[Federal Register Volume 77, Number 114 (Wednesday, June 13, 2012)]
[Notices]
[Pages 35450-35453]
[FR Doc No: 2012-14343]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67160; File No. SR-EDGA-2012-19]

Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Amendments to the EDGA Exchange, Inc. Fee Schedule

DATES: June 7, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on May 29, 2012 the EDGA Exchange, Inc. (the ``Exchange'' or the
``EDGA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend its fees and rebates applicable to
Members \3\ of the Exchange pursuant to EDGA Rule 15.1(a) and (c). All
of the changes described herein are applicable to EDGA Members. The
text of the proposed rule change is available on the Exchange's
Internet Web site at http://www.directedge.com, at the Exchange's
principal office, and at the Public Reference Room of the Commission.
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    \3\ A Member is any registered broker or dealer, or any person
associated with a registered broker or dealer, that has been
admitted to membership in the Exchange.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in sections A, B and C below, of the
most significant aspects of such statements.

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

Purpose
    The Exchange proposes to introduce the Message Efficiency Incentive
Program (``MEIP'') to its fee schedule and codify it in footnote c of
the fee schedule. Under the MEIP, Members will receive standard rebates
and tier rebates as provided on the EDGA fee schedule so long as the
Member's average inbound message-to-trade ratio, measured monthly, is
at or less than 100:1 for that month. The Exchange notes that the
message-to-trade ratio is calculated by including total messages as the
numerator (orders, cancels, and cancel/replace messages) and dividing
it by total executions.\4\ The Exchange also notes that any cancel/
replace message, regardless of whether it is a partial cancel, is
considered a new order. Members who do not satisfy this criteria will
have their rebates reduced by $0.0001 per share, regardless of any
tiers for which the Member would otherwise qualify.
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    \4\ The Exchange notes that it counts only the first partial or
complete execution resulting from an order if it is filled in parts.
So, if a 1,000 share orders results in three partial executions of
400 shares, 300 shares, and 300 shares, it counts only the first
execution of 400 shares toward the denominator. Thus, the Exchange
counts all fills against an order as one trade for purposes of
``total executions.''
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    The Exchange notes that Members sending fewer than 1 million
messages per day are exempt from MEIP. Because of a Market Maker's \5\
importance in liquidity provision and their ongoing obligations in Rule
11.21(d) \6\ to maintain continuous two-sided interest, Members that
are registered as Market Makers \7\ will be exempt from the MEIP
requirements in all securities provided that a Market Maker is
registered in at least 100 securities over the course of a given month
and is meeting its continuous, two-sided quoting obligations in those
100 securities as provided for in Rule 11.21(d) on at least 10
consecutive trading days in the month, where the Exchange believes that
10 days represents a consistent quoting obligation from the Member.\8\

Because a Member's trading activity is not segregated by market
participant identifiers (MPID), the Market Making exemption applies to
the parent firm and all wholly owned affiliates upon the satisfaction
of the Market Maker exemption criteria by one MPID. All MPIDs that are
wholly-owned affiliates are exempt from the MEIP as long as one MPID
satisfies the criteria for an exemption under market making. In
recognition of the value that the Exchange derives from such market
making, any Member that meets the market making obligations pursuant to
Rule 11.21(d) on at least 10 consecutive trading days in the month will
be exempt from a MEIP rebate reduction.
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    \5\ As defined in Rule 1.5(l).
    \6\ Rule 11.21(d) provides that ``For each security in which a
Member is registered as a Market Maker, the Member shall be willing
to buy and sell such security for its own account on a continuous
basis during Regular Trading Hours shall enter and maintain a two-
sided trading interest (``Two-Sided Obligation'') that is displayed
in the Exchange's System at all times.''
    \7\ Registration requirements for Market Makers are outlined in
Rule 11.20.
    \8\ The Exchange notes that all registered Market Makers are
obligated to meet continuous, two-sided quoting obligations under
Rule 11.21(d) whether or not they qualify for the exemption under
the MEIP.
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    The Exchange may exclude one or more days of data for purposes of
calculating the message-to-trade ratio for a Member if the Exchange
determines, in its sole discretion, that one or more Members or the
Exchange experienced a bona fide systems problem.\9\ Any Member seeking
relief as a result of a systems problem will be required to notify the
Exchange via email with a description of the systems problem. The
Exchange shall keep a record of all such requests and whether the
request was deemed by the Exchange to be a bona fide systems problem
resulting in waiving that day's activity from the calculation of the
message-to-trade ratio.
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    \9\ An example of bona fide systems problem includes, but is not
limited to, an Exchange systems problem that causes a Member to
continually attempt to update or withdraw its orders, generating a
large volume of traffic. In those cases, where the bona fide systems
problem is at the Exchange, the Exchange will exclude the day's
activity from the calculation of the message-to-trade ratio for all
Members that were impacted by the bona fide systems problem. See
Securities Exchange Act Release No. 65341 (September 14, 2011), 76
FR 58555 (September 21, 2011) (SR-NYSEAmex-2011-68) for
substantially similar exclusions from their ``Messages Fee.''
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    The Exchange proposes to implement these amendments to its fee
schedule on June 1, 2012.
Basis
    The Exchange believes that the proposed rule changes are consistent
with the objectives of Section 6 of the Act,\10\ in general, and
furthers the objectives of Section 6(b)(4),\11\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its members and other persons using its
facilities.
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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the MEIP is designed to provide for the
equitable allocation of reasonable dues, fees and other charges among
its Members and other persons using its facilities. The Exchange
believes that the MEIP will promote a more efficient marketplace and
enhance the trading experience of all Members by encouraging Members to
more efficiently participate in the marketplace, ensuring that systems
capacity/bandwidth is utilized efficiently while still encouraging the
provision of liquidity in volatile, high-volume markets and provide
Members with order management flexibility. Unfettered growth in
bandwidth consumption can have a detrimental effect on all market
participants who are potentially compelled to upgrade capacity as a
result of the bandwidth usage of other participants. All Members are
still free to manage their order and message flow as is consistent with
their business models. However, Members who more efficiently
participate by sending average monthly inbound message-to-trade ratios
of equal to or less than 100:1 for that month are rewarded with the
standard rebates and tiered fees provided in the fee schedule. The
Exchange believes that this will promote a more efficient marketplace,
encourage liquidity provision and enhance the trading experience of all
Members on an ongoing basis. The Exchange notes that its technology and
infrastructure are still able to handle high-volume and high-volatility
situations for those Members that do not satisfy the criteria of the
MEIP. The Exchange believes that the proposal is equitable and non-
discriminatory in that it applies uniformly to all Members, except with
respect to its Members that are registered as Market Makers who meet
certain criteria, as discussed in more detail below.
    The MEIP is also reasonable in that it is similar to other programs
offered by equities exchanges, namely Nasdaq OMX (``Nasdaq''), NYSE,
and NYSE Arca. The Exchange believes the MEIP encourages Members to
avoid sending extraneous messages to the Exchange's system and thereby
encourages more efficient amounts of liquidity to be added to EDGA each
month. The Exchange believes that the MEIP will thus discourage trading
practices that offer little benefit from liquidity posted to or routed
through the EDGA book that may place unwarranted burdens on EDGA's
systems. Such increased ``efficient'' volume lowers operational,
bandwidth, and surveillance costs of the Exchange and promotes more
relevant quotes, which may result in lower per share costs for all
Members. The increased liquidity also benefits all investors by
deepening EDGA's liquidity pool, offering additional flexibility for
all investors to enjoy cost savings, supporting the quality of price
discovery, promoting market transparency and improving investor
protection.
    In addition, the rebate is also reasonable in that other exchanges
likewise employ similar pricing mechanisms. For example, Nasdaq \12\
and NYSE Arca \13\ offer investor support programs and investor tiers,
respectively. Such programs reward liquidity provision attributes and
encourage price discovery by encouraging a low cancellation rate on
liquidity-providing orders. MEIP is similar to Nasdaq's/NYSE Arca's
programs in they both encourage efficient liquidity provision. It is
similar to Nasdaq's Investor Support Program in that for Nasdaq members
to qualify, among a firm's liquidity-providing

orders, it must maintain a ratio of ``orders'' to ``orders executed''
of less than ten to one (i.e., at least one out of every ten liquidity-
providing orders submitted must be executed rather than cancelled).
Similarly, NYSE Arca's investor tiers require its members to maintain a
ratio of cancelled orders to total orders of less than 30% and maintain
a ratio of executed liquidity adding volume to total volume of greater
than 80%, among other criteria. The MEIP is similar to NYSE Arca's
investor tiers in that like NYSE Arca's investor tiers, the Exchange's
goal is to incentivize Members to maintain low cancellation rates and
provide liquidity that supports the quality of price discovery and
promotes market transparency. In addition, similar to the investor
tiers of NYSE Arca, the MEIP ``reward[s] providers whose orders stay on
the [b]ook and do not rapidly cancel a large portion of their orders
placed, which makes the price discovery process more efficient and
results in higher fill rates, greater depth and lower volatility. It
serves to encourage customers to post orders that are more likely to be
executed.'' \14\
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    \12\ See Nasdaq Rule 7014. Similarly, Nasdaq established an
Investor Support Program (``ISP'') targeting retail and
institutional investor orders where firms receive a higher rebate if
they meet all of the following criteria: (1) Add at least 10 million
shares of liquidity per day via ISP-designated ports; (2) Maintain a
ratio of orders-to-orders executed of less than 10 to 1 (counting
only liquidity-providing orders and excluding certain order types)
on ISP-designated ports; (3) Exceed the firm's August 2010/2011
``baseline'' volume of liquidity added across all the firm's ports.
For a detailed description of the Investor Support Program as
originally implemented, see Securities Exchange Act Release No.
63270 (November 8, 2010), 75 FR 69489 (November 12, 2010) (SR-
Nasdaq-2010-141) (notice of filing and immediate effectiveness) (the
``ISP Filing''). See also Securities Exchange Act Release Nos. 63414
(December 2, 2010), 75 FR 76505 (December 8, 2010) (SR-Nasdaq-2010-
153) (notice of filing and immediate effectiveness); 63628 (January
3, 2011), 76 FR 1201 (January 7, 2011) (SR-Nasdaq-2010-154) (notice
of filing and immediate effectiveness); 63891 (February 11, 2011),
76 FR 9384 (February 17, 2011) (SR-Nasdaq-2011-022) (notice of
filing and immediate effectiveness); and 64050 (March 8, 2011), 76
FR 13694 (March 14, 2011) (SR-Nasdaq-2011-034). See also Securities
Exchange Act Release No. 65717 (November 9, 2011), 76 FR 70784
(November 15, 2011) (SR-Nasdaq-2011-150).
    \13\ NYSE Arca also implemented investor tiers where they allow
Members to earn a credit of $0.0032 per share for executed orders
that provide liquidity to the Book for Tape A, Tape B and Tape C
securities when they meet all of the following criteria on a monthly
basis: (1) Maintain a ratio of cancelled orders to total orders of
less than 30%; (2) Maintain a ratio of executed liquidity adding
volume to total volume of greater than 80%; and (3) Firms must add
liquidity that represents 0.45% or more of the total US average
daily consolidated share volume (``ADV'') per month (volume on days
when the market closes early is excluded from the calculation of
ADV). See Securities Exchange Act Release No. 64593 (June 3, 2011),
76 FR 33380 (June 8, 2011) (SR-NYSEArca-2011-34); Securities
Exchange Act Release No. 66115 (January 6, 2012), 77 FR 1969
(January 12, 2012) (SR-NYSEArca-2011-101) (notice of filing and
immediate effectiveness of a proposed rule change replacing
numerical thresholds with percentage thresholds for the Investor
Tiers' volume requirements). See also Securities Exchange Act
Release No. 66378 (February 10, 2012), 77 FR 9278 (February 16,
2012) (SR-NYSEArca-2012-13).
    \14\ See Securities Exchange Act Release No. 64593 (June 3,
2011), 74 FR 33380 (June 8, 2011) (SR-NYSEArca-2011-34).
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    The MEIP is also similar to Nasdaq's ``excessive message fee'', in
which Nasdaq charges a per order fee for its members that make
inefficient use of certain features of Nasdaq's routing facility.\15\
When Nasdaq members route to the NYSE after having their orders check
the Nasdaq book, they may designate their orders as eligible for
posting to the Nasdaq book after accessing available liquidity at NYSE
and elsewhere, or they may designate their orders for posting the NYSE
book. Nasdaq's excessive message fee applies to round lot or mixed lot
orders that attempt to execute on Nasdaq for the full size of the order
prior to routing, but that are designated as not eligible to post on
Nasdaq (``DOTI Orders''). If a member sends an average of more than
10,000 DOTI Orders per day during the month, and the ratio between
total DOTI Orders and DOTI Orders that are fully or partially executed
(either at Nasdaq or NYSE) exceeds 300 to 1, then the Nasdaq member
will be charged a fee of $ 0.01 for each order that exceeds the ratio.
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    \15\ See Securities Exchange Act Release No. 59455 (February 25,
2009), 74 FR 9457 (March 4, 2009) (SR-NYSEArca-2009-013).
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    Similar to the Exchange, Nasdaq introduced the excessive message
fee to encourage more efficient liquidity provision--namely, ``to
address the practice of [its] members routing an order to the NYSE book
through NASDAQ and quickly cancelling the order and resubmitting it at
a different price if it does not execute within a short period of time.
The practice offers no benefits in terms of liquidity posted to the
NASDAQ book or execution or routing revenues, and could place
unwarranted burdens on NASDAQ routing systems.'' \16\ Nasdaq stated
that ``Members wishing to continue to use this routing strategy may do
so through other means of routing to NYSE, but will be discouraged from
doing so through NASDAQ systems.'' \17\ The Exchange shares these same
objectives in introducing MEIP.
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    \16\ Id.
    \17\ Id.
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    The MEIP is also similar to the NYSE Amex options exchange's
``Messages Fee,'' which promotes efficient usage of system capacity by
assessing a fee against its members that enter excessive amounts of
orders and quotes that produce little or no volume based on the ratio
of quotes and orders to contracts traded. Like NYSE Amex, the Exchange
believes it is in the best interest of all Members who access its
markets to encourage efficient usage of capacity.\18\ In addition, the
MEIP is also similar to a host of other options exchanges that assess
cancellation fees based on the number of order cancellations, as such
high cancellations increases these market centers' costs by requiring
them to spend increased amounts on systems and other hardware to
process increased order traffic flow.\19\
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    \18\ See Securities Exchange Act Release No. 64655 (June 13,
2011), 76 FR 35495 (June 17, 2011) (SR-NYSEAmex-2011-37); See also
Securities Exchange Act Release No. 65341 (September 14, 2011), 76
FR 58555 (September 21, 2011) (SR-NYSEAmex-2011-68).
    \19\ See Securities and Exchange Act Release No. 62744 (August
19, 2010), 75 FR 52558 (August 26, 2010) (SR-Phlx-2010-105);
Securities and Exchange Act Release No. 53226 (February 3, 2006), 71
FR 7602 (February 13, 2006) (SR-Phlx-2005-92); Securities and
Exchange Act Release No. 49802 (June 3, 2004), 69 FR 32391 (June 9,
2004) (SR-PCX-2004-31); Securities and Exchange Act Release No.
46189 (July 11, 2002), 67 FR 47587 (July 19, 2002) (SR-ISE-2002-16);
Securities and Exchange Act Release No. 44607 (July 27, 2001), 66 FR
40757 (August 3, 2001) (SR-CBOE-2001-40).
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    Finally, the lower rebates offered to Members who do not satisfy
the MEIP criteria allows the Exchange to recoup costs associated with
the higher costs of surveillance, data, storage, bandwidth, and other
infrastructure associated with higher message traffic compared to those
Members with lower message traffic. The Exchange believes it to be
equitable for Members to get lower rebates when their higher message
traffic causes the Exchange to incur higher costs and for Members to
receive higher rebates when their message traffic causes the Exchange
to incur lower costs.
    The Exchange believes that the proposal is allocated in a
reasonable and equitable manner because it exempts Members that are
registered as Market Makers that contribute to market quality by
providing higher volumes of liquidity and have enhanced obligations
under Exchange Rule 11.21(d) to maintain fair and orderly markets and
quote continuous, two-sided markets. The proposal is equitable because
it provides discounts that are reasonably related to the value to an
exchange's market quality associated with higher levels of market
activity, such as higher levels of liquidity provision and introduction
of higher volumes of orders into the price and volume discovery
processes. The Exchange believes that allowing Market Makers to be
exempt from the MEIP will attract additional order flow and liquidity
to the Exchange. This concept is similar to the structure of varying
rebate schedules on other exchanges, where it is common to tie rebates
to market making obligations. For example, rewarding Market Makers with
better rebates tied to their market making obligations is consistent
with how Supplemental Liquidity Providers (``SLPs'') and Designated
Market Makers (``DMMs'') are rebated on NYSE \20\ and Lead Market
Makers (``LMMs'') are rebated on NYSE Arca.\21\ NYSE offers rebates to
Designated Market Makers ranging from $0.0004 per share to $0.0035 per
share and to Supplemental Liquidity Providers ranging from $0.0010 per
share to $0.0024 per share. NYSE Arca offers rebates to its market
makers ranging from $0.001 per share to $0.0015 per share and to its
Lead Market Makers ranging from $0.004 per share to $0.0045 per share.
In addition, the NYSE Amex's messages to contracts traded ratio fee
allows its market makers to have incentives, but incorporate a higher
level of message traffic before its fees take effect. Like the
Exchange, NYSE Amex felt that the ``higher level of free message
traffic [was] appropriate due to the quoting obligations incurred by
market makers and their importance as liquidity providers in the
options market.'' \22\ In addition, Members that send less than 1
million messages/day are exempt from this reduction in rebate under the
MEIP as well. The Exchange believes this to be equitable and

reasonable since those Members do not have a large cumulative effect on
the Exchange's message traffic and thus the Exchange's operational,
surveillance, and administrative costs are lower for those Members than
those Members with higher message traffic.
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    \20\ See NYSE Price List 2012.
    \21\ See NYSE Arca Equities, Inc. Schedule of Fees and Charges
for Exchange Services.
    \22\ See Securities Exchange Act Release No. 64655 (June 13,
2011), 76 FR 35495 (June 17, 2011) (SR-NYSEAmex-2011-37).
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    Thus, the Exchange believes that the MEIP's fees among its Members
are uniform except with respect to reasonable and well-established
distinctions with respect to market making and Members with lower
message traffic (those that send less than 1 million messages/day).
These distinctions or analogous versions of them have been previously
filed with the Commission.\23\
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    \23\ Id. See also supra notes 13-15, 18-21 (NYSE Amex assesses a
messages fee if the certain of its members exceed one billion quotes
and/or orders (``messages''); Nasdaq assesses its excessive message
fee if a member sends an average of more than 10,000 DOTI Orders per
day during the month, and the ratio between total DOTI Orders and
DOTI Orders that are fully or partially executed (either at Nasdaq
or NYSE) exceeds 300 to 1.)
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    The Exchange also notes that it operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive. The proposed rule change reflects a competitive pricing
structure designed to encourage market participants to direct their
order flow to the Exchange. The Exchange believes that the proposed
rates are equitable and non-discriminatory in that they apply uniformly
to all Members, except with respect to Market Makers for the reasons
cited above. The Exchange believes the fees and credits remain
competitive with those charged by other venues and therefore continue
to be reasonable and equitably allocated to Members.

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

    The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.

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

    The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3) of the Act \24\ and Rule 19b-4(f)(2) \25\ thereunder. At any
time within 60 days of the filing of such proposed rule change, the
Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
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    \24\ 15 U.S.C. 78s(b)(3)(A).
    \25\ 17 CFR 19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please
include File Number SR-EDGA-2012-19 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-EDGA-2012-19. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-EDGA-2012-19 and should be
submitted on or before July 5, 2012.
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    \26\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14343 Filed 6-12-12; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: May 7, 2009 (Volume 74, Number 87)]
[Rules and Regulations]
[Page 21254-21255]
[DOCID:fr07my09-5]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2008-1275; Directorate Identifier 2007-NM-167-AD;
Amendment 39-15892; AD 2009-09-06]
RIN 2120-AA64

Airworthiness Directives; Boeing Model 737-100, -200, -200C, -
300, -400, and -500 Series Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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SUMMARY: We are adopting a new airworthiness directive (AD) for certain
Boeing Model 737-100, -200, -200C, -300, -400, and -500 series
airplanes. This AD requires repetitive detailed and high frequency eddy
current inspections to detect cracks of the backup intercostals and the
upper sill of the forward airstair doorway, and applicable corrective
actions. This AD also provides for an optional terminating action,
which would eliminate the need for repetitive inspections. This AD
results from a report indicating that cracks were found in the backup
intercostals and upper sill web of the forward airstair doorway. We are
issuing this AD to detect and correct fatigue cracking of the backup
intercostals and upper sill web of the forward airstair doorway, which
could result in a rapid loss of cabin pressure.

DATES: This AD is effective June 11, 2009.
    The Director of the Federal Register approved the incorporation by
reference of a certain publication listed in the AD as of June 11,
2009.

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

Examining the AD Docket

    You may examine the AD docket on the Internet at http://
www.regulations.gov; or in person at the Docket Management Facility
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays. The AD docket contains this AD, the regulatory evaluation,
any comments received, and other information. The address for the
Docket Office (telephone<PHONE_NUMBER>) is the Document Management
Facility, U.S. Department of Transportation, Docket Operations, M-30,
West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE.,
Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Alan Pohl, Aerospace Engineer,
Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office,
1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone (425)
917-6450; fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR
part 39 to include an airworthiness directive (AD) that would apply to
certain Boeing Model 737-100, -200, -200C, -300, -400, and -500 series
airplanes. That NPRM was published in the Federal Register on December
5, 2008 (73 FR 74080). That NPRM proposed to require repetitive
detailed and high frequency eddy current inspections to detect cracks
of the backup intercostals and the upper sill of the forward airstair
doorway, and applicable corrective actions. That NPRM also provided an
optional terminating action, which would eliminate the need for
repetitive inspections.

Comments

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

Support for the NPRM

    Boeing concurs with the contents of the NPRM.

Request for Clarification

    Southwest Airlines requests more information regarding alternative
procedures for airplanes that have had the airstair door deactivated
per Boeing Service Bulletin 737-52-1092. Southwest Airlines asks
whether instructions developed by operators, for open and close of an
airstair door after deactivation per Boeing Service Bulletin 737-52-
1092, will be considered approved equivalent procedures.
    No alternative procedures have been established that have general
FAA approval; however, according to the provisions of paragraph (h) of
the final rule we may approve requests for different compliance methods
if the requests include data that prove that the new methods would
provide an acceptable level of safety.

Conclusion

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

Costs of Compliance

    There are 1,712 airplanes of the affected design in the worldwide
fleet. This AD affects 509 airplanes of U.S. registry. The inspections
take 2 work hours per airplane, at an average labor rate of $80 per
work hour. Based on these figures, the estimated cost of the AD for
U.S. operators is $81,440, or $160 per airplane, per inspection cycle.
    The optional terminating action, if done, would take 9 work hours,
at an average labor rate of $80 per work hour. Required parts cost
between $533 and $566 per airplane, depending on the airplane
configuration. Based on these figures, the estimated cost of the
optional terminating action would range between $1,253 and $1,286 per
airplane, depending on the airplane configuration.

Authority for This Rulemaking

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

Regulatory Findings

    This AD will not have federalism implications under Executive Order
13132. This AD will not have a substantial direct effect on the States,
on the relationship between the national government and the States, or
on the distribution of power and

responsibilities among the various levels of government.
    For the reasons discussed above, I certify that this AD:
    (1) Is not a ``significant regulatory action'' under Executive
Order 12866,
    (2) Is not a ``significant rule'' under DOT Regulatory Policies and
Procedures (44 FR 11034, February 26, 1979), and
    (3) Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.
    You can find our regulatory evaluation and the estimated costs of
compliance in the AD Docket.

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new AD:

2009-09-06 Boeing: Amendment 39-15892. Docket No. FAA-2008-1275;
Directorate Identifier 2007-NM-167-AD.

Effective Date

    (a) This airworthiness directive (AD) is effective June 11,
2009.

Affected ADs

    (b) None.

Applicability

    (c) This AD applies to Boeing Model 737-100, -200, -200C, -300,
-400, and -500 series airplanes, certificated in any category; as
identified in Boeing Alert Service Bulletin 737-53A1269, dated May
17, 2007.

Unsafe Condition

    (d) This AD results from a report indicating that cracks were
found in the backup intercostals and upper sill web of the forward
airstair doorway. We are issuing this AD to detect and correct
fatigue cracking of the backup intercostals and upper sill web of
the forward airstair doorway, which could result in a rapid loss of
cabin pressure.

Compliance

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

Inspections

    (f) At the applicable compliance times and repeat intervals
listed in the tables of paragraph 1.E., ``Compliance,'' of Boeing
Alert Service Bulletin 737-53A1269, dated May 17, 2007 (hereafter
``the service bulletin''), except as provided by paragraphs (f)(1),
(f)(2), and (f)(3) of this AD: Do repetitive detailed and high
frequency eddy current inspections to detect cracks of the backup
intercostals and the upper sill of the forward airstair doorway, and
applicable corrective actions by accomplishing all the applicable
actions specified in the Accomplishment Instructions of the service
bulletin. Do the applicable corrective actions before further
flight.
    (1) Where the service bulletin specifies a compliance time from
the release date of the service bulletin, this AD requires
compliance within the specified compliance time after the effective
date of this AD.
    (2) Where the columns identified as ``Airplane Flight Cycles''
in the tables of the service bulletin specify less than 45,000 total
flight cycles for certain actions, this AD affects airplanes having
less than or equal to 45,000 total flight cycles.
    (3) Where the columns identified as ``Repeat Interval'' in the
tables of the service bulletin specify an interval of 4,500 flight
cycles for all conditions, this AD requires repetitive inspections
only if no crack is found during any inspection required by
paragraph (f) of this AD.

Optional Terminating Action

    (g) Accomplishing the backup intercostal repair/preventative
modification and/or the upper door sill web repair, in accordance
with the Accomplishment Instructions of Boeing Alert Service
Bulletin 737-53A1269, dated May 17, 2007, terminates all the
corresponding repetitive inspection requirements of paragraph (f) of
this AD.

Alternative Methods of Compliance (AMOCs)

    (h)(1) The Manager, Seattle Aircraft Certification Office (ACO),
FAA, has the authority to approve AMOCs for this AD, if requested
using the procedures found in 14 CFR 39.19. Send information to
ATTN: Alan Pohl, Aerospace Engineer, Airframe Branch, ANM-120S, FAA,
Seattle ACO, 1601 Lind Avenue, SW., Renton, Washington 98057-3356;
telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>.
    (2) To request a different method of compliance or a different
compliance time for this AD, follow the procedures in 14 CFR 39.19.
Before using any approved AMOC on any airplane to which the AMOC
applies, notify your principal maintenance inspector (PMI) or
principal avionics inspector (PAI), as appropriate, or lacking a
principal inspector, your local Flight Standards District Office.
The AMOC approval letter must specifically reference this AD.
    (3) An AMOC that provides an acceptable level of safety may be
used for any repair required by this AD, if it is approved by an
Authorized Representative for the Boeing Commercial Airplanes
Delegation Option Authorization Organization who has been authorized
by the Manager, Seattle ACO, FAA, to make those findings. For a
repair method to be approved, the repair must meet the certification
basis of the airplane, and the approval must specifically refer to
this AD.

Material Incorporated by Reference

    (i) You must use Boeing Alert Service Bulletin 737-53A1269,
dated May 17, 2007, to do the actions required by this AD, unless
the AD specifies otherwise. The optional actions specified by this
AD, if accomplished, must also be done in accordance with Boeing
Alert Service Bulletin 737-53A1269, dated May 17, 2007.
    (1) The Director of the Federal Register approved the
incorporation by reference of this service information under 5
U.S.C. 552(a) and 1 CFR part 51.
    (2) For service information identified in this AD, contact
Boeing Commercial Airplanes, Attention: Data & Services Management,
P.O. Box 3707, MC 2H-65, Seattle, Washington 98124-2207; telephone
206-544-5000, extension 1; fax<PHONE_NUMBER>; e-mail
<EMAIL_ADDRESS>Internet https://www.myboeingfleet.com.
    (3) You may review copies of the service information at the FAA,
Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton,
Washington. For information on the availability of this material at
the FAA, call<PHONE_NUMBER> or<PHONE_NUMBER>.
    (4) You may also review copies of the service information that
is incorporated by reference at the National Archives and Records
Administration (NARA). For information on the availability of this
material at NARA, call<PHONE_NUMBER>, or go to: http://
www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.

    Issued in Renton, Washington, on April 22, 2009.
Stephen P. Boyd,
Assistant Manager, Transport Airplane Directorate, Aircraft
Certification Service.
[FR Doc. E9-9947 Filed 5-6-09; 8:45 am]

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