[Federal Register Volume 84, Number 175 (Tuesday, September 10, 2019)]
[Rules and Regulations]
[Pages 47420-47427]
[FR Doc No: 2019-18342]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 271 and 276

[Release Nos. IA-5325; IC-33605]

Commission Guidance Regarding Proxy Voting Responsibilities of
Investment Advisers

AGENCY: Securities and Exchange Commission.

ACTION: Guidance.

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SUMMARY: The Securities and Exchange Commission (the ``SEC'' or the
``Commission'') is publishing guidance regarding the proxy voting
responsibilities of investment advisers under its regulations issued
under the Investment Advisers Act of 1940 (the ``Advisers Act''), and
Form N-1A, Form N-2, Form N-3, and Form N-CSR under the Investment
Company Act of 1940 (the ``Investment Company Act'').

DATES: Effective: September 10, 2019.

FOR FURTHER INFORMATION CONTACT: Thankam A. Varghese, Senior Counsel;
or Holly Hunter-Ceci, Assistant Chief Counsel, at<PHONE_NUMBER> or
<EMAIL_ADDRESS>Chief Counsel's Office, Division of Investment
Management, Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549-8549.

SUPPLEMENTARY INFORMATION: The Commission is publishing guidance
regarding the proxy voting responsibilities of investment advisers
under 17 CFR 275.206(4)-6 [Rule 206(4)-6 under the Advisers Act [15
U.S.C. 80b]],\1\ Form N-1A,\2\ Form N-2,\3\ Form N-3,\4\ and Form N-CSR
\5\ under the Investment Company Act [15 U.S.C. 80a].\6\
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    \1\ Unless otherwise noted, when we refer to the Advisers Act,
or any paragraph of the Advisers Act, we are referring to 15 U.S.C.
80b of the United States Code, at which the Advisers Act is
codified, and when we refer to rules under the Advisers Act, or any
paragraph of these rules, we are referring to title 17, part 275 of
the Code of Federal Regulations [17 CFR part 275], in which these
rules are published.
    \2\ Referenced in 17 CFR 274.11A.
    \3\ Referenced in 17 CFR 274.11a-1.
    \4\ Referenced in 17 CFR 274.11b.
    \5\ Referenced in 17 CFR 274.128.
    \6\ Unless otherwise noted, when we refer to the Investment
Company Act, or any paragraph of the Investment Company Act, we are
referring to 15 U.S.C. 80a of the United States Code, at which the
Investment Company Act is codified, and when we refer to rules under
the Investment Company Act, or any paragraph of these rules, we are
referring to title 17, part 270 of the Code of Federal Regulations
[17 CFR part 270], in which these rules are published.
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Table of Contents

I. Introduction
II. Guidance Regarding Investment Advisers' Proxy Voting
Responsibilities and Disclosures on Form N-1A, Form N-2, Form N-3,
and Form N-CSR
III. Other Matters

I. Introduction

    Investment advisers regularly are faced with an array of decisions
regarding voting of equity securities on behalf of their clients,
whether those clients are individual investors, funds or other
institutional investors.\7\ In various contexts, and in respect of a
wide range of matters submitted to shareholders for a vote, investment
advisers that have agreed to take on proxy voting authority are called
upon to make voting determinations.
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    \7\ Investment advisers owe each of their clients a fiduciary
duty under the Advisers Act, which ``must be viewed in the context
of the agreed-upon scope of the relationship between the adviser and
the client.'' Commission Interpretation Regarding Standard of
Conduct for Investment Advisers, Release No. IA-5248 (June 5, 2019),
84 FR 33669, at 33671 (July 12, 2019) (``Fiduciary
Interpretation''). In the case of a registered investment company
(``fund''), the scope of this relationship is defined by the
advisory agreement between the investment adviser and its client
(i.e., the fund), and the fund board has the authority to set the
scope of voting authority in accordance with its fiduciary duty.
With respect to funds, the Investment Company Institute noted that a
fund board typically delegates its proxy voting duties to the fund's
investment adviser. During the 2017 proxy season, funds cast more
than 7.6 million votes for proxy proposals, and the average fund
voted on 1,504 separate proxy proposals for U.S. listed portfolio
companies (figures exclude companies domiciled outside the United
States.). See Letter dated Mar. 15, 2019 from Paul Schott Stevens,
President and CEO, Investment Company Institute (``ICI Letter II'')
at p. 3. Unless otherwise noted, letters cited herein were submitted
in response to the Statement Announcing SEC Staff Roundtable on the
Proxy Process, July 30, 2018 available at https://www.sec.gov/comments/4-725/4-725.htm.
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    In general, matters are put forth for a shareholder vote either by
the issuer \8\ or by a shareholder or group of shareholders. The
submission of matters for a vote by shareholders typically occurs in
connection with a meeting of shareholders, including annual shareholder
meetings and special shareholder meetings.\9\ Some matters appear
regularly and consistently at each annual meeting of shareholders, such
as the shareholder vote on whether to ratify the issuer's selection of
an outside auditor.\10\ Other matters, such as shareholder votes on
proposed mergers, acquisitions, or other corporate actions and matters
proposed by a shareholder or group of shareholders, are generally more
idiosyncratic in substance and timing.
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    \8\ As used in this Release, the terms ``company'' and
``issuer'' refer to the issuer of the securities for which proxies
are solicited.
    \9\ Concept Release on the U.S. Proxy System, Release No. 34-
62495 (July 14, 2010), 75 FR 42982 (July 22, 2010) (``Concept
Release'').
    \10\ Many of these matters are required to be submitted to
shareholders as a result of federal law, state law, exchange
requirements or the company's governance documents. See, e.g.,
Section 14A(a) of the Securities Exchange Act of 1934 (``say-on-
pay'' votes); 8 Del. C. 1953, sec. 211 (annual meeting to elect
directors); NYSE Listed Company Manual Section 312.03(b)
(shareholder approval for certain related party transactions
involving issuances of common stock); and NASDAQ Rule 5635(a)
(shareholder approval is required in certain instances prior to the
issuance of securities in connection with the acquisition of the
stock or assets of another company).
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    Investment advisers are fiduciaries that owe each of their clients
duties of care and loyalty with respect to services undertaken on the
client's behalf, including voting.\11\ In the context of voting, the
specific obligations that flow from the investment adviser's fiduciary
duty depend upon the scope of voting authority assumed by the
adviser.\12\ To satisfy its fiduciary duty in making any voting
determination, the investment adviser must make the determination in
the best interest of the client and must not place the investment
adviser's own interests ahead of the interests of the client.
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    \11\ See Fiduciary Interpretation, 84 FR 33669, at n. 32.
    \12\ See Fiduciary Interpretation, 84 FR 33669, at 33671-72.
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    Specifically, an investment adviser's duty of care includes, among
other things, the duty to provide advice that

is in the best interest of the client.\13\ Where an investment adviser
has assumed the authority to vote on behalf of its client, the
investment adviser, among other things, must have a reasonable
understanding of the client's objectives and must make voting
determinations that are in the best interest of the client.\14\ As
discussed below, for an investment adviser to form a reasonable belief
that its voting determinations are in the best interest of the client,
it should conduct an investigation reasonably designed to ensure that
the voting determination is not based on materially inaccurate or
incomplete information.\15\ Further, Rule 206(4)-6 under the Advisers
Act provides that it is a fraudulent, deceptive, or manipulative act,
practice, or course of business for an investment adviser registered or
required to be registered with the Commission to exercise voting
authority with respect to client securities unless the adviser, among
other things, adopts and implements written policies and procedures
that are reasonably designed to ensure that the investment adviser
votes proxies in the best interest of its clients.\16\ We discuss
further below how the fiduciary duty and Rule 206(4)-6 relate to an
investment adviser's exercise of voting authority on behalf of clients.
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    \13\ See Fiduciary Interpretation, 84 FR 33669, at 33672.
    \14\ See Fiduciary Interpretation, 84 FR 33669, at 33673
(discussing an adviser's obligation to make a reasonable inquiry
into its client's financial situation, level of financial
sophistication, investment experience and financial goals and have a
reasonable belief that the advice it provides is in the best
interest of the client based on the client's objectives).
    \15\ See Fiduciary Interpretation, 84 FR 33669, at 33674. See
also Proxy Voting by Investment Advisers, Release No. IA-2106 (Jan.
31, 2003), 68 FR 6585 (Feb. 7, 2003) (``Proxy Voting Release''), at
6586 (explaining that an adviser's duty of care with respect to
proxy voting requires, among other things, an adviser with proxy
voting authority to monitor corporate events.)
    \16\ See Rule 206(4)-6 under the Advisers Act. With respect to
conflicts of interests, the Commission brought a settled enforcement
action against an investment adviser that had voting authority,
where the adviser's policies and procedures did not include how the
adviser would address potential conflicts that may arise between its
interests and those of its clients. See In the Matter of Intech
Investment Management, LLC and David E. Hurley, Release No. IA-2872
(May 7, 2009).
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    When making voting determinations on behalf of clients, many
investment advisers retain proxy advisory firms to perform a variety of
functions and services. Some of these are administrative, such as
providing the investment adviser with an electronic platform that
enables the adviser to manage voting mechanics more efficiently. Other
services provided by proxy advisory firms relate to the substance of
voting, such as: Providing research and analysis regarding the matters
subject to a vote; promulgating general voting guidelines that
investment advisers can adopt; and making voting recommendations to
investment advisers on specific matters subject to a vote.\17\ We
understand that these voting recommendations may be based on a proxy
advisory firm's own voting guidelines or on custom voting guidelines
that the investment adviser has created.\18\ We understand further that
custom guidelines, where they are used, may be more or less detailed,
depending on the level of instruction an investment adviser has
provided to a proxy advisory firm.\19\ Contracting with proxy advisory
firms to provide these types of functions and services can reduce
burdens for investment advisers (and potentially reduce costs for their
clients) as compared to conducting them in-house.
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    \17\ See, e.g., Letter dated Dec. 31, 2018 from Gail C.
Bernstein, General Counsel, Investment Adviser Association (``IAA
Letter''), at p. 2; ICI Letter II, at pp. 8-9; Letter dated Jan. 16,
2019 from Dieter Waizenegger, Executive Director, CtW Investment
Group at p. 2 (explaining that the value-added analysis provided by
proxy advisory firms is especially important during the U.S. proxy
season); see generally Roundtable on the Proxy Process, Transcript
(Nov. 15, 2018) available at https://www.sec.gov/files/proxy-round-table-transcript-111518.pdf.
    \18\ See, e.g., IAA Letter, at 2; Letter dated Nov. 14, 2018
from Paul Schott Stevens, President and CEO, Investment Company
Institute (``ICI Letter I''), at p. 34.
    \19\ See, e.g., Letter dated Nov. 14, 2018 from Katherine Rabin,
Chief Executive Officer, Glass Lewis, at p. 2 (noting that
institutional investors who engage a proxy advisory firm are opting
for such firms to execute increasingly detailed policies).
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    We understand further that an investment adviser that has assumed
the authority to vote proxies on behalf of its clients may look to the
voting recommendations of a proxy advisory firm when the investment
adviser has a conflict of interest, such as if, for example, the
investment adviser's interests in an issuer or voting matter differ
from those of some or all of its clients. While this third-party input
into such an investment adviser's voting decision may mitigate the
investment adviser's potential conflict of interest, it does not
relieve that investment adviser of (1) its obligation to make voting
determinations in the client's best interest, or (2) its obligation to
provide full and fair disclosure of the conflicts of interest and
obtain informed consent from its clients.\20\
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    \20\ See Fiduciary Interpretation, 84 FR 33669, at 33675-76
(``To meet its duty of loyalty, an adviser must make full and fair
disclosure to its clients of all material facts relating to the
advisory relationship. . . . In addition, an adviser must eliminate
or at least expose through full and fair disclosure all conflicts of
interest which might incline an investment adviser--consciously or
unconsciously--to render advice which was not disinterested.'')
(internal citations omitted).
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    We have solicited feedback on, and our staff has previously
provided guidance regarding, various means investment advisers can use
to fulfill their proxy voting responsibilities, including the retention
and use of proxy advisory firms. In addition, we and our staff have
engaged with the public through various forums and statements on a
variety of issues related to the proxy voting process, including those
discussed below.
    For example, in 2010, the Commission issued a concept release that
sought public comment about, among other things, the role and legal
status of proxy advisory firms within the U.S. proxy system.\21\ In
2013, the staff held a roundtable on the use of proxy advisory firm
services by institutional investors and investment advisers.\22\ In
2014, the staff of the Divisions of Investment Management and
Corporation Finance issued a Staff Legal Bulletin (``SLB 20'') to
provide (1) the staff's views regarding an investment adviser's
responsibilities in voting client proxies and retaining proxy advisory
firms, as well as (2) guidance about the availability and requirements
of two exemptions to the federal proxy rules that are often relied upon
by proxy advisory firms.\23\ The SEC's Office of Compliance Inspections
and Examinations has also examined investment advisers' compliance with
their fiduciary duty when voting proxies on behalf of investors,
including review of risk areas related to conflicts of interest, proxy
voting policies and procedures, and oversight of proxy

advisory firms, among other issues.\24\ Most recently, the staff hosted
a roundtable on the proxy process in November 2018 (the ``2018
Roundtable'') that included a panel on the role of proxy advisory firms
and their use by investment advisers.\25\ In connection with the 2018
Roundtable, the public was invited to provide input on questions that
arise regarding the use of proxy advisory firms and their
activities.\26\ We have carefully considered the feedback received on
these topics, and with the benefit of this extensive body of
information, historical experience, and engagement, the Commission is
today issuing guidance to investment advisers about their voting
responsibilities.\27\
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    \21\ See Concept Release, 75 FR 42982. The comment letters
received in response to the Concept Release are available at https://www.sec.gov/comments/s7-14-10/s71410.shtml.
    \22\ See SEC Announces Agenda, Panelists for Roundtable on Proxy
Advisory Services (Nov. 27, 2013), available at https://www.sec.gov/news/press-release/2013-253. The letters received in response to the
announcement are available at https://www.sec.gov/comments/4-670/4-670.shtml.
    \23\ See SEC Staff Legal Bulletin No. 20, Proxy Voting: Proxy
Voting Responsibilities of Investment Advisers and Availability of
Exemptions from the Proxy Rules for Proxy Advisory Firms (June 30,
2014), available at https://www.sec.gov/interps/legal/cfslb20.htm.
SLB 20 represents the views of the staff of the Divisions of
Investment Management and Corporation Finance. It is not a rule,
regulation, or statement of the Commission. Furthermore, the
Commission has neither approved nor disapproved its content. SLB 20,
like all staff guidance, has no legal force or effect: It does not
alter or amend applicable law, and it creates no new or additional
obligations for any person.
    \24\ See, e.g., SEC, Office of Compliance Inspections and
Examinations, 2015 Examination Priorities for 2015, available at
https://www.sec.gov/about/offices/ocie/national-examination-program-priorities-2015.pdf.
    \25\ See Chairman Jay Clayton, Statement Announcing SEC Staff
Roundtable on the Proxy Process, available at https://www.sec.gov/news/public-statement/statement-announcing-sec-staff-roundtable-proxy-process.
    \26\ See Comments on Statement Announcing SEC Staff Roundtable
on the Proxy Process; File No. 4-725, available at https://www.sec.gov/comments/4-725/4-725.htm.
    \27\ The Commission today is also issuing interpretation and
guidance regarding certain rules promulgated under Section 14 of the
Securities Exchange Act of 1934 regarding proxy voting advice.
Release No. 34-86721 (August 21, 2019), published elsewhere in this
issue of the Federal Register.
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    In Section II below, we discuss how the fiduciary duty and Rule
206(4)-6 relate to an investment adviser's exercise of voting authority
on behalf of clients. In that Section, we are focused in particular on
providing guidance to investment advisers that retain a proxy advisory
firm to assist them in some aspect of their proxy voting
responsibilities.\28\ More specifically, we have followed the question
and answer format used by the staff in SLB 20 as we understand that
many investment advisers have found that format useful.
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    \28\ The staff previously provided its views on certain of these
questions in SLB 20.
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    In this guidance, we provide examples to help facilitate investment
advisers' compliance with their proxy voting responsibilities; however,
these examples are not the only way by which investment advisers could
comply with their principles-based fiduciary duty imposed on them by
the Advisers Act.
    We encourage investment advisers and proxy advisory firms to review
their policies and practices in light of the guidance below in advance
of next year's proxy season. To the extent that firms identify
operational or other questions in the course of that review, we
encourage them to contact the staff of the Division of Investment
Management.
    The Commission will consider any questions or other feedback on its
guidance regarding the proxy voting responsibilities of investment
advisers under their fiduciary duty and Rule 206(4)-6 under the
Advisers Act, and Form N-1A, Form N-2, Form N-3, and Form N-CSR under
the Investment Company Act to evaluate whether additional guidance
might be appropriate in the future. Based on any feedback received, the
Commission could supplement this guidance.

II. Guidance Regarding Investment Advisers' Proxy Voting
Responsibilities and Disclosures on Form N-1A, Form N-2, Form N-3, and
Form N-CSR

    Question 1: How may an investment adviser and its client, in
establishing their relationship, agree upon the scope of the investment
adviser's authority and responsibilities to vote proxies on behalf of
that client?
    Response: As we recently stated, ``[t]he fiduciary duty follows the
contours of the relationship between the adviser and its client, and
the adviser and its client may shape that relationship by agreement,
provided that there is full and fair disclosure and informed consent.''
\29\ Accordingly, an investment adviser is not required to accept the
authority to vote client securities, regardless of whether the client
undertakes to vote the proxies itself.\30\ If an investment adviser
does accept voting authority, it may agree with its client, subject to
full and fair disclosure and informed consent, on the scope of voting
arrangements, including the types of matters for which it will exercise
proxy voting authority. While the application of the investment
adviser's fiduciary duty in the context of proxy voting will vary with
the scope of the voting authority assumed by the investment adviser,
the relationship in all cases remains that of a fiduciary to the
client.\31\
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    \29\ See Fiduciary Interpretation, 84 FR at 33677, footnotes 67-
70 and accompanying text for a detailed discussion of informed
consent and how it is generally considered on an objective basis and
may be inferred. See also Form ADV, Part 2A, Item 17, and Proxy
Voting Release, 68 FR 6585, at n. 19.
    \30\ We believe, however, that to the extent an investment
adviser has discretionary authority to manage the client's portfolio
and has not agreed with the client to a narrower scope of voting
authority through full and fair disclosure and informed consent, the
adviser's responsibility for making voting determinations is
implied. See Proxy Voting Release, 68 FR 6585 at n. 10.
    \31\ As we recently stated, ``an adviser's federal fiduciary
duty may not be waived, though it will apply in a manner that
reflects the agreed-upon scope of the relationship.'' See Fiduciary
Interpretation, 84 FR 33669, at 33672.
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    Differences in agreements between investment advisers and their
clients as to the scope of the advisory relationship may result in a
variety of arrangements for voting client securities. While a client
and its investment adviser may agree that the client will delegate all
of its proxy voting authority to its investment adviser, the client and
the investment adviser may instead agree (in the manner described
above) to other proxy voting arrangements in which the investment
adviser would not assume all of the proxy voting authority, or in which
the investment adviser would only assume the authority to vote on
behalf of the client in limited circumstances or not at all.\32\
Following are several non-exhaustive examples of possible voting
arrangements to which a client and its investment adviser may agree,
subject to full and fair disclosure and informed consent: \33\
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    \32\ Some letters asked the Commission to clarify the various
types of voting arrangements that might be adopted. See, e.g.,
Letter dated Dec. 21, 2018 from Benjamin Zycher, Ph.D., American
Enterprise Institute at p. 5 (seeking clarification about when it is
appropriate to vote proxies).
    \33\ As we stated in the Fiduciary Interpretation, ``[w]hether
the disclosure is full and fair will depend upon, among other
things, the nature of the client, the scope of the services, and the
material fact or conflict. Full and fair disclosure for an
institutional client (including the specificity, level of detail,
and explanation of terminology) can differ, in some cases
significantly, from full and fair disclosure for a retail client
because institutional clients generally have a greater capacity and
more resources than retail clients to analyze and understand complex
conflicts and their ramifications.'' (internal citations omitted).
See Fiduciary Interpretation, 84 FR 33669, at 33677.
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     A client and its investment adviser may agree that the
investment adviser should exercise voting authority pursuant to
specific parameters designed to serve the client's best interest. For
example, the client and the investment adviser may agree that, absent
receipt of a contrary instruction from the client or a determination by
the investment adviser that voting a particular proposal in a different
way would be in the client's best interest (e.g., if voting differently
would further the investment strategy being pursued by the investment
adviser on behalf of the client):
    [cir] The investment adviser will vote in accordance with the
voting recommendations of management of the issuer. Such an arrangement
could be subject to conditions, for example additional analysis by the
investment adviser where the voting recommendation concerns a matter
that may present heightened management conflicts of interest or involve
a type of matter of particular interest to the investment adviser's
client; or

    [cir] The investment adviser will vote in favor of all proposals
made by particular shareholder proponents. Such an arrangement could be
subject to conditions, for example requiring that the shareholder
proponent has particular expertise or an investment strategy that will
further the interests of the investment adviser's client.
     A client and its investment adviser may agree that the
investment adviser would not exercise voting authority in circumstances
under which voting would impose costs on the client, such as
opportunity costs for the client resulting from restricting the use of
securities for lending in order to preserve the right to vote.\34\
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    \34\ We note, however, that the investment adviser would still
have to fulfill its duty of loyalty while exercising its voting
authority on behalf of its client. For example, an investment
adviser must make any determination regarding whether to retain a
security and vote the accompanying proxy or lend out the security in
the client's best interest.
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     A client and its investment adviser may agree that the
investment adviser will focus voting resources only on particular types
of proposals based on the client's preferences, such as proposals
relating to corporate events (mergers and acquisition transactions,
dissolutions, conversions, or consolidations) or contested elections
for directors.
     A client and its investment adviser may agree that the
investment adviser would not exercise voting authority on certain types
of matters where the cost of voting would be high, or the benefit to
the client would be low.\35\ This could include, for example:
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    \35\ See Proxy Voting Release, 68 FR 6585 at n. 18 and
accompanying text.
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    [cir] Circumstances where the cost of voting the proxy exceeds the
expected benefit to the client, including, for example, casting a vote
on a foreign security that could involve the additional costs of hiring
a translator or traveling to a foreign country to vote the security in
person; or
    [cir] Circumstances under which casting a vote would not reasonably
be expected to have a material effect on the value of the client's
investment.

While, as noted above, an investment adviser and its client may shape
the voting authority through full and fair disclosure and informed
consent, we reiterate that an investment adviser that assumes proxy
voting authority must make voting determinations consistent with its
fiduciary duty and in compliance with Rule 206(4)-6.\36\
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    \36\ Rule 206(4)-6 under the Advisers Act requires an investment
adviser that assumes proxy voting authority to adopt and implement
policies and procedures that are reasonably designed to ensure it
votes client securities in the best interest of clients.
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    Question 2: What steps could an investment adviser that has assumed
the authority to vote proxies on behalf of a client take to demonstrate
that it is making voting determinations in a client's best interest and
in accordance with the investment adviser's proxy voting policies and
procedures?
    Response: As we discuss in Section I above, an investment adviser
is a fiduciary and owes each of its clients a fiduciary duty with
respect to services undertaken on the client's behalf, including
voting. In that discussion, we explain some of the requirements that
follow from an investment adviser's fiduciary duty in the context of
voting on behalf of clients, including the need for an investment
adviser to conduct a reasonable investigation into matters on which the
adviser votes and to vote in the best interest of the client.\37\
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    \37\ The Commission has noted that an investment adviser uses
various means of ensuring that proxy votes are voted in its client's
best interest and not affected by the adviser's conflicts of
interest, in addition to looking to the voting recommendations of a
proxy advisory firm. For example, the Commission has stated that
``[c]learly, an adviser's policy of disclosing the conflict to
clients and obtaining their consents before voting satisfies the
requirements of the rule and, when implemented, fulfills the
adviser's fiduciary obligations under the Advisers Act. . . . Other
policies and procedures are also available; their effectiveness (and
the effectiveness of any policies and procedures) will turn on how
well they insulate the decision on how to vote client proxies from
the conflict.'' See Proxy Voting Release, 68 FR 6585, at 6587-88.
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    An investment adviser should consider how its fiduciary duty and
its obligations under Rule 206(4)-6 apply when it has multiple clients.
Many investment advisers have multiple clients, including funds, other
pooled investment vehicles, and individual investors, with differing
investment objectives and strategies.\38\ In considering whether an
investment adviser's proxy voting policies and procedures are
reasonably designed to ensure compliance with Rule 206(4)-6 and to
fulfill its fiduciary duty to its clients, an investment adviser should
consider whether voting all of its clients' shares in accordance with a
uniform voting policy would be in the best interest of each of its
clients.\39\ In particular, where an investment adviser undertakes
proxy voting responsibilities on behalf of multiple funds, pooled
investment vehicles, or other clients, it should consider whether it
should have different voting policies for some or all of these
different funds, vehicles, or other clients, depending on the
investment strategy and objectives of each.\40\ For example, a growth
fund that targets companies with high growth prospects may have a
different perspective on certain matters submitted to shareholders than
an income or dividend fund that seeks to generate an income stream for
shareholders in the form of dividends or interest payments.
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    \38\ Such other pooled investment vehicles may include, for
example, private funds that are excluded from the definition of
investment company by either Section 3(c)(1) or Section 3(c)(7) of
the Investment Company Act.
    \39\ Some letters have noted that proxy voting guidelines allow
funds to handle efficiently the large majority of votes that are
recurring and non-controversial. See, e.g., ICI Letter I at pp. 9-
10; ICI Letter II at p. 4.
    \40\ As we have noted in the Proxy Voting Release, nothing in
Rule 206(4)-6 under the Advisers Act prevents an investment adviser
from having different policies and procedures for different clients
or different categories of clients. Thus, the board of directors of
a fund could adopt and require an investment adviser to use policies
and procedures that differ from those the adviser uses with respect
to its other clients. Proxy Voting Release, FR 6587 at n. 13.
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    Funds that invest in voting securities are also required to
disclose in their statements of additional information (``SAI'') \41\
or on Form N-CSR,\42\ as applicable, the policies and procedures that
they use to determine how to vote proxies relating to securities held
in their portfolios.\43\ As discussed above, if the funds have
different voting policies and procedures, these should be reflected in
the SAI or on Form N-CSR, as applicable.
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    \41\ The SAI is part of a fund's registration statement and
contains information about a fund in addition to that contained in
the prospectus. The SAI is required to be delivered to investors
upon request and is available on the Commission's Electronic Data
Gathering, Analysis, and Retrieval System (``EDGAR'').
    \42\ Form N-CSR is used by open-end funds and closed-end funds
to file certified shareholder reports with the Commission on EDGAR.
    \43\ Open-end funds must disclose their proxy voting policies
and procedures in their SAIs. Because closed-end funds do not offer
their shares continuously, and are therefore generally not required
to maintain an updated SAI to meet their obligations under the
Securities Act of 1933, they are required to disclose their proxy
voting policies and procedures in their annual reports on Form N-
CSR. See Disclosure of Proxy Voting Policies and Proxy Voting
Records by Registered Management Investment Companies, Release No.
IC-25922 (Jan. 31, 2003), 68 FR 6564 (Feb. 7, 2003), Form N-1A, Form
N-2, Form N-3, and Form N-CSR.
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    An investment adviser should also consider whether certain types of
matters may necessitate that the adviser conduct a more detailed
analysis than what may be entailed by application of its general voting
guidelines, to consider factors particular to the issuer or the voting
matter under consideration. Such matters might include, but are not
limited to, corporate events (mergers and acquisition transactions,
dissolutions, conversions, or consolidations) or contested elections
for directors. When determining whether to conduct such an issuer-
specific analysis, or an analysis specific

to the matter to be voted on, an investment adviser should consider the
potential effect of the vote on the value of a client's investments. An
investment adviser should consider identifying in its voting policy or
policies the factors that it will consider in determining which matters
require company-specific evaluation, and how it will evaluate voting
decisions on such matters.
    In addition, an investment adviser should consider reasonable
measures to determine that it is casting votes on behalf of its clients
consistently with its voting policies and procedures. For example, one
way in which an investment adviser could evaluate its compliance with
Rule 206(4)-6 would be to sample the proxy votes it casts on behalf of
its clients as part of its annual review of its compliance policies and
procedures.\44\ Such a review could specifically include sampling of
proxy votes that relate to proposals that may require more issuer-
specific analysis (e.g., mergers and acquisition transactions,
dissolutions, conversions, or consolidations), to assist in evaluating
whether the investment adviser's voting determinations are consistent
with its voting policies and procedures and in its client's best
interest.\45\
---------------------------------------------------------------------------

    \44\ See 17 CFR 275.206(4)-7(b) [Rule 206(4)-7(b) under the
Advisers Act].
    \45\ Id.
---------------------------------------------------------------------------

    An investment adviser that retains a proxy advisory firm to provide
voting recommendations or voting execution services also should
consider additional steps to evaluate whether the investment adviser's
voting determinations are consistent with its voting policies and
procedures and in the client's best interest before the votes are cast.
For example, some steps that an investment adviser could use to
evaluate its compliance are:
     Sampling pre-populated votes: Where the investment adviser
utilizes the proxy advisory firm for either voting recommendations or
voting execution (or both), it could assess ``pre-populated'' votes
shown on the proxy advisory firm's electronic voting platform before
such votes are cast, such as through periodic sampling of the proxy
advisory firm's pre-populated votes.
     Consideration of additional information: Where the
investment adviser utilizes the proxy advisory firm for voting
recommendations, it could consider policies and procedures that provide
for consideration of additional information that may become available
regarding a particular proposal. This additional information may
include an issuer's or a shareholder proponent's subsequently filed
additional definitive proxy materials or other information conveyed by
an issuer or shareholder proponent to the investment adviser that would
reasonably be expected to affect the investment adviser's voting
determination.
     Higher degree of analysis: Where the investment adviser
utilizes the proxy advisory firm for either voting recommendations or
voting execution (or both), with respect to matters where the
investment adviser's voting policies and procedures do not address how
it should vote on a particular matter, or where the matter is highly
contested or controversial,\46\ it could consider whether a higher
degree of analysis may be necessary or appropriate to assess whether
any votes it casts on behalf of its client are cast in the client's
best interest.
---------------------------------------------------------------------------

    \46\ This may include, for example, major acquisitions involving
takeovers or contested director elections where a shareholder has
proposed its own slate of directors.
---------------------------------------------------------------------------

    Finally, as part of an investment adviser's ongoing compliance
program, the adviser must review and document, no less frequently than
annually, the adequacy of its voting policies and procedures to ensure
that they have been formulated reasonably and implemented effectively,
including whether the applicable policies and procedures continue to be
reasonably designed to ensure that the adviser casts votes on behalf of
its clients in the best interest of such clients.\47\
---------------------------------------------------------------------------

    \47\ See Proxy Voting Release; see also 17 CFR 204-2(a)(17)(ii)
[Rule 204-2(a)(17)(ii) under the Advisers Act] (requiring an
investment adviser to maintain copies of its records documenting the
investment adviser's annual review of policies and procedures
conducted pursuant to Rule 206(4)-7(b)); Rule 206(4)-7 under the
Advisers Act (e.g., requiring investment advisers to adopt and
implement written policies and procedures reasonably designed to
prevent violation, by the adviser and its supervised person, of the
Advisers Act. The rule also requires, among other things, that
investment advisers review, no less frequently than annually, the
adequacy of their policies and procedures and the effectiveness of
their implementation). See also Rule 38a-1 under the Investment
Company Act (e.g., requiring each fund to adopt and implement
written policies and procedures reasonably designed to prevent
violation of the federal securities laws by the fund, including
policies and procedures that provide for the oversight of compliance
by the fund's investment adviser, among others. The rule also
requires, among other things, that the fund review, no less
frequently than annually, the adequacy of the policies and
procedures of the fund and of each investment adviser, principal
underwriter, administrator, and transfer agent, and the
effectiveness of their implementation).
---------------------------------------------------------------------------

    Question 3: What are some of the considerations that an investment
adviser should take into account if it retains a proxy advisory firm to
assist it in discharging its proxy voting duties?
    Response: When an investment adviser is considering whether to
retain or continue retaining a proxy advisory firm to provide research
or voting recommendations as an input to the adviser's voting
decisions, we believe that an investment adviser should consider, among
other things, whether the proxy advisory firm has the capacity and
competency to adequately analyze the matters for which the investment
adviser is responsible for voting.\48\ In this regard, investment
advisers could consider, among other things, the adequacy and quality
of the proxy advisory firm's staffing, personnel, and/or technology.
---------------------------------------------------------------------------

    \48\ In Question No. 4, we provide guidance regarding an
investment adviser's duties with respect to evaluating the care and
competency of the proxy advisory firm with respect to potential
factual errors, potential incompleteness, or potential
methodological weaknesses that may materially affect the proxy
advisory firm's voting recommendations.
---------------------------------------------------------------------------

    Such an investment adviser should also consider whether the proxy
advisory firm has an effective process for seeking timely input from
issuers and proxy advisory firm clients with respect to, for example,
its proxy voting policies, methodologies, and peer group constructions,
including for ``say-on-pay'' votes.\49\ For example, if peer group
comparisons are a component of the substantive evaluation, the
investment adviser should consider how the proxy advisory firm
incorporates appropriate input in formulating its methodologies and
construction of issuer peer groups. Where relevant, an investment
adviser should also consider how the proxy advisory firm, in
constructing peer groups, takes into account the unique characteristics
regarding the issuer, to the extent available, such as the issuer's
size; its governance structure; its industry and any particular
practices unique to that industry; its history; and its financial
performance.
---------------------------------------------------------------------------

    \49\ 17 CFR 240.14a-21 [Rule 14a-21 under the Securities
Exchange Act of 1934] requires, among other things, companies
soliciting proxies for an annual or other meeting of shareholders at
which directors will be elected to include a separate resolution
subject to a shareholder advisory vote to approve the compensation
of named executive officers.
---------------------------------------------------------------------------

    Such an investment adviser should also consider whether a proxy
advisory firm has adequately disclosed to the investment adviser its
methodologies in formulating voting recommendations, such that the
investment adviser can understand the factors underlying the proxy
advisory firm's voting recommendations.\50\ In addition, the

investment adviser should consider the nature of any third-party
information sources that the proxy advisory firm uses as a basis for
its voting recommendations. The investment adviser also should consider
what steps it should take to develop a reasonable understanding of when
and how the proxy advisory firm would expect to engage with issuers and
third parties.
---------------------------------------------------------------------------

    \50\ If an investment adviser utilizes the proxy advisory firm
for research and not voting recommendations, it could still evaluate
to what extent, if any, the proxy advisory firm's peer group
construction methodology may influence how the firm would determine
``say-on-pay'' votes.
    Some letters have called for greater transparency to issuers and
clients about the formulation of proxy advisory recommendations and
guidelines. See, e.g., Letter dated Oct. 10, 2018 from Timothy M.
Doyle, Vice President of Policy and General Counsel, American
Council for Capital Formation at p. 2; Letter dated July 26, 2019
from Neil A. Hansen, Vice President, Investor Relations and
Corporate Secretary, ExxonMobil at 2 (stating that proxy advisory
firms' methodology in evaluating executive compensation can
undermine the company's ability to offer incentives for management
to pursue long-term shareholder value creation).
---------------------------------------------------------------------------

    More generally, an investment adviser's decision regarding whether
to retain a proxy advisory firm should also include a reasonable review
of the proxy advisory firm's policies and procedures regarding how it
identifies and addresses conflicts of interest.\51\ Some ways in which
an investment adviser could conduct this review include, for example,
assessing:
---------------------------------------------------------------------------

    \51\ Some letters have noted concerns about proxy advisory firm
conflicts of interest. See, e.g., Letter dated Nov. 9, 2018,
Business Roundtable; Letter dated Nov. 29, 2018 from Suanne
Estatico; Letter dated Jan. 11, 2019 from Darryl M. Burman, Office
of the General Counsel, Group 1 Automotive, Inc.
---------------------------------------------------------------------------

     Whether the proxy advisory firm has adequate policies and
procedures to identify, disclose, and address actual and potential
conflicts of interest, including (1) conflicts relating to the
provision of proxy voting recommendations and proxy voting services
generally, (2) conflicts relating to activities other than providing
proxy voting recommendations and proxy voting services, and (3)
conflicts presented by certain affiliations. In the first instance,
actual or potential conflicts may include conflicts arising from the
provision of recommendations and services to issuers as well as
proponents of shareholder proposals regarding matters that may be the
subject of a vote. In the third instance, actual or potential conflicts
presented by certain affiliations may include whether a third party
with significant influence over the proxy advisory firm (e.g., as a
shareholder, lender, or significant source of business) has taken a
position on a particular voting issue or voting issues more generally;
\52\
---------------------------------------------------------------------------

    \52\ See, e.g., U.S. Government Accountability Office, Report to
Congressional Requesters, Corporate Shareholder Meetings--Issues
Relating to Firms That Advise Institutional Investors on Proxy
Voting (June 2007).
---------------------------------------------------------------------------

     Whether the proxy advisory firm's policies and procedures
provide for adequate disclosure (i.e., context-specific, non-
boilerplate disclosure) of the proxy advisory firm's actual and
potential conflicts with respect to the services the proxy advisory
firm provides to the investment adviser. This disclosure could include
details on, for example, whether the issuer has received consulting
services from the proxy advisory firm, and if so, the amount of
compensation paid to the firm, if any; whether a proponent of a
shareholder proposal or an affiliate of the proponent is or has been a
client of the proxy advisory firm; and
     Whether the proxy advisory firm's policies and procedures
utilize technology in delivering conflicts disclosures that are readily
accessible (for example, usage of online portals or other tools to make
conflicts disclosure transparent and accessible).
    The steps an investment adviser should take when considering
whether to retain or continue retaining a proxy advisory firm could
depend on, among other things (1) the scope of the investment adviser's
voting authority, and (2) the type of functions and services that the
investment adviser has retained the proxy advisory firm to perform.
Accordingly, the extent to which an investment adviser takes some or
all of the steps described above could vary based on these factors. For
example, some of these considerations may be less relevant for an
investment adviser that engages a proxy advisory firm solely to execute
votes according to detailed voting instructions from the investment
adviser, which leaves minimal discretion to the proxy advisory firm.
Nevertheless, an investment adviser that retains a proxy advisory firm
for this limited purpose should consider what steps to take to
understand the proxy advisory firm's own policies and procedures,
including its methodologies if applicable, with respect to implementing
the investment adviser's voting instructions.
    Question 4: When retaining a proxy advisory firm for research or
voting recommendations as an input to its voting determinations, what
steps should an investment adviser consider taking when it becomes
aware of potential factual errors, potential incompleteness, or
potential methodological weaknesses in the proxy advisory firm's
analysis that may materially affect one or more of the investment
adviser's voting determinations?
     As discussed in Section I above, for an investment adviser to form
a reasonable belief that its voting determinations are in the best
interest of the client, it should conduct a reasonable investigation
into the matter. In the case of potential factual errors, potential
incompleteness, or potential methodological weaknesses in the proxy
advisory firm's analysis, the investment adviser's policies and
procedures should be reasonably designed to ensure that its voting
determinations are not based on materially inaccurate or incomplete
information. For example, an investment adviser that has retained a
proxy advisory firm for research or voting recommendations as an input
to its voting determinations should consider including in its policies
and procedures a periodic review of the investment adviser's ongoing
use of the proxy advisory firm's research or voting recommendations.
Such a review could include an assessment of the extent to which
potential factual errors, potential incompleteness, or potential
methodological weaknesses in the proxy advisory firm's analysis (that
the investment adviser becomes aware of and deems credible and relevant
to its voting determinations) materially affected the proxy advisory
firm's research or recommendations that the investment adviser
utilized.
    In reviewing its use of a proxy advisory firm, an investment
adviser should also consider the effectiveness of the proxy advisory
firm's policies and procedures for obtaining current and accurate
information relevant to matters included in its research and on which
it makes voting recommendations. As part of this assessment, investment
advisers should consider, and in certain cases may wish to communicate
with proxy advisory firms, regarding the following:
     The proxy advisory firm's engagement with issuers,
including the firm's process for ensuring that it has complete and
accurate information about the issuer and each particular matter, and
the firm's process, if any, for investment advisers to access the
issuer's views about the firm's voting recommendations in a timely and
efficient manner;
     The proxy advisory firm's efforts to correct any
identified material deficiencies in the proxy advisory firm's analysis;
     The proxy advisory firm's disclosure to the investment
adviser regarding the sources of information and methodologies used in
formulating

voting recommendations or executing voting instructions; \53\ and
---------------------------------------------------------------------------

    \53\ See Question No. 3 above.
---------------------------------------------------------------------------

     The proxy advisory firm's consideration of factors unique
to a specific issuer or proposal when evaluating a matter subject to a
shareholder vote.
    Question 5: How can an investment adviser evaluate the services of
a proxy advisory firm that it retains, including evaluating any
material changes in services or operations by the proxy advisory firm?
    Response: In order to act consistently with Rule 206(4)-6, an
investment adviser that has retained a third party (such as a proxy
advisory firm) to assist substantively with its proxy voting
responsibilities and carrying out its fiduciary duty should adopt and
implement policies and procedures that are reasonably designed to
sufficiently evaluate the third party in order to ensure that the
investment adviser casts votes in the best interest of its clients.\54\
---------------------------------------------------------------------------

    \54\ See supra at n. 47.
---------------------------------------------------------------------------

    For example, a proxy advisory firm's business and/or its policies
and procedures regarding conflicts of interest could change after an
investment adviser's initial assessment of the proxy advisory firm, and
these changes could, for example, materially alter the effectiveness of
the proxy advisory firm's policies and procedures and may require the
investment adviser to make a subsequent assessment. In this regard, we
believe that investment advisers that retain a proxy advisory firm to
provide research or voting recommendations (or both) should consider
policies and procedures to identify and evaluate a proxy advisory
firm's conflicts of interest that can arise on an ongoing basis, in
addition to updates regarding the proxy advisory firm's capacity and
competency to provide voting recommendations or to execute votes in
accordance with an investment adviser's voting instructions.\55\
Accordingly, the investment adviser should consider requiring the proxy
advisory firm to update the investment adviser regarding business
changes the investment adviser considers relevant (i.e., with respect
to the proxy advisory firm's capacity and competency to provide
independent proxy voting advice or carry out voting instructions). An
investment adviser should also consider whether the proxy advisory firm
appropriately updates its methodologies, guidelines, and voting
recommendations on an ongoing basis, including in response to feedback
from issuers and their shareholders.
---------------------------------------------------------------------------

    \55\ Id.
---------------------------------------------------------------------------

    Question 6: If an investment adviser has assumed voting authority
on behalf of a client, is it required to exercise every opportunity to
vote a proxy for that client?
    Response: No, if either of two situations applies. First, if an
investment adviser and its client have agreed in advance to limit the
conditions under which the investment adviser would exercise voting
authority, as discussed above, the investment adviser need not cast a
vote on behalf of the client where contemplated by their agreement.
    Second, as the Commission has stated previously, there may be times
when an investment adviser that has voting authority may refrain from
voting a proxy on behalf of a client if it has determined that
refraining is in the best interest of that client.\56\ This may be the
case where the adviser determines that the cost to the client of voting
the proxy exceeds the expected benefit to the client.\57\ In making
such a determination, the investment adviser may not ignore or be
negligent in fulfilling the obligation it has assumed to vote client
proxies and cannot fulfill its fiduciary responsibilities to its
clients by merely refraining from voting the proxies.\58\ Accordingly,
before refraining from voting under the circumstances described in this
second situation, an investment adviser should consider whether it is
fulfilling its duty of care to its client in light of the scope of
services to which it and the client have agreed.
---------------------------------------------------------------------------

    \56\ See Proxy Voting Release, 68 FR 6585, at 6587. We also have
stated that ``[w]hether the advice is in a client's best interest
must be evaluated in the context of the portfolio that the adviser
manages for the client and the client's objectives.'' See Fiduciary
Interpretation, 84 FR 33669, at 33673.
    \57\ See Proxy Voting Release, 68 FR 6585, at 6587. The
Commission stated in that release that ``we do not suggest that an
adviser that fails to vote every proxy would necessarily violate its
fiduciary obligations. There may even be times when refraining from
voting a proxy is in the client's best interest, such as when the
adviser determines that the cost of voting the proxy exceeds the
expected benefit to the client.'' Id. In this second situation, the
costs to be considered would necessarily have to be additional costs
to the client.
    \58\ See 68 FR 6585, at 6587-88.
---------------------------------------------------------------------------

III. Other Matters

    Pursuant to the Congressional Review Act,\59\ the Office of
Information and Regulatory Affairs has designated this guidance as not
a ``major rule,'' as defined by 5 U.S.C. 804(2).
---------------------------------------------------------------------------

    \59\ 5 U.S.C. 801 et seq.
---------------------------------------------------------------------------

* * * * *

List of Subjects in 17 CFR Parts 271 and 276

    Securities.

Amendments to the Code of Federal Regulations

    For the reasons set out above, the Commission is amending title 17,
chapter II of the Code of Federal Regulations as set forth below:

PART 271--INTERPRETATIVE RELEASES RELATING TO THE INVESTMENT
COMPANY ACT OF 1940 AND GENERAL RULES AND REGULATIONS THEREUNDER

0
1. An authority citation is added for part 271 to read as follows:

    Authority: 15 U.S.C. 80a et seq.

0
2. The table is amended by adding an entry for Release No. IC-33605 at
the end to read as follows:

----------------------------------------------------------------------------------------------------------------
                Subject                           Release No.               Date           FR vol. and  page
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Commission Guidance Regarding the Proxy  IC-33605                          August 21,  [Insert FR Volume Number]
 Voting Responsibilities of Investment                                           2019   FR [Insert FR Page
 Advisers.                                                                              Number].
----------------------------------------------------------------------------------------------------------------

PART 276--INTERPRETATIVE RELEASES RELATING TO THE INVESTMENT
ADVISERS ACT OF 1940 AND GENERAL RULES AND REGULATIONS THEREUNDER

0
3. An authority citation is added for part 276 to read as follows:

    Authority: 15 U.S.C. 80b et seq.

0
4. The table is amended by adding an entry for Release No. IA-5325 at
the end to read as follows:

----------------------------------------------------------------------------------------------------------------
                Subject                           Release No.               Date           FR vol. and  page
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Commission Guidance Regarding the Proxy  IA-5325                           August 21,  [Insert FR Volume Number]
 Voting Responsibilities of Investment                                           2019   FR [Insert FR Page
 Advisers.                                                                              Number].
----------------------------------------------------------------------------------------------------------------

    By the Commission.

    Dated: August 21, 2019.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2019-18342 Filed 9-9-19; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 75, Number 140 (Thursday, July 22, 2010)]
[Rules and Regulations]
[Pages 42585-42589]
[FR Doc No: 2010-16182]

=======================================================================
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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2010-0174; Directorate Identifier 2009-NM-186-AD;
Amendment 39-16359; AD 2010-14-14]
RIN 2120-AA64

Airworthiness Directives; Empresa Brasileira de Aeronautica S.A.
(EMBRAER) Model ERJ 170 and ERJ 190 Airplanes

AGENCY: Federal Aviation Administration (FAA), Department of
Transportation (DOT).

ACTION: Final rule.

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

SUMMARY: We are superseding an existing airworthiness directive (AD)
for the products listed above. This 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 for EMBRAER Model ERJ 170
airplanes describes the unsafe condition as:

    It has been found the occurrence of an engine in-flight shutdown
caused by the LPCV [low pressure check valves] failing to close due
to excessive wear, which leads to the concern that such fault may be
present in both engines of a given aircraft.
* * * * *

The MCAI for EMBRAER Model ERJ 190 airplanes describes the unsafe
condition as:
An occurrence of an uncommanded engine in-flight shutdown (IFSD) was
reported * * *, which was caused by an ERJ 170 defective LPCV * * *.
The valve failed to close due to excessive wear. Despite there were
no IFSD related to LPCV * * * failure, some ERJ 190 valves * * *
were inspected and presented cracks due to low cycle fatigue. Since
this failure mode also might lead to an engine in-flight shutdown
and since both engines of the airplane have the same valves, there
is a possibility of an occurrence of a dual engine IFSD due to LPCV
failure.
* * * * *
We are issuing this AD to require actions to correct the unsafe
condition on these products.

DATES: This AD becomes effective August 26, 2010.
    The Director of the Federal Register approved the incorporation by
reference of certain publications listed in this AD as of August 26,
2010.

ADDRESSES: You may examine the AD docket on the Internet at http://www.regulations.gov or in person at the U.S. Department of
Transportation, Docket Operations, M-30, West Building Ground Floor,
Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Kenny Kaulia, Aerospace Engineer,
International Branch, ANM-116, Transport Airplane Directorate, FAA,
1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone (425)
227-2848; fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR
part 39 to include an AD that would apply to the specified products.
That NPRM was published in the Federal Register on March 4, 2010 (75 FR
9816), and proposed to supersede AD 2007-16-09, Amendment 39-15148 (72
FR 44734, August 9, 2007). That NPRM proposed to correct an unsafe
condition for the specified products. The MCAI for EMBRAER Model ERJ
170 airplanes states:

    It has been found the occurrence of an engine in-flight shutdown
caused by the LPCV [low pressure check valves] failing to close due
to excessive wear, which leads to the concern that such fault may be
present in both engines of a given aircraft.
* * * * *
The MCAI for EMBRAER Model ERJ 190 airplanes states:

    An occurrence of an uncommanded engine in-flight shutdown (IFSD)
was reported on 20 Sep. 2005, which was caused by an ERJ 170
defective LPCV [part number] P/N 1001447-3 logging 3900 Flight Hours
(FH). The valve failed to close due to excessive wear. Despite there
were no IFSD related to LPCV P/N 1001447-4 failure, some ERJ 190
valves P/N 1001447-4 logging around 2472 FH were inspected and
presented cracks due to low cycle fatigue. Since this failure mode
also might lead to an engine in-flight shutdown and since both
engines of the airplane have the same valves, there is a possibility
of an occurrence of a dual engine IFSD due to LPCV failure.
* * * * *
The required actions include repetitive replacements of the low-stage
check valves and associated seals of the left-hand and right-hand
engine bleed system with new or serviceable valves, depending on the
model. For certain airplanes, this AD also includes an optional
terminating action for the repetitive replacements. This AD also
requires, if the terminating action is done, revising the approved
maintenance plan to include repetitive functional tests of the low-
stage check valve. For certain other airplanes, this AD requires
replacing a certain low-stage check valve with an improved low-stage
check valve. You may obtain further information by examining the MCAI
in the AD docket.

Comments

    We gave the public the opportunity to participate in developing
this AD. We considered the comment received. The Air Line Pilots
Association, International (ALPA), supports the NPRM.

Explanation of Change Made to This AD

    Since we issued the NPRM, we have received Revision 6, of EMBRAER
170 Maintenance Review Board Report (MRBR), MRB-1621, dated January 14,
2010. We have updated the final rule to reference EMBRAER 170
Maintenance Review Board Report (MRBR), MRB-1621, Revision 6, dated
January 14, 2010. We have added paragraph (j)(14) to this final rule to
give credit for revising the maintenance program to include maintenance
Task 36-11-02-002 (Low Stage Bleed Check Valve) specified in Section 1
of the EMBRAER 170 Maintenance Review Board Report (MRBR), MRB-1621,
Revision 5, dated November 5, 2008.
    We also revised paragraph (j)(13) of this AD to clarify that doing
a replacement before the effective date of this AD is acceptable for
compliance with a replacement specified in paragraph (j)(1) of this AD.

Conclusion

    We reviewed the available data, including the comment received, and
determined that air safety and the public interest require adopting the
AD with the changes described previously.

We have determined that these changes will not increase the economic
burden on any operator or increase the scope of the AD.

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 required different actions in this AD from those
in the MCAI in order to follow our FAA policies. Any such differences
are highlighted in a NOTE within the AD.

Costs of Compliance

    We estimate that this AD will affect about 231 products of U.S.
registry.
    The actions that are required by AD 2007-16-09 and retained in this
AD, which are provided in the following table, provide the estimated
costs, at an average labor rate of $85 per work hour, for U.S.
operators to comply with this AD. The parts manufacturer states that it
will supply required parts to operators at no cost.

                                                 Estimated Costs
----------------------------------------------------------------------------------------------------------------
                                                                          Number of U.S.-
               Action                 Work hours    Cost per airplane       registered           Fleet cost
                                                                             airplanes
----------------------------------------------------------------------------------------------------------------
Replacement of right-hand check                3  $255 per replacement                 55  $14,025 per
 valves on Model ERJ 170-100 LR, -                 cycle.                                   replacement cycle.
 100 STD, -100 SE, and -100 SU
 airplanes.
Replacement of left-hand check                 3  $255 per replacement                 75  $19,125 per
 valves on Model ERJ 170-100 LR, -                 cycle.                                   replacement cycle.
 100 STD, -100 SE, -100 SU, -200
 LR, -200 STD, and -200 SU
 airplanes.
----------------------------------------------------------------------------------------------------------------

    We estimate that it will take about 6 work-hours per product to
comply with the new basic requirements of this AD. The average labor
rate is $85 per work-hour. Required parts will cost about $4,219 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 this AD to the
U.S. operators to be $1,092,399, or $4,729 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 AD will not have federalism implications
under Executive Order 13132. This AD will not have a substantial direct
effect on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.
    For the reasons discussed above, I certify this AD:
    1. Is not a ``significant regulatory action'' under Executive Order
12866;
    2. Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979); and
    3. Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.
    We prepared a regulatory evaluation of the estimated costs to
comply with this AD and placed it in the AD docket.

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

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

0
Accordingly, under the authority delegated to me by the Administrator,
the FAA amends 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by removing Amendment 39-15148 (72 FR
44734, August 9, 2007) and adding the following new AD:

2010-14-14 Empresa Brasileira de Aeronautica S.A. (EMBRAER):
Amendment 39-16359. Docket No. FAA-2010-0174; Directorate Identifier
2009-NM-186-AD.

Effective Date

    (a) This airworthiness directive (AD) becomes effective August
26, 2010.

Affected ADs

    (b) This AD supersedes AD 2007-16-09, Amendment 39-15148.

Applicability

    (c) This AD applies to the airplanes identified in paragraphs
(c)(1) and (c)(2) of this AD, certificated in any category.
    (1) Empresa Brasileira de Aeronautica S.A. (EMBRAER) Model ERJ
170-100 LR, -100 STD, -100 SE, and -100 SU airplanes; and

Model ERJ 170-200 LR, -200 STD, and -200 SU airplanes; equipped with
Hamilton Sundstrand low pressure check valve (LPCV) having part
number (P/N) 1001447-3.
    (2) Empresa Brasileira de Aeronautica S.A. (EMBRAER) Model ERJ
190-100 ECJ, -100 LR, -100 IGW, -100 STD airplanes; and Model ERJ
190-200 STD, -200 LR, and -200 IGW airplanes; equipped with Hamilton
Sundstrand LPCV having P/N 1001447-3 or 1001447-4.

Subject

    (d) Air Transport Association (ATA) of America Code 36:
Pneumatic.

Reason

    (e) The mandatory continuing airworthiness information (MCAI)
for EMBRAER Model ERJ 170 airplanes states:

    It has been found the occurrence of an engine in-flight shutdown
caused by the LPCV [low pressure check valves] failing to close due
to excessive wear, which leads to the concern that such fault may be
present in both engines of a given aircraft.
* * * * *
The MCAI for EMBRAER Model ERJ 190 airplanes states:
    An occurrence of an uncommanded engine in-flight shutdown (IFSD)
was reported on 20 Sep. 2005, which was caused by an ERJ 170
defective LPCV P/N 1001447-3 logging 3,900 Flight Hours (FH). The
valve failed to close due to excessive wear. Despite there were no
IFSD related to LPCV P/N 1001447-4 failure, some ERJ 190 valves P/N
1001447-4 logging around 2472 FH were inspected and presented cracks
due to low cycle fatigue. Since this failure mode also might lead to
an engine in-flight shutdown and since both engines of the airplane
have the same valves, there is a possibility of an occurrence of a
dual engine IFSD due to LPCV failure.
* * * * *
The required actions include repetitive replacements of the low-
stage check valves and associated seals of the left-hand and right-
hand engine bleed system with new or serviceable valves, depending
on the model. For certain airplanes, this AD also includes an
optional terminating action for the repetitive replacements. This AD
also requires, if the terminating action is done, revising the
approved maintenance plan to include repetitive functional tests of
the low-stage check valve. For certain other airplanes, this AD
requires replacing a certain low-stage check valve with an improved
low-stage check valve.
    Restatement of Requirements of AD 2005-23-14, With Revised
Service Information:

Replacement for Right-Hand (RH) Engine on Model ERJ 170-100 LR, -100
STD, -100 SE, and -100 SU Airplanes

    (f) For Model ERJ 170-100 LR, -100 STD, -100 SE, and -100 SU
airplanes: Within 100 flight hours after November 29, 2005 (the
effective date of AD 2005-23-14, which was superseded by AD 2007-16-
09), or prior to the accumulation of 3,000 total flight hours,
whichever occurs later, replace the low-stage check valve and
associated seals of the RH engine's engine bleed system with a new
check valve and new seals, in accordance with the Accomplishment
Instructions of EMBRAER Alert Service Bulletin 170-36-A004, dated
September 28, 2005; or paragraph 3.C. of the Accomplishment
Instructions of EMBRAER Service Bulletin 170-36-0004, dated November
18, 2005, or Revision 01, dated March 10, 2008. As of the effective
date of this AD, only use EMBRAER Service Bulletin 170-36-0004,
Revision 01, dated March 10, 2008. Repeat the replacement thereafter
at intervals not to exceed 3,000 flight hours.

Removed Check Valves

    (g) Although EMBRAER Alert Service Bulletin 170-36-A004, dated
September 28, 2005, specifies to send removed check valves to the
manufacturer, this AD does not include that requirement.
    Restatement of Certain Requirements of AD 2007-16-09, With
Revised Service Information:

Replacement for Left-Hand (LH) Engine on All Model ERJ 170 Airplanes

    (h) For Model ERJ 170-100 LR, -100 STD, -100 SE, -100 SU, -200
LR, -200 STD, and -200 SU airplanes: Within 300 flight hours after
September 13, 2007 (the effective date of AD 2007-16-09) or prior to
the accumulation of 3,000 total flight hours, whichever occurs
later, replace the low-stage check valve and associated seals of the
LH engine's engine bleed system with a new check valve and new
seals, in accordance with paragraph 3.B. of the Accomplishment
Instructions of EMBRAER Service Bulletin 170-36-0004, dated November
18, 2005; or Revision 01, dated March 10, 2008. As of the effective
date of this AD, only use EMBRAER Service Bulletin 170-36-0004,
Revision 01, dated March 10, 2008. Repeat the replacement thereafter
at intervals not to exceed 3,000 flight hours.

Removed Check Valves in Accordance With New Service Bulletin

    (i) Although EMBRAER Service Bulletin 170-36-0004, dated
November 18, 2005, specifies to send removed check valves to the
manufacturer, this AD does not include that requirement.
    New Requirements of This AD:

Actions and Compliance

    (j) Unless already done, do the following actions.
    (1) For Model ERJ 170-200 LR, -200 STD, and -200 SU airplanes:
Within 100 flight hours after the effective date of this AD, or
prior to the accumulation of 3,000 total flight hours, whichever
occurs later, replace the low-stage check valve and associated seals
of the RH engine's engine bleed system with a new check valve and
new seals, in accordance with the Accomplishment Instructions of
EMBRAER Service Bulletin 170-36-0004, Revision 01, dated March 10,
2008. Repeat the replacement thereafter at intervals not to exceed
3,000 flight hours.
    (2) For Model ERJ 170-100 LR, -100 STD, -100 SE, -100 SU, -200
LR, -200 STD, and -200 SU airplanes: Replacing the LPCV having P/N
1001447-3 with a new one having P/N 1001447-4 in accordance with the
Accomplishment Instructions of EMBRAER Service Bulletin 170-36-0011,
Revision 02, dated July 19, 2007, terminates the repetitive
replacements required by paragraphs (f), (h), and (j)(1) of this AD.
    (3) For Model ERJ 170-100 LR, -100 STD, -100 SE, -100 SU, -200
LR, -200 STD, and -200 SU airplanes, at the earlier of the times
specified in paragraphs (j)(3)(i) and (j)(3)(ii) of this AD, revise
the maintenance program to include maintenance Task 36-11-02-002
(Low Stage Bleed Check Valve), specified in Section 1 of the EMBRAER
170 Maintenance Review Board Report (MRBR), MRB-1621, Revision 6,
dated January 14, 2010. Thereafter, except as provided by paragraph
(k) of this AD, no alternative inspection intervals may be approved
for the task.
    (i) Within 180 days after accomplishing paragraph (j)(2) of this
AD.
    (ii) Before any LPCV having P/N 1001447-4 accumulates 3,000
total flight hours, or within 300 flight hours after the effective
date of this AD, whichever occurs later.
    (4) For Model ERJ 170-100 LR, -100 STD, -100 SE, -100 SU, -200
LR, -200 STD, and -200 SU airplanes: As of the effective date of
this AD, no person may install any LPCV identified in paragraph
(j)(4)(i) or (j)(4)(ii) of this AD on any airplane.
    (i) Any LPCV having P/N 1001447-3, installed on Model ERJ-170
airplanes, that has accumulated more than 3,000 total flight hours.
    (ii) Any LPCV having P/N 1001447-3, installed on Model ERJ-170
and ERJ-190 airplanes, that has accumulated 3,000 or more total
flight hours. To calculate the equivalent number of flight hours for
a LPCV having P/N 1001447-3 that was installed on Model ERJ-190
airplane to be installed on a Model ERJ-170 airplane, the flight
hours accumulated in operation on ERJ-190 models must be multiplied
by a factor of 2 (100 percent).
    (5) For Model ERJ 190-100 ECJ, -100 LR, -100 IGW, -100 STD, -200
STD, -200 LR, and -200 IGW airplanes: Within 100 flight hours after
the effective date of this AD, replace all LPCVs having P/N 1001447-
3 that have accumulated 1,500 total flight hours or more as of the
effective date of this AD, with a new or serviceable LPCV having P/N
1001447-4 that has accumulated less than 2,000 total flight hours
since new or since overhaul, in accordance with the Accomplishment
Instructions of EMBRAER Service Bulletin 190-36-0006, Revision 01,
dated July 19, 2007.
    (6) For Model ERJ 190-100 ECJ, -100 LR, -100 IGW, -100 STD, -200
STD, -200 LR, and -200 IGW airplanes: Replace all LPCVs having P/N
1001447-3 that have accumulated less than 1,500 total flight hours
as of the effective date of this AD, before the LPCV accumulates
1,500 total flight hours or within 100 flight hours after the
effective date of this AD, whichever occurs later. Replace that LPCV
with a new or serviceable LPCV having P/N 1001447-4 that has
accumulated less than 2,000 total flight hours since new or since
overhaul, in accordance with the Accomplishment Instructions of
EMBRAER Service Bulletin 190-36-0006, Revision 01, dated July 19,
2007.
    (7) For Model ERJ 190-100 ECJ, -100 LR, -100 IGW, -100 STD, -200
STD, -200 LR, and -200 IGW airplanes: Within 200 flight

hours after the effective date of this AD, or before any LPCV having
P/N 1001447-4 installed on the right engine accumulates 2,000 total
flight hours since new or since overhaul, whichever occurs later,
replace the valve with a new or serviceable LPCV having P/N 1001447-
4 that has accumulated less than 2,000 total flight hours since new
or since overhaul, in accordance with the Accomplishment
Instructions of EMBRAER Service Bulletin 190-36-0014, Revision 01,
dated January 14, 2009. Repeat the replacement on the right engine
at intervals not to exceed 2,000 total flight hours on the LPCV
since new or last overhaul.
    (8) For Model ERJ 190-100 ECJ, -100 LR, -100 IGW, -100 STD, -200
STD, -200 LR, and -200 IGW airplanes: Within 200 flight hours after
the effective date of this AD, or before any LPCV having P/N
1001447-4 installed on the left engine accumulates 2,000 total
flight hours since new or last overhaul, whichever occurs later,
replace the valve with a new or serviceable LPCV having P/N 1001447-
4 that has accumulated less than 2,000 total flight hours since new
or since overhaul, in accordance with the Accomplishment
Instructions of EMBRAER Service Bulletin 190-36-0014, Revision 01,
dated January 14, 2009. Repeat the replacement on the left engine at
intervals not to exceed 2,000 total flight hours on the LPCV since
new or last overhaul.
    (9) For Model ERJ 190-100 ECJ, -100 LR, -100 IGW, -100 STD, -200
STD, -200 LR, and -200 IGW airplanes: As of the effective date of
this AD, installation on the left and right engines with a LPCV
having P/N 1001447-4 is allowed only if the valve has accumulated
less than 2,000 total flight hours since new or last overhaul prior
to installation.
    (10) For Model ERJ 190-100 ECJ, -100 LR, -100 IGW, -100 STD, -
200 STD, -200 LR, and -200 IGW airplanes: As of the effective date
of this AD, no LPCV having P/N 1001447-3 may be installed on any
airplane. Any LPCV having P/N 1001447-3 already installed on an
airplane may remain in service until reaching the flight-hour limit
defined in paragraphs (j)(5) and (j)(6) of this AD.
    (11) Replacing the LPCV is also acceptable for compliance with
the requirements of paragraph (j)(2) of this AD if done before the
effective date of this AD in accordance with EMBRAER Service
Bulletin 170-36-0011, dated January 9, 2007; or EMBRAER Service
Bulletin 170-36-0011, Revision 01, dated May 28, 2007.
    (12) Replacing the LPCV is also acceptable for compliance with
the requirements of paragraphs (j)(5) and (j)(6) of this AD if done
before the effective date of this AD in accordance with EMBRAER
Service Bulletin 190-36-0006, dated April 9, 2007.
    (13) Replacing the LPCV is also acceptable for compliance with
the corresponding replacement in paragraph (j)(1) of this AD if done
before the effective date of this AD in accordance with EMBRAER
Service Bulletin 170-36-0004, dated November 18, 2005.
    (14) Revising the maintenance program to include maintenance
Task 36-11-02-002 (Low Stage Bleed Check Valve) specified in Section
1 of the EMBRAER 170 Maintenance Review Board Report (MRBR), MRB-
1621, Revision 5, dated November 5, 2008, is acceptable for
compliance with the requirements of paragraph (j)(3) of this AD if
done before the effective date of this AD.

    Note 1: The actions in paragraphs (j)(5), (j)(6), (j)(7),
(j)(8), (j)(9), and (j)(10) of this AD are considered interim action
until a final action is identified, at which time we might consider
issuing further rulemaking.

FAA AD Differences

    Note 2: This AD differs from the MCAI and/or service information
as follows: No differences.

Other FAA AD Provisions

    (k) The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager,
International Branch, ANM-116, Transport Airplane Directorate, FAA,
has the authority to approve AMOCs for paragraph (j) of this AD, if
requested using the procedures found in 14 CFR 39.19. Send
information to ATTN: Kenny Kaulia, Aerospace Engineer, International
Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind
Avenue, SW., Renton, Washington 98057-3356; telephone (425) 227-
2848; fax<PHONE_NUMBER>. Before using any approved AMOC on any
airplane to which the AMOC applies, notify your principal
maintenance inspector (PMI) or principal avionics inspector (PAI),
as appropriate, or lacking a principal inspector, your local Flight
Standards District Office. The AMOC approval letter must
specifically reference this AD.
    AMOCs approved previously in accordance with AD 2007-16-09,
Amendment 39-15148, are approved as AMOCs for the corresponding
provisions of paragraph (j) of this AD.
    (2) Airworthy Product: For any requirement in this AD to obtain
corrective actions from a manufacturer or other source, use these
actions if they are FAA-approved. Corrective actions are considered
FAA-approved if they are approved by the State of Design Authority
(or their delegated agent). You are required to assure the product
is airworthy before it is returned to service.
    (3) Reporting Requirements: For any reporting requirement in
this AD, under the provisions of the Paperwork Reduction Act (44
U.S.C. 3501 et seq.), the Office of Management and Budget (OMB) has
approved the information collection requirements and has assigned
OMB Control Number 2120-0056.

Related Information

    (l) Refer to MCAI Brazilian Airworthiness Directives 2005-09-
03R2, effective February 25, 2008, and 2006-11-01R4, effective April
9, 2009; and the service information listed in Table 1 of this AD;
for related information.

                  Table 1--Related Service Information
------------------------------------------------------------------------
           Document               Revision               Date
------------------------------------------------------------------------
EMBRAER Service Bulletin 170-            01  March 10, 2008.
 36-0004.
EMBRAER Service Bulletin 170-            02  July 19, 2007.
 36-0011.
EMBRAER Service Bulletin 190-            01  July 19, 2007.
 36-0006.
EMBRAER Service Bulletin 190-            01  January 14, 2009.
 36-0014.
Task 36-11-02-002 (Low Stage              6  January 14, 2010.
 Bleed Check Valve) specified
 in Section 1 of the EMBRAER
 170 Maintenance Review Board
 Report (MRBR) MRB-1621.
------------------------------------------------------------------------

Material Incorporated by Reference

    (m) You must use the service information contained in Table 2 of
this AD, and the specified task in Section 1 of the EMBRAER 170
Maintenance Review Board Report (MRBR) MRB-1621, Revision 6, dated
January 14, 2010, as applicable, to do the actions required by this
AD, unless the AD specifies otherwise.

               Table 2--Material Incorporated by Reference
------------------------------------------------------------------------
           Document               Revision               Date
------------------------------------------------------------------------
EMBRAER Service Bulletin 170-            01  March 10, 2008.
 36-0004.
EMBRAER Service Bulletin 170-            02  July 19, 2007.
 36-0011.
EMBRAER Service Bulletin 190-            01  July 19, 2007.
 36-0006.
EMBRAER Service Bulletin 190-            01  January 14, 2009.
 36-0014.
------------------------------------------------------------------------

     (1) The Director of the Federal Register approved the
incorporation by reference of the service information specified in
this AD under 5 U.S.C. 552(a) and 1 CFR part 51.
    EMBRAER 170 MRBR MRB-1621, Revision 6, dated January 14, 2010,
contains the following effective pages:

                                             List of Effective Pages
----------------------------------------------------------------------------------------------------------------
      Page title/description              Page Nos.            Revision No.           Date shown on page(s)
----------------------------------------------------------------------------------------------------------------
MRBR Title Page...................  None shown...........  6...................  January 14, 2010.
MRBR List of Effective Pages......  A-P..................  None shown\*\.......  January 14, 2010.
MRBR Table of Contents............  1....................  None shown\*\.......  November 5, 2008.
                                    2-3..................  None shown\*\.......  January 14, 2010.
                                    4....................  None shown\*\.......  May 31, 2007.
Section 1.........................  1-1, 1-2, 1-8........  None shown\*\.......  May 31, 2007.
                                    1-3 through 1-7, 1-9,  None shown\*\.......  January 14, 2010.
                                     1-13 through 1-86.
                                    1-10.................  None shown\*\.......  November 5, 2008.
                                    1-11, 1-12...........  None shown\*\.......  June 29, 2006.
----------------------------------------------------------------------------------------------------------------
\*\ Only the title page of EMBRAER 170 MRBR MRB-1621, Revision 6, contains the revision level of this document.

    (2) For service information identified in this AD, contact
Empresa Brasileira de Aeronautica S.A. (EMBRAER), Technical
Publications Section (PC 060), Av. Brigadeiro Faria Lima, 2170--
Putim--12227-901 S[atilde]o Jose dos Campos--SP--BRASIL; telephone
+55 12 3927-5852 or +55 12 3309-0732; fax +55 12 3927-7546; e-mail
<EMAIL_ADDRESS>Internet http://www.flyembraer.com.
    (3) You may review copies of the service information at the FAA,
Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton,
Washington. For information on the availability of this material at
the FAA, call<PHONE_NUMBER>.
    (4) You may also review copies of the service information that
is incorporated by reference at the National Archives and Records
Administration (NARA). For information on the availability of this
material at NARA, call<PHONE_NUMBER>, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.

    Issued in Renton, Washington, on June 23, 2010.
Ali Bahrami,
Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 2010-16182 Filed 7-21-10; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 84, Number 98 (Tuesday, May 21, 2019)]
[Rules and Regulations]
[Pages 22971-22972]
[FR Doc No: 2019-10539]

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

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 165

[Docket No. USCG-2019-0314]

Safety Zone; Chicago Harbor, Navy Pier Southeast, Chicago, IL

AGENCY: Coast Guard, DHS.

ACTION: Notice of enforcement of regulation.

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

SUMMARY: The Coast Guard will enforce the Navy Pier Southeast Safety
Zone within the Chicago Harbor during specified times from May 25, 2019
through January 1, 2020. This action is necessary and intended to
protect safety of life and property on navigable waters prior to,
during, and immediately after firework displays. During the enforcement
periods listed below, entry into, transiting, or anchoring within the
safety zone is prohibited unless authorized by the Captain of the Port,
Lake Michigan or a designated representative.

DATES: The regulation in 33 CFR 165.931 will be enforced at the times
specified below in SUPPLEMENTARY INFORMATION from May 25, 2019 through
January 1, 2020.

FOR FURTHER INFORMATION CONTACT: If you have questions about this
notice of enforcement, call or email LT John Ramos, Waterways
Management Division, Marine Safety Unit Chicago, U.S. Coast Guard;
telephone<PHONE_NUMBER>, email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: The Coast Guard will enforce Safety Zone;
Chicago Harbor, Navy Pier Southeast, Chicago, IL listed in 33 CFR
165.931, from 10:10 p.m. through 10:30 p.m. each Saturday from May 25,
2019 through August 31, 2019, and from 9:25 p.m. through 9:45 p.m. each
Wednesday from May 29, 2019 through August 28, 2019. Additionally, this
safety zone will be enforced from 9:20 p.m. through 10 p.m. on July 4,
2019, and from 11:45 p.m. on December 31, 2019 through 12:30 a.m. on
January 1, 2020.
    This safety zone encompasses all waters of Lake Michigan within
Chicago Harbor bounded by coordinates beginning at 41[deg]53'23.3'' N,
087[deg]36'04.5'' W; then south to 41[deg]53'11.8'' N,
087[deg]36'04.1'' W; then west to 41[deg]53'12.1'' N, 087[deg]35'40.5''
W; then north to 41[deg]53'23.6'' N, 087[deg]35'40.07'' W; then east
back to the point of origin (NAD 83). Entry into, transiting, or
anchoring within the safety zone is prohibited unless authorized by the
Captain of the Port, Lake Michigan or a designated on-scene
representative.
    This notice of enforcement is issued under authority of 33 CFR
165.931 and 5 U.S.C. 552(a). In addition to this notification in the
Federal Register, the Coast Guard will provide the maritime community
with advance notification of the above-specified enforcement periods of
this safety zone via Broadcast Notice to Mariners and Local Notice to

Mariners. The Captain of the Port, Lake Michigan or a designated on-
scene representative may be contacted via Channel 16, VHF-FM or at
(414) 747-7182.

    Dated: May 15, 2019.
Thomas J. Stuhlreyer,
Captain, U.S. Coast Guard, Captain of the Port, Lake Michigan.
[FR Doc. 2019-10539 Filed 5-20-19; 8:45 am]
 BILLING CODE 9110-04-P


Emission Rate kg/ yr Cost Savings $ M/ yr Incidence case/ year Incremental Cost $ M/ yr Incremental cases avoided/ year Incremental Cost Effectiveness $ M/ case avoided Baseline 0.0 0.40 Baseline to 100,000 ( 3.2) 0.14 ($ 22.8) 100000 ( 3.2) 0.26 100,000 to 60,000 ( 0.3) 0.05 ($ 6.0) 60,000 ( 3.5) 0.21 60,000 to 40,000 ( 0.1) 0.04 ($ 2.5) 40,000 ( 3.6) 0.17 40,000 to 25,000 0.6 0.04 $ 15.0 25,000 ( 3.0) 0.13 25,000 to 15,000 1.4 0.04 $ 47.5 15,000 ( 1.6) 0.09 15,000 to 6,000 3.1 0.05 $ 62.0 6,000 1.5 0.04