[Federal Register: February 5, 2008 (Volume 73, Number 24)]
[Rules and Regulations]
[Page 6578-6582]
[DOCID:fr05fe08-3]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2007-29061; Directorate Identifier 2006-NM-243-AD;
Amendment 39-15362; AD 2008-03-12]
RIN 2120-AA64

Airworthiness Directives; McDonnell Douglas Model DC-8-11, DC-8-
12, DC-8-21, DC-8-31, DC-8-32, DC-8-33, DC-8-41, DC-8-42, and DC-8-43
Airplanes; Model DC-8F-54 and DC-8F-55 Airplanes; Model DC-8-50, -60, -
60F, -70, and -70F Series Airplanes; Model DC-9-10, -20, -30, -40, and
-50 Series Airplanes; Model DC-9-81 (MD-81), DC-9-82 (MD-82), DC-9-83
(MD-83), and DC-9-87 (MD-87) Airplanes; and Model MD-88 Airplanes

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

ACTION: Final rule.

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SUMMARY: The FAA is superseding an existing airworthiness directive
(AD), which applies to certain McDonnell Douglas airplanes. The
existing AD currently requires an initial general visual or dye
penetrant inspection, repetitive dye penetrant inspections, and
replacement, as necessary, of the rudder pedal bracket. The existing AD
also currently requires, for certain airplanes, replacing the rudder
pedal bracket assemblies with new, improved parts, which would
terminate the repetitive inspections. For certain airplanes, this new
AD requires initial inspection at a reduced threshold, removes an
inspection option, and lengthens the repetitive inspection intervals.
This AD results from reports of failures of the captain's rudder pedal
brackets before reaching the initial inspection threshold identified in
the existing AD. We are issuing this AD to prevent failure of the
rudder pedal bracket assembly, which could result in the loss of rudder
and braking control at either the captain's or first officer's
position.

DATES: This AD becomes effective March 11, 2008.
    The Director of the Federal Register approved the incorporation by
reference of certain publications listed in the AD as of March 11,
2008.
    On May 16, 2006 (71 FR 18201, April 11, 2006), the Director of the
Federal Register approved the incorporation by reference of certain
other publications listed in the AD.

ADDRESSES: For service information identified in this AD, contact
Boeing Commercial Airplanes, Long Beach Division, 3855 Lakewood
Boulevard, Long Beach, California 90846, Attention: Data and Service
Management, Dept. C1-L5A (D800-0024).

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: Wahib Mina, Aerospace Engineer,
Airframe Branch, ANM-120L, FAA, Los Angeles Aircraft Certification
Office, 3960 Paramount Boulevard, Lakewood, California 90712-4137;
telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Discussion

    The FAA issued a notice of proposed rulemaking (NPRM) to amend 14
CFR part 39 to include an AD that supersedes AD 2006-07-25, amendment
39-14552 (71 FR 18201, April 11, 2006). The existing AD applies to
certain McDonnell Douglas airplanes. That NPRM was published in the
Federal Register on August 31, 2007 (72 FR 50284). That NPRM proposed
to retain the requirements of AD 2006-07-25. That NPRM also, for
certain airplanes, proposed to reduce certain initial inspection
thresholds, remove an inspection option, and lengthen certain
repetitive inspection intervals.

Comments

    We provided the public the opportunity to participate in the
development of this AD. We have considered the comments that have been
received on the NPRM.

Request To Clarify Repetitive Inspections

    Air Transport Association (ATA), on behalf of its member American
Airlines, requests that we clarify paragraphs (h) and (l) of the NPRM.
These paragraphs specify repetitive inspections to continue based on
the part number of the replaced rudder pedal bracket assemblies in
accordance with paragraph (g) or (k) of the NPRM. The commenters state
that the referenced rudder pedal bracket assemblies should be clarified
to indicate that repetitive inspections apply only to rudder pedal
bracket assemblies that are of the same part number as the ones
inspected.
    We agree with the request for the reasons stated. The intent of the
replacement in paragraphs (h) and (l) of the NPRM is to replace the
rudder pedal bracket assemblies with a part that has the same part
number as the part inspected. Therefore, we have revised paragraph (h)
and (l) of the AD to replace the words ``new part'' with ``same part
number as the one inspected.''

Request To Clarify Inspection Criteria in Paragraph (j) of the NPRM

    ATA, on behalf of its member ASTAR Air Cargo, requests that we
clarify the inspection criteria in paragraph (j) of the NPRM. The
commenters note that paragraph (j) of the NPRM specifies a special
detailed inspection in accordance with McDonnell Douglas

DC-8 Alert Service Bulletin A27-273, Revision 1, dated May 16, 1989; or
Revision 5, dated February 18, 1993. The commenters point out that the
service bulletins do not have any inspection criteria listed.
    We agree with the commenters that the paragraph needs
clarification. The intent of paragraph (j) of the AD is to specify a
general visual inspection and penetrant inspection for Category 2
airplanes in accordance with McDonnell Douglas DC-8 Alert Service
Bulletin A27-273, Revision 1. Revision 1 of that service bulletin
contains the inspection criteria. The intent of paragraph (j) was to
specify a special detailed inspection for Category 4 airplanes in
accordance with Boeing Alert Service Bulletin DC9-27A307, Revision 7,
dated August 29, 2006. Revision 7 of that service bulletin contains the
inspection criteria. We have revised paragraph (j) of the AD to clarify
the requirements.

Request To Clarify Compliance Time in Paragraph (j)(1) of the NPRM

    ATA, on behalf of its member ASTAR Air Cargo, also notes that
paragraph (j)(1) of the NPRM specifies a compliance time of within
40,000 total landings or 30 days after the effective date of the AD,
whichever occurs later. The commenters state that paragraph (j)(1)
should refer instead to 40,000 total landings on the installed part.
    We agree with the commenters. McDonnell Douglas DC-8 Alert Service
Bulletin A27-273, Revision 1, and Revision 5, specify a compliance time
based on the accumulation of 40,000 total landings on the bracket
assembly. We have revised paragraph (j)(1) of the AD to specify that
the compliance time is 40,000 total landings on the installed part.

Conclusion

    We have carefully reviewed the available data, including the
comments that have been 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 neither increase
the economic burden on any operator nor increase the scope of the AD.

Costs of Compliance

    There are about 1,840 airplanes of the affected design in the
worldwide fleet. The following table provides the estimated costs for
U.S. operators to comply with this AD. The replacements are applicable
only to Model DC-9-10, -20, -30, -40, and -50 series airplanes; Model
DC-9-81 (MD-81), DC-9-82 (MD-82), DC-9-83 (MD-83), and DC-9-87 (MD-87)
airplanes; and Model MD-88 airplanes.

                                                                     Estimated Costs
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                                                  Average
                                         Work      labor                                                     Number of U.S.-
               Action                   hours     rate per         Parts            Cost per airplane     registered  airplanes         Fleet cost
                                                    hour
--------------------------------------------------------------------------------------------------------------------------------------------------------
General visual inspection (required           3        $80  None...............  $240, per inspection    250....................  $60,000, per
 by AD 2006-07-25).                                                               cycle.                                           inspection cycle.
Dye penetrant (special detailed)              5         80  None...............  $400, per inspection    946....................  $378,400, per
 inspection (required by AD 2006-07-                                              cycle.                                           inspection cycle.
 25).
Replacements (required by AD 2006-07-         9         80  $9,466.............  $10,186...............  up to 946..............  up to $9,635,956.
 25).
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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 have determined that this AD will not have federalism
implications under Executive Order 13132. This AD will not have a
substantial direct effect on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government.
    For the reasons discussed above, I certify that this AD:
    (1) Is not a ``significant regulatory action'' under Executive
Order 12866;
    (2) Is not a ``significant rule'' under DOT Regulatory Policies and
Procedures (44 FR 11034, February 26, 1979); and
    (3) Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.
    We prepared a regulatory evaluation of the estimated costs to
comply with this AD and placed it in the AD docket. See the ADDRESSES
section for a location to examine the regulatory evaluation.

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 Federal Aviation Administration (FAA) amends Sec.  39.13 by
removing amendment 39-14552 (71 FR 18201, April 11, 2006) and by adding
the following new airworthiness directive (AD):

2008-03-12 McDonnell Douglas: Amendment 39-15362. Docket No. FAA-
2007-29061; Directorate Identifier 2006-NM-243-AD.

Effective Date

    (a) This AD becomes effective March 11, 2008.

Affected ADs

    (b) This AD supersedes AD 2006-07-25.

Applicability

    (c) This AD applies to the airplanes identified in Table 1 of
this AD, certificated in any category.

                         Table 1.--Applicability
------------------------------------------------------------------------
            McDonnell Douglas--                  As identified in--
------------------------------------------------------------------------
Model DC-8-11, DC-8-12, DC-8-21, DC-8-31,   McDonnell Douglas DC-8 Alert
 DC-8-32, DC-8-33, DC-8-41, DC-8-42, and     Service Bulletin A27-273,
 DC-8-43 airplanes; Model DC-8-51, DC-8-     Revision 5, dated February
 52, DC-8-53, and DC-8-55 airplanes; Model   18, 1993.
 DC-8F-54 and DC-8F-55 airplanes; Model DC-
 8-61, DC-8-62, and DC-8-63 airplanes;
 Model DC-8-61F, DC-8-62F, and DC-8-63F
 airplanes; Model DC-8-71, DC-8-72, and DC-
 8-73 airplanes; Model DC-8-71F, DC-8-72F,
 and DC-8-73F airplanes.
Model DC-9-11, DC-9-12, DC-9-13, DC-9-14,   Boeing Alert Service
 DC-9-15, and DC-9-15F airplanes; Model DC-  Bulletin DC9-27A307,
 9-21 airplanes; Model DC-9-31, DC-9-32,     Revision 7, dated August
 DC-9-32 (VC-9C), DC-9-32F, DC-9-33F, DC-9-  29, 2006.
 34, DC-9-34F, and DC-9-32F (C-9A, C-9B)
 airplanes; Model DC-9-41 airplanes; Model
 DC-9-51 airplanes; Model DC-9-81 (MD-81),
 DC-9-82 (MD-82), DC-9-83 (MD-83), and DC-
 9-87 (MD-87) airplanes; and Model MD-88
 airplanes.
------------------------------------------------------------------------

Unsafe Condition

    (d) This AD results from reports of failures of the captain's
rudder pedal brackets before reaching the initial inspection
threshold identified in AD 2006-07-25. We are issuing this AD to
prevent failure of the rudder pedal bracket assembly, which could
result in the loss of rudder and braking control at either the
captain's or first officer's position.

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.

Service Information and Airplane Categories

    (f) The term ``service bulletin,'' as used in this AD, means the
Accomplishment Instructions of the applicable service bulletin
identified in Table 2 of this AD. The term ``airplane category,'' as
used in this AD, means the category identified in Table 2 of this
AD.

          Table 2.--Service Information and Airplane Categories
------------------------------------------------------------------------
                                      Called
           For Model--               airplane              Use--
                                    category--
------------------------------------------------------------------------
(1) DC-8-11, DC-8-12, DC-8-21,                 1  McDonnell Douglas DC-8
 DC-8-31, DC-8-32, DC-8-33, DC-8-                  Alert Service
 41, DC-8-42, and DC-8-43                          Bulletin A27-273,
 airplanes; Model DC-8-51, DC-8-                   Revision 1, dated May
 52, DC-8-53, and DC-8-55                          16, 1989; or Revision
 airplanes; Model DC-8F-54 and                     5, dated February 18,
 DC-8F-55 airplanes; Model DC-8-                   1993.
 61, DC-8-62, and DC-8-63
 airplanes; Model DC-8-61F, DC-8-
 62F, and DC-8-63F airplanes;
 Model DC-8-71, DC-8-72, and DC-
 8-73 airplanes.
(2) DC-8-71F, DC-8-72F, and DC-8-              2
 73F airplanes.
(3) DC-9-11, DC-9-12, DC-9-13,                 3  McDonnell Douglas DC-9
 DC-9-14, DC-9-15, and DC-9-15F                    Alert Service
 airplanes; Model DC-9-21                          Bulletin A27-307,
 airplanes; Model DC-9-31, DC-9-                   Revision 1, dated May
 32, DC-9-32 (VC-9C), DC-9-32F,                    16, 1989; or Boeing
 DC-9-33F, DC-9-34, DC-9-34F,                      Alert Service
 and DC-9-32F (C-9A, C-9B)                         Bulletin DC9-27A307,
 airplanes; Model DC-9-41                          Revision 7, dated
 airplanes; Model DC-9-51                          August 29, 2006,
 airplanes.                                        after the effective
                                                   date of this AD, only
                                                   Revision 7 may be
                                                   used.
(4) DC-9-81 (MD-81), DC-9-82 (MD-              4
 82), DC-9-83 (MD-83), and DC-9-
 87 (MD-87) airplanes; and Model
 MD-88 airplanes.
------------------------------------------------------------------------

Requirements of AD 2006-07-25

Initial Inspection Threshold

    (g) For airplane categories 1, 3, and 4, prior to the
accumulation of 40,000 total landings or within 30 days after July
5, 1989 (the effective date of AD 89-14-02, amendment 39-6245, which
was superseded by AD 2006-07-25), whichever occurs later: Perform
either a general visual inspection, dye penetrant inspection, or
special detailed inspection (eddy current with dye penetrant or just
dye penetrant), as applicable, for cracking of the captain's and
first officer's rudder pedal bracket, part numbers (P/N) 5616067 and
5616068, respectively, in accordance with the Accomplishment
Instructions of the applicable service bulletin specified in Table 2
of this AD. After the effective date of this AD, only the special
detailed inspection specified in Boeing Alert Service Bulletin DC9-
27A307, Revision 7, dated August 29, 2006, may be used for airplanes
identified in Revision 7. For airplane category 4: Do the inspection
required by this paragraph until the inspection required by
paragraph (j) of this AD is accomplished.

    Note 1: For the purposes of this AD, a general visual inspection
is: ``A visual examination of an interior or exterior area,
installation, or assembly to detect obvious damage, failure, or
irregularity. This level of inspection is made from within touching
distance unless otherwise specified. A mirror may be necessary to
ensure visual access to all surfaces in the inspection area. This
level of inspection is made under normally available lighting
conditions such as daylight, hangar lighting, flashlight, or
droplight and may require removal or opening of access panels or
doors. Stands, ladders, or platforms may be required to gain
proximity to the area being checked.''

    (1) If an initial general visual inspection is accomplished, and
no crack is found, perform a dye penetrant inspection of the rudder
pedal bracket assembly within 180 days after the general visual
inspection, and thereafter accomplish dye penetrant inspections at
intervals not to exceed 12 months or 2,500 landings, whichever
occurs earlier. For airplane categories 3 and 4, repeat at this
interval until the inspection required by paragraph (k) of this AD
is accomplished.
    (2) If an initial dye penetrant inspection is accomplished, and
no crack is found, accomplish repetitive dye penetrant inspections
at intervals not to exceed 12 months or 2,500 landings, whichever
occurs earlier. For airplane categories 3 and 4, repeat at this
interval until the inspection required by paragraph (k) of this AD
is accomplished.
    (3) If an initial special detailed inspection is accomplished
after the effective date of this AD, and no crack is found, repeat
the

inspection in accordance with paragraph (k) of this AD.

Corrective Action

    (h) Except as provided by paragraph (l) of this AD: If any crack
is detected during any inspection required by paragraph (g) or (j)
of this AD, before further flight, remove and replace the rudder
pedal bracket assembly in accordance with the service bulletin.
Prior to the accumulation of 40,000 total landings after replacement
with a part that has the same number as the part inspected, resume
the repetitive inspections in accordance with paragraph (g) or (k)
of this AD, as applicable. Doing the action required by paragraph
(l) of this AD terminates the requirements of this paragraph for
airplane category 4.

Terminating Action for Certain Airplanes

    (i) For airplane categories 3 and 4: Do the actions in
paragraphs (i)(1) and (i)(2) of this AD in accordance with the
Accomplishment Instructions of the applicable service bulletin
specified in Table 2 of this AD.
    (1) Before the accumulation of 75,000 total landings on the
captain's rudder pedal bracket assembly, P/N 5616067-501, or within
60 months after May 16, 2006, whichever occurs later: Remove the
rudder pedal bracket assembly and replace it with new, improved P/N
5962903-501. Accomplishment of the replacement terminates the
repetitive inspections of the captain's rudder pedal bracket
assembly required by paragraphs (g), (h), (j), (k), and (l) of this
AD.
    (2) Before the accumulation of 75,000 total landings on the
first officer's rudder pedal bracket assembly, P/N 5616068-501, or
within 60 months after May 16, 2006, whichever occurs later: Remove
the rudder pedal bracket assembly and replace it with new, improved
P/N 5962904-501. Accomplishment of the replacement terminates the
repetitive inspections of the first officer's rudder pedal bracket
assembly required by paragraphs (g), (h), (j), (k), and (l) of this
AD.

New Requirements of This AD

Revised Initial Inspection at Reduced Threshold for Certain Airplanes

    (j) For airplane categories 2 and 4, at the applicable time
specified in paragraph (j)(1), (j)(2) or (j)(3) of this AD: Do a
general visual and penetrant inspection (for airplane category 2),
and a special detailed inspection (for airplane category 4), as
applicable, to detect cracking of the captain's and first officer's
rudder pedal bracket, part numbers (P/N) 5616067 and 5616068,
respectively, in accordance with the applicable service bulletin
specified in Table 2 of this AD. Procedures for the dye penetrant
inspection for airplane category 2 are contained only in the
Accomplishment Instructions of McDonnell Douglas DC-8 Alert Service
Bulletin A27-273, Revision 1, dated May 16, 1989. Procedures for the
special detailed inspection are contained in Boeing Alert Service
Bulletin DC9-27A307, Revision 7, dated August 29, 2006. Doing the
applicable inspection required by this paragraph terminates the
inspection requirements of paragraphs (g) and (h) of this AD for
airplane category 4.
    (1) For category 2 airplanes: Before the accumulation of 40,000
total landings on the installed part, or within 30 days after the
effective date of this AD, whichever occurs later.
    (2) For category 4 airplanes that have accumulated fewer than
25,000 total landings as of the effective date of this AD: Before
the accumulation of 25,000 total landings, or within 3,000 landings
after the effective date of this AD, whichever occurs later.
    (3) For category 4 airplanes that have accumulated 25,000 or
more total landings as of the effective date of this AD, do the next
inspection at the applicable time in paragraph (j)(3)(i) or
(j)(3)(ii) of this AD.
    (i) For category 4 airplanes on which the corrective action
specified in paragraph (h) of this AD has not been accomplished, do
the inspection within 3,000 landings after the effective date of
this AD.
    (ii) For category 4 airplanes on which the corrective action
required by paragraph (h) of this AD has been accomplished, do the
inspection at the earlier of the following: The next repetitive
interval required by paragraph (h) of this AD; 40,000 total landings
after doing the corrective action required by paragraph (h) of this
AD; or 3,000 landings after the effective date of this AD.

Repetitive Inspections at Revised Interval for Certain Airplanes

    (k) For airplane categories 3 and 4: Repeat the special detailed
inspection required by paragraph (g) or (j) of this AD thereafter at
intervals not to exceed 3,000 landings. Doing the first repetitive
inspection required by this paragraph terminates the repetitive
inspection requirements of paragraph (g) of this AD for airplane
categories 3 and 4.

Corrective Action Including Reduced Inspection Threshold for Certain
Airplanes

    (l) For airplane category 4: If any crack is detected during any
inspection required by paragraph (g), (j), or (k) of this AD: Before
further flight, remove and replace the rudder pedal bracket assembly
with a part that has the same part number as the one inspected, in
accordance with the applicable service bulletin specified in Table 2
of this AD. Before the accumulation of 25,000 total landings after
replacement, resume the repetitive inspections in accordance with
paragraph (k) of this AD. Doing the action in this paragraph
terminates the requirements of paragraph (h) of this AD for airplane
category 4.

Alternative Methods of Compliance (AMOCs)

     (m)(1) The Manager, Los Angeles Aircraft Certification Office,
Transport Airplane Directorate, FAA, has the authority to approve
AMOCs for this AD, if requested in accordance with the procedures
found in 14 CFR 39.19.
    (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 appropriate principal inspector (PI) in the FAA
Flight Standards District Office (FSDO), or lacking a PI, your local
FSDO.
    (3) AMOCs, approved previously in accordance with AD 2006-07-25,
amendment 39-14552; and AD 89-14-02, amendment 39-6245; are approved
as AMOCs for the corresponding requirements of this AD.

Material Incorporated by Reference

    (n) You must use the service information listed in Table 3 of
this AD to perform the actions that are required by this AD, unless
the AD specifies otherwise.

             Table 3.--All Material Incorporated by Reference
------------------------------------------------------------------------
                                  Revision
        Service Bulletin           level                 Date
------------------------------------------------------------------------
 McDonnell Douglas DC-8 Alert             1  May 16, 1989.
 Service Bulletin A27-273.
 McDonnell Douglas DC-8 Alert             5  February 18, 1993.
 Service Bulletin A27-273.
 McDonnell Douglas DC-9 Alert             1  May 16, 1989.
 Service Bulletin A27-307.
 Boeing Alert Service bulletin            7  August 29, 2006.
 DC9-27A307.
------------------------------------------------------------------------

    (1) The Director of the Federal Register approved the
incorporation by reference of McDonnell Douglas DC-8 Alert Service
Bulletin A27-273, Revision 5, dated February 18, 1993; and Boeing
Alert Service Bulletin DC9-27A307, Revision 7, dated August 29,
2006; in accordance with 5 U.S.C. 552(a) and 1 CFR part 51.
    (2) On May 16, 2006 (71 FR 18201, April 11, 2006), the Director
of the Federal Register approved the incorporation by reference of
McDonnell Douglas DC-8 Alert Service Bulletin A27-273, Revision 1,
dated May 16, 1989; and McDonnell Douglas DC-9 Alert Service
Bulletin A27-307, Revision 1, dated May 16, 1989.
    (3) Contact Boeing Commercial Airplanes, Long Beach Division,
3855 Lakewood Boulevard, Long Beach, California 90846, Attention:
Data and Service Management, Dept. C1-L5A (D800-0024), for a copy of
this service information. You may review copies at the FAA,
Transport Airplane Directorate, 1601 Lind Avenue SW., Renton,
Washington;

or at the National Archives and Records Administration (NARA). For
information on the availability of this material at NARA, call 202-
741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html
.

    Issued in Renton, Washington, on January 24, 2008.
Ali Bahrami,
Manager, Transport Airplane Directorate, Aircraft Certification
Service.
 [FR Doc. E8-1813 Filed 2-4-08; 8:45 am]

BILLING CODE 4910-13-P


[Federal Register: April 7, 2010 (Volume 75, Number 66)]
[Notices]
[Page 17810-17813]
[DOCID:fr07ap10-113]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61817; File No. SR-FINRA-2010-011]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Modify Certain FINRA/Nasdaq Trade Reporting
Facility Fees

March 31, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 12, 2010, Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as ``establishing or changing a
due, fee or other charge'' under Section 19(b)(3)(A)(ii) of the Act \3\
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal
effective upon receipt of this filing by the Commission. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------

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

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

    FINRA is proposing to amend FINRA Rule 7620A to modify certain fees
applicable to members that use the FINRA/Nasdaq Trade Reporting
Facility (the ``FINRA/Nasdaq TRF'').
    The text of the proposed rule change is available on FINRA's Web
site at http://www.finra.org, at the principal office of FINRA and at
the Commission's Public Reference Room.

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

    In its filing with the Commission, FINRA 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. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.

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

1. Purpose

Background

    The FINRA/Nasdaq TRF is a facility of FINRA that is operated by The
NASDAQ OMX Group, Inc. (``NASDAQ OMX'') and utilizes Automated
Confirmation Transaction (``ACT'') Service technology. In connection
with the establishment of the FINRA/Nasdaq

TRF, FINRA and NASDAQ OMX entered into a limited liability company
agreement (the ``LLC Agreement''). Under the LLC Agreement, FINRA, the
``SRO Member,'' has sole regulatory responsibility for the FINRA/Nasdaq
TRF. NASDAQ OMX, the ``Business Member,'' is primarily responsible for
the management of the FINRA/Nasdaq TRF's business affairs, including
establishing pricing for use of the FINRA/Nasdaq TRF, to the extent
those affairs are not inconsistent with the regulatory and oversight
functions of FINRA. Additionally, the Business Member is obligated to
pay the cost of regulation and is entitled to the profits and losses,
if any, derived from the operation of the FINRA/Nasdaq TRF.
    Pursuant to Rule 7620A, FINRA members are charged fees for trade
reporting to the FINRA/Nasdaq TRF. The current fee structure for
reports of ``locked-in trades'' (i.e., trades that are not submitted
for ACT comparison and do not require specific acceptance by the contra
party) is based on (1) the number of reports submitted to the FINRA/
Nasdaq TRF in which the member is identified as a party to the trade;
(2) whether the transaction is ``media'' eligible (i.e., the trade
report is submitted to FINRA for public dissemination by the Securities
Information Processors); \5\ (3) whether the trade report is submitted
for clearance and settlement related functions; and (4) whether the
transaction is in a non-Nasdaq exchange-listed security that is
reported to one of the Consolidated Tape Association (``CTA'')
tapes.\6\ Members must pay a fee for reports submitted to the FINRA/
Nasdaq TRF with respect to media-eligible locked-in transactions in
non-Nasdaq exchange-listed (or CTA) securities. A member that exceeds,
in any given month, a daily average of 5,000 media reports in which the
member is identified as the reporting party is afforded a cap on its
fees equal to $145 ($0.029 multiplied by 5,000) multiplied by the
number of trading days in the month. By contrast, there currently is no
fee for the submission of locked-in reports for media-eligible
transactions in Nasdaq-listed securities.
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    \5\ ``Non-media'' reports are not submitted to FINRA for public
dissemination purposes, but are submitted for regulatory and/or
clearance and settlement purposes.
    \6\ Market data is transmitted to three tapes based on the
listing venue of the security: New York Stock Exchange securities
(``Tape A''), American Stock Exchange and regional exchange
securities (``Tape B''), and Nasdaq Stock Market securities (``Tape
C''). Tape A and Tape B are generally referred to as the
Consolidated Tape.
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Proposed Fee Schedule

    NASDAQ OMX, as the Business Member, has determined to replace the
current fee schedule for reporting ``locked-in'' trades to the FINRA/
Nasdaq TRF with a new fee schedule applicable to ``Non-Comparison/
Accept (Non-Match/Compare)'' trades. Such trades are defined as
transactions that are not subject to the ACT comparison process, and
they may be submitted as media or non-media, clearing or non-clearing,
AGU (automated give-up), QSR (Qualified Service Representative), one-
sided and internalized crosses.\7\
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    \7\ FINRA is proposing to adopt Supplementary Material in Rule
7260A to define a number of terms used in the proposed fee schedule,
including ``Non-Comparison/Accept (Non-Match/Compare)'' trades.
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    Accordingly, FINRA is proposing to amend Rule 7620A to reflect the
new fee schedule. Under the proposed schedule, for each media and non-
media report submitted to the FINRA/Nasdaq TRF, both the member
identified in the report as the ``Executing Party (EP)'' and the member
identified as the ``Contra (CP)'' will be assessed a fee.\8\ Thus, the
proposed rule change establishes four categories of fees (Media/
Executing Party, Non-Media/Executing Party, Media/Contra and Non-Media/
Contra), and each category is applicable to transactions in each of the
three Tapes (Tapes A, B and C).\9\ A member will be assessed a
transaction fee of $0.018 if it is the Executing Party, and $0.013 if
it is the Contra, multiplied by the number of same-type reports (i.e.,
media or non-media) submitted in a given month.
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    \8\ Pursuant to the proposed Supplementary Material, the
``Executing Party (EP)'' is defined as the member with the trade
reporting obligation under FINRA rules, and the ``Contra (CP)'' is
defined as the member on the contra side of a trade report. These
positions formerly were identified in FINRA rules as the ``Market
Maker'' or ``MM'' side and the ``Order Entry'' or ``OE'' side,
respectively.
    FINRA notes that non-members (non-member broker-dealers and
customers) are not assessed fees under FINRA rules.
    \9\ The four categories of fees are independent of each other
and, as such, may be subsequently adjusted individually. Any change
to one or more of these categories would be subject to a future
proposed rule change by FINRA.
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    Additionally, the proposed fee schedule includes a cap applicable
to each of the four new fee categories based on the average daily
volume of reports submitted to a particular Tape. To be eligible for a
cap in a particular Tape, a member must achieve a minimum average daily
volume of media reports submitted to that Tape as Executing Party in a
given month. (The proposed volume threshold for all three Tapes is
2,500.) \10\ Thus, the proposed rule change would reduce the per unit
fee traditionally assessed (from $0.029 to $0.018 and $0.013, as
applicable), as well as the volume threshold required to achieve a fee
cap (from 5,000 to 2,500).
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    \10\ Although the proposed fee schedule includes identical
average daily volume thresholds for all three Tapes, the thresholds
are independent of each other and, as such, may be subsequently
adjusted individually. Any change to one or more of these thresholds
would be subject to a future proposed rule change by FINRA.
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    Trade reports in which the member appears as the Contra Party do
not contribute to achievement of the cap. However, if a member is
eligible for a cap based on media trade reports in which it appears as
the Executing Party, then caps also would apply to media reports in
which that member appears as the Contra Party, as well as to non-media
reports where the member appears as Executing Party or Contra Party.
Thus, once a member achieves a cap (based on the number of Media/
Executing Party reports), under the current proposal, the maximum
number of billable trade reports applicable to each fee category is
2,500 for Tape A, B or C. The maximum number of billable Media/
Executing Party reports will always be equal to the daily average
number of Media/Executing Party trades needed to qualify for a cap for
Tape A, B or C, as specified in the Rule. For each of the other three
fee categories (Non-Media/Executing Party, Media/Contra and Non-Media/
Contra), the maximum number of billable trades also is specified in the
Rule and can be adjusted independently of the Media/Executing Party
cap.\11\ Under the current proposal, if a member is eligible for the
fee cap, it will be assessed a maximum fee within each category equal
to the category fee (either $0.018 or $0.013) multiplied by 2,500
multiplied by the number of trading days in the month.
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    \11\ Any change to one or more of these caps would be subject to
a future proposed rule change by FINRA.
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    The following table provides an example of the fee schedule
applicable to a member that is ineligible for a fee cap (based on 22
trading days in the month):

                           No Fee Cap--Tape A
------------------------------------------------------------------------
                               Average
      Report type/side          daily     Billable     Rate       Cost
                                trades     trades
------------------------------------------------------------------------
Media/EP....................      2,100      2,100     $0.018       $832
Non-Media/EP................      4,000      4,000      0.018       1584
Media/Contra................      3,000      3,000      0.013        858
Non-Media/Contra............      2,100      2,100      0.013        601
                             -------------------------------------------
    Total...................     11,200     11,200  .........      3,875
------------------------------------------------------------------------

    The following table provides an example of the fee schedule
applicable to a member that is eligible for a fee cap (based on 22
trading days in the month):

                             Fee Cap--Tape A
------------------------------------------------------------------------
                               Average
      Report type/side          daily     Billable     Rate       Cost
                                trades     trades
------------------------------------------------------------------------
Media/EP....................      4,000      2,500     $0.018       $990
Non-Media/EP................      4,000      2,500      0.018        990
Media/Contra................      4,000      2,500      0.013        715
Non-Media/Contra............      4,000      2,500      0.013        715
                             -------------------------------------------
    Total...................     16,000     10,000  .........      3,410
------------------------------------------------------------------------

    FINRA notes that the proposed rule change does not propose to
modify the other fees assessed under Rule 7620A, specifically: the fee
assessed a member for submitting a clearing report to the FINRA/Nasdaq
TRF to transfer a transaction fee pursuant to Rule 7230A(h); the
``Comparison'' fee; the ``Late Report--T+N'' fee; the ``Query'' fee;
and the ``Corrective Transaction Charge.''
    NASDAQ OMX, as the Business Member, has advised FINRA that it
believes that the proposed fee schedule more equitably allocates the
fees assessed to members for their use of the FINRA/Nasdaq TRF. Under
current Rule 7620A, the fee burden can fall disproportionately on
certain parties (e.g., reporting parties submitting media-only reports
(with no clearing) of transactions in CTA securities and contra parties
to locked-in trades in CTA securities). Under the proposed fee
schedule, both members identified as parties to the trade in the trade
report will be assessed a fee. In addition, the proposed fee schedule
introduces fees for reports of transactions in Nasdaq-listed
securities, as well as non-media, non-clearing trade reports, which
have historically not been assessed a fee. NASDAQ OMX believes that
extending fees for the submission of these reports is consistent with
its goal of fairly and equitably distributing the costs associated with
the operation and maintenance of the FINRA/Nasdaq TRF. Thus, the
proposed fees for the submission of non-comparison trade reports to the
FINRA/Nasdaq TRF are spread more equitably across parties (Executing
Party and Contra), as well as report type (media and non-media) and
security type (Nasdaq-listed and non-Nasdaq exchange-listed). NASDAQ
OMX believes that the proposed reduction in fees is appropriate given
that the burden of paying for the use of the FINRA/Nasdaq TRF will be
shared by all participants across the full range of transactions.
    FINRA has filed the proposed rule change for immediate
effectiveness. FINRA is proposing that the operative date of the
proposed rule change will be April 1, 2010.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(5) of the Act,\12\ which requires, among
other things, that FINRA rules provide for the equitable allocation of
reasonable dues, fees and other charges among members and issuers and
other persons using any facility or system that FINRA operates or
controls. FINRA believes that the proposed fee schedule is fair and
provides an equitable allocation of fees in that it will apply
uniformly to all FINRA members that use the FINRA/Nasdaq TRF.
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    \12\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

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

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

    No written comments were either solicited or received.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \13\ and paragraph (f)(2) of Rule 19b-4
thereunder.\14\ At any time within 60 days of the filing of the
proposed rule change, the Commission may summarily abrogate 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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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-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 e-mail to<EMAIL_ADDRESS>Please include
File Number SR-FINRA-2010-011 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-FINRA-2010-011. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for Web site
viewing and printing in the Commission's Public Reference Room on
official business days between the hours of 10 a.m. and 3 p.m. Copies
of such filing also will be available for inspection and copying at the
principal office of FINRA. 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 publicly available. All submissions should refer to File Number
SR-FINRA-2010-011 and should be submitted on or before April 28, 2010.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-7842 Filed 4-6-10; 8:45 am]
BILLING CODE 8011-01-P