[Federal Register Volume 77, Number 240 (Thursday, December 13, 2012)]
[Notices]
[Pages 74231-74237]
[FR Doc No: 2012-30051]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-30296; File No. 812-14040]

Hatteras Variable Trust, et al.; Notice of Application

December 6, 2012.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an exemption pursuant to Section 6(c)
of the Investment Company Act of 1940, as amended (the ``Act''),
seeking exemptions from Sections 9(a), 13(a), 15(a) and 15(b) of the
Act and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder.

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Applicants:  Hatteras Variable Trust (``Trust'') and Hatteras
Alternative Mutual Funds (``Hatteras'') (collectively, ``Applicants'').

Summary of Application:  Applicants request an order pursuant to
Section 6(c) of the Act granting exemptions from the provisions of
Sections 9(a), 13(a), 15(a), and 15(b) of the Act and Rules 6e-2(b)(15)
and 6e-3(T)(b)(15) thereunder in cases where a life insurance company
separate account supporting variable life insurance contracts (``VLI
Accounts'') holds shares of an existing portfolio of the Trust (an
``Existing Fund'') or a ``Future Fund,'' as defined below (any Existing
Fund or Future Fund is referred to herein as a ``Fund,'' and
collectively, the ``Funds''), and one or more of the following other
types of investors also hold shares of the Funds: (i) Any life
insurance company separate account supporting variable annuity
contracts (``VA Accounts''); (ii) any VLI Account; (iii) trustees of
qualified group pension or group retirement plans (``Plans'' or
``Qualified Plans'') outside the separate account context; (iv) the
investment adviser or any subadviser to a Fund or affiliated persons of
the adviser or subadviser (representing seed money investments in the
Fund) (``Advisers''); and (v) any general account of an insurance
company depositor of VA Accounts and/or VLI Accounts and affiliated
persons of such insurance company (``General Accounts''). As used
herein, a Future Fund is any investment company (or investment
portfolio or series thereof), other than an Existing Fund, designed to
be sold to VA Accounts and/or VLI Accounts and to which Applicants or
their affiliates may in the future serve as investment advisers,
investment subadvisers, investment managers, administrators, principal
underwriters or sponsors.

DATES: Filing Date: The application was filed on June 4, 2012, and
amended and restated on October 2, 2012.

Hearing or Notification of Hearing:  An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Secretary of the
Commission and serving Applicants with a copy of the request,
personally or by mail. Hearing requests should be received by the
Commission by 5:30 p.m. on December 31, 2012, and should be accompanied
by proof of service on Applicants, in the form of an affidavit or, for
lawyers, a certificate of service. Hearing requests should state the
nature of the writer's interest, the reason for the request, and the
issues contested. Persons may request notification of a hearing by
writing to the Secretary of the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street
NE., Washington, DC 20549-1090. Applicants, c/o Joshua B. Deringer,
Esq., Drinker Biddle & Reath LLP, One Logan Square, Ste. 2000,
Philadelphia, PA 19103-6996. Copy to J. Michael Fields, Hatteras
Alternative Mutual Funds, LLC, 8540 Colonnade Center Drive, Suite 401,
Raleigh, NC 27615.

FOR FURTHER INFORMATION CONTACT: Mark Cowan, Senior Counsel, or Michael
Kosoff, Branch Chief, Office of Insurance Products, Division of

Investment Management at<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at http://www.sec.gov/search.htm,
or by calling<PHONE_NUMBER>.

Applicants' Representations

    1. The Trust is registered under the Act as an open-end management
investment company (File No. 811-22660) and is currently comprised of
one Existing Fund: Hatteras Alpha Hedged Strategies Variable Fund. The
Trust has registered a class of shares of the Existing Fund under the
Securities Act of 1933 (the ``1933 Act'') (File No. 333-179263) on Form
N-1A. The Trust may in the future establish additional Funds and
additional classes of shares for any of the Funds. Shares of the Trust
will not be offered to the general public.
    2. Hatteras serves as the investment adviser to the Trust and the
Existing Fund. Subject to the authority of the Board of Trustees of the
Trust, Hatteras is responsible for the overall management of the
business affairs of the Trust and manages the investment operations of
the Existing Fund, including the purchase, retention and disposition of
securities in accordance with the Fund's investment objective.
    3. The Existing Fund proposes, on their own behalf and on behalf of
Future Funds, to offer their shares to VLI and VA Accounts of various
life insurance companies (``Participating Insurance Companies'') to
serve as investment media to support variable life insurance contracts
and variable annuity contracts (together, ``Variable Contracts'')
issued through such accounts. Each VLI Account and VA Account is or
will be established as a segregated asset account by a Participating
Insurance Company pursuant to the insurance law of the insurance
company's state of domicile. If a VLI Account or VA Account is
registered as an investment company, it will be a ``separate account''
as defined by Rule 0-1(e) (or any successor rule) under the Act and
will be registered as a unit investment trust. For purposes of the Act,
the Participating Insurance Company that establishes such a registered
VLI Account or VA Account is the depositor and sponsor of the Account
as those terms have been interpreted by the Commission with respect to
variable life insurance and variable annuity separate accounts.
    4. There are currently no Participating Insurance Companies.
    5. The Funds will sell their shares to VLI and VA Accounts only if
each Participating Insurance Company sponsoring such a VLI or VA
Account enters into a participation agreement with the Funds. The
participation agreements define or will define the relationship between
each Fund and each Participating Insurance Company and memorialize or
will memorialize, among other matters, the fact that, except where the
agreement specifically provides otherwise, the Participating Insurance
Company will remain responsible for establishing and maintaining any
VLI or VA Account covered by the agreement and for complying with all
applicable requirements of state and federal law pertaining to such
accounts and to the sale and distribution of Variable Contracts issued
through such Accounts. The role of the Funds under this arrangement,
with regard to the federal securities laws, will consist of offering
and selling shares of the Funds to the separate accounts and fulfilling
any conditions that the Commission may impose in granting the requested
order.
    6. The use of a common management investment company (or investment
portfolio thereof) as an investment medium for both VLI Accounts and VA
Accounts of the same Participating Insurance Company, or of two or more
insurance companies that are affiliated persons of each other, is
referred to herein as ``mixed funding.'' The use of a common management
investment company (or investment portfolio thereof) as an investment
medium for VLI Accounts and/or VA Accounts of two or more Participating
Insurance Companies that are not affiliated persons of each other is
referred to herein as ``shared funding.''
    7. Applicants propose that the Existing Fund and any Future Fund
may offer and sell their shares directly to Qualified Plans and to the
Fund's Adviser or General Account of a Participating Insurance Company.
    8. The use of a common management investment company (or investment
portfolio thereof) as an investment medium for VLI Accounts, VA
Accounts, Qualified Plans, Advisers and General Accounts is referred to
herein as ``extended mixed funding.''

Applicants' Legal Analysis

    1. Section 9(a) of the Act makes it unlawful for any company to
serve as an investment adviser or principal underwriter of any
investment company, including a unit investment trust, if an affiliated
person of that company is subject to disqualification enumerated in
Section 9(a)(1) or (2) of the Act. Sections 13(a), 15(a), and 15(b) of
the Act have been deemed by the Commission to require ``pass-through''
voting with respect to an underlying investment company's shares.
    2. Rules 6e-2(b)(15) and 6e-3(T)(b)(15) under the Act provides
partial exemptions from Sections 9(a), 13(a), 15(a), and 15(b) of the
Act to VLI Accounts supporting certain VLI Contracts and to their life
insurance company depositors under limited circumstances, as described
in the application. VLI Accounts, their depositors and their principal
underwriters may not rely on the exemptions provided by Rules 6e-
2(b)(15) and 6e-3(T)(b)(15) if shares of the Fund are held by a VLI
Account through which certain VLI Contracts are issued, a VLI Account
of an unaffiliated Participating Insurance Company, an unaffiliated
Adviser, any VA Account, a Qualified Plan or a General Account.
Accordingly, Applicants request an order of the Commission granting
exemptions from Sections 9(a), 13(a), 15(a), and 15(b) of the Act and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder in cases where certain
VLI Account holds shares of the Funds and one or more of the following
types of investors also hold shares of the Funds: (i) VA Accounts and
VLI Accounts (supporting scheduled premium or flexible premium VLI
Contracts) of affiliated and unaffiliated Participating Insurance
Companies; (ii) Qualified Plans; (iii) Advisers; and/or (iv) General
Accounts.
    3. Applicants maintain that there is no policy reason for the sale
of Fund shares to Qualified Plans, Advisers or General Accounts to
prohibit or otherwise limit a Participating Insurance Company from
relying on the relief provided by Rules 6e-2(b)(15) and 6e-3(T)(b)(15).
Nonetheless, Rule 6e-2 and Rule 6e-3(T) each specifically provides that
the relief granted thereunder is available only where shares of the
underlying fund are offered exclusively to insurance company separate
accounts. In this regard, Applicants request exemptive relief to the
extent necessary to permit shares of the Funds to be sold to Qualified
Plans, Advisers and General Accounts while allowing Participating
Insurance Companies and their VA Accounts and VLI Accounts to enjoy the
benefits of the relief granted under Rule 6e-2(b)(15) and Rule 6e-
3(T)(b)(15). Applicants note that if the Funds were to sell their
shares only to Qualified Plans, exemptive relief under Rule 6e-2 and
Rule 6e-3(T) would not be

necessary. The relief provided for under Rule 6e-2(b)(15) and Rule 6e-
3(T)(b)(15) does not relate to Qualified Plans, Advisers or General
Accounts or to a registered investment company's ability to sell its
shares to such purchasers.
    4. Applicants are not aware of any reason for excluding separate
accounts and investment companies engaged in shared funding from the
exemptive relief provided under Rules 6e-2(b)(15) and 6e-3(T)(b)(15),
or for excluding separate accounts and investment companies engaged in
mixed funding from the exemptive relief provided under Rule 6e-
2(b)(15). Similarly, Applicants are not aware of any reason for
excluding Participating Insurance Companies from the exemptive relief
requested because the Funds may also sell their shares to Qualified
Plans, Advisers and General Accounts. Rather, Applicants submit that
the proposed sale of shares of the Funds to these purchasers may allow
for the development of larger pools of assets resulting in the
potential for greater investment and diversification opportunities, and
for decreased expenses at higher asset levels resulting in greater cost
efficiencies.
    5. For the reasons explained below, Applicants have concluded that
investment by Qualified Plans, Advisers and General Accounts in the
Funds should not increase the risk of material irreconcilable conflicts
between owners of VLI Contracts and other types of investors or between
owners of VLI Contracts issued by unaffiliated Participating Insurance
Companies.
    6. Consistent with the Commission's authority under Section 6(c) of
the Act to grant exemptive orders to a class or classes of persons and
transactions, Applicants request exemptions for a class consisting of
Participating Insurance Companies and their separate accounts investing
in the Existing Fund and Future Funds, as well as their principal
underwriters, that currently invest or in the future will invest in the
Funds.
    7. Section 6(c) of the Act provides, in part, that the Commission,
by order upon application, may conditionally or unconditionally exempt
any person, security or transaction, or any class or classes of
persons, securities or transactions, from any provision or provisions
of the Act, or any rule or regulation thereunder, if and to the extent
that such exemption is necessary or appropriate in the public interest
and consistent with the protection of investors and the purposes fairly
intended by the policy and provisions of the Act. Applicants submit
that the exemptions requested are appropriate in the public interest
and consistent with the protection of investors and the purposes fairly
intended by the policy and provisions of the Act.
    8. Section 9(a)(3) of the Act provides, among other things, that it
is unlawful for any company to serve as investment adviser or principal
underwriter of any registered open-end investment company if an
affiliated person of that company is subject to a disqualification
enumerated in Sections 9(a)(1) or (2). Rules 6e-2(b)(15)(i) and (ii)
and Rules 6e-3(T)(b)(15)(i) and (ii) under the Act provide exemptions
from Section 9(a) under certain circumstances, subject to the
limitations discussed above on mixed funding, extended mixed funding
and shared funding. These exemptions limit the application of the
eligibility restrictions to affiliated individuals or companies that
directly participate in management of the underlying investment
company.
    9. Rules 6e-2(b)(15)(iii) and 6e-3(T)(b)(15)(iii) under the Act
provide exemptions from pass-through voting requirements with respect
to several significant matters, assuming the limitations on mixed
funding, extended mixed funding and shared funding are observed. Rules
6e-2(b)(15)(iii)(A) and 6e-3(T)(b)(15)(iii)(A) provide that the
insurance company may disregard the voting instructions of its variable
life insurance contract owners with respect to the investments of an
underlying investment company, or any contract between such an
investment company and its investment adviser, when required to do so
by an insurance regulatory authority (subject to the provisions of
paragraphs (b)(5)(i) and (b)(7)(ii)(A) of Rules 6e-2 and 6e-3(T)).
    10. The Applicants represent that the sale of Fund shares to
Qualified Plans, Advisers or General Accounts will not have any impact
on the exemptions requested herein regarding the disregard of pass-
through voting rights. Shares sold to Qualified Plans will be held by
such Plans. The exercise of voting rights by Plans, whether by
trustees, participants, beneficiaries, or investment managers engaged
by the Plans, does not raise the type of issues respecting disregard of
voting rights that are raised by VLI Accounts. With respect to Plans,
which are not registered as investment companies under the Act, there
is no requirement to pass through voting rights to Plan participants.
Indeed, to the contrary, applicable law expressly reserves voting
rights associated with Plan assets to certain specified persons as
discussed in the application.
    11. Similarly, Advisers and General Accounts are not subject to any
pass-through voting rights. Accordingly, unlike the circumstances
surrounding VLI Account and VA Account investments in shares of the
Funds, the issue of the resolution of any material irreconcilable
conflicts with respect to voting is not present with respect to
Advisers or General Accounts of Participating Insurance Companies.
    12. Applicants recognize that the prohibitions on mixed and shared
funding might raise concerns regarding possible different investment
motivations among investors. When Rule 6e-2 was first adopted, variable
annuity separate accounts could invest in mutual funds whose shares
were also offered to the general public. However, now, under the tax
code any underlying fund, including the Funds, that sells shares to VA
Accounts or VLI Accounts, would, in effect, be precluded from also
selling its shares to the public. Consequently, the Funds may not sell
their shares to the public.
    13. Applicants assert that the rights of an insurance company on
its own initiative or on instructions from a state insurance regulator
to disregard the voting instructions of owners of Variable Contracts is
not inconsistent with either mixed funding or shared funding.
Applicants state that The National Association of Insurance
Commissioners Variable Life Insurance Model Regulation (the ``NAIC
Model Regulation'') suggests that it is unlikely that insurance
regulators would find an underlying fund's investment policy,
investment adviser or principal underwriter objectionable for one type
of Variable Contract but not another type.
    14. Applicants assert that shared funding by unaffiliated insurance
companies does not present any issues that do not already exist where a
single insurance company is licensed to do business in several or all
states. A particular state insurance regulator could require action
that is inconsistent with the requirements of other states in which the
insurance company offers its contracts. However, the fact that
different insurers may be domiciled in different states does not create
a significantly different or enlarged problem. Shared funding by
unaffiliated insurers, in this respect, is no different than the use of
the same investment company as the funding vehicle for affiliated
insurers, which Rules 6e-2(b)(15) and 6e-3(T)(b)(15) permit. Affiliated
insurers may be domiciled in different states and be subject to
differing state law requirements. Affiliation does not reduce the

potential, if any exists, for differences in state regulatory
requirements. In any event, the conditions set forth below are designed
to safeguard against, and provide procedures for resolving, any adverse
effects that differences among state regulatory requirements may
produce. If a particular state insurance regulator's decision conflicts
with the majority of other state regulators, then the affected
Participating Insurance Company will be required to withdraw its
separate account investments in the relevant Fund. This requirement
will be provided for in the participation agreement that will be
entered into by Participating Insurance Companies with the relevant
Fund.
    15. Rules 6e-2(b)(15) and 6e-3(T)(b)(15) give Participating
Insurance Companies the right to disregard the voting instructions of
VLI Contract owners in certain circumstances. This right derives from
the authority of state insurance regulators over VLI Accounts and VA
Accounts. Under Rules 6e-2(b)(15) and 6e-3(T)(b)(15), a Participating
Insurance Company may disregard VLI Contract owner voting instructions
only with respect to certain specified items. Affiliation does not
eliminate the potential, if any exists, for divergent judgments as to
the advisability or legality of a change in investment policies,
principal underwriter or investment adviser initiated by such Contract
owners. The potential for disagreement is limited by the requirements
in Rules 6e-2 and 6e-3(T) that the Participating Insurance Company's
disregard of voting instructions be reasonable and based on specific
good faith determinations.
    16. A particular Participating Insurance Company's disregard of
voting instructions, nevertheless, could conflict with the voting
instructions of a majority of VLI Contract owners. The Participating
Insurance Company's action possibly could be different than the
determination of all or some of the other Participating Insurance
Companies (including affiliated insurers) that the voting instructions
of VLI Contract owners should prevail, and either could preclude a
majority vote approving the change or could represent a minority view.
If the Participating Insurance Company's judgment represents a minority
position or would preclude a majority vote, then the Participating
Insurance Company may be required, at the relevant Fund's election, to
withdraw its VLI Accounts' and VA Accounts' investments in the relevant
Fund. No charge or penalty will be imposed as a result of such
withdrawal. This requirement will be provided for in the participation
agreement entered into by the Participating Insurance Companies with
the relevant Fund.
    17. Applicants assert that there is no reason why the investment
policies of a Fund would or should be materially different from what
these policies would or should be if the Fund supported only VA
Accounts or VLI Accounts, whether flexible premium or scheduled premium
VLI Contrasts. Each type of insurance contract is designed as a long-
term investment program.
    18. Each Fund will be managed to attempt to achieve its specified
investment objective, and not favor or disfavor any particular
Participating Insurance Company or type of insurance contract. There is
no reason to believe that different features of various types of
Variable Contracts will lead to different investment policies for each
or for different VLI Accounts and VA Accounts. The sale of Variable
Contracts and ultimate success of all VA Accounts and VLI Accounts
depends, at least in part, on satisfactory investment performance,
which provides an incentive for each Participating Insurance Company to
seek optimal investment performance.
    19. Furthermore, no single investment strategy can be identified as
appropriate to a particular Variable Contract. Each ``pool'' of VLI
Contract and VA Contract owners is composed of individuals of diverse
financial status, age, insurance needs and investment goals. A Fund
supporting even one type of Variable Contract must accommodate these
diverse factors in order to attract and retain purchasers. Permitting
mixed and shared funding will provide economic support for the
continuation of the Funds. Mixed and shared funding will broaden the
base of potential Variable Contract owner investors, which may
facilitate the establishment of additional Funds serving diverse goals.
    20. Applicants do not believe that the sale of the shares to Plans,
Advisers or General Accounts will increase the potential for material
irreconcilable conflicts of interest between or among different types
of investors. In particular, Applicants see very little potential for
such conflicts beyond those that would otherwise exist between owners
of VLI Contracts and VA Contracts. Applicants submit that either there
are no conflicts of interest or that there exists the ability by the
affected parties to resolve such conflicts consistent with the best
interests of VLI Contract owners, VA Contract owners and Plan
participants.
    21. Applicants considered whether there are any issues raised under
the Code, Treasury Regulations, or Revenue Rulings thereunder, if
Qualified Plans, VA Accounts, VLI Accounts, Advisers and General
Accounts all invest in the same Fund. Applicants have concluded that
neither the Code, nor the Treasury Regulations nor Revenue Rulings
thereunder, present any inherent conflicts of interest if Plans, VLI
Accounts, and VA Accounts all invest in the same Fund.
    22. Applicants note that, while there are differences in the manner
in which distributions from VLI Accounts and Qualified Plans are taxed,
these differences have no impact on the Funds. When distributions are
to be made, and a VLI Account or Plan is unable to net purchase
payments to make distributions, the VLI Account or Plan will redeem
shares of the relevant Fund at its net asset values in conformity with
Rule 22c-1 under the Act (without the imposition of any sales charge)
to provide proceeds to meet distribution needs. A Participating
Insurance Company will then make distributions in accordance with the
terms of its VLI Contract and a Plan will then make distributions in
accordance with the terms of the Plan.
    23. Applicants considered whether it is possible to provide an
equitable means of giving voting rights to Variable Contract owners,
Plans, Advisers and General Accounts. In connection with any meeting of
Fund shareholders, the Fund will inform each Participating Insurance
Company (with respect to its separate accounts and general account),
Adviser, and Qualified Plan of its share holdings and provide other
information necessary for such shareholders to participate in the
meeting (e.g., proxy materials). Each Participating Insurance Company
then will solicit voting instructions from owners of VLI Contracts and
VA Contracts in accordance with Rules 6e-2 or 6e-3(T), or Section
12(d)(1)(E)(iii)(aa) of the Act, as applicable, and its participation
agreement with the relevant Fund. Shares of a Fund that are held by an
Adviser or a General Account will generally be in the same proportion
as all votes cast on behalf of all Variable Contract owners having
voting rights. However, an Adviser or General Account will vote its
shares in such other manner as may be required by the Commission or its
staff. Shares held by Plans will be voted in accordance with applicable
law. The voting rights provided to Plans with respect to the shares
would be no different from the voting rights that are provided to Plans
with respect to shares of mutual funds sold to the general public.
Furthermore, if a material irreconcilable conflict arises because of a
Plan's decision to

disregard Plan participant voting instructions, if applicable, and that
decision represents a minority position or would preclude a majority
vote, the Plan may be required, at the election of the relevant Fund,
to withdraw its investment in the Fund, and no charge or penalty will
be imposed as a result of such withdrawal.
    24. Applicants do not believe that the ability of a Fund to sell
its shares to a Qualified Plan, Adviser or General Account gives rise
to a senior security as defined by Section 18(g) of the Act. Regardless
of the rights and benefits of participants under Plans or owners of
Variable Contracts, VLI Accounts, VA Accounts, Qualified Plans,
Advisers and General Accounts only have, or will only have, rights with
respect to their respective shares of a Fund. These parties can only
redeem such shares at net asset value. No shareholder of a Fund has any
preference over any other shareholder with respect to distribution of
assets or payment of dividends.
    25. Applicants do not believe that the veto power of state
insurance commissioners over certain potential changes to Fund
investment objectives approved by Variable Contract owners creates
conflicts between the interests of such owners and the interests of
Plan participants, Advisers or General Accounts. Applicants note that a
basic premise of corporate democracy and shareholder voting is that not
all shareholders may agree with a particular proposal. Their interests
and opinions may differ, but this does not mean that inherent conflicts
of interest exist between or among such shareholders or that occasional
conflicts of interest that do occur between or among them are likely to
be irreconcilable.
    26. Although Participating Insurance Companies may have to overcome
regulatory impediments in redeeming shares of a Fund held by their
separate accounts, Applicants state that the Plans and participants in
participant-directed Plans can make decisions quickly and redeem their
shares in a Fund and reinvest in another investment company or other
funding vehicle without impediments, or as is the case with most Plans,
hold cash pending suitable investment. As a result, conflicts between
the interests of Variable Contract owners and the interests of Plans
and Plan participants can usually be resolved quickly since the Plans
can, on their own, redeem their Fund shares. Advisers and General
accounts can similarly redeem their shares of a Fund and make
alternative investments at any time.
    27. Finally, Applicants considered whether there is a potential for
future conflicts of interest between Participating Insurance Companies
and Qualified Plans created by future changes in the tax laws.
Applicants do not see any greater potential for material irreconcilable
conflicts arising between the interests of Variable Contract owners and
Plan participants from future changes in the federal tax laws than that
which already exists between VLI Contract owners and VA Contract
owners.
    28. Applicants recognize that the foregoing is not an all-inclusive
list, but rather is representative of issues that they believe are
relevant to this Application. Applicants believe that the sale of Fund
shares to Qualified Plans would not increase the risk of material
irreconcilable conflicts between the interests of Plan participants and
Variable Contract owners or other investors. Further, Applicants submit
that the use of the Funds with respect to Plans is not substantially
dissimilar from each Fund's current and anticipated use, in that Plans,
like separate accounts, are generally long-term investors.
    29. Applicants assert that permitting a Fund to sell its shares to
an Adviser or to the General Account of a Participating Insurance
Company for the purpose of obtaining seed money will enhance management
of each Fund without raising significant concerns regarding material
irreconcilable conflicts among different types of investors.
    30. Various factors have limited the number of insurance companies
that offer Variable Contracts. These factors include the costs of
organizing and operating a funding vehicle, certain insurers' lack of
experience with respect to investment management, and the lack of name
recognition by the public of certain insurance companies as investment
experts. In particular, some smaller life insurance companies may not
find it economically feasible, or within their investment or
administrative expertise, to enter the Variable Contract business on
their own. Use of the Funds as a common investment vehicle for Variable
Contracts would reduce or eliminate these concerns. Mixed and shared
funding should also provide several benefits to owners of Variable
Contracts by eliminating a significant portion of the costs of
establishing and administering separate underlying funds.
    31. Applicants state that the Participating Insurance Companies
will benefit not only from the investment and administrative expertise
of the Funds' Adviser, but also from the potential cost efficiencies
and investment flexibility afforded by larger pools of funds.
Therefore, making the Funds available for mixed and shared funding will
encourage more insurance companies to offer Variable Contracts. This
should result in increased competition with respect to both Variable
Contract design and pricing, which can in turn be expected to result in
more product variety. Applicants also assert that sale of shares in a
Fund to Qualified Plans, in addition to VLI Accounts and VA Accounts,
will likewise result in an increased amount of assets available for
investment in a Fund.
    32. Applicants also submit that, regardless of the type of
shareholder in a Fund, an Adviser is or would be contractually and
otherwise obligated to manage the Fund solely and exclusively in
accordance with the Fund's investment objectives, policies and
restrictions, as well as any guidelines established by the Fund's Board
of Trustees (the ``Board'').
    33. Applicants assert that sales of Fund shares, as described
above, will not have any adverse federal income tax consequences to
other investors in such a Fund.
    34. In addition, Applicants assert that granting the exemptions
requested herein is in the public interest and, as discussed above,
will not compromise the regulatory purposes of Sections 9(a), 13(a),
15(a), or 15(b) of the Act or Rules 6e-2 or 6e-3(T) thereunder.

Applicants' Conditions

    Applicants agree that the order granting the requested relief shall
be subject to the following conditions which shall apply to the Funds
as well as any Future Fund that relies on the order:
    1. A majority of the Board of each Fund will consist of persons who
are not ``interested persons'' of the Fund, as defined by Section
2(a)(19) of the Act, and the rules thereunder, and as modified by any
applicable orders of the Commission, except that if this condition is
not met by reason of death, disqualification or bona fide resignation
of any trustee or trustees, then the operation of this condition will
be suspended: (a) For a period of 90 days if the vacancy or vacancies
may be filled by the Board; (b) for a period of 150 days if a vote of
shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the Commission may prescribe by order upon
application, or by future rule.

    2. The Board will monitor a Fund for the existence of any material
irreconcilable conflict between and among the interests of the owners
of all VLI Contracts and VA Contracts and participants of all Plans
investing in the Fund, and determine what action, if any, should be
taken in response to such conflicts. A material irreconcilable conflict
may arise for a variety of reasons, including: (a) An action by any
state insurance regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or regulations, or
a public ruling, private letter ruling, no-action or interpretive
letter, or any similar action by insurance, tax or securities
regulatory authorities; (c) an administrative or judicial decision in
any relevant proceeding; (d) the manner in which the investments of the
Fund are being managed; (e) a difference in voting instructions given
by VA Contract owners, VLI Contract owners, and Plans or Plan
participants; (f) a decision by a Participating Insurance Company to
disregard the voting instructions of contract owners; or (g) if
applicable, a decision by a Plan to disregard the voting instructions
of Plan participants.
    3. Participating Insurance Companies (on their own behalf, as well
as by virtue of any investment of General Account assets in a Fund),
any investment adviser to a Fund, and any Plan that executes a
participation agreement upon its becoming an owner of 10% or more of
the net assets of a Fund (collectively, ``Participants'') will report
any potential or existing conflicts to the Board. Each Participant will
be responsible for assisting the Board in carrying out the Board's
responsibilities under these conditions by providing the Board with all
information reasonably necessary for the Board to consider any issues
raised. This responsibility includes, but is not limited to, an
obligation by each Participating Insurance Company to inform the Board
whenever Variable Contract owner voting instructions are disregarded,
and, if pass-through voting is applicable, an obligation by each Plan
to inform the Board whenever it has determined to disregard Plan
participant voting instructions. The responsibility to report such
information and conflicts, and to assist the Board, will be a
contractual obligation of all Participating Insurance Companies under
their participation agreement with a Fund, and these responsibilities
will be carried out with a view only to the interests of the Variable
Contract owners. The responsibility to report such information and
conflicts, and to assist the Board, also will be contractual
obligations of all Plans under their participation agreement with a
Fund, and such agreements will provide that these responsibilities will
be carried out with a view only to the interests of Plan participants.
    4. If it is determined by a majority of the Board, or a majority of
the disinterested trustees of the Board, that a material irreconcilable
conflict exists, then the relevant Participant will, at its expense and
to the extent reasonably practicable (as determined by a majority of
the disinterested trustees), take whatever steps are necessary to
remedy or eliminate the material irreconcilable conflict, up to and
including: (a) Withdrawing the assets allocable to some or all of their
VLI Accounts or VA Accounts from the Fund and reinvesting such assets
in a different investment vehicle, including another Fund; (b) in the
case of a Participating Insurance Company, submitting the question as
to whether such segregation should be implemented to a vote of all
affected Variable Contract owners and, as appropriate, segregating the
assets of any appropriate group (i.e., VA Contract owners or VLI
Contact owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change; (c) withdrawing the
assets allocable to some or all of the Plans from the affected Fund and
reinvesting them in a different investment medium; and (d) establishing
a new registered management investment company or managed separate
account. If a material irreconcilable conflict arises because of a
decision by a Participating Insurance Company to disregard Variable
Contract owner voting instructions, and that decision represents a
minority position or would preclude a majority vote, then the
Participating Insurance Company may be required, at the election of the
Fund, to withdraw such Participating Insurance Company's VLI Account
and VA Account investments in the Fund, and no charge or penalty will
be imposed as a result of such withdrawal. If a material irreconcilable
conflict arises because of a Plan's decision to disregard Plan
participant voting instructions, if applicable, and that decision
represents a minority position or would preclude a majority vote, the
Plan may be required, at the election of the Fund, to withdraw its
investment in the Fund, and no charge or penalty will be imposed as a
result of such withdrawal. The responsibility to take remedial action
in the event of a Board determination of a material irreconcilable
conflict and to bear the cost of such remedial action will be a
contractual obligation of all Participants under their participation
agreement with a Fund, and these responsibilities will be carried out
with a view only to the interests of Variable Contract owners or, as
applicable, Plan participants.
    For purposes of this Condition 4, a majority of the disinterested
trustees of the Board of a Fund will determine whether or not any
proposed action adequately remedies any material irreconcilable
conflict, but, in no event, will the Fund or its investment adviser be
required to establish a new funding vehicle for any Variable Contract
or Plan. No Participating Insurance Company will be required by this
Condition 4 to establish a new funding vehicle for any Variable
Contract if any offer to do so has been declined by vote of a majority
of the Contract owners materially and adversely affected by the
material irreconcilable conflict. Further, no Plan will be required by
this Condition 4 to establish a new funding vehicle for the Plan if:
(a) A majority of the Plan participants materially and adversely
affected by the irreconcilable material conflict vote to decline such
offer, or (b) pursuant to documents governing the Plan, the Plan
trustee makes such decision without a Plan participant vote.
    5. The determination by the Board of the existence of a material
irreconcilable conflict and its implications will be made known in
writing promptly to all Participants.
    6. Participating Insurance Companies will provide pass-through
voting privileges to all Variable Contract owners whose Contracts are
issued through registered VLI Accounts or registered VA Accounts for as
long as the Commission continues to interpret the Act as requiring such
pass-through voting privileges. However, as to Variable Contracts
issued through VA Accounts or VLI Accounts not registered as investment
companies under the Act, pass-through voting privileges will be
extended to owners of such Contracts to the extent granted by the
Participating Insurance Company. Accordingly, such Participating
Insurance Companies, where applicable, will vote the shares of each
Fund held in their VLI Accounts and VA Accounts in a manner consistent
with voting instructions timely received from Variable Contract owners.
Participating Insurance Companies will be responsible for assuring that
each of their VLI and VA Accounts investing in a Fund calculates voting
privileges in a manner consistent

with all other Participating Insurance Companies investing in that
Fund.
    The obligation to calculate voting privileges as provided in this
Application shall be a contractual obligation of all Participating
Insurance Companies under their participation agreement with the Fund.
Each Participating Insurance Company will vote shares of each Fund held
in its VLI or VA Accounts for which no timely voting instructions are
received, as well as shares attributed to it, in the same proportion as
those shares for which voting instructions are received. Each Plan will
vote as required by applicable law, governing Plan documents and as
provided in this Application.
    7. As long as the Commission continues to interpret the Act as
requiring that pass-through voting privileges be provided to Variable
Contract owners, a Fund Adviser or any General Account will vote its
respective shares of the Fund in the same proportion as all votes cast
on behalf of all Variable Contract owners having voting rights;
provided, however, that such an Adviser or General Account shall vote
its shares in such other manner as may be required by the Commission or
its staff.
    8. Each Fund will comply with all provisions of the Act requiring
voting by shareholders (which, for these purposes, shall be the persons
having a voting interest in its shares), and, in particular, the Fund
will either provide for annual meetings (except to the extent that the
Commission may interpret Section 16 of the Act not to require such
meetings) or comply with Section 16(c) of the Act (although each Fund
is not, or will not be, one of those trusts of the type described in
Section 16(c) of the Act), as well as with Section 16(a) of the Act
and, if and when applicable, Section 16(b) of the Act. Further, each
Fund will act in accordance with the Commission's interpretations of
the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate
thereunder.
    9. A Fund will make its shares available to the VLI Accounts, VA
Accounts, and Plans at or about the time it accepts any seed capital
from its Adviser or from the General Account of a Participating
Insurance Company.
    10. Each Fund has notified, or will notify, all Participants that
disclosure regarding potential risks of mixed and shared funding may be
appropriate in VLI Account and VA Account prospectuses or Plan
documents. Each Fund will disclose, in its prospectus that: (a) Shares
of the Fund may be offered to both VA Accounts and VLI Accounts and, if
applicable, to Plans; (b) due to differences in tax treatment and other
considerations, the interests of various Variable Contract owners
participating in the Fund and the interests of Plan participants
investing in the Fund, if applicable, may conflict; and (c) the Fund's
Board will monitor events in order to identify the existence of any
material irreconcilable conflicts and to determine what action, if any,
should be taken in response to any such conflicts.
    11. If and to the extent Rule 6e-2 and Rule 6e-3(T) under the Act
are amended, or proposed Rule 6e-3 under the Act is adopted, to provide
exemptive relief from any provision of the Act, or the rules
thereunder, with respect to mixed or shared funding, on terms and
conditions materially different from any exemptions granted in the
order requested in this Application, then each Fund and/or
Participating Insurance Companies, as appropriate, shall take such
steps as may be necessary to comply with Rules 6e-2 or 6e-3(T), as
amended, or Rule 6e-3, to the extent such rules are applicable.
    12. Each Participant, at least annually, shall submit to the Board
of each Fund such reports, materials or data as the Board reasonably
may request so that the trustees may fully carry out the obligations
imposed upon the Board by the conditions contained in this Application.
Such reports, materials and data shall be submitted more frequently if
deemed appropriate by the Board. The obligations of the Participants to
provide these reports, materials and data to the Board, when it so
reasonably requests, shall be a contractual obligation of all
Participants under their participation agreement with the Fund.
    13. All reports of potential or existing conflicts received by a
Board, and all Board action with regard to determining the existence of
a conflict, notifying Participants of a conflict and determining
whether any proposed action adequately remedies a conflict, will be
properly recorded in the minutes of the Board or other appropriate
records, and such minutes or other records shall be made available to
the Commission upon request.
    14. Each Fund will not accept a purchase order from a Qualified
Plan if such purchase would make the Plan an owner of 10 percent or
more of the net assets of the Fund unless the Plan executes an
agreement with the Fund governing participation in the Fund that
includes the conditions set forth herein to the extent applicable. A
Plan will execute an application containing an acknowledgement of this
condition at the time of its initial purchase of shares.

Conclusion

    Applicants submit, for all the reasons explained above, that the
exemptions requested are appropriate in the public interest and
consistent with the protection of investors and the purposes fairly
intended by the policy and provisions of the Act.

    For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Kevin O'Neill,
Deputy Secretary.
[FR Doc. 2012-30051 Filed 12-12-12; 8:45 am]
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[Federal Register: August 16, 2007 (Volume 72, Number 158)]
[Proposed Rules]
[Page 45968-45970]
[DOCID:fr16au07-24]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2007-28988; Directorate Identifier 2007-NM-047-AD]
RIN 2120-AA64

Airworthiness Directives; Boeing Model 747-400 and -400D Series
Airplanes

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

ACTION: Notice of proposed rulemaking (NPRM).

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

SUMMARY: The FAA proposes to adopt a new airworthiness directive (AD)
for certain Boeing Model 747-400 and -400D series airplanes. This
proposed AD would require installing new relays to allow the flightcrew
to turn off electrical power to the in-flight entertainment (IFE)
system and other non-essential passenger cabin systems through the left
and right utility bus switches, and other specified actions. This
proposed AD results from an IFE systems review. We are proposing this
AD to ensure that the flightcrew is able to turn off electrical power
to the IFE system and other non-essential passenger cabin systems
through utility bus switches in the flight compartment, in the event of
smoke or fumes. The flightcrew's inability to turn off electrical power
to the IFE system and other non-essential passenger cabin systems could
result in the inability to control smoke or fumes in the airplane
flight deck or passenger cabin during a non-normal or emergency
situation.

DATES: We must receive comments on this proposed AD by October 1, 2007.

ADDRESSES: Use one of the following addresses to submit comments on
this proposed AD.
     DOT Docket Web site: Go to http://dms.dot.gov and follow

the instructions for sending your comments electronically.
     Government-wide rulemaking Web site: Go to http://www.regulations.gov
 and follow the instructions for sending your

comments electronically.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue, SE., Washington, DC 20590.
     Fax:<PHONE_NUMBER>.
     Hand Delivery: Room W12-140 on the ground floor of the
West Building, 1200 New Jersey Avenue, SE., Washington, DC, between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
    Contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle,
Washington 98124-2207, for the service information identified in this
proposed AD.

FOR FURTHER INFORMATION CONTACT: Shohreh Safarian, Aerospace Engineer,
Systems and Equipment Branch, ANM-130S, FAA, Seattle Aircraft
Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98057-
3356; telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to submit any relevant written data, views, or
arguments regarding this proposed AD. Send your comments to an address
listed in the ADDRESSES section. Include the docket number ``FAA-2007-
28988; Directorate Identifier 2007-NM-047-AD'' at the beginning of your
comments. We specifically invite comments on the overall regulatory,
economic, environmental, and energy aspects of the proposed AD. We will
consider all comments received by the closing date and may amend the
proposed AD in light of those comments.
    We will post all comments we receive, without change, to http://dms.dot.gov
, including any personal information you provide. We will

also post a report summarizing each substantive verbal contact with FAA
personnel concerning this proposed AD. Using the search function of
that Web site, anyone can find and read the comments in any of our
dockets, including the name of the individual who sent the comment (or
signed the comment on behalf of an association, business, labor union,
etc.). You may review DOT's complete Privacy Act Statement in the
Federal Register published on April 11, 2000 (65 FR 19477-78), or you
may visit http://dms.dot.gov.

Examining the Docket

    You may examine the AD docket on the Internet at http://dms.dot.gov
, or in person at the Docket Operations office between 9

a.m. and 5 p.m., Monday through Friday, except Federal holidays. The
Docket Operations office (telephone<PHONE_NUMBER>) is located on the
ground floor of the West Building at the DOT street address stated in
the ADDRESSES section. Comments will be available in the AD docket
shortly after the Docket Management System receives them.

Discussion

    The Federal Aviation Administration (FAA) completed a review of in-
flight entertainment (IFE) systems installed on transport category
airplanes. The review focused on the interface between the IFE system
and airplane electrical system, with the objective of determining if
any unsafe conditions exist with regard to the interface.
    The type of IFE systems considered for review were those that
contain video monitors (cathode ray tubes or liquid crystal displays,
either hanging above the aisle or mounted on individual seat backs or
seat trays), or complex circuitry (i.e., power supplies, electronic
distribution boxes, extensive wire routing, relatively high power
consumption, multiple layers of circuit protection, etc.). In addition,
in-seat power supply systems that provide power to more than 20 percent
of the total passenger seats were also considered for the review. The
types of IFE systems not considered for review include systems that
provide only audio signals to each passenger seat, ordinary in-flight
telephone systems (e.g., one telephone handset per group of seats or
bulkhead-mounted telephones), systems that have only a video monitor on
the forward bulkhead(s) (or a projection system) to provide passengers
with basic airplane and flight information, and in-seat power supply
systems that provide power to less than 20 percent of the total
passenger seats.
    Items considered during the review include the following:
     Can the electrical bus(es) supplying power to the IFE
system be de-energized when necessary without removing power from
systems that may be required for continued safe flight and landing?
     Can IFE system power be removed when required without
pulling IFE system circuit breakers (i.e., is there a switch (dedicated
to the IFE system or a combination of loads) located in the flight deck
or cabin that can be used to remove IFE power?
     If the IFE system requires changes to flightcrew
procedures, has the airplane flight manual (AFM) been properly amended?
     If the IFE system requires changes to cabin crew
procedures, have they been properly amended?
     Does the IFE system require periodic or special
maintenance?
    In all, we reviewed approximately 180 IFE systems. The review
results indicate that potential unsafe conditions exist on some IFE
systems installed on various transport category airplanes. These
conditions can be summarized as:

     Electrical bus(es) supplying power to the IFE system
cannot be de-energized when necessary without removing power from
systems that may be required for continued safe flight and landing.
     Power cannot be removed from the IFE system when required
without pulling IFE system circuit breakers (i.e., there is no switch
dedicated to the IFE system or combination of systems for the purpose
of removing power).
     Installation of the IFE system has affected crew
(flightcrew and/or cabin crew) procedures, but the procedures have not
been properly revised.
    Boeing has received numerous reports of smoke or flames in the
passenger cabin of Model 747-400 series airplanes. Investigation of
several of these reports revealed that the source of the smoke and
flames was the wiring for the passenger cabin IFE system, cabin
lighting, or passenger seats. Currently, the flightcrew is not able to
turn off power to the IFE system and other non-essential passenger
cabin systems through utility bus switches in the flight compartment,
in the event of smoke or fumes. The flightcrew's inability to turn off
electrical power to the IFE system and other non-essential passenger
cabin systems, if not corrected, could result in the inability to
control smoke or fumes in the airplane flight deck or passenger cabin
during a non-normal or emergency situation.

Relevant Service Information

    We have reviewed Boeing Service Bulletin 747-24-2246, dated October
6, 2005. The service bulletin describes procedures for installing new
relays to allow the flightcrew to turn off electrical power to the IFE
system and other non-essential passenger cabin systems through the left
and right utility bus switches, and doing other specified actions. The
other specified actions include installing new wiring, rerouting
existing wiring, removing certain wiring, and testing the cabin
lighting, passenger IFE systems, and certain circuit breakers.
Accomplishing the actions specified in the service information is
intended to adequately address the unsafe condition.

FAA's Determination and Requirements of the Proposed AD

    We have evaluated all pertinent information and identified an
unsafe condition that is likely to exist or develop on other airplanes
of this same type design. For this reason, we are proposing this AD,
which would require accomplishing the actions specified in the service
information described previously.

Costs of Compliance

    There are about 490 airplanes of the affected design in the
worldwide fleet. This proposed AD would affect about 62 airplanes of
U.S. registry. The proposed actions would take about 123 work hours per
airplane, at an average labor rate of $80 per work hour. Required parts
would cost between $9,412 and $11,936 per airplane. Based on these
figures, the estimated cost of the proposed AD for U.S. operators is up
to $1,350,112, or up to $21,776 per airplane.

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

The Proposed Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

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

BOEING: Docket No. FAA-2007-28988; Directorate Identifier 2007-NM-
047-AD.

Comments Due Date

    (a) The FAA must receive comments on this AD action by October
1, 2007.

Affected ADs

    (b) None.

Applicability

    (c) This AD applies to Boeing Model 747-400 and -400D series
airplanes, certificated in any category; as identified in Boeing
Service Bulletin 747-24-2246, dated October 6, 2005.

Unsafe Condition

    (d) This AD results from an in-flight entertainment (IFE)
systems review. We are issuing this AD to ensure that the flightcrew
is able to turn off electrical power to the IFE system and other
non-essential passenger cabin systems through utility bus switches
in the flight compartment, in the event of smoke or fumes. The
flightcrew's inability to turn off electrical power to the IFE
system and other non-essential passenger cabin systems could result
in the inability to control smoke or fumes in the airplane flight
deck or passenger cabin during a non-normal or emergency situation.

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.

Install New Relays

    (f) Within 60 months after the effective date of this AD,
install new relays to allow the flightcrew to turn off electrical
power to the IFE system and other non-essential passenger cabin
systems through the left and right utility bus switches and do all
other specified actions as applicable, by accomplishing all the
applicable actions specified in the Accomplishment Instructions of
Boeing Service Bulletin 747-24-2246, dated October 6, 2005. The
other specified actions must be done before further flight after
installing the new relays.

Alternative Methods of Compliance (AMOCs)

    (g)(1) The Manager, Seattle Aircraft Certification Office, 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.

    Issued in Renton, Washington, on July 30, 2007.
Ali Bahrami,
Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. E7-16115 Filed 8-15-07; 8:45 am]

BILLING CODE 4910-13-P