[Federal Register: July 20, 2010 (Volume 75, Number 138)]
[Rules and Regulations]
[Page 42269-42278]
[DOCID:fr20jy10-17]

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Part IV

Securities and Exchange Commission

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5 CFR Part 4401 and 17 CFR Part 200

Adoption of Supplemental Standards of Ethical Conduct for Members and
Employees of the Securities and Exchange Commission and Revisions to
the Commission's Ethics Rules; Final Rule

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SECURITIES AND EXCHANGE COMMISSION

5 CFR Part 4401 and 17 CFR Part 200

[Release No. 34-62501]

Adoption of Supplemental Standards of Ethical Conduct for Members
and Employees of the Securities and Exchange Commission and Revisions
to the Commission's Ethics Rules

AGENCY: Office of Government Ethics and Securities and Exchange
Commission.

ACTION: Final rule.

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SUMMARY: The Securities and Exchange Commission with the concurrence of
the Office of Government Ethics is adopting supplemental standards of
ethical conduct for the Commission's members and employees. The new
supplemental standards give guidance to Commission members and
employees on permitted, prohibited, and restricted financial interests
and transactions and on engaging in outside employment and activities.
In addition, the Commission has revised its ethics rules to make them
compatible with the Office of Government Ethics' government-wide ethics
provisions and to reflect current Commission policies.

DATES: Effective Date: August 19, 2010.

FOR FURTHER INFORMATION CONTACT: Richard E. Connor, Office of the
General Counsel,<PHONE_NUMBER>, Securities and Exchange Commission,
100 F Street, NE., Washington, DC 20549-1050.

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission with
the concurrence of the Office of Government Ethics (``OGE'') is
adopting supplemental standards of ethical conduct for the Commission's
members and employees. The Commission first adopted conduct regulations
in 1953 ``to restate the ethical principles which it believes should
govern and have governed the conduct of members and employees and
former members and employees.'' Subsequent comprehensive revisions in
1966 and 1980 were enacted to provide members, employees, special
government employees, and former Commission members and employees with
a comprehensive statement of standards of conduct which are dictated by
applicable Federal law, Executive Orders, and the Commission's own
requirements.\5\
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    \5\ See, e.g., 45 FR 36064 (May 29, 1980).
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    Executive Order 12674, as amended by Executive Order 12731,
authorized OGE to establish a single, comprehensive, and clear set of
executive-branch standards of conduct. On August 7, 1992, OGE published
the Standards of ethical conduct for employees of the executive branch,
codified at 5 CFR part 2635, to establish uniform standards of ethical
conduct for all executive branch employees.\6\ With the concurrence of
OGE, 5 CFR 2635.105 authorizes executive branch agencies to publish
agency-specific supplemental regulations necessary to implement their
respective ethics programs.
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    \6\ See 57 FR 35006-35067 (Aug. 7, 1992), as corrected at 57 FR
48557 (Oct. 27, 1992) and 57 FR 52583 (Nov. 4, 1992), with
additional grace period extensions at 59 FR 4779-4780 (Feb. 2,
1994), 60 FR 6390-6391 (Feb. 2, 1995), 60 FR 66857-66858 (Dec. 27,
1995) and 61 FR 40950-40952 (Aug. 7, 1996).
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    The Commission has responsibility for oversight of the securities
industry and the protection of investors. These new supplemental
standards are necessary to re-codify and provide guidance to Commission
members and employees on permitted, prohibited, and restricted
financial interests and transactions and on engaging in outside
employment and activities. The Commission is also updating its existing
ethics rules to conform to OGE's government-wide ethics obligations and
reflect current Commission policies.
    A. The Commission's supplemental standards are contained in new 5
CFR part 4401. New Rule 4401.101 (General) states that Commission
members and employees must comply with 5 CFR part 2635 (Standards of
ethical conduct for employees of the executive branch). New Rule
4401.101 further states that members and employees are subject to the
Executive branch financial disclosure regulations, 5 CFR part 2634; the
Office of Personnel Management's Employee responsibilities and conduct
regulations at 5 CFR part 735; and 17 CFR part 200, subparts C and M,
as amended, the Commission's Canons of ethics and the Regulation
concerning conduct of members and employees and former members and
employees.
    New Rule 4401.102 (Prohibited and restricted financial interests
and transactions) supersedes former Commission ethics rule 735-5
(Securities transactions). New Rule 4401.102(a) provides that the
rule's provisions apply to all securities holdings or transactions
effected directly or indirectly on behalf of the member or employee.
The rule's requirements also extend to holdings and transactions of or
on behalf of the member's or employee's spouse, unemancipated minor
children, or persons for whom the member or employee serves as legal
guardian.
    New Rule 4401.102(b)(1) prohibits members and employees from
purchasing or selling a security while in possession of material
nonpublic information, as defined in 5 CFR 2635.703(b). Rule
2635.703(b) states that nonpublic information is information that the
individual gains through his or her Federal position, which the person
knows or reasonably should know is not available to the general public.
Under this definition, nonpublic information includes information
routinely exempt from disclosure under the Freedom of Information Act,
5 U.S.C. 552 or otherwise protected by statute, rule, or Executive
Order; information that the Commission designates as confidential; and
information that is not generally available to the public and that the
Commission has not actually released or disseminated.\7\
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    \7\ Prohibitions regarding disclosure or use of confidential or
nonpublic information are set forth in Clause 30 of Schedule A of
the Securities Act of 1933, 15 U.S.C. 77aa(30) and Securities Act
Rules 122 and 406 (17 CFR 230.122, 230.406); sections 13(f)(3) and
24(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(f)(3),
78x) and Exchange Act Rule 0-4 (17 CFR 240.24b-2); section 45(a)(1)
of the Investment Company Act of 1940 (15 U.S.C. 80a-44) and
Investment Company Act Rule 45a-1 (17 CFR 270.45a-1); and section
210(b) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-10).
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    New Rule 4401.102(b)(2) prohibits members or employees from
recommending or suggesting the purchase or sale of a security either
based on material nonpublic information about the security or which the
member or employee cannot purchase or sell because of this rule's
restrictions.
    New Rule 4401.102(c) states that members and employees may not--

--Knowingly purchase or hold a security or other financial interest in
an entity directly regulated by the Commission;
--Purchase a security in an initial public offering (``IPO'') for seven
calendar days after the IPO is effective, except for IPOs of shares in
a registered investment company or other publicly traded or publicly
available collective investment fund;
--Purchase or carry securities on margin;
--Sell securities short; \8\
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    \8\ Short selling is defined in 17 CFR 242.200(a).
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--Enter into a financial relationship or obtain a loan from an entity
or person directly regulated by the Commission and receive terms more
favorable than would be available in like circumstances to members of
the public, except as otherwise permitted

by 5 CFR 2635, subpart B (Gifts from outside sources);
--Engage in any transactions involving derivatives, except for
transactions in shares in a registered investment company or other
publicly traded or publicly available collective investment fund; or
--Purchase or sell any security of an entity that is under
investigation by the Commission, a party to a proceeding before the
Commission, or a party to a proceeding in which the Commission is a
party.

    New Rule 4401.102(d)(1) generally requires members and employees to
clear any securities or related financial transaction. Currently, the
Commission is clearing transactions through the Ethics Program System
(``EPS'') computer system. New Rule 4401.102(d)(2) provides that, if
the member or employee obtains clearance of the transaction as provided
in the rule, that clearance will be prima facie evidence that the
member or employee did not knowingly purchase, sell, or hold a security
of a regulated entity; improperly purchase an IPO or engage in a
transaction in a derivative; or improperly purchase or sell a security
of an entity subject to Commission investigation or enforcement action.
    New Rule 4401.102(e) provides generally that members and employees
must hold a security for a minimum of six months from the trade
date.\9\ Under new Rule 4401.102(e)(2), the holding period does not
apply to securities that are sold for 90 percent or less of their
original purchase price; securities with an initial term of less than
six months that are held to term; or shares in money market funds. New
Rule 4401.102(e)(3) requires members and employees to hold shares of
registered investment companies for a minimum of 30 days from the
purchase date.
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    \9\ This rule applies to securities purchased after Commission
employment.
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    New Rule 4401.102(f)(1) generally requires members and employees to
report all securities holdings as required by the Designated Agency
Ethics Official (``DAEO''). Currently, this reporting occurs through
EPS. Also, members and employees must provide duplicate statements for
every account containing reportable securities to the DAEO. Under new
Rule 4401.102(f)(2) members and employees must report all purchases and
sales within five days of receipt of confirmation of the
transaction.\10\ The reporting of purchases and sales is also done
through EPS.
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    \10\ Any person who receives a conditional offer of employment
from the Commission must report all securities holdings after
acceptance of that offer and before commencement of employment with
the Commission on the prescribed form. These reports are currently
received on SEC Form 682.
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    Consistent with current Commission standards, new Rule
4401.102(g)(1) excludes certain transactions and holdings from the
rule's requirements. Certain holdings and transactions are excluded
from the prohibition of new Rule 4401.102(c) and the prior clearance,
holding period, and reporting requirements. These include:

--Transactions effected by the member's or employee's spouse on behalf
of someone other than the member or employee, the spouse, their
unemancipated minor child, or a person for whom the member or employee
serves as legal guardian;
--Holdings or transactions effected by a member's or employee's legally
separated spouse living apart from the member or employee (even if for
their unemnacipated minor child) so long as the member or employee does
not in fact control, advise with respect to, or have knowledge of these
holdings and transactions;
--U.S. Government or Federal government agency securities;
--Investments in the Thrift Savings Plan or a government retirement
plan administered by a Federal agency; and
--Certificates of deposit and comparable instruments issued by
depository institutions subject to Federal regulation and Federal
deposit insurance.

    In accordance with existing standards, new Rule 4401.102(g)(2)
provides that certain additional transactions are not prohibited by new
Rule 4401.102(c) and excludes these holdings and transactions from the
prior clearance and holding requirements. However, these interests must
be reported in accordance with new Rule 4401.102(f).
    This exclusion applies to:

--The holdings of a trust in which the member or employee (or the
member's or employee's spouse, the member's or employee's unemancipated
minor child, or person for whom the member or employee serves as legal
guardian) is (i) solely a vested beneficiary of an irrevocable trust or
(ii) solely a vested beneficiary of a revocable trust where the trust
instrument expressly directs the trustee to make present, mandatory
distributions of trust income or principal; provided, that the member
or employee did not create the trust, has no power to control, and does
not, in fact, control or advise with respect to the holdings and
transactions of the trust or have knowledge of its holdings or
transactions;
--The acceptance or reinvestment of stock dividends on securities
already owned;
--The exercise of a right to convert securities; and
--The acquisition of stock or the acquisition or exercise of employee
stock options or similar instruments received as compensation and
issued by either (i) a member's or employee's former employer or (ii)
the present or former employer of the member's or employee's spouse.

    New Rule 4401.102(h) sets forth the circumstances under which
members and employees may seek a waiver of the requirements of the
rule.
    New Rule 4401.103 supersedes in part Commission rule 735-4, 17 CFR
200.735-4 (Outside employment and activities) and sets forth the
circumstances under which Commission members, employees, and special
government employees may engage in outside employment or activities.
New Rule 4401.103(a)(2) broadly defines employment to include any form
of non-Federal employment or business relationship, involving the
provision of personal service by the employee. The definition includes
acting as an officer, director, employee, agent, attorney, consultant,
contractor, general partner, trustee, teacher, writer, or speaker. The
rule excludes participation in certain nonprofit religious, charitable,
and civic organizations from the definition of employment unless the
person (i) serves as an officer or director; (ii) provides professional
services or advice; (iii) receives compensation (other than
reimbursement for expenses) from the organization; or (iv) is an active
participant as defined in 5 CFR 2635.502(b)(1)(v) on a committee of a
professional organization whose interests may be substantially affected
by the Commission.
    New Rule 4401.103(b) encourages members and employees to
participate in pro bono and community service so long as that service
is consistent with OGE's requirements including 5 CFR parts 2634
(governing financial reporting) and 2635 (establishing the government-
wide ethics standards), as well as the restrictions contained in 18
U.S.C. 203 (prohibiting seeking or receiving compensation for
representational services before the Government), 205 (prohibiting
assisting in prosecution of claims against or acting as attorney or
agent before the Government), and 208 (prohibiting an employee's
participation in matters

affecting the employee's own financial interest and those of certain
specified persons and organizations).
    Under new Rule 4401.103(d)(1), each employee must obtain prior
approval before engaging in any outside employment, whether or not for
compensation. New Rule 4401.103(c)(1)(i) provides that no employee may
engage in any outside employment or activity that conflicts with
Commission employment. New Rule 4401.103(c)(1)(iii) prohibits any
employee from (i) outside employment on behalf of any entity regulated
by the Commission; (ii) engaging in activity directly or indirectly
related to the issuance, purchase, investment, or trading of securities
or securities futures, except for securities holdings or transactions
permitted by new Rule 4401.102; or (iii) engaging in work otherwise
involved with the securities industry. Commission members are subject
to the restrictions of Section 4(a) of the Securities Exchange Act of
1934, 15 U.S.C. 78d(a).
    Under new Rule 4401.103(d)(2), an employee's request for prior
approval of any outside employment must be made both to the appropriate
Division Directors, Office Heads, or Regional Directors as well as the
Commission's Office of the General Counsel's Ethics Office. New Rule
4401.103(d)(3) requires that the request identify the proposed outside
employer; describe the work to be performed, the duration of the
employment, and any compensation to be received; and include a
statement that the employee will disqualify himself or herself from
matters involving the proposed employer.
    Under new Rule 4401.103(d)(4), the request must be updated annually
or if there is a significant change in either the nature of the
employment or in the employee's position with the Commission. New Rule
4401.103(d)(5) provides that approval will be granted only if the
outside employment does not involve conduct prohibited by law or
regulation, including the government-wide ethics requirements in 5 CFR
part 2635.
    B. The Commission is separately amending its Regulation concerning
conduct of Commission members and employees and former members and
employees, 17 CFR 200-735-1 et seq. These amendments generally delete
Commission requirements that are duplicative of OGE's government-wide
requirements. The amendments also direct members, employees, special
government employees, and former members and employees to the
applicable ethics laws and regulations for ease of reference.
    Certain Commission ethics requirements remain in effect. Under 17
CFR 200.735-3(b) (General provisions), a member or employee shall not
engage in any personal business transaction or arrangement for personal
profit which arises from his or her official position or authority or
is based on nonpublic information obtained by virtue of that position
or authority. The restrictions on release of nonpublic Commission
documents contained in 17 CFR 200.735-3(b)(2) (Policy) (formerly Rule
735-3(b)(7)) also remain in effect. The Commission encourages its
members and employees to engage in teaching, lecturing, and writing.
Therefore, the provisions governing those activities, including the
clearance of publications and speeches, contained in 17 CFR 200.735-
4(b) and (d) (formerly Rules 735-4(b)(5) and (e)), continue.
    The Commission will also continue to require any former member or
employee who is retained or employed to represent any person before the
Commission within two years of leaving the Commission to provide
written notice of that representation. 17 CFR 200.735-8(b) (Practice by
former members and employees of the Commission).
    The amendments also replace references to the Director of Personnel
with references to the General Counsel, the Commission's Office of the
General Counsel's Ethics Office, and the Designated Agency Ethics
Official to reflect current agency practice.

I. Administrative Procedure Act, Regulatory Flexibility Act, and
Paperwork Reduction Act

    The Commission finds, in accordance with section 553(b)(3)(A) of
the Administrative Procedure Act,\11\ that these rules relate solely to
agency organization, procedure, or practice. These rules are therefore
not subject to the provisions of the Administrative Procedure Act
requiring notice, opportunity for public comment, and publication. The
Regulatory Flexibility Act \12\ therefore does not apply. Because these
rules relate to ``agency organization, procedure or practice that does
not substantially affect the right or obligations of non-agency
parties,'' they are not subject to the Small Business Regulatory
Enforcement Fairness Act.\13\ The rules do not contain any new
collection of information requirements as defined by the Paperwork
Reduction Act of 1995, as amended.\14\
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    \11\ 5 U.S.C. 553(b)(3)(A).
    \12\ 5 U.S.C. 601 et seq.
    \13\ 5 U.S.C. 804(3)(C).
    \14\ 44 U.S.C. 3501 et seq.
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II. Costs and Benefits of the Amendments

    Taken as a whole, the Commission and the public have a substantial
interest in the integrity of the Commission's processes. Congress has
directed the Commission to oversee the securities markets and
securities professionals and to protect investors. To that end, the
ethical standards contained in the rules enacted today require the
Commission's members and employees to maintain high standards of
honesty, integrity, and impartiality, and to avoid actual, or the
appearance of, conflicts of interest.
    In general, the costs of the procedures in the Commission's rules
of practice fall largely on the Commission and its employees. As noted,
the amendments set forth in this release relate to internal agency
management. These rules re-codify pre-existing obligations on the
Commission's members and employees with certain minor modifications. As
such, the Commission believes that the costs imposed by compliance with
these amended rules have not substantially increased from the
obligations of Commission members and employees before these
amendments.

III. Consideration of Burden on Competition

    Section 23(a)(2) of the Exchange Act, 15 U.S.C. 78w(a)(2), requires
the Commission, in making rules pursuant to any provision of the
Exchange Act, to consider among other matters the impact any such rule
would have on competition. The purposes of the Exchange Act include
protection of interstate commerce and maintenance of fair and honest
markets. The degree of trust that investors and the public have in the
Commission and its employees is critical to these goals. The Commission
and its employees must adhere to the highest standards of integrity and
impartiality and avoid the appearance of conflicts of interest. These
rules affect a relatively small number of persons. Therefore, the
Commission has determined that the burden on competition is small and
is necessary and appropriate in furtherance of the purposes of the
Exchange Act.
    Section 2(b) of the Securities Act, 15 U.S.C. 77b(b); Section 3(f)
of the Exchange Act, 15 U.S.C. 78c(f); Section 2(c) of the Investment
Company Act of 1940, 15 U.S.C. 80a-2(c); and Section 202(c) of the
Investment Advisers Act of 1940, 15 U.S.C. 80b-2(c) require that the
Commission consider efficiency, competition, and capital formation, in
addition to the protection of investors, whenever it is required to
consider or

determine whether an action is necessary or appropriate in the public
interest. As noted above, these rules apply to a relatively small
number of people and do not substantially alter their pre-existing
obligations. The Commission believes that the amendments that the
Commission is adopting today will have a small impact on competition,
the capital markets, or capital formation.

IV. Statutory Basis for the Rules

    These new supplemental rules and the amendments to the Commission's
ethics rules are being adopted pursuant to statutory authority granted
to OGE and to the Commission. These include 5 U.S.C. 7301; 5 U.S.C.
App. (Ethics in Government Act of 1978); section 19 of the Securities
Act of 1933, 15 U.S.C. 77s; section 23 of the Securities Exchange Act
of 1934, 15 U.S.C. 78w; section 319 of the Trust Indenture Act of 1939,
15 U.S.C. 77sss; section 40 of the Investment Company Act of 1940, 15
U.S.C. 80a-39; and section 211 of the Investment Advisers Act of 1940,
15 U.S.C. 80b-11.

List of Subjects

5 CFR Part 4401

    Administrative practice and procedure, Conduct and Ethics.

17 CFR Part 200

    Administrative practice and procedure, Authority delegations
(Government Agencies), Conduct and Ethics, Information and Requests,
and Organization.

0
For the reasons set out in the preamble, Title 5 of the Code of Federal
Regulations and Title 17, Chapter II, Part 200, are amended as follows:

TITLE 5--ADMINISTRATIVE PERSONNEL

0
1. Add a new chapter XXXIV, consisting of part 4401 to read as follows:

CHAPTER XXXIV--SECURITIES AND EXCHANGE COMMISSION

PART 4401--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR MEMBERS
AND EMPLOYEES OF THE SECURITIES AND EXCHANGE COMMISSION

Sec.
4401.101 General.
4401.102 Prohibited and restricted financial interests and
transactions.
4401.103 Outside employment and activities.

    Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government
Act of 1978); E.O. 12674, 54 FR 15159; 3 CFR 1989 Comp., p. 215, as
modified by E.O. 12731, 55 FR 42547; 3 CFR, 1990 Comp., p. 306; 5
CFR 2635.105, 2635.403, 2635.803; 15 U.S.C. 77s, 78w, 77sss, 80a-37,
80b-11.

Sec.  4401.101  General.

    In accordance with 5 CFR 2635.105, the regulations in this part
apply to members and employees of the Securities and Exchange
Commission (``Commission'') and supplement the Standards of ethical
conduct for employees of the executive branch contained in 5 CFR part
2635. Members and employees of the Commission are required to comply
with 5 CFR part 2635 and this part. In addition, they are subject to
the Executive branch financial disclosure regulations, 5 CFR part 2634;
the Office of Personnel Management Employee responsibilities and
conduct regulations at 5 CFR part 735; and the Commission's Canons of
ethics and Regulation concerning conduct of members and employees and
former members and employees, 17 CFR part 200, subparts C and M.

Sec.  4401.102  Prohibited and restricted financial interests and
transactions.

    (a) Applicability. The requirements of this section apply to all
securities holdings or transactions effected, directly or indirectly,
by or on behalf of a member or employee, the member's or employee's
spouse, the member's or employee's unemancipated minor child, or any
person for whom the member or employee serves as legal guardian. A
member or employee is deemed to have sufficient interest in the
securities holdings and transactions of his or her spouse,
unemancipated minor child, or person for whom the member or employee
serves as legal guardian that such holdings or transactions are subject
to all the terms of this part.
    (b) In general.
    (1) Members and employees are prohibited from purchasing or selling
any security while in possession of material nonpublic information
regarding that security. Nonpublic information has the meaning as
provided in 5 CFR 2635.703(b).
    (2) Members and employees are prohibited from recommending or
suggesting to any person the purchase or sale of security:
    (i) Based on material nonpublic information regarding that
security; or
    (ii) That the member or employee could not purchase or sell because
of the restrictions contained in this Rule.
    (c) Prohibited and restricted holdings and transactions. Members
and employees are prohibited from:
    (1) Knowingly purchasing or holding a security or other financial
interest in an entity directly regulated by the Commission;
    (2) Purchasing a security in an initial public offering (``IPO'')
for seven calendar days after the IPO effective date, except that this
prohibition does not apply to an IPO of shares in a registered
investment company or other publicly traded or publicly available
collective investment fund;
    (3) Purchasing or otherwise carrying securities on margin;
    (4) Selling securities short as defined in 17 CFR 242.200(a);
    (5) Accepting a loan from, or entering into any other financial
relationship with, an entity, institution or other person directly
regulated by the Commission if the loan or financial relationship is
governed by terms more favorable than would be available in like
circumstances to members of the public, except as otherwise permitted
by 5 CFR part 2635, subpart B (Gifts from outside sources);
    (6) Engaging in transactions involving financial instruments that
are derivatives of securities (that is, the value of the security
depends on or is derived from, in whole or in part, the value of
another security, or a group, or an index of securities), except that
this prohibition does not apply to transactions in shares in a
registered investment company or other publicly traded or publicly
available collective investment fund; and
    (7) Purchasing or selling any security issued by an entity that is:
    (i) Under investigation by the Commission;
    (ii) A party to a proceeding before the Commission; or
    (iii) A party to a proceeding to which the Commission is a party.
    (d) Prior clearance of transactions in securities or related
financial interests.
    (1) Except as set forth in paragraph (g) of this section, members
and employees must confirm before entering into any security or other
related financial transaction that the security or related financial
transaction is not prohibited or restricted as to them by clearing the
transaction in the manner required by the Designated Agency Ethics
Official (``DAEO''). A member or employee will have five business days
after clearance to effect a transaction.
    (2) Documentation of the clearance of any transaction pursuant to
this paragraph (d) shall be prima facie evidence that the member or
employee has not knowingly purchased, sold, or held such financial
interest in violation of the provisions of paragraphs (c)(1), (2), (6),
or (7) of this section.
    (3) The DAEO shall be responsible for administering the
Commission's

clearance systems. The DAEO shall maintain a record of securities that
members and employees may not purchase or sell, or otherwise hold,
because such securities are the subject of the various prohibitions and
restrictions contained in this section.
    (e) Holding periods for securities and related financial interests.
    (1) General rule. Except as set forth in paragraph (g) and in
paragraphs (e)(2) and (3) of this section, members and employees must
hold a security purchased after commencement of employment with the
Commission for a minimum of six (6) months from the trade date.
    (2) General exceptions. This holding period does not apply to:
    (i) Securities sold for ninety percent (90) or less of the original
purchase price;
    (ii) Securities with an initial term of less than six (6) months
that are held to term; and
    (iii) Shares in money market funds, as defined in Rule 12d1-
1(d)(2), 17 CFR 270.12d1-1(d)(2).
    (3) Exception for shares in registered investment companies.
Members and employees must hold shares in registered investment
companies for a minimum of thirty (30) days from the purchase date.
    (f) Reporting requirements.
    (1) Except as set forth in paragraph (g) of this section, members
and employees must:
    (i) Report and certify all securities holdings according to the
schedule required by the DAEO; and
    (ii) Submit duplicate statements for every account containing
reportable securities to the DAEO according to such procedures required
by the DAEO.
    (2) Members and employees must report all purchases, sales,
acquisitions, or dispositions of securities within five (5) business
days after receipt of confirmation of the transaction.
    (3) Any person who receives a conditional offer of employment from
the Commission must report all securities holdings after acceptance of
that offer and before commencement of employment with the Commission on
the form prescribed by the Commission.
    (g) Exceptions.
    (1) The following transactions are exempt from the requirements of
paragraphs (c), (d), (e), and (f) of this section:
    (i) Securities transactions effected by a member's or employee's
spouse on behalf of an entity or person other than the member or
employee, the member's or employee's spouse, the member's or employee's
unemancipated minor child, or any person for whom the member or
employee serves as legal guardian;
    (ii) Securities holdings and transactions of a member's or
employee's legally separated spouse living apart from the member or
employee (including those effected for the benefit of the member's or
employee's minor child), provided that the member or employee has no
control, and does not, in fact, control, advise with respect to, or
have knowledge of those holdings and transactions;
    (iii) Securities issued by the United States Government or one of
its agencies;
    (iv) Investments in funds administered by the Thrift Savings Plan
or by any retirement plan administered by a Federal government agency;
and
    (v) Certificates of deposit or other comparable instruments issued
by depository institutions subject to Federal regulation and Federal
deposit insurance.
    (2) The following holdings and transactions are exempt from the
requirements of paragraphs (c), (d), and (e), but these interests must
be reported in accordance with this paragraph (f) of this section:
    (i) The holdings of a trust in which the member or employee (or the
member's or employee's spouse, the member's or employee's unemancipated
minor child, or person for whom the member or employee serves as legal
guardian) is:
    (A) Solely a vested beneficiary of an irrevocable trust; or
    (B) Solely a vested beneficiary of a revocable trust where the
trust instrument expressly directs the trustee to make present,
mandatory distributions of trust income or principal; provided, the
member or employee did not create the trust, has no power to control,
and does not, in fact, control or advise with respect to the holdings
and transactions of the trust;
    (ii) Acceptance or reinvestment of stock dividends on securities
already owned;
    (iii) Exercise of a right to convert securities; and
    (iv) The acquisition of stock or the acquisition or the exercise of
employee stock options, or other comparable instruments, received as
compensation from an issuer that is:
    (A) The member's or employee's former employer; or
    (B) The present or former employer of the member's or employee's
spouse.
    (h) Waivers.
    (1) Members may request from the Commission a waiver of the
prohibitions or limitations that would otherwise apply to a securities
holding or transaction on the grounds that application of the rule
would cause an undue hardship. A member requests a waiver by submitting
a confidential written application to the Commission's Office of the
General Counsel's Ethics Office. The DAEO will review the request and
provide to the Commission a recommendation for resolution of the waiver
request. In developing a recommendation, the DAEO may consult, on a
confidential basis, other Commission personnel as the DAEO in his or
her discretion considers necessary.
    (2) Employees may request from the DAEO a waiver of the
prohibitions or limitations that would otherwise apply to a securities
holding or transaction on the grounds that application of the rule
would cause an undue hardship. An employee requests a waiver by
submitting a confidential written application to the Commission's
Office of the General Counsel's Ethics Office in the manner prescribed
by the DAEO. In considering a waiver request, the DAEO, or his or her
designee, may consult with the employee's supervisors and other
Commission personnel as the DAEO in his or her discretion considers
necessary.
    (3) The Commission or the DAEO, as applicable, will provide written
notice of its determination of the waiver request to the requesting
member or employee.
    (4) The Commission or the DAEO, as applicable, may condition the
grant of a waiver under this provision upon the agreement to certain
undertakings (such as execution of a written statement of
disqualification) to avoid the appearance of misuse of position or loss
of impartiality, and to ensure confidence in the impartiality and
objectivity of the Commission. The Commission or DAEO, as applicable,
shall note the existence of conditions on the waiver and describe them
in reasonable detail in the text of the waiver-request determination.
    (5) The grant of a waiver requested pursuant to this section must
reflect the judgment that the waiver:
    (i) Is necessary to avoid an undue hardship; and, under the
particular circumstances, application of the prohibition or restriction
is not necessary to avoid the appearance of misuse of position or loss
of impartiality, or otherwise necessary to ensure confidence in the
impartiality and objectivity of the Commission;
    (ii) Is consistent with 18 U.S.C. 208 (Acts affecting a personal
financial interest), 5 CFR part 2635 (Standards of ethical conduct for
employees of the executive branch), and 5 CFR part 2640

(Interpretation, exemptions and waiver guidance concerning 18 U.S.C.
208); and
    (iii) Is not otherwise prohibited by law.
    (6) The determination of the Commission with respect to a member's
request for a waiver is final and binding on the member.
    (7) The determination of the DAEO with respect to an employee's
request for a waiver may be appealed to the Commission, in accordance
with the requirements of Rules 430 and 431 of the Commission's Rule of
Practice, 17 CFR 201.430, 201.431. The determination of the DAEO or, if
appealed, the Commission, is final and binding on the employee.
    (8) Notwithstanding the grant of a waiver, a member or employee
remains subject to the disqualification requirements of 5 CFR 2635.402
(Disqualifying financial interests) and 5 CFR 2635.502 (Personal and
business relationships) with respect to transactions or holdings
subject to the waiver.
    (i) Required disposition of securities. The DAEO is authorized to
require disposition of securities acquired as a result of a violation
of the provisions of this section, whether unintentional or not. The
DAEO shall report repeated violations to the Commission for appropriate
action.

Sec.  4401.103  Outside employment and activities.

    (a) Definitions. As used in this section:
    (1) Employee is defined in 5 CFR 2635.102(h) and includes employees
and special government employees of the Commission.
    (2) Employment is defined broadly, as any form of non-Federal
employment or business relationship, involving the provision of
personal services by the employee. It includes services as an officer,
director, employee, agent, attorney, accountant, consultant,
contractor, general partner, trustee, teacher, writer, or speaker, but
does not include participation in the activities of a nonprofit
charitable, religious, professional, civic, or public service
organization, unless such activities:
    (i) Involve serving as an officer or director of the organization;
    (ii) Involve providing professional services or advice to the
organization;
    (iii) Are for compensation, other than reimbursement of expenses;
or
    (iv) Involve serving as an active participant (as defined in 5 CFR
2635.502(b)(1)(v)) in a professional organization whose interests may
be substantially affected by the Commission.
    (3) Professional services means practicing a profession as the term
``profession'' is defined in 5 CFR 2636.305(b)(1).
    (4) DAEO is the Designated Agency Ethics Official.
    (b) Pro bono and community service. Subject to the prohibitions,
restrictions and requirements contained in law and Federal regulations,
including 18 U.S.C. 203 (Compensation to members of Congress, officers,
and others in matters affecting the Government), 205 (Activities of
officers and employees in claims against and other matters affecting
the Government), and 208 (Acts affecting a personal financial
interest), 5 CFR part 2634 (Executive branch financial disclosure), 5
CFR part 2635 (Standards of ethical conduct for employees of the
executive branch), and paragraph (c) of this section, employees are
encouraged to participate in matters involving improvement to their
communities, and, when qualified, to provide professional pro bono
services.
    (c) Prohibitions and restrictions on outside employment and
activities.
    (1) Prohibitions and restrictions on employees other than members.
    (i) No employee may engage in any outside employment or activities
that conflict with employment with the Commission.
    (ii) No employee shall engage in any outside employment, whether or
not for compensation, without prior approval, in accordance with
paragraph (d) of this section.
    (iii) The Commission will not approve the following kinds of
employment or activities:
    (A) Employment with any entity regulated by the Commission;
    (B) Employment or any activity directly or indirectly related to
the issuance, purchase, sale, investment or trading of securities or
futures on securities or a group of securities, except this prohibition
does not apply to securities holdings or transactions permitted by
Sec.  4401.102 of this subpart; or
    (C) Employment otherwise involved with the securities industry.
    (2) Prohibitions and restrictions on members.
    (i) Members of the Commission may engage in outside employment only
to the extent permitted by Section 4(a) of the Securities Exchange Act
of 1934, 15 U.S.C. 78d(a). This provision does not preclude members
from engaging in permitted securities transactions.
    (ii) Notwithstanding the absence of a statutory prohibition, a
member may not engage in any outside employment or activity, if such
outside employment or activity would materially impair the member's
ability to perform properly the member's duties. Such outside
employment or activity includes such fiduciary relationships such as
serving as a trustee, executor or corporate director.
    (d) Prior approval requirement.
    (1) An employee, other than a member or special government
employee, must obtain written approval before engaging in any outside
employment (whether or not for compensation).
    (2) Requests for prior approval of outside employment shall be
submitted in writing to the appropriate agency designee and to the
Commission's Office of the General Counsel's Ethics Office. Agency
designees include Division Directors, Office Heads and Regional
Directors.
    (3) The request shall include, at a minimum:
    (i) The name and address of the prospective outside employer;
    (ii) A description of the proposed outside employment, including
the duties and services to be performed;
    (iii) The expected duration of the outside employment;
    (iv) The fee or other compensation, if any, to be received by the
Commission employee for the outside employment; and
    (v) A statement that the employee will disqualify himself or
herself, if the request is approved, from participating in particular
matters that could directly affect his outside employer during the
period of the outside employment and, thereafter, from participating in
particular matters involving specific parties, consistent with 5 CFR
2635.502 (Personal and business relationships).
    (4) The employee shall submit an updated request for approval:
    (i) Annually;
    (ii) Upon a significant change in the nature or scope of the
outside employment; or
    (iii) Upon a significant change in the employee's official position
at the Commission.
    (5) Approval shall be granted only upon a determination by both the
agency designee and Designated Agency Ethics Officers (``DAEO'') or by
the Commission, on appeal, pursuant to paragraph (d)(6) of this
section, that the outside employment is not expected to involve conduct
prohibited by law or Federal regulation, including 5 CFR part 2635
(Standards of ethical conduct for employees of the executive branch),
and this part.
    (6) An employee may appeal the disapproval of a request to engage
in outside employment by the agency designee or by the Commission's
Office of the General Counsel's Ethics Office to

the Commission in accordance with the requirements of Commission Rules
430 and 431 of the Commission's Rules of Practice, 17 CFR 201.430,
201.431. That appeal shall be submitted in writing to the Commission
through the Commission's Office of the General Counsel's Ethics Office
and shall explain why the employee believes that his or her request
should be approved.
    (e) Employees are required to submit proposed publications or
prepared speeches relating to the Commission, or the statutes or rules
it administers, to the Commission's Office of the General Counsel's
Ethics Office for review, pursuant to the Commission's Regulation
Concerning Conduct of Members and Employees and Former Members and
Employees of the Commission, 17 CFR 200.735-4 (Outside Employment and
Activities). Any such publication or speech must include the disclaimer
prescribed in 17 CFR 200.735-4(c). Employees who wish to engage in
teaching, writing or speaking for compensation should review the
provisions of 5 CFR 2635.807 (Teaching, Speaking, and Writing).

TITLE 17--COMMODITY AND SECURITIES EXCHANGES

PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND
REQUESTS

Subpart M--Regulation Concerning Conduct of Members and Employees
and Former Members and Employees of the Commission

0
2. The general authority citation for part 200, subpart M is revised to
read as follows:

    Authority: 15 U.S.C. 77s, 77sss, 78w, 80a-37, 80b-11; E.O.
11222, 3 CFR, 1964-1965 Comp., p. 36; 5 CFR 735.104; 5 CFR 2634; and
5 CFR 2635, unless otherwise noted.

0
3. Sec.  200.735-1 is amended as follows:
0
a. Revising Sec.  200.735-1 to read as follows; and
0
b. Removing footnote 1.

    This revision reads as follows:

Sec.  200.735-1  Purpose.

    This subpart sets forth the standards of ethical conduct required
of members, employees and special Government employees, and former
members and employees of the Securities and Exchange Commission.

0
4. Sec.  200.735-2(b) is revised to read as follows:

Sec.  200.735-2  Policy.

* * * * *
    (b) For these reasons, members, employees, and special Government
employees should at all times abide by the standards of ethical conduct
for employees of the executive branch (codified in 5 CFR part 2635);
the supplemental standards of ethical conduct for members and employees
of the Securities and Exchange Commission (codified in 5 CFR part
4401); the standards of conduct set forth in this subpart; the Canons
of ethics for members of the Securities and Exchange Commission
(codified in subpart C of this part 200); and, in the case of a person
practicing a profession as defined in 5 CFR 2636.305(b)(1), the
applicable professional ethical standards.

0
5. Sec.  200.735-3 is amended by:
0
a. Revising paragraph (a);
0
b. Removing footnote 2 in paragraph (b)(1);
0
c. Removing paragraphs (b)(2) through (b)(6) and footnotes 3 and 4 in
paragraphs (b)(3)(vi) and (b)(6) respectively;
0
d. Redesignating paragraph (b)(7) as paragraph (b)(2), removing
footnote 5 in paragraph (b)(7)(i), redesignating footnote 6 in
paragraph (b)(7)(iii) as footnote 1 and removing the words ``section
22(c) of the Public Utility Holding Company Act of 1935 (15 U.S.C. 79y)
and Rule 104 thereunder (17 CFR 250.104)'' and removing the words ``But
see, section 171 of the Administrative Manual which authorizes the
staff to divulge certain nonpublic information with Commission approval
(n. 5, supra).'' from the newly redesignated footnote 2 to newly
redesignated paragraph (b)(2);
0
e. Removing paragraphs (b)(8) through (b)(12) and footnote 7 in
paragraph (b)(8); and
0
f. Adding paragraphs (c), (d), (e), (f), (g), and (h).
    The revision and additions read as follows:

Sec.  200.735-3  General provisions.

    (a) A member or employee shall comply with the requirements of 5
CFR part 2635, subpart A (General provisions) and in particular with
the provisions of 5 CFR 2635.101 (Basic obligations of public service);
2635.103 (Applicability to members of the uniformed services); and
2635.104 (Applicability to employees on detail).
* * * * *
    (c) A member or employee shall comply with the requirements of 5
CFR part 2635, subpart B (Gifts from outside sources).
    (d) A member or employee shall comply with the requirements of 5
CFR part 2635, subpart C (Gifts between employees).
    (e) A member or employee shall comply with the requirements of 5
CFR part 2635, subpart D (Conflicting financial requirements);
    (f) A member or employee shall comply with the requirements of 5
CFR part 2635, subpart E (Impartiality).
    (g) A member or employee shall comply with the requirements of 5
CFR part 2635, subpart G (Misuse of position).
    (h) No member or employee shall accept host-paid travel or
reimbursement except as in accordance with the requirements of the
Supplemental standards of ethical conduct for members and employees of
the Securities and Exchange Commission (codified at 5 CFR 4401.103
(Outside Employment and Activities)); 5 CFR part 2635, subpart H
(Outside Activities); and 31 U.S.C. 353 and 41 CFR 304-1.1 (Acceptance
of payment from a non-Federal source for travel expenses).

0
6. Sec.  200.735-4 is amended by:
0
a. Revising paragraph (a) and removing footnote 8 to paragraph (a);
0
b. Removing paragraphs (b)(1) through (b)(4) and paragraphs (b)(6)
through (b)(8);
0
c. Redesignating paragraph (b)(5) as paragraph (b); in redesignated
paragraph (b), further redesginating paragraphs (i), (ii), and (iii) as
paragraphs (b)(1), (2), and (3); and redesignating footnotes 9 and 10
in newly designated paragraphs (b) introductory text and (b)(3) as
footnotes 2 and 3 respectively and removing the words ``(See 17 CFR
200.735-4(b)(7))'' from newly redesignated footnote 2;
0
d. Removing footnote 11;
0
e. Revising paragraph (c) and removing footnotes 12, 13, and 14;
0
f. Removing paragraph (d);
0
g. Redesignating paragraph (e) as paragraph (d) and removing footnote
15 in newly redesignated paragraph (d)(1) and adding new footnote 4 to
newly redesignated paragraph (d)(1);
0
h. In newly redesignated paragraph (d)(1), removing the words
``paragraph (b)(5)'' and, in their place, adding ``paragraph (b)'', and
revising newly redesignated paragraph (d)(2)(ii);
0
i. Redesignating paragraphs (f) and (g) as paragraphs (g) and (h);
0
j. Adding new paragraphs (e) and (f);
0
k. Removing footnote 16 in paragraph (g) and the authority citation at
the end of the section.
    The revisions and additions read as follows:

Sec.  200.735-4  Outside employment and activities.

    (a) Members and employees shall comply with the requirements of the

Supplemental standards of ethical conduct for members and employees of
the Securities and Exchange Commission (codified at 5 CFR 4401.103
(Outside employment and activities) and 5 CFR part 2635, subpart H
(Outside activities)).
* * * * *
    (c) If otherwise permitted by 18 U.S.C. 203 and 205, the provisions
of these rules or of 5 CFR 4401.103 do not preclude an employee from
acting as agent or attorney:
    (1) For any Commission employee who is sued or under investigation
in connection with his or her official duties;
    (2) For any Commission employee who is the subject of disciplinary,
loyalty, or other personnel administrative proceedings in connection
with those proceedings; or
    (3) For any Commission employee who raises claims or against whom
allegations of wrongdoing are made pursuant to the Commission's Equal
Opportunity regulations, if such representation is not inconsistent
with the faithful performance of the employee's duties.
    (d)(1) * * * \4\
---------------------------------------------------------------------------

    \4\ This paragraph (d), requiring review of prepared speeches or
writings relating to the Commission does not apply to teaching
activities.
---------------------------------------------------------------------------

    (2) * * *
    (ii) (A) A determination by the General Counsel that a proposed
publication conforms to the requirements of the rule will not involve
adoption of, or concurrence in, the views expressed. Therefore, such
publication or speech shall include at an appropriate place or in a
footnote or otherwise, the following disclaimer of responsibility:
    The Securities and Exchange Commission disclaims responsibility for
any private publication or statement of any SEC employee or
Commissioner.
    This [article, outline, speech, chapter] expresses the author's
views and does not necessarily reflect those of the Commission, the
[other] Commissioners, or [other] members of the staff.
    (B) In appropriate cases, the above disclaimer may be modified by
the General Counsel or the Commission to reflect the circumstances of
an individual case. In addition, any publication or speech that
reflects positions taken by the Commission shall set forth those
positions accurately and, if it contains differences with Commission
positions, it shall clearly state that such positions are those of the
employee.
    (e) With respect to host-paid travel, members and employees shall
comply with the requirements of the Supplemental standards of ethical
conduct for members and employees of the Securities and Exchange
Commission (codified at 5 CFR 4401.103 (Outside employment and
activities)); 5 CFR part 2635, subpart H (Outside Activities); and 31
U.S.C. 1353 and 41 CFR 304-1.1 (Acceptance of payment from a non-
Federal source for travel expenses).
    (f)(1) With respect to seeking or negotiating outside employment,
members and employees shall comply with the requirements of the
Supplemental standards of ethical conduct for members and employees of
the Securities and Exchange Commission (codified at 5 CFR 4401.103
(Outside employment and activities)); 5 CFR part 2635, subpart F
(Seeking other employment); 5 CFR part 2635, subpart H (Outside
activities).
    (2) Members and employees should be aware that 18 U.S.C. 208 (Acts
affecting a personal interest) provides, among other things, that a
member or employee is prohibited from participating personally and
substantially in any particular matter in which, to his or her
knowledge, the member or employee, his or her spouse, minor child,
general partner, organization of which the employee is an officer,
director, trustee, general partner or employee, or any person or
organization with whom he or she is negotiating or has any arrangement
concerning prospective employment, has a financial interest. This
provision does not apply if the employee has received a written
determination by an authorized official that the financial interest is
not so substantial as to be deemed likely to affect the integrity of
the employee's government service.
    (3) Members may follow the procedural provision contained in Part
V, Section 503 of the Executive Order 11222.
* * * * *

0
7. Sec.  200.735-5 is amended by:
0
a. Revising Sec.  200.735-5; and
0
b. Removing footnote 17 in paragraph (b)(1)(ii).
    The revision reads as follows:

Sec.  200.735.5  Securities transactions.

    Securities transactions by members and employees must comply with
the provisions of 5 CFR 4401.102 (Prohibited and restricted financial
interests and transactions).

0
8. Sec.  200.735-6 is amended by:
0
(a) Revising Sec.  200.735-6; and
0
(b) Removing footnote 18.
    The revision reads as follows:

Sec.  200.735-6  Action in case of personal interest.

    Members and employees shall comply with the requirements of 5 CFR
part 2640 (Interpretation, exemptions, and waiver guidance concerning
18 U.S.C. 208 (Acts affecting a personal interest)).

0
9. Sec.  200.735-7 is amended by:
0
(a) Revising 200.735-7;
0
(b) Removing footnote 19 in paragraph (c).
    The revision reads as follows:

Sec.  200.735-7  Negotiation for employment.

    Members and employees shall comply with the requirements of 18
U.S.C. 208 (Acts affecting a personal interest) and 5 CFR part 2635,
subpart F (Seeking other employment). See Sec.  200.735-4(f)(2) of this
subpart.

0
10. Sec.  200.735-8 is amended as follows:
0
a. Revising paragraph (a) and removing footnotes 20 and 21 in paragraph
(a);
0
b. Removing footnote 22 in paragraph (a)(4);
0
c. In paragraph (d)(1) removing the words ``by paragraph (a)(1) of this
section'';
0
d. In paragraph (d)(2) removing the words ``under paragraph (a)(1) of
this section'';
0
e. Redesignating footnote 23 in paragraph (d)(3) as footnote 5; and
0
f. Redesignating footnote 24 in paragraph (e) as footnote 6.
    The revisions read as follows:

Sec.  200.735-8  Practice by former members and employees of the
Commission.

    (a) Members and employees and former members and employees shall
comply with the requirements of 18 U.S.C. 207 and 5 CFR part 2641 (Post
employment conflict of interest restrictions). Members and employees
and former members and employees should be aware that, among other
restrictions, 18 U.S.C. 207 generally prohibits a former member or
employee from knowingly communicating to or appearing before a Federal
agency with the intent to influence a particular matter involving
specific parties in which that person personally and substantially
participated while at the Commission.
* * * * *

0
11. Sec.  200.735-9 is revised to read as follows:

Sec.  200.735-9  Indebtedness.

    Members and employees shall comply with the requirements of 5 CFR
2635.809 (Just financial obligations).
0
12. Sec.  200.735-10 is revised to read as follows:

Sec.  200.735-10  Miscellaneous statutory provisions.

    Each member and employee is responsible for acquainting himself or
herself with the statutory provisions listed in 5 CFR 2635.902 (Related
statutes). A violation of any of these provisions is deemed a violation
of this subpart M.

0
13. Sec.  200.735-11 is amended as follows:
0
a. Revising paragraph (a) and removing footnote 25 in paragraph (b);
0
b. Removing paragraphs (c) through (f);
0
c. Redesignating paragraph (g) as paragraph (c), removing the words
``paragraph (c)'' and in their place, adding the words ``paragraph
(a)'' and removing the words ``Director of Personnel'' and in their
place, adding the words ``Commission's Office of the General Counsel's
Ethics Office'' in newly redesignated paragraph (c);
0
d. Redesignating paragraph (h) through (i) as paragraphs (d) through
(e);
0
e. Removing paragraph (j);
0
f. Redesignating paragraphs (k) through (l) as paragraph (f) through
(g);
0
g. In newly redesignated paragraph (d), removing each time they appear
the words ``Director of Personnel or the Assistant Director of
Personnel'' and, in their place, adding the words ``Commission's Office
of the General Counsel's Ethics Office''; and
0
h. In newly redesignated paragraph (e), removing the words ``paragraph
(c)'' and in their place, adding the words ``paragraph (a)''; and
removing the words ``Director of Personnel or the Assistant Director of
Personnel'' and, in their place, adding the words ``Commission's Office
of the General Counsel's Ethics Office''.
    The revision reads as follows:

Sec.  200.735-11  Statement of employment and financial interests.

    (a) Members and employees shall file financial disclosure reports
in accordance with the requirements of 5 CFR part 2634 (Executive
branch financial disclosure).
* * * * *

0
14. Sec.  200.735-15(b), (e), and (f) are amended by removing the words
``Director of Personnel'' and, in their place, adding ``Commission's
Office of the General Counsel's Ethics Office''.

0
15. Sec.  200.735-17 is amended by removing the words ``the Executive
Director, the Director of Personnel'' and adding, in their place, ``the
General Counsel, the Designated Agency Ethics Official''.

    Dated: July 14, 2010.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
Robert I. Cusick,
Director, Office of Government Ethics.
[FR Doc. 2010-17658 Filed 7-19-10; 8:45 am]
BILLING CODE 8010-01-P


[Federal Register: December 7, 2006 (Volume 71, Number 235)]
[Rules and Regulations]
[Page 70880-70883]
[DOCID:fr07de06-14]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2005-SC-0003; EPA-R04-OAR-2005-SC-0005-200620b; FRL-8252-
9]

Approval and Promulgation of Implementation Plans; South
Carolina: Revisions to State Implementation Plan

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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

SUMMARY: EPA is approving several revisions to the South Carolina State
Implementation Plan (SIP), submitted by the South Carolina Department
of Health and Environmental Control (SC DHEC) on April 13, 2005, and
October 24, 2005. Both revisions include modifications to South
Carolina's Regulation 61-62.1 ``Definitions and General Requirements.''
In the April 13, 2005, submission, Regulation 61-62.1 is being amended
to be consistent with the new Federal emissions reporting requirements,
referred to as the Consolidated Emissions Reporting Rule (CERR), and to
streamline the existing emissions inventory requirements. SC DHEC is
taking an action that is consistent with the final rule, published on
June 10, 2002 (67 FR 39602).
    The October 24, 2005 submittal revises the definition of Volatile
Organic Compounds (VOC). The revision adds several compounds to the
list of compounds excluded from the definition of VOC on the basis that
they make a negligible contribution to ozone formation, and similarly
removes several compounds from the definition of VOC.
    This action is being taken pursuant to section 110 of the Clean Air
Act (CAA).

DATES: This direct final rule is effective February 5, 2007 without
further notice, unless EPA receives adverse comment by January 8, 2007.
If adverse comment is received, EPA will publish a timely withdrawal of
the direct final rule in the Federal Register and inform the public
that the rule will not take effect.

ADDRESSES: Submit your comments, identified by Docket ID No. ``EPA-R04-
OAR-2005-SC-0003, EPA-R04-OAR-2005-SC-0005'' by one of the following
methods:
    1. http://www.regulations.gov: Follow the online instructions for

submitting comments.
    2. E-mail<EMAIL_ADDRESS>    3. Fax:<PHONE_NUMBER>.
    4. Mail: ``EPA-R04-OAR-2005-SC-0003, EPA-R04-OAR-2005-SC-0005,''
Regulatory Development Section, Air Planning Branch, Air, Pesticides
and Toxics Management Division, U.S. Environmental Protection Agency,
Region Forsyth Street, SW., Atlanta, Georgia 30303-8960.
    5. Hand Delivery or Courier: Nacosta Ward, Regulatory Development
Section, Air Planning Branch, Air, Pesticides and Toxics Management
Division floor, U.S. Environmental Protection Agency, Region Forsyth
Street, SW., Atlanta, Georgia 30303-8960. Such deliveries are only
accepted during the Regional Office's normal hours of operation. The
Regional Office's official hours of business are Monday through Friday,
8:30 to 4:30 excluding federal holidays.
    Instructions: Direct your comments to EPA Docket ID No. ``R04-OAR-
2005-SC-0005-SC-0003, EPA-R04-OAR-2005-SC-005.'' EPA's policy is that
all comments received will be included in the public docket without
change and may be made available online 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 through http://www.regulations.gov or e-mail, information that

you consider to be CBI or otherwise protected. The http://www.regulations.gov

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 http://www.regulations.gov, your e-mail address will be

automatically captured and included as part of the comment that is
placed in the public 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. For additional information about public docket
visit the EPA Docket Center at http://www.epa.gov/epahome/dockets.htm.

    Docket: All documents in the electronic docket are listed in the
http://www.regulations.gov index. Although listed in the index, some

information is not publicly available, i.e., 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 either electronically in http://www.regulations.gov or

in hard copy at the Regulatory Development Section, Air Planning
Branch, Air, Pesticides and Toxics Management Division, U.S.
Environmental Protection Agency, Region Forsyth Street, SW., Atlanta,
Georgia 30303-8960. EPA requests that if at all possible, you contact
the person listed in the FOR FURTHER INFORMATION CONTACT section to
schedule your inspection. The Regional Office's official hours of
business are 8:30 to 4:30, excluding federal holidays.

FOR FURTHER INFORMATION CONTACT: Nacosta Ward, Regulatory Development
Section, Air Planning Branch, Air, Pesticides and Toxics Management

Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth
Street, SW., Atlanta, Georgia 30303-8960. The telephone number is (404)
562-9040. Ms. Ward can also be reached via electronic mail at
<EMAIL_ADDRESS>

SUPPLEMENTARY INFORMATION:

I. Today's Action

Revisions Submitted on April 13, 2005

    On April 13, 2005, SC DHEC submitted proposed SIP revisions to EPA
for review and approval into the South Carolina SIP. The proposed
revisions include changes made by the State of South Carolina to
Regulation 61-62.1, regarding CERR reporting requirements. The rules
became state effective on February 25, 2005. The purpose of the CERR is
to simplify emissions reporting, establish new reporting requirements
for PM2.5 and establish statewide reporting of area source and mobile
source emissions. Currently, the CERR requires that all facilities
needing to obtain a Title V permit must submit an emissions inventory
every two years. Approximately 50 of the 354 current Title V sources
(Type A sources) will be required to increase their emissions inventory
reporting to an annual basis. However, the majority of the Title V
sources (Type B sources) with fewer emissions, approximately 80 of 354
current sources, will only need to submit their emissions inventory
every three years. Thus, the reporting requirements for these sources
will decrease from every other year to every third year. The remaining
Title V sources, except those that emit significant hazardous air
pollutants (HAPs) will gain an even greater decrease in the reporting
requirements. If those sources have submitted an initial inventory, no
further reporting will be required. Those sources that emit significant
HAPs will also have a decrease in reporting requirements, from every
other year to every three years. SC DHEC is revising these revisions to
be consistent with the new Federal emissions reporting requirements,
and to revise existing State specific requirements to streamline the
reporting process. EPA is now taking direct final action to approve the
proposed revisions, which include revising the CERR emissions reporting
regulations. The proposed revisions summarized above are approvable
pursuant to section 110 of the CAA.

Revisions Submitted on October 24, 2005

    Tropospheric ozone, a major component of smog, is formed when VOCs
and nitrogen oxides react in the atmosphere. Because of the harmful
health effects of ozone, EPA limits the amount of VOCs and that can be
released into the atmosphere. VOCs are those compounds of carbon
(excluding carbon monoxide, carbon dioxide, carbonic acid, metallic
carbides, or carbonates, and ammonium carbonate) which form ozone
through atmospheric photochemical reactions. Compounds of carbon (or
organic compounds) have different levels of reactivity; they do not
react at the same speed, or do not form ozone to the same extent. It
has been EPA's policy that compounds of carbon with a negligible level
of reactivity need not be regulated to reduce ozone (see 42 FR 35314,
July 8, 1977). EPA determines whether a given carbon compound has
``negligible'' reactivity by comparing the compound's reactivity to the
reactivity of ethane. EPA lists these compounds in its regulations (at
40 CFR 51.100(s)) and excludes them from the definition of VOC. The
chemicals on this list are often called ``negligibly reactive.'' EPA
may periodically revise the list of negligibly reactive compounds to
add compounds to or delete them from the list. EPA promulgated such
changes on November 29, 2004 (69 FR 69298).
    On October 24, 2005, SC DHEC submitted proposed SIP revisions to
EPA for review and approval into the South Carolina SIP. The proposed
revisions include changes made by the State of South Carolina to
Regulation 61-62.1, regarding the definition of VOC, to reflect EPA's
November 29, 2004, changes. The rules became state effective on August
26, 2005. Specifically, South Carolina is removing the following
compounds from the definition of VOC:

 2 (ethoxydifluoromethyl) (1,1,1,2,3,3,3 heptafluoropropane)
 (C4F9OCH3) (1,1,1,2,2,3,3,4,4
nonafluoro 4 methoxybutane)
 (C4F9OC2H5) (1
ethoxy 1,1,2,2,3,3,4,4,4 nonafluorobutane)
 CFC-113 (trichlorotrifluoroethane)
 CFC-114 (dichlorotetrafluoroethane)
 HCFC-123 (dichlorotrifluoroethane)
 HCFC-134a (tetrafluoroethane)
 HCFC-141b (dichlorofluoroethane)
 HCFC-142b (chlorodifluoroethane)
 Methylene chloride
 Perchloroethylene

    South Carolina is adding the following compounds to the definition
of VOC:

(CF3)2CFCF2OC2H5
to (2-(ethoxydi&fnlfluoromethyl)-(1,1,1,2,3,3,3-heptafluoropropane)
 CFC-113 (1,1,2-trichloro-1,2,2-trifluoroethane)
 CFC-114 (1,2-dichloro-1,1,2,2-tetrafluoroethane)
 HCFC-123 (1,1,1-trifluoro-2,2-dichloroethane)
 HCFC-134a (1,1,1,2-tetrafluoroethane)
 HCFC-141b (1,1-dichloro-1-fluoroethane)
 HCFC-142b (1-chloro-1,1-difluoroethane)
 HFC-227ea (1,1,1,2,3,3,3-heptafluoropropane)
 HFE-7000 (1,1,1,2,2,3,3-heptafluoro-3-methoxy-propane) or (n-
C3F7OCH3)
 HFE-7100 (1,1,1,2,2,3,3,4,4-nonafluoro-4-methoxybutane) or
(C4F9OCH3)
 HFE-7200 (1-ethoxy-1,1,2,2,3,3,4,4,4-nonafluorobutane) or
(C4F9OC2H5)
 HFE-7500 (3-ethoxy-1,1,1,2,3,4,4,5,5,6,6,6-dodecafluoro-2-
(trifluoromethyl) hexane
 Methylene chloride (dichloromethane)
 Methyle formate (HCOOCH3)
 Perchloroethylene (tetrachloroethylene); and perfluorocarbon
compounds that fall into these classes:

    (i) Cyclic, branched, or linear, completely fluorinated alkanes;
    (ii) Cyclic, branched, or linear, completely fluorinated alkanes;
    (iii) Cyclic, branched, or linear, completely fluorinated ethers
with no unsaturations;
    (iv) Sulfur containing perfluorocarbons with no unsaturations and
with sulfur bonds only to carbon and fluorine.

II. Final Action

    EPA is approving revisions to South Carolina's Regulation 61-62.1
``Definitions and General Requirements.'' These revisions include
changes to the CERR reporting requirements, and the definition of VOCs.
These changes are consistent with the CAA.
    EPA is publishing this rule without prior proposal because the
Agency views this as a noncontroversial submittal and anticipates no
adverse comments. However, in the proposed rules section of this
Federal Register publication, EPA is publishing a separate document
that will serve as the proposal to approve the SIP revision should
adverse comments be filed. This rule will be effective February 5, 2007
without further notice unless the Agency receives adverse comments by
January 8, 2007.

    If EPA receives such comments, then EPA will publish a document
withdrawing the final rule and informing the public that the rule will
not take effect. All public comments received will then be addressed in
a subsequent final rule based on the proposed rule. EPA will not
institute a second comment period. Parties interested in commenting
should do so at this time. If no such comments are received, the public
is advised that this rule will be effective on February 5, 2007 and no
further action will be taken on the proposed rule.

III. Statutory and Executive Order Reviews

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this
action is not a ``significant regulatory action'' and therefore is not
subject to review by the Office of Management and Budget. For this
reason, this action is also not subject to Executive Order 13211,
``Actions Concerning Regulations That Significantly Affect Energy
Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001). This action
merely approves state law as meeting Federal requirements and imposes
no additional requirements beyond those imposed by state law.
Accordingly, the Administrator certifies that this rule will not have a
significant economic impact on a substantial number of small entities
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because
this rule approves pre-existing requirements under state law and does
not impose any additional enforceable duty beyond that required by
state law, it does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4).
    This rule also does not have tribal implications because it will
not have a substantial direct effect on one or more Indian tribes, on
the relationship between the Federal Government and Indian tribes, or
on the distribution of power and responsibilities between the Federal
Government and Indian tribes, as specified by Executive Order 13175 (65
FR 67249, November 9, 2000). This action also does not have Federalism
implications because it does not have substantial direct effects 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, as specified in Executive Order 13132 (64
FR 43255, August 10, 1999). This action merely approves a State rule
implementing a Federal standard, and does not alter the relationship or
the distribution of power and responsibilities established in the CAA.
This rule also is not subject to Executive Order 13045, ``Protection of
Children from Environmental Health Risks and Safety Risks'' (62 FR
19885, April 23, 1997), because it is not economically significant.
    In reviewing SIP submissions, EPA's role is to approve State
choices, provided that they meet the criteria of the CAA. In this
context, in the absence of a prior existing requirement for the State
to use voluntary consensus standards (VCS), EPA has no authority to
disapprove a SIP submission for failure to use VCS. It would thus be
inconsistent with applicable law for EPA, when it reviews a SIP
submission, to use VCS in place of a SIP submission that otherwise
satisfies the provisions of the CAA. Thus, the requirements of section
12(d) of the National Technology Transfer and Advancement Act of 1995
(15 U.S.C. 272 note) do not apply. This rule does not impose an
information collection burden under the provisions of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
    The Congressional Review Act, U.S.C. section 801 et seq., as added
by the Small Business Regulatory Enforcement Fairness Act of 1996,
generally provides that before a rule may take effect, the agency
promulgating the rule must submit a rule report, which includes a copy
of the rule, to each House of the Congress and to the Comptroller
General of the United States. EPA will submit a report containing this
rule and other required information to the U.S. Senate, the U.S. House
of Representatives, and the Comptroller General of the United States
prior to publication of the rule in the Federal Register. A major rule
cannot take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).
    Under section 307(b)(1) of the CAA, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by February 5, 2007. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this rule for the purposes of judicial review nor does
it extend the time within which a petition for judicial review may be
filed, and shall not postpone the effectiveness of such rule or action.
This action may not be challenged later in proceedings to enforce its
requirements. (See section 307(b)(2)).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide,
Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate
matter, Reporting and recordkeeping requirements, Sulfur oxides,
Volatile organic compounds.

    Dated: November 21, 2006.
A. Stanley Meiburg,
Acting Regional Administrator, Region 4.

0
Amend 40 CFR part 52 as follows:

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart PP--South Carolina

0
2. Section 52.2120(c) is amended under Regulation No. 62.1 by revising
entries for ``Section I'' and ``Section III'' to read as follows:

Sec.  52.2120  Identification of Plan.

* * * * *
    (c) * * *

                              Air Pollution Control Regulations for South Carolina
----------------------------------------------------------------------------------------------------------------
                                                     State       EPA approval
   State  citation          Title/subject       effective date       date            Federal Register notice
----------------------------------------------------------------------------------------------------------------
                            Regulation No. 62.1 Definitions and General Requirements
----------------------------------------------------------------------------------------------------------------
Section I............  Definitions............      08/26/2005      12/07/2006  [Insert citation
                                                                                of publication].

                                                  * * * * * * *
Section III..........  Emissions Inventory....      02/25/2005      12/07/2006  [Insert citation
                                                                                of publication].

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

* * * * *
[FR Doc. E6-20767 Filed 12-6-06; 8:45 am]

BILLING CODE 6560-50-P


[Federal Register: June 24, 2008 (Volume 73, Number 122)]
[Proposed Rules]
[Page 35601-35603]
[DOCID:fr24jn08-17]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2008-0670; Directorate Identifier 2007-NM-339-AD]
RIN 2120-AA64

Airworthiness Directives; Airbus Model A318, A319, A320, and A321
Series Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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

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

    Damage to the lower lateral fittings of the 80VU rack * * *
[and] damage to the lower central support fitting * * *.
    In the worst case scenario a complete failure of the 80VU
fittings in combination with a high load factor or strong vibration
could lead to failure of the rack structure and/or computers or
rupture/disconnection of the cable harnesses to one or more
computers located in the 80VU. This rack contains computers for
Flight Controls, Communication and Radio-navigation. These functions
are duplicated across other racks but during critical phases of
flight the multiple system failures/re-configuration may constitute
an unsafe condition.
* * * * *
The proposed AD would require actions that are intended to address the
unsafe condition described in the MCAI.

DATES: We must receive comments on this proposed AD by July 24, 2008.

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 W12-40, 1200 New
Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://
www.regulations.gov; or in person at the Docket Operations office
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays. The AD docket contains this proposed AD, the regulatory
evaluation, any comments received, and other information. The street
address for the Docket Operations office (telephone<PHONE_NUMBER>) is
in the ADDRESSES section. Comments will be available in the AD docket
shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Tim Dulin, Aerospace Engineer,
International Branch, ANM-116, Transport Airplane Directorate, FAA,
1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone (425)
227-2141; fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to send any written relevant data, views, or
arguments about this proposed AD. Send your comments to an address
listed under the ADDRESSES section. Include ``Docket No. FAA-2008-0670;
Directorate Identifier 2007-NM-339-AD'' at the beginning of your
comments. We specifically invite comments on the overall regulatory,
economic, environmental, and energy aspects of this proposed AD. We
will consider all comments received by the closing date and may amend
this proposed AD based on those comments.
    We will post all comments we receive, without change, to http://
www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact we
receive about this proposed AD.

Discussion

    The European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Community, has issued EASA
Airworthiness Directive 2007-0276, dated October 26, 2007 (referred to
after this as ``the MCAI''), to correct an unsafe condition for the
specified products. The MCAI states:

    Damage to the lower lateral fittings of the 80VU rack, typically
elongated holes, migrated bushes [bushings], and/or missing bolts
have been reported in-service. In addition damage to the lower
central support fitting (including cracking) has been reported.
    In the worst case scenario a complete failure of the 80VU
fittings in combination with a high load factor or strong vibration
could lead to failure of the rack structure and/or computers or
rupture/disconnection of the cable harnesses to one or more
computers located in the 80VU. This rack contains computers for
Flight Controls, Communication and Radio-navigation. These functions
are duplicated across other racks but during critical phases of
flight the multiple system failures/re-configuration may constitute
an unsafe condition.
    This Airworthiness Directive (AD) mandates the repetitive
inspection of the lower lateral 80VU fittings for damage and the
inspection of the lower central 80VU support for damage and
cracking, and the associated corrective actions as necessary with
more restrictive actions than defined in Airbus Service Bulletin
(SB) A320-25A1555 at its original issue.
    The new requirements defined in this AD will be introduced in
revision 1 of SB A320-25A1555.

The associated corrective actions include repair or replacement of the
lower lateral fittings and/or central support. Replacing the 80VU
support fittings eliminates the need for the repetitive inspection of
the lower lateral fittings, and extends the repetitive interval for the
lower central support. You may obtain further information by examining
the MCAI in the AD docket.

Relevant Service Information

    Airbus has issued Service Bulletins A320-25A1555, dated June 14,
2007; and A320-25-1557, dated June 14, 2007. The actions described in
this service information are intended to correct the unsafe condition
identified in the MCAI. The compliance times for doing the corrective
actions are either before further flight, or within 4,500 flight cycles
with repetitive inspections at intervals not to exceed 750 flight
cycles until the repair is accomplished.

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.

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 also have proposed different actions in this AD from those
in the MCAI in order to follow FAA policies. Any such differences are
highlighted in a Note within the proposed AD.

Costs of Compliance

    Based on the service information, we estimate that this proposed AD
would affect about 678 products of U.S. registry. We also estimate that
it would take about 82 work-hours per product to comply with the basic
requirements of this proposed AD. The average labor rate is $80 per
work-hour. Required parts would cost about $2,592 per product. Where
the service information lists required parts costs that are covered
under warranty, we have assumed that there will be no charge for these
costs. As we do not control warranty coverage for affected parties,
some parties may incur costs higher than estimated here. Based on these
figures, we estimate the cost of the proposed AD on U.S. operators to
be $6,205,056, or $9,152 per product.

Authority for This Rulemaking

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

Regulatory Findings

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

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, 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

    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]

    2. The FAA amends Sec.  39.13 by adding the following new AD:

Airbus: Docket No. FAA-2008-0670; Directorate Identifier 2007-NM-
339-AD.

Comments Due Date

    (a) We must receive comments by July 24, 2008.

Affected ADs

    (b) None.

Applicability

    (c) This AD applies to Airbus Model A318-111, A318-112, A319-
111, A319-112, A319-113, A319-114, A319-115, A319-131, A319-132,
A319-133, A320-111, A320-211, A320-212, A320-214, A320-231, A320-
232, A320-233, A321-111, A321-112, A321-131, A321-211, A321-212,
A321-213, A321-231, and A321-232 airplanes, certificated in any
category, except airplanes on which Airbus Modification 34804 has
been embodied in production.

Subject

    (d) Air Transport Association (ATA) of America Code 25:
Equipment/Furnishings.

Reason

    (e) The mandatory continuing airworthiness information (MCAI)
states:

    Damage to the lower lateral fittings of the 80VU rack, typically
elongated holes, migrated bushes [bushings], and/or missing bolts
have been reported in-service. In addition, damage to the lower
central support fitting (including cracking) has been reported.
    In the worst case scenario a complete failure of the 80VU
fittings in combination with a high load factor or strong vibration
could lead to failure of the rack structure and/or computers or
rupture/disconnection of the cable harnesses to one or more
computers located in the 80VU. This rack contains computers for
Flight Controls, Communication and Radio-navigation. These functions
are duplicated across other racks but during critical phases of
flight the multiple system failures/re-configuration may constitute
an unsafe condition.
    This Airworthiness Directive (AD) mandates the repetitive
inspection of the lower lateral 80VU fittings for damage and the
inspection of the lower central 80VU

support for damage and cracking, and the associated corrective
actions as necessary with more restrictive actions than defined in
Airbus Service Bulletin (SB) A320-25A1555 at its original issue.
    The new requirements defined in this AD will be introduced in
revision 1 of SB A320-25A1555.

The associated corrective actions include repair or replacement of
the lower lateral fittings and/or central support. Replacing the
80VU support fittings eliminates the need for the repetitive
inspection of the lower lateral fittings, and extends the repetitive
interval for the lower central support.

Actions and Compliance

    (f) Unless already done, do the following actions.
    (1) Prior to the accumulation of 24,000 total flight cycles, or
within 500 flight cycles after the effective date of this AD,
whichever occurs later: Do a special detailed inspection of the 80VU
rack lower lateral fittings for damage (e.g., broken fitting,
missing bolts, migrated bushings, material burr, or rack in contact
with the fitting) of the 80VU rack lower lateral fittings in
accordance with the Accomplishment Instructions of Airbus Service
Bulletin A320-25A1555, dated June 14, 2007. Except as provided by
paragraph (f)(2) of this AD, repeat the inspection thereafter at the
interval specified in paragraph (f)(1)(i) or (f)(1)(ii) of this AD,
as applicable. Replacing the 80VU lower lateral fittings in
accordance with Airbus Service Bulletin A320-25-1557, dated June 14,
2007, terminates the inspection requirements of this paragraph.
    (i) If the 80VU rack lower lateral fittings have not been
repaired in accordance with the Accomplishment Instructions of
Airbus Service Bulletin A320-25A1555, dated June 14, 2007, repeat
the inspection thereafter at intervals not to exceed 4,500 flight
cycles.
    (ii) If the 80VU rack lower lateral fittings have been repaired
in accordance with the Accomplishment Instructions of Airbus Service
Bulletin A320-25A1555, dated June 14, 2007, repeat the inspection
thereafter at intervals not to exceed 24,000 flight cycles.
    (2) If any damage is found during any inspection required by
paragraph (f)(1) of this AD, do all applicable corrective actions
(inspection and/or repair) in accordance with the Accomplishment
Instructions and timeframes given in Airbus Service Bulletin A320-
25A1555, dated June 14, 2007.
    (3) Prior to the accumulation of 24,000 total flight cycles, or
within 500 flight cycles after the effective date of this AD,
whichever occurs later: Do a special detailed inspection of the 80VU
rack lower central support for cracking in accordance with the
Accomplishment Instructions of Airbus Service Bulletin A320-25A1555,
dated June 14, 2007. Except as provided by paragraph (f)(4) of this
AD, repeat the inspection thereafter at the interval specified in
paragraph (f)(3)(i) or (f)(3)(ii) of this AD, as applicable.
    (i) If the 80VU rack lower central support has not been repaired
or replaced in accordance with the Accomplishment Instructions of
Airbus Service Bulletin A320-25A1555, dated June 14, 2007; or Airbus
Service Bulletin A320-25-1557, dated June 14, 2007; repeat the
inspection thereafter at the interval specified in paragraph
(f)(3)(i)(A) or (f)(3)(i)(B) of this AD, as applicable.
    (A) For airplanes on which the lower central support has
accumulated more than 30,000 total flight cycles as of the effective
date of this AD: At intervals not to exceed 500 flight cycles.
    (B) For airplanes on which the lower central support has
accumulated 30,000 total flight cycles or fewer as of the effective
date of this AD: At intervals not to exceed 4,500 flight cycles,
without exceeding 30,750 total flight cycles for the first
repetitive inspection.
    (ii) If the 80VU rack lower central support has been repaired or
replaced in accordance with the Accomplishment Instructions of
Airbus Service Bulletin A320-25A1555, dated June 14, 2007; or Airbus
Service Bulletin A320-25-1557, dated June 14, 2007; repeat the
inspection thereafter at intervals not to exceed 24,000 flight
cycles.
    (4) If any crack is found during any inspection required by
paragraph (f)(3) of this AD, do the action in paragraph (f)(4)(i) or
(f)(4)(ii) of this AD, as applicable.
    (i) If the crack length is more than 40 mm on the front or the
rear sheet of the lower central support, as shown in Figure 3, Sheet
2 of Airbus Service Bulletin A320-25A1555, dated June 14, 2007, or
if any crack is found on the upper sheet of the lower central
support as shown in Figure 3, Sheet 3 of Airbus Service Bulletin
A320-25A1555, dated June 14, 2007: Before further flight, repair or
replace the lower central support in accordance with the
Accomplishment Instructions of Airbus Service Bulletin A320-25A1555,
dated June 14, 2007; or Airbus Service Bulletin A320-25-1557, dated
June 14, 2007; as applicable.
    (ii) If the crack length is 40 mm or less on the front or the
rear sheet, as specified in Figure 3, Sheet 2 of Service Bulletin
A320-25A1555, dated June 14, 2007: Within 20 months or 4,500 flight
cycles after the crack finding, whichever occurs first, repair or
replace the lower central support in accordance with the
Accomplishment Instructions of Airbus Service Bulletin A320-25A1555,
dated June 14, 2007; or A320-25-1557, dated June 14, 2007, as
applicable. Until the repair or replacement of the lower central
support is accomplished, repeat the inspection required by paragraph
(f)(3) of this AD thereafter at intervals not to exceed 500 flight
cycles.

FAA AD Differences

    Note 1: This AD differs from the MCAI and/or service information
as follows: No differences.

Other FAA AD Provisions

    (g) The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager, ANM-
116, International Branch, Transport Airplane Directorate, 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: Tim
Dulin, Aerospace Engineer, International Branch, ANM-116, Transport
Airplane Directorate, FAA, 1601 Lind Avenue, SW., Renton, Washington
98057-3356; 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, 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)
Airworthiness Directive 2007-0276, dated October 26, 2007; Airbus
Service Bulletin A320-25A1555, dated June 14, 2007; and Airbus
Service Bulletin A320-25-1557, dated June 14, 2007, for related
information.

    Issued in Renton, Washington, on June 8, 2008.
Michael Kaszycki,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. E8-14184 Filed 6-23-08; 8:45 am]

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