced on the type certificate data sheet.

Costs of Compliance

    We estimate that this proposed AD affects 6 airplanes of U.S.
registry.
    We estimate the following costs to comply with this proposed AD:
    We have determined that revising the maintenance or inspection
program takes an average of 90 work-hours per operator, although this
figure may vary from operator to operator. In the past, we have
estimated that this action takes 1 work-hour per airplane. Since
operators incorporate maintenance or inspection program changes for
their affected fleet(s), we have determined that a per-operator
estimate is more accurate than a per-airplane estimate. Therefore, we
estimate the total cost per operator to be $7,650 (90 work-hours x $85
per work-hour).

Authority for This Rulemaking

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

Regulatory Findings

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

List of Subjects in 14 CFR Part 39

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

The Proposed Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13   [Amended]

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

Airbus: Docket No. FAA-2018-0508; Product Identifier 2018-NM-012-AD.

(a) Comments Due Date

    We must receive comments by July 26, 2018.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to Airbus Model A350-941 airplanes, certificated
in any category, with an original certificate of airworthiness or
original export certificate of airworthiness issued on or before
December 15, 2017.

(d) Subject

    Air Transport Association (ATA) of America Code 05, Time Limits/
Maintenance Checks.

(e) Reason

    This AD was prompted by a determination that more restrictive
maintenance requirements and airworthiness limitations are
necessary. We are issuing this AD to address safety-significant
latent failures that would, in combination with one or more other
specific failures or events, result in a hazardous or catastrophic
failure condition.

(f) Compliance

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

(g) Maintenance or Inspection Program Revision

    Within 90 days after the effective date of this AD, revise the
maintenance or inspection program, as applicable, to incorporate
Airbus A350 Airworthiness Limitations Section (ALS) Part 3,
Certification Maintenance Requirements (CMR), Revision 04, dated
December 15, 2017. The initial compliance time for accomplishing the
actions is at the applicable times specified in Airbus A350
Airworthiness Limitations Section (ALS) Part 3, Certification
Maintenance Requirements (CMR), Revision 04, dated December 15,
2017; or within 90 days after the effective date of this AD;
whichever occurs later.

(h) No Alternative Actions or Intervals

    After the maintenance or inspection program has been revised as
required by paragraph (g) of this AD, no alternative actions (e.g.,
inspections) or intervals, may be used unless the actions or
intervals are approved as an alternative method of compliance (AMOC)
in accordance with the procedures specified in paragraph (i)(1) of
this AD.

(i) Other FAA AD Provisions

    The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager,
International Section, Transport Standards Branch, FAA, has the
authority to approve AMOCs for this AD, if requested using the
procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19,
send your request to your principal inspector or local Flight
Standards District Office, as appropriate. If sending information
directly to the International Section, send it to the attention of
the person identified in paragraph (j)(2) of this AD. Information
may be emailed to: [email protected]. Before using any
approved AMOC, notify your appropriate principal inspector, or
lacking a principal inspector, the manager of the local flight
standards district office/certificate holding district office.
    (2) Contacting the Manufacturer: For any requirement in this AD
to obtain corrective actions from a manufacturer, the action must be
accomplished using a method approved by the Manager, International
Section, Transport Standards Branch, FAA; or the European Aviation
Safety Agency (EASA); or Airbus's EASA Design Organization Approval
(DOA). If approved by the DOA, the approval must include the DOA-
authorized signature.

(j) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information
(MCAI) EASA AD 2018-0004, dated January 9, 2018, for related
information. This MCAI may be found in the AD docket on the internet
at http://www.regulations.gov by searching for and locating Docket
No. FAA-2018-0508.
    (2) For more information about this AD, contact Kathleen
Arrigotti, Aerospace Engineer, International Section, Transport
Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198;
telephone and fax<PHONE_NUMBER>.
    (3) For service information identified in this AD, contact
Airbus SAS, Airworthiness Office--EAL, 1 Rond Point Maurice
Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96;
fax +33 5 61 93 45 80; email [email protected]; internet http://www.airbus.com. You
may view this service information at the FAA, Transport Standards
Branch, 2200 South 216th St., Des Moines, WA. For information on the
availability of this material at the FAA, call<PHONE_NUMBER>.

    Issued in Des Moines, Washington, on May 31, 2018.
Michael Kaszycki,
Acting Director, System Oversight Division, Aircraft Certification
Service.
[FR Doc. 2018-12233 Filed 6-8-18; 8:45 am]
 BILLING CODE 4910-13-P


[Federal Register: April 19, 2006 (Volume 71, Number 75)]
[Notices]
[Page 20098-20100]
[DOCID:fr19ap06-79]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OPP-2006-0120; FRL-8065-8]

Notice of Filing of a Pesticide Petition for a Certain Chemical
from the Exemption from the Requirement of Regulations on All Food
Commodities When Used as an Inert Ingredient in Pesticide Products

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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

SUMMARY: This notice announces the initial filing of a pesticide
petition proposing the establishment of an exemption from the
requirement of regulations for residues of poly(acrylic acid/butyl
acrylate/methacrylic acid/methyl acrylate/methyl methacrylate), salt
with2-amino-2-methyl-1-propanol in or on all food commodities when used
as an inert ingredient in pesticide products.

DATES: Comments must be received on or before May 19, 2006.

ADDRESSES: Submit your comments, identified by docket identification
(ID)

number EPA-HQ-OPP-2006-0120, by one of the following methods:
     Federal eRulemaking Portal:http://www.regulations.gov.

Follow the on-line instructions for submitting comments.
     Mail: Office of Pesticide Programs (OPP) Regulatory Public
Docket (7502C), Environmental Protection Agency, 1200 Pennsylvania
Ave., NW., Washington, DC 20460-0001.
     Hand Delivery: OPP Regulatory Public Docket, Environmental
Protection Agency, Rm. 119, Crystal Mall 2, 1801 S. Bell St.,
Arlington, VA. Deliveries are only accepted during the Docket's normal
hours of operation (8:30 a.m. to 4 p.m., Monday through Friday,
excluding legal holidays). Special arrangements should be made for
deliveries of boxed information. The Docket telephone number is (703)
305-5805.
     Important Note: OPP will be moving to a new location the
first week of May 2006. As a result, from Friday, April 28 to Friday,
May 5, 2006, the OPP Regulatory Public Docket will NOT be accepting any
deliveries at the Crystal Mall 2 address and this facility
will be closed to the public. Beginning on May 8, 2006, the OPP
Regulatory Public Docket will reopen at 8:30 a.m. and deliveries will
be accepted in Rm. S-4400, One Potomac Yard (South Building), 2777 S.
Crystal Drive, Arlington, VA 22202. The mail code for the mailing
address will change to (7502P), but will otherwise remain the same. The
OPP Regulatory Public Docket telephone number and hours of operation
will remain the same after the move.
    Instructions: Direct your comments to docket ID number EPA-HQ-OPP-
2006-0120. EPA's policy is that all comments received will be included
in the docket without change and may be made available on-line at
http://www.regulations.gov, including any personal information

provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through regulations.gov or e-
mail. The Federal regulations.gov website is an ``anonymous access''
system, which means EPA will not know your identity or contact
information unless you provide it in the body of your comment. If you
send an e-mail comment directly to EPA without going through
regulations.gov, your e-mail address will be automatically captured and
included as part of the comment that is placed in the docket and made
available on the Internet. If you submit an electronic comment, EPA
recommends that you include your name and other contact information in
the body of your comment and with any disk or CD-ROM you submit. If EPA
cannot read your comment due to technical difficulties and cannot
contact you for clarification, EPA may not be able to consider your
comment. Electronic files should avoid the use of special characters,
any form of encryption, and be free of any defects or viruses.
    Docket: All documents in the docket are listed in the docket index.
Although listed in the index, some information is not publicly
available, e.g., CBI or other information whose disclosure is
restricted by statute. Certain other material, such as copyrighted
material, is not placed on the Internet and will be publicly available
only in hard copy form. Publicly available docket materials are
available in the electronic docket at http://www.regulations.gov, or,

if only available in hard copy, at the OPP Regulatory Public Docket at
the location identified under ``Delivery'' and ``Important Note.'' The
hours of operation for this docket facility are from 8:30 a.m. to 4
p.m., Monday through Friday, excluding legal holidays. The docket
telephone number is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Bipin Gandhi, Registration Division
(7505C), Office of Pesticide Programs, Environmental Protection Agency,
1200 Pennsylvania Ave., NW., Washington, DC 20460-0001; telephone
number:<PHONE_NUMBER>; e-mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this Action Apply to Me?

    You may be potentially affected by this action if you are an
agricultural producer, food manufacturer, or pesticide manufacturer.
Potentially affected entities may include, but are not limited to:
     Crop production (NAICS code 111).
     Animal production (NAICS code 112).
     Food manufacturing (NAICS code 311).
     Pesticide manufacturing (NAICS code 32532).
    This listing is not intended to be exhaustive, but rather provides
a guide for readers regarding entities likely to be affected by this
action. Other types of entities not listed in this unit could also be
affected. The North American Industrial Classification System (NAICS)
codes have been provided to assist you and others in determining
whether this action might apply to certain entities. If you have any
questions regarding the applicability of this action to a particular
entity, consult the person listed at the end of the pesticide petition
summary of interest.

B. What Should I Consider as I Prepare My Comments for EPA?

    1. Submitting CBI. Do not submit this information to EPA through
regulations.gov or e-mail. Clearly mark the part or all of the
information that you claim to be CBI. For CBI information in a disk or
CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as
CBI and then identify electronically within the disk or CD ROM the
specific information that is claimed as CBI. In addition to one
complete version of the comment that includes information claimed as
CBI, a copy of the comment that does not contain the information
claimed as CBI must be submitted for inclusion in the public docket.
Information so marked will not be disclosed except in accordance with
procedures set forth in 40 CFR part 2.
    2. Tips for preparing your comments. When submitting comments,
remember to:
    i. Identify the document by docket number and other identifying
information (subject heading, Federal Register date and page number).
    ii. Follow directions. The Agency may ask you to respond to
specific questions or organize comments by referencing a Code of
Federal Regulations (CFR) part or section number.
    iii. Explain why you agree or disagree; suggest alternatives and
substitute language for your requested changes.
    iv. Describe any assumptions and provide any technical information
and/or data that you used.
    v. If you estimate potential costs or burdens, explain how you
arrived at your estimate in sufficient detail to allow for it to be
reproduced.
    vi. Provide specific examples to illustrate your concerns, and
suggest alternatives.
    vii. Explain your views as clearly as possible, avoiding the use of
profanity or personal threats.
    viii. Make sure to submit your comments by the comment period
deadline identified.

II. What Action is the Agency Taking?

    EPA is printing a summary of a pesticide petition received under
section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21
U.S.C. 346a, proposing the establishment or amendment of regulations in
40 CFR part 180 for residues of a pesticide

chemical in or on various food commodities. EPA has determined that
this pesticide petition contains data or information regarding the
elements set forth in FFDCA section 408(d)(2); however, EPA has not
fully evaluated the sufficiency of the submitted data at this time or
whether the data support granting of the pesticide petition. Additional
data may be needed before EPA rules on this pesticide petition.
    Pursuant to 40 CFR 180.7(f), a summary of the petition included in
this notice, prepared by the petitioner is available on EPA's
Electronic Docket athttp://www.regulations.gov/. To locate this

information on the home page of EPA's Electronic Docket, select ``Quick
Search'' and type the docket ID number ``EPA-HQ-OPP-2006-0120.'' Once
the search has located the docket, clicking on the ``Docket ID'' will
bring up a list of all documents in the docket for the pesticide
including the petition summary.

New Exemption from Tolerance

    PP 6E7032. E. I. du Pont de Nemours & Company, Inc., 1007 Market
St., Wilmington, DE 19898, proposes to establish an exemption from the
requirement of a tolerance for residues of poly(acrylic acid/butyl
acrylate/methacrylic acid/methyl acrylate/methyl methacrylate) (CAS
Reg. No. 153163-36-1) in or on food commodities when used as an inert
ingredient in pesticide products. Because this petition is a request
for an exemption from the requirement of a tolerance without numerical
limitations, no analytical method is required.

List of Subjects

    Environmental protection, Agricultural commodities, Feed additives,
Food additives, Pesticides and pests, Reporting and recordkeeping
requirements.

    Dated: April 11, 2006.
Donald R. Stubbs,
Acting Director, Registration Division, Office of Pesticide Programs.
[FR Doc. E6-5875 Filed 4-18-06; 8:45 am]

BILLING CODE 6560-50-S


[Federal Register Volume 85, Number 64 (Thursday, April 2, 2020)]
[Notices]
[Pages 18615-18617]
[FR Doc No: 2020-06849]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88494; File No. SR-NSCC-2020-002]

Self-Regulatory Organizations; National Securities Clearing
Corporation; Order Approving a Proposed Rule Change To Enhance the
Calculation of the Family-Issued Securities Charge

March 27, 2020.
    On January 28, 2020, National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\
proposed rule change SR-NSCC-2020-002 to enhance the calculation of the
Family-Issued Securities Charge.\3\ The proposed rule change was
published for comment in the Federal Register on February 18, 2020,\4\
and the Commission received no comment letters regarding the changes
proposed in the proposed rule change.\5\ For the reasons discussed
below, the Commission is approving the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ NSCC also filed the proposals contained in the proposed rule
change as advance notice SR-NSCC-2020-801 with the Commission
pursuant to Section 806(e)(1) of the Dodd-Frank Wall Street Reform
and Consumer Protection Act entitled the Payment, Clearing, and
Settlement Supervision Act of 2010, 12 U.S.C. 5465(e)(1), and Rule
19b-4(n)(1)(i) of the Act, 17 CFR 240.19b-4(n)(1)(i). Notice of
Filing of the Advance Notice was published for comment in the
Federal Register on February 27, 2020. Securities Exchange Act
Release No. 88267 (February 24, 2020), 85 FR 11437 (February 27,
2020) (File No. SR-NSCC-2020-801).
    \4\ Securities Exchange Act Release No. 88163 (February 11,
2020), 85 FR 8964 (February 18, 2020) (``Notice of Filing'').
    \5\ As the proposals contained in the proposed rule change were
also filed as an advance notice, all public comments received on the
proposals are considered regardless of whether the comments are
submitted on the proposed rule change or the advance notice.
---------------------------------------------------------------------------

I. Description of the Proposed Rule Change

    The proposed rule change would revise NSCC's Rules and Procedures
(``Rules'') \6\ to amend the calculation of NSCC's existing margin
charge applied to long positions in Family-Issued Securities to address
certain risk presented by these positions.
---------------------------------------------------------------------------

    \6\ Capitalized terms not defined herein are defined in NSCC's
Rules and Procedures (``Rules''), available at http://www.dtcc.com/
~/media/Files/Downloads/legal/rules/nscc_rules.pdf.
---------------------------------------------------------------------------

A. Background

    NSCC provides clearing, settlement, risk management, central
counterparty services, and a guarantee of completion for virtually all
broker-to-broker trades involving equity securities, corporate and
municipal debt securities, and certain other securities. NSCC manages
its credit exposure to its Members by determining an appropriate
Required Fund Deposit for each Member, which serves as each Member's
margin.\7\ The aggregate of all NSCC Members' Required Fund Deposits
(together with certain other deposits required under the Rules)
constitutes NSCC's Clearing Fund, which NSCC would access should a
Member default and that Member's Required Fund Deposit, upon
liquidation, is insufficient to satisfy NSCC's losses.
---------------------------------------------------------------------------

    \7\ See Rule 4 (Clearing Fund) and Procedure XV (Clearing Fund
Formula and Other Matters) of the Rules, supra note 6.
---------------------------------------------------------------------------

    Each Member's Required Fund Deposit consists of a number of
applicable components, each of which is calculated to address specific
risks faced by NSCC.\8\ NSCC states that it regularly assesses the
market, liquidity, and other risks that its margining methodologies are
designed to mitigate to evaluate whether margin levels are commensurate
with the particular risk attributes of each relevant product,
portfolio, and market.\9\ Such risks include risks introduced by its
counterparties or Members. In particular, NSCC seeks to identify and
mitigate its exposures to specific wrong-way risk (``SWWR''), which is
the risk that an exposure to a counterparty is highly likely to
increase when the creditworthiness of that counterparty deteriorates.
Such risk would arise when NSCC acts as central counterparty to a
Member with unsettled long positions in securities that were issued by
that Member or an affiliate of that Member (``Family-Issued
Securities''). If that Member defaults, NSCC would seek to cover its
losses by closing out the unsettled Family-Issued Securities long
positions. However, because the Member default would also likely lead
to a drop in the creditworthiness of the Member and, therefore, the
value of the Family-Issued Securities, NSCC would likely not be able to
completely cover its losses in closing out those positions.
---------------------------------------------------------------------------

    \8\ Id.
    \9\ See Notice of Filing supra note 4, at 85 FR 8965.
---------------------------------------------------------------------------

    In order to address this particular form of SWWR, NSCC imposes a
charge on all Members with unsettled long positions in their own
Family-Issued Securities, called the FIS Charge, which is calculated by
multiplying the value of the net unsettled long positions in Family-
Issued Securities by a certain percentage (``Haircut Rate'').
Currently, the Haircut Rate applied in the FIS Charge calculation is
based on a Member's rating category on NSCC's Credit Risk Rating Matrix
(``CRRM''), which ranges from 1 to 7. NSCC utilizes the CRRM to
evaluate its credit risk exposure to each Member; a higher CRRM rating
represents a higher credit risk (i.e., a greater risk of defaulting on
settlement obligations) and may cause a Member to be subject to
enhanced surveillance or additional margin requirements.\10\
---------------------------------------------------------------------------

    \10\ See Rule 1 and Section 4 of Rule 2B of the Rules, supra
note 6. See also Securities Exchange Act Release Nos. 80734 (May 19,
2017), 82 FR 24177 (May 25, 2017) (SR-DTC-2017-002, SR-FICC-2017-
006, SR-NSCC-2017-002); and 80731 (May 19, 2017), 82 FR 24174 (May
25, 2017) (SR-DTC-2017-801, SR-FICC-2017-804, SR-NSCC-2017-801).
---------------------------------------------------------------------------

    Currently, the applicable Haircut Rate for the FIS Charge depends
on a Member's rating on the CRRM.

Specifically, for Members that are rated 6 or 7 on the CRRM, the
applicable Haircut Rate for net unsettled long positions in Family-
Issued Securities shall be (1) at least 80 percent for fixed income
securities, and (2) 100 percent for equity securities. For Members that
are rated 1 through 5 on the CRRM, the applicable Haircut Rate shall be
(1) at least 40 percent for fixed income securities, and (2) at least
50 percent for equity securities.\11\
---------------------------------------------------------------------------

    \11\ See Procedure XV (Clearing Fund Formula and Other Matters)
of the Rules, supra note 6.
---------------------------------------------------------------------------

B. Proposed Changes to FIS Charge

    In the proposed rule change, NSCC is proposing to revise the
calculation of the FIS Charge to use the same Haircut Rate for all
Members regardless of their CRRM rating category. Under the proposal,
net unsettled long positions in (1) fixed income securities that are
Family-Issued Securities are charged a Haircut Rate of no less than 80
percent, and (2) equity securities that are Family-Issued Securities
are charged a Haircut Rate of 100 percent.
    NSCC states that it may still be exposed to SWWR despite applying
different Haircut Rates based on a Member's rating on the CRRM, and it
can better mitigate its exposure to this risk by calculating the FIS
Charge without considering Members' CRRM rating categories.\12\
According to NSCC, while the current methodology appropriately assumes
that Members with a higher rating category on the CRRM present a
heightened credit risk to NSCC or have demonstrated higher risk related
to their ability to meet settlement, this methodology does not account
for the risk that a Member may default due to unanticipated causes
(referred to as a ``jump-to-default'' scenario) not captured by the
CRRM.\13\ This is because the CRRM relies on historical data as a
predictor of future risks,\14\ whereas jump-to-default scenarios are
triggered by unanticipated causes that could not be predicted based on
historical trends or data (e.g., instances of fraud or other bad
actions by a Member's management). Therefore, NSCC represents that the
proposed change is designed to cover SWWR arising from potential jump-
to-default scenarios by applying the higher applicable Haircut Rate in
calculating the FIS Charge for all Members.\15\
---------------------------------------------------------------------------

    \12\ See Notice of Filing supra note 4, at 85 FR 8965.
    \13\ See id.
    \14\ See Notice of Filing supra note 4, at 85 FR 8965-66.
    \15\ See Notice of Filing supra note 4, at 85 FR 8966.
---------------------------------------------------------------------------

    The practical outcome of this proposed change is that for all
Family-Issued Securities, NSCC would apply a haircut equivalent to the
current Haircut Rate for Members that are rated 6 or 7 on the CRRM
regardless of whether a Member is rated at a 6 or 7. To implement this
proposal, NSCC would amend Sections I.(A)(1)(a)(iv) and I.(A)(2)(a)(iv)
of Procedure XV of the Rules.

II. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \16\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that such proposed rule change is consistent with the
requirements of the Act and rules and regulations thereunder applicable
to such organization. After carefully considering the proposed rule
change, the Commission finds that the proposed rule change is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to NSCC. In particular, the
Commission finds that the proposed rule change is consistent with
Section 17A(b)(3)(F) \17\ of the Act and Rules 17Ad-22(e)(4)(i) and
(e)(6)(i) and (v) thereunder.\18\
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(2)(C).
    \17\ 15 U.S.C. 78q-1(b)(3)(F).
    \18\ 17 CFR 240.17Ad-22(e)(4)(i) and (e)(6)(i) and (v).
---------------------------------------------------------------------------

A. Consistency With Section 17A(b)(3)(F)

    Section 17A(b)(3)(F) of the Act requires, in part, that the rules
of a clearing agency, such as NSCC, be designed to promote the prompt
and accurate clearance and settlement of securities transactions, and
to assure the safeguarding of securities and funds which are in the
custody or control of the clearing agency or for which it is
responsible.\19\
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The Commission believes that the proposal is consistent with the
promotion of prompt and accurate clearance and settlement of securities
transactions. As described above, NSCC faces SWWR when it acts as
central counterparty to a Member with long positions in Family-Issued
Securities. Although NSCC's current margin methodology addresses SWWR
through imposition of the FIS Charge, it does not address SWWR
associated with a jump-to-default scenario. The proposal would address
SWWR associated with a jump-to-default scenario by using the higher
applicable Haircut Rate for all Members concerning their net unsettled
long positions in Family-Issued Securities, regardless of the Members'
CRRM rating category. As such, the proposal would address a risk not
captured currently under NSCC's margin methodology and provide for more
comprehensive risk management of NSCC's risks. Further, applying the
higher applicable Haircut Rate in calculating the FIS Charge for all
Members would result in the collection of additional margin, which
should, in turn, better enable NSCC to manage the potential losses
arising out of a Member default and continue operations of its critical
clearance and settlement services in default scenarios. Accordingly,
the Commission finds that NSCC's proposal should help NSCC to continue
providing prompt and accurate clearance and settlement of securities
transactions in the event of a Member default.
    The Commission also believes that the proposal is consistent with
assuring the safeguarding of securities and funds which are in the
custody or control of NSCC for which it is responsible. As described
above, the proposal would allow NSCC to collect additional margin to
collateralize exposures to SWWR associated with jump-to-default
scenario that NSCC may face when liquidating Family-Issued Securities
positions that are depreciating in value in response to a Member's
default. By expanding the higher haircut rates to all Members, the
proposal would assist NSCC in collecting margin and maintaining the
Clearing Fund that more precisely reflects NSCC's overall risk exposure
to its Members. By better limiting NSCC's exposure to Members, the
proposal is designed to help ensure that NSCC has collected sufficient
margin from Members with long positions in Family-Issued Securities, so
that non-defaulting Members would not be exposed to mutualized losses
as a result of a default of a Member with long positions in Family-
Issued Securities. By helping to limit non-defaulting Members' exposure
to mutualized losses, the proposal is designed to help assure the
safeguarding of securities and funds which are in NSCC's custody or
control. For the reasons stated above, the Commission believes that the
Proposed Rule Change is consistent with the requirements of Section
17A(b)(3)(F) of the Act.\20\
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

B. Consistency With Rule 17Ad-22(e)(4)(i)

    Rule 17Ad-22(e)(4)(i) under the Act requires that each covered
clearing agency establish, implement, maintain and enforce written
policies and procedures reasonably designed to

effectively identify, measure, monitor, and manage its credit exposures
to participants and those arising from its payment, clearing, and
settlement processes, including by maintaining sufficient financial
resources to cover its credit exposure to each participant fully with a
high degree of confidence.\21\
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    \21\ 17 CFR 240.17Ad-22(e)(4)(i).
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    As described above, NSCC is exposed to SWWR where it acts as
central counterparty for its Members' transactions in Family-Issued
Securities. Applying the same higher Haircut Rate to all Members with
net long unsettled positions in Family-Issued Securities, regardless of
their rating on the CRRM, would help further mitigate NSCC's SWWR
exposures, especially in a jump-to-default scenario. Thus, applying the
same Haircut Rate in the FIS charge calculation is designed to help
NSCC collect sufficient financial resources to help cover its credit
exposures, with a high degree of confidence, to those Members seeking
to clear and settle transactions in Family-Issued Securities.
Therefore, the Commission believes the proposed change is consistent
with Rule 17Ad-22(e)(4)(i).\22\
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    \22\ Id.
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C. Consistency With Rules 17Ad-22(e)(6)(i) and (v)

    Rule 17Ad-22(e)(6)(i) under the Act requires that each covered
clearing agency that provides central counterparty services establish,
implement, maintain and enforce written policies and procedures
reasonably designed to cover its credit exposures to its participants
by establishing a risk-based margin system that, at a minimum,
considers, and produces margin levels commensurate with, the risks and
particular attributes of each relevant product, portfolio, and
market.\23\ Rule 17Ad-22(e)(6)(v) under the Act requires that each
covered clearing agency that provides central counterparty services
establish, implement, maintain and enforce written policies and
procedures reasonably designed to cover its credit exposures to its
participants by establishing a risk-based margin system that, at a
minimum, uses an appropriate method for measuring credit exposure that
accounts for relevant product risk factors and portfolio effects across
products.\24\
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    \23\ 17 CFR 240.17Ad-22(e)(6)(i).
    \24\ 17 CFR 240.17Ad-22(e)(6)(v).
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    As described above, NSCC faces SWWR in jump-to-default scenarios
where it acts as central counterparty to Member transactions in Family-
Issued Securities. This risk is present regardless of a Member's rating
on the CRRM. However, the current methodology assumes that Members with
a higher rating on the CRRM present a heightened credit risk to NSCC
and applies a higher Haircut Rate to such Members. This distinction
does not take into account the SWWR that would manifest in a jump-to-
default scenario. As such, NSCC proposes to apply the same higher
Haircut Rate to all Members. This proposal would improve NSCC's ability
to mitigate its exposure to SWWR in a jump-to-default scenario, thereby
helping NSCC to maintain a risk-based margin system that considers, and
produces margin levels commensurate with, the risks and particular
attributes of net unsettled long positions in Family-Issued Securities.
Therefore, the Commission believes that the proposal would be
consistent with Rule 17Ad-22(e)(6)(i).\25\
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    \25\ 17 CFR 240.17Ad-22(e)(6)(i).
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    Additionally, because the enhanced FIS Charge would be a component
of the margin that NSCC collects from its Members to help cover NSCC
credit exposure to the Members, and because the charge would be based
on different product risk factors with respect to equity and fixed-
income securities, it would be part of an appropriate method for
measuring credit exposure that accounts for relevant product risk
factors and portfolio effects across products, as described above.
Therefore, the Commission believes the proposed change is consistent
with Rule 17Ad-22(e)(6)(v).\26\
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    \26\ 17 CFR 240.17Ad-22(e)(6)(v).
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III. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular with the requirements of Section 17A of the Act \27\ and
the rules and regulations promulgated thereunder.
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    \27\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\28\ that proposed rule change SR-NSCC-2020-002, be, and hereby is,
approved.\29\
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    \28\ 15 U.S.C. 78s(b)(2).
    \29\ In approving the proposed rule change, the Commission
considered the proposals' impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-06849 Filed 4-1-20; 8:45 am]
BILLING CODE 8011-01-P