[Federal Register: March 20, 2008 (Volume 73, Number 55)]
[Notices]
[Page 15019-15025]
[DOCID:fr20mr08-73]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57497; File No. SR-FINRA-2007-021]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Proposed Rule Change and Amendment
No. 1 Relating to Amendments to the Code of Arbitration Procedure for
Customer Disputes and the Code of Arbitration Procedure for Industry
Disputes To Address Motions To Dismiss and To Amend the Eligibility
Rule Related to Dismissals

    March 14, 2008.
    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
Financial Industry Regulatory Authority, Inc. (``FINRA'') (f/k/a
National Association of Securities Dealers, Inc. (``NASD'')) filed with
the Securities and Exchange Commission (``SEC'' or ``Commission'') on
November 2, 2007, and amended on February 13, 2008 (Amendment No. 1),
the proposed rule change as described in Items I, II, and III below,
which Items have been substantially prepared by FINRA Dispute
Resolution. The Commission is publishing this notice to solicit
comments on the proposed rule change, as amended, from interested
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FINRA Dispute Resolution is proposing to amend NASD Rules 12206 and
12504 of the Code of Arbitration Procedure for Customer Disputes
(``Customer Code'') and NASD Rules 13206 and 13504 of the Code of
Arbitration Procedure for Industry Disputes (``Industry Code'') by
providing specific procedures that will govern motions to dismiss, and
amending the provision of the eligibility rule related to dismissals.
Below is the text of the proposed rule change. Proposed new language is
in italics; proposed deletions are in brackets.
* * * * *
12206. Time Limits

    (a) No change.
    (b) Dismissal under Rule
    Dismissal of a claim under this rule does not prohibit a party from
pursuing the claim in court. By filing a motion to

dismiss a claim under this rule, the moving party agrees that if the
panel dismisses a claim under this rule, the non-moving party may
withdraw any remaining related claims without prejudice and may pursue
all of the claims in court.
    (1) Motions under this rule must be made in writing, and must be
filed separately from the answer, and only after the answer is filed.
    (2) Unless the parties agree or the panel determines otherwise,
parties must serve motions under this rule at least 90 days before a
scheduled hearing, and parties have 30 days to respond to the motion.
    (3) Motions under this rule will be decided by the full panel.
    (4) The panel may not grant a motion under this rule unless an in-
person or telephonic prehearing conference on the motion is held or
waived by the parties. Prehearing conferences to consider motions under
this rule will be recorded as set forth in Rule 12606.
    (5) If the panel grants a motion under this rule (in whole or
part), the decision must be unanimous, and must be accompanied by a
written explanation.
    (6) If the panel denies a motion under this rule, a party may not
re-file the denied motion, unless specifically permitted by panel
order.
    (7) If the party moves to dismiss on multiple grounds including
eligibility, the panel must decide eligibility first.
     If the panel grants the motion to dismiss the case on
eligibility grounds on all claims, it shall not rule on any other
grounds for the motion to dismiss.
     If the panel grants the motion to dismiss on eligibility
grounds on some, but not all claims, and the party against whom the
motion was granted elects to move the case to court, the panel shall
not rule on any other ground for dismissal for 15 days from the date of
service of the panel's decision to grant the motion to dismiss on
eligibility grounds.
     If a panel dismisses any claim on eligibility grounds, the
panel must record the dismissal on eligibility grounds on the face of
its order and any subsequent award the panel may issue.
     If the panel denies the motion to dismiss on eligibility
grounds, it shall rule on the other bases for the motion to dismiss the
remaining claims in accordance with the procedures set forth in Rule
12504(a).
    (8) If the panel denies a motion under this rule, the panel must
assess forum fees associated with hearings on the motion against the
moving party.
    (9) If the panel deems frivolous a motion filed under this rule,
the panel must also award reasonable costs and attorneys' fees to any
party that opposed the motion.
    (10) The panel also may issue other sanctions under Rule 12212 if
it determines that a party filed a motion under this rule in bad faith.
    (c)-(d) No change.
* * * * *

Rule 12504. [Reserved] Motions to Dismiss

    (a) Motions to Dismiss Prior to Conclusion of Case in Chief
    (1) Motions to dismiss a claim prior to the conclusion of a party's
case in chief are discouraged in arbitration.
    (2) Motions under this rule must be made in writing, and must be
filed separately from the answer, and only after the answer is filed.
    (3) Unless the parties agree or the panel determines otherwise,
parties must serve motions under this rule at least 60 days before a
scheduled hearing, and parties have 45 days to respond to the motion.
    (4) Motions under this rule will be decided by the full panel.
    (5) The panel may not grant a motion under this rule unless an in-
person or telephonic prehearing conference on the motion is held or
waived by the parties. Prehearing conferences to consider motions under
this rule will be recorded as set forth in Rule 12606.
    (6) The panel cannot act upon a motion to dismiss a party or claim
under paragraph (a) of this rule, unless the panel determines that:
    (A)  the non-moving party previously released the claim(s) in
dispute by a signed settlement agreement and/or written release; or
    (B) the moving party was not associated with the account(s),
security(ies), or conduct at issue.
    (7) If the panel grants a motion under this rule (in whole or
part), the decision must be unanimous, and must be accompanied by a
written explanation.
    (8) If the panel denies a motion under this rule, the moving party
may not re-file the denied motion, unless specifically permitted by
panel order.
    (9) If the panel denies a motion under this rule, the panel must
assess forum fees associated with hearings on the motion against the
moving party.
    (10) If the panel deems frivolous a motion filed under this rule,
the panel must also award reasonable costs and attorneys' fees to any
party that opposed the motion.
    (11) The panel also may issue other sanctions under Rule 12212 if
it determines that a party filed a motion under this rule in bad faith.
    (b) Motions to Dismiss After Conclusion of Case in Chief
    A motion to dismiss made after the conclusion of a party's case in
chief is not subject to the procedures set forth in subparagraph (a).
    (c) Motions to Dismiss Based on Eligibility
    A motion to dismiss based on eligibility filed under Rule 12206
will be governed by that rule.
    (d) Motions to Dismiss Based on Failure to Comply with Code or
Panel Order
    A motion to dismiss based on failure to comply with any provision
in the Code, or any order of the panel or single arbitrator filed under
Rule 12212 will be governed by that rule.
    (e) Motions to Dismiss Based on Discovery Abuse
    A motion to dismiss based on discovery abuse filed under Rule 12511
will be governed by that rule.
* * * * *
13206. Time Limits

    (a) No change.
    (b) Dismissal under Rule
    Dismissal of a claim under this rule does not prohibit a party from
pursuing the claim in court. By filing a motion to dismiss a claim
under this rule, the moving party agrees that if the panel dismisses a
claim under this rule, the non-moving party may withdraw any remaining
related claims without prejudice and may pursue all of the claims in
court.
    (1) Motions under this rule must be made in writing, and must be
filed separately from the answer, and only after the answer is filed.
    (2) Unless the parties agree or the panel determines otherwise,
parties must serve motions under this rule at least 90 days before a
scheduled hearing, and parties have 30 days to respond to the motion.
    (3) Motions under this rule will be decided by the full panel.
    (4) The panel may not grant a motion under this rule unless an in-
person or telephonic prehearing conference on the motion is held or
waived by the parties. Prehearing conferences to consider motions under
this rule will be recorded as set forth in Rule 13606.
    (5) If the panel grants a motion under this rule (in whole or
part), the decision must be unanimous, and must be accompanied by a
written explanation.
    (6) If the panel denies a motion under this rule, a party may not
re-file the denied motion, unless specifically permitted by panel
order.
    (7) If the party moves to dismiss on multiple grounds including
eligibility, the panel must decide eligibility first.
     If the panel grants the motion to dismiss the case on
eligibility grounds

on all claims, it shall not rule on any other grounds for the motion to
dismiss.
     If the panel grants the motion to dismiss on eligibility
grounds on some, but not all claims, and the party against whom the
motion was granted elects to move the case to court, the panel shall
not rule on any other ground for dismissal for 15 days from the date of
service of the panel's decision to grant the motion to dismiss on
eligibility grounds.
     If a panel dismisses any claim on eligibility grounds, the
panel must record the dismissal on eligibility grounds on the face of
its order and any subsequent award the panel may issue.
     If the panel denies the motion to dismiss on eligibility
grounds, it shall rule on the other bases for the motion to dismiss the
remaining claims in accordance with the procedures set forth in Rule
13504(a).
    (8) If the panel denies a motion under this rule, the panel must
assess forum fees associated with hearings on the motion against the
moving party.
    (9) If the panel deems frivolous a motion filed under this rule,
the panel must also award reasonable costs and attorneys' fees to any
party that opposed the motion.
    (10) The panel also may issue other sanctions under Rule 13212 if
it determines that a party filed a motion under this rule in bad faith.
    (c)-(d) No change.
* * * * *
13504. [Reserved] Motions to Dismiss

    (a) Motions to Dismiss Prior to Conclusion of Case in Chief
    (1) Motions to dismiss a claim prior to the conclusion of a party's
case in chief are discouraged in arbitration.
    (2) Motions under this rule must be made in writing, and must be
filed separately from the answer, and only after the answer is filed.
    (3) Unless the parties agree or the panel determines otherwise,
parties must serve motions under this rule at least 60 days before a
scheduled hearing, and parties have 45 days to respond to the motion.
    (4) Motions under this rule will be decided by the full panel.
    (5) The panel may not grant a motion under this rule unless an in-
person or telephonic prehearing conference on the motion is held or
waived by the parties. Prehearing conferences to consider motions under
this rule will be recorded as set forth in Rule 13606.
    (6) The panel cannot act upon a motion to dismiss a party or claim
under paragraph (a) of this rule, unless the panel determines that:
    (A) the non-moving party previously released the claim(s) in
dispute by a signed settlement agreement and/or written release; or
    (B) the moving party was not associated with the account(s),
security(ies), or conduct at issue.
    (7) If the panel grants a motion under this rule (in whole or
part), the decision must be unanimous, and must be accompanied by a
written explanation.
    (8) If the panel denies a motion under this rule, the moving party
may not re-file the denied motion, unless specifically permitted by
panel order.
    (9) If the panel denies a motion under this rule, the panel must
assess forum fees associated with hearings on the motion against the
moving party.
    (10) If the panel deems frivolous a motion filed under this rule,
the panel must also award reasonable costs and attorneys' fees to any
party that opposed the motion.
    (11) The panel also may issue other sanctions under Rule 13212 if
it determines that a party filed a motion under this rule in bad faith.
    (b) Motions to Dismiss After Conclusion of Case in Chief
    A motion to dismiss made after the conclusion of a party's case in
chief is not subject to the procedures set forth in subparagraph (a).
    (c) Motions to Dismiss Based on Eligibility
    A motion to dismiss based on eligibility filed under Rule 13206
will be governed by that rule.
    (d) Motions to Dismiss Based on Failure to Comply with Code or
Panel Order
    A motion to dismiss based on failure to comply with any provision
in the Code, or any order of the panel or single arbitrator filed under
Rule 13212 will be governed by that rule.
    (e) Motions to Dismiss Based on Discovery Abuse
    A motion to dismiss based on discovery abuse filed under Rule 13511
will be governed by that rule.
* * * * *

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
    FINRA \3\ proposes to provide specific procedures to govern motions
to dismiss, and to amend the provision of the eligibility rule related
to dismissals. The proposal is designed to ensure that parties would
have their claims heard in arbitration, by significantly limiting the
grounds for filing motions to dismiss prior to the conclusion of a
party's case in chief and by imposing stringent sanctions against
parties for engaging in abusive practices under the rule.
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    \3\ Although some of the events referenced in this rule filing
occurred prior to the formation of FINRA through consolidation of
NASD and the member regulatory functions of NYSE Regulation, the
rule filing refers to FINRA throughout for simplicity.
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Background
    The Code of Arbitration Procedure that was in use prior to April
16, 2007, did not address motion practice.\4\ Because motions were
becoming increasingly common in arbitration, FINRA proposed to include
in its revision of the entire Code of Arbitration Procedure (Code
Revision) some guidance for parties and arbitrators with respect to
motions practice.
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    \4\ The Customer and Industry Codes became effective on April
16, 2007, for claims filed on or after that date; the old Code
continues to apply to pending cases until their conclusion.
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    The Code Revision, as initially filed with the SEC in 2003,
contained a rule that would have permitted a panel to grant a motion to
decide claims before a hearing on the merits (a ``dispositive motion'')
only under extraordinary circumstances. FINRA proposed this rule in an
attempt to address concerns raised by investors' counsel, SEC staff and
other constituent groups about abusive and duplicative filing of
dispositive motions. Specifically, FINRA received complaints that
parties (typically respondent \5\ firms) were filing dispositive
motions routinely and repetitively in an apparent effort to delay
scheduled hearing sessions on the merits, increase investors' costs
(typically claimants \6\), and intimidate less sophisticated
parties.\7\ In some

cases, if a party did not receive a favorable ruling on a dispositive
motion filed at a particular stage in an arbitration proceeding, that
party would re-file the same or a similar dispositive motion at a later
time, which often served only to increase investors' costs and delay
the hearing and the issuance of any award. Moreover, FINRA learned
through various constituent and focus groups that some respondents'
attorneys were being counseled by their law firms that an acceptable
and useful tactic was to file multiple dispositive motions at various
stages of an arbitration proceeding.
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    \5\ A respondent is a party against whom a statement of claim or
third party claim has been filed.
    \6\ A claimant is a party that files the statement of claim and
other documents that initiate an arbitration.
    \7\ For example, the Securities Arbitration Commentator
published a study in Fall 2006 on motions to dismiss in customer
cases, which concludes that, in the universe of cases that went to
award, there were motions to dismiss in 28% of the cases in 2006 as
compared to 10% in 2004. Securities Arbitration Commentator, Nov.
2006 (Vol. 2006, No. 5), at 3.
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    When the Code Revision was published for comment in the Federal
Register, commenters opposed the dispositive motion rule for a variety
of reasons. Therefore, FINRA removed the rule from the Code Revision
and re-filed it separately.\8\ The SEC then approved the Code Revision
without the dispositive motion rule.\9\
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    \8\ See Securities Exchange Act Release No. 54360 (August 24,
2006); 71 FR 51879 (August 31, 2006) (SR-NASD-2006-088) (notice).
    \9\ See Securities Exchange Act Release No. 55158 (January 24,
2007); 72 FR 4574 (January 31, 2007) (SR-NASD-2003-158 and SR-NASD-
2004-011) (approval order).
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Prior Dispositive Motion Proposal
    As re-filed with the SEC, the dispositive motion proposal would
have permitted a panel to grant a dispositive motion prior to an
evidentiary hearing only under extraordinary circumstances. \10\ The
SEC published the proposal for public comment on August 31, 2006, and
received over 60 comment letters,\11\ the majority of which opposed the
proposal. The comments and FINRA's response are discussed in Section 5
below.
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    \10\ See note 8.
    \11\ See Comments on File No. SR-NASD-2006-088, Notice of Filing
of Proposed Rule Change Relating to Motions to Decide Claims Before
a Hearing on the Merits, available at http://www.sec.gov/comments/
sr-nasd-2006-088/nasd2006088.shtml (last visited October 5, 2007).
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    Based on the comments, FINRA recognized that the proposal did not
provide effective guidance on how dispositive motions would be handled
in the forum. Because the comments indicated that various issues
involving dispositive motions required more guidance, FINRA withdrew
the dispositive motion proposal, and filed a new proposed rule change
to provide specific procedures that would govern motions to dismiss.
FINRA also proposes to amend the separate rule governing dismissals
made on eligibility grounds.
Motions To Dismiss on Other Than Eligibility Grounds
    FINRA filed the proposed rule change to provide specific procedures
that would govern motions to dismiss. Generally, FINRA believes that
parties have the right to a hearing in arbitration. In certain very
limited circumstances, however, it would be unfair to require a party
to proceed to a hearing. The proposal is designed to balance these
competing interests. The proposal should ensure that parties \12\ have
their claims heard in arbitration, by significantly limiting the
grounds for filing motions to dismiss prior to conclusion of a party's
case in chief and by imposing stringent sanctions against parties for
engaging in abusive practices under the rule. The proposal would permit
parties to file a motion to dismiss at the conclusion of a party's case
in chief, based on any theory of law.
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    \12\ For purposes of the proposal, a party could be an initial
claimant, respondent, counterclaimant, cross claimant, or third
party claimant and his or her motion to dismiss would be subject to
Rules 12206 and 12504 of the Customer Code or Rules 13206 and 13504
of the Industry Code.
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    The proposed rule change would govern motions to dismiss filed
prior to the conclusion of a party's case in chief (under the Customer
Code or Industry Code, as applicable), as discussed in further detail
below.
Discourage Motions To Dismiss a Claim Prior to a Party's Case in Chief
    The proposed rule change would clarify that motions to dismiss a
claim prior to a party's case in chief are discouraged in arbitration.
FINRA believes that parties have the right to a hearing in arbitration,
and only in certain very limited circumstances should that right be
challenged. This provision would not apply to motions filed on the
basis of eligibility grounds, as discussed below.
Require That Motions To Dismiss Be Filed in Writing, Separately From
the Answer, and After the Answer Is Filed
    FINRA believes that requiring a party to file a motion to dismiss
in writing separately from the answer and only after the answer is
filed would deter parties from filing these motions routinely in lieu
of an answer, and would prevent parties from combining a motion to
dismiss with an answer. This provision should ensure that parties
receive an answer that responds directly to the statement of claim.
Filing Deadlines
    The proposed rule change would require parties to serve motions
under this provision at least 60 days before a scheduled hearing and
would provide 45 days to respond to a motion unless the parties agree
or the panel determines otherwise. FINRA believes that requiring a
motion to dismiss to be served at least 60 days before a scheduled
hearing and providing 45 days for a party to respond to such a motion
would prevent the moving party from filing a motion shortly before a
hearing as a surprise tactic to force a delay in the arbitration
process.
Require the Full Panel To Decide Motions To Dismiss
    The proposal would require the full panel to decide motions to
dismiss. Given the ramifications of granting a motion to dismiss, FINRA
believes that each member of the panel should be required to hear the
parties' arguments, so that each panel member may make an informed
decision when ruling on the motion.
Require an Evidentiary Hearing
    Under the proposal, the panel may not grant a motion to dismiss
prior to the conclusion of a party's case in chief unless the panel
holds an in-person or telephonic prehearing conference on the motion
that is recorded in accordance with Rule 12606 or Rule 13206, unless
such conference is waived by the parties. FINRA believes this
requirement would ensure that the panel holds a hearing on the motion
and that the panel has sufficient information to make a ruling.
Limited Grounds on Which a Motion May Be Granted
    FINRA proposes to limit the grounds on which a panel may act upon a
motion to dismiss prior to the conclusion of the party's case in chief.
The proposal states that a panel may act upon a motion to dismiss only
after the party rests its case in chief unless the panel determines
that:
     The non-moving party previously released the claim(s) in
dispute by a signed settlement agreement and/or written release; or
     the moving party was not associated with the account(s),
security(ies), or conduct at issue.\13\

    \13\ A motion to dismiss on eligibility grounds would be
governed by Rules 12206 and 13206 of the Customer and Industry Code,
respectively; the amendments to those rules are discussed below.

FINRA believes that limiting the grounds on which a motion to dismiss
may be granted prior to the conclusion

of the party's case in chief would minimize the potential for abusive
practices and ensure that most parties' claims would be heard in the
forum.
Require a Unanimous, Explained, Written Decision To Grant a Motion To
Dismiss
    The proposal would require a unanimous decision by the panel to
grant a motion to dismiss as well as a written explanation of the
decision in the award. Under the proposal, each member of the panel
must agree to grant a motion to dismiss. FINRA believes that because
these decisions are an integral part of the arbitration process, all
panel members should agree to dismiss a claim; otherwise the case
should continue. Moreover, the provision that requires the panel to
provide a written explanation of its decision would help parties
understand the panel's rationale for its decision.
Require Permission From the Arbitrators To Re-File a Denied Motion To
Dismiss
    Under the proposal, a party would be prohibited from re-filing a
denied motion to dismiss, unless specifically permitted by a panel
order. FINRA believes this limitation would serve to expedite the
arbitration process and minimize parties' costs.
Require Arbitrators To Award Fees Associated With Denied Motions To
Dismiss and To Award Fees and Costs Associated With Frivolously Filed
Motions To Dismiss
    The proposal would also require that the panel assess forum fees
associated with hearings on the motion to dismiss against the party
filing the motion to dismiss, if the panel denies the motion. Further,
if the panel deems frivolous a motion filed under this rule, the panel
must award reasonable costs and attorneys' fees to a party that opposed
the motion. FINRA believes that imposing monetary penalties would
minimize abusive practices involving motions to dismiss and would deter
parties from filing such motions frivolously.
Permit Sanctions for Motion To Dismiss Filed in Bad Faith
    If the panel determines that a party filed a motion under this rule
in bad faith, the panel also may issue sanctions under Rule 12212 or
Rule 13212. FINRA believes that these stringent sanction requirements
would provide panels with additional enforcement mechanisms to address
abusive practices involving motions to dismiss if other deterrents
prove ineffective.
    When a moving party (governed by the Customer Code or Industry
Code, as applicable) files a motion to dismiss at the conclusion of a
party's case in chief, the provisions governing motions to dismiss
filed prior to the conclusion of a party's case in chief discussed
above would not apply. Thus, a moving party could file a motion to
dismiss at the conclusion of a party's case in chief, based on any
theory of law. The rule, however, would not preclude the panel under
this scenario from issuing an explanation of its decision if it grants
the motion, or awarding costs or fees to the party that opposed the
motion if it denies the motion.
    FINRA believes that permitting a moving party to file a motion to
dismiss at the conclusion of a party's case in chief should balance the
goal of ensuring that non-moving parties have their claims heard by a
panel against the rights of moving parties to challenge a claim they
believe lacks merit or has not been proved. Moreover, FINRA believes
that arbitrators should be permitted to entertain and act upon a motion
to dismiss at this stage of a hearing to minimize the moving parties'
incurring unnecessary additional attorneys' fees and forum fees. If a
claimant has presented its case in chief and clearly failed to present
sufficient evidence to support a claim, then the moving party should
not be forced to incur the additional expenses and costs associated
with unnecessary hearings.
    The proposal provides that motions to dismiss based on failure to
comply with code or panel order under Rule 12212 or 13212, as
applicable, would be governed by that rule. Further, the proposal
provides that motions to dismiss based on discovery abuse filed under
Rule 12511 or 13511, as applicable, would be governed by that rule.
Amendments to the Dismissal Provision of the Eligibility Rule
    FINRA proposes to amend Rules 12206(b) and 13206(b) of the Customer
and Industry Codes, respectively, to address motions to dismiss made on
eligibility grounds. Under this proposal, a party may file a motion to
dismiss on eligibility grounds at any stage of the proceeding (after
the answer is filed), except that a party may not file this motion any
later than 90 days before the scheduled hearing on the merits. FINRA is
also proposing to amend the rule to address the res judicata defense
claimants could encounter when they attempt to pursue in court a claim
dismissed in arbitration, when the grounds for the dismissal are
unclear.
    The first issue FINRA addresses with the proposal is amending Rules
12206(b) and 13206(b) to establish procedures for motions to dismiss
made on eligibility grounds. In light of the new motions to dismiss
proposal, FINRA believes that similar changes should be incorporated
into the existing eligibility rule to provide procedures and guidance
for dealing with motions to dismiss made on eligibility grounds. The
proposed changes to the eligibility rule contain most of the same
provisions as those contained in the proposed motions to dismiss rule
(discussed above), except for those criteria that are not applicable to
eligibility motions, that is, the two other grounds on which a panel
may grant a motion to dismiss before a party has presented its case in
chief (i.e., signed settlement and written release and factual
impossibility).
    In addition, the filing deadlines would be different from those in
the motions to dismiss proposal. Under the proposed rule, a party may
file a motion to dismiss on eligibility grounds at any stage of the
proceeding (after the answer is filed), except that a party may not
file this motion any later than 90 days before the scheduled hearing on
the merits. FINRA believes that this requirement would encourage moving
parties to determine in the early stages of the case whether to pursue
their claims in court or to proceed with the arbitration. Further,
FINRA believes that this requirement would prevent the moving party
from filing this motion shortly before a hearing as a surprise tactic
to force a delay in the arbitration process.
    The proposal also would provide parties with 30 days to respond to
an eligibility motion. If a panel grants a motion to dismiss a party's
claim based on eligibility grounds, that party must re-file the claim
in court to pursue its remedies, which could further delay resolution
of the dispute. Therefore, FINRA is proposing the 30-day timeframe to
respond to eligibility motions to expedite the process, so that the
time between filing a claim and resolution of the dispute is shortened.
    The second issue concerns potential problems in the implementation
of the eligibility rule since it was last amended in 2005. Currently,
the eligibility rule makes clear that dismissal of a claim on
eligibility grounds in arbitration does not preclude a party from
pursuing the claim in court; it provides that, by requesting dismissal
of a claim under the rule, the requesting party is agreeing that the
non-moving party may withdraw any remaining related claims

without prejudice and may pursue all of the claims in court.\14\
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    \14\ Rule 12206(b) of the Customer Code and Rule 13206(b) of the
Industry Code.
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    In certain situations, when a claim is dismissed under the
eligibility rule, FINRA understands that claimants have had difficulty
proceeding with their claims in court, because respondents have
asserted a res judicata defense when the panel's grounds for dismissing
the arbitration claim were unclear. For example, if a respondent files
a motion to dismiss based on several grounds, including eligibility,
and the panel issues an order dismissing a claim, but without citing
reasons, the claimants would not know whether or not they are afforded
the right to pursue the claim in court, as provided by the rule. If the
claimants proceed to file the dismissed claim in court, the respondents
may argue that the panel's decision on the claim is the final decision,
and that claimants are barred from having the court decide the same
claim again. In such a case, claimants would be required to prove that
the dismissal was based on eligibility, not the other grounds for
dismissal that the respondents raised. This would be difficult or
impossible if the arbitrator or panel did not explain the reasons for
the dismissal.
    FINRA proposes to amend the eligibility rule to address this issue.
The rule would be amended to provide that, when a party files a motion
to dismiss on multiple grounds, including eligibility, the panel must
consider the threshold issue of eligibility first. First, the rule
would be amended to require that if the panel grants the motion to
dismiss on eligibility grounds on all claims, it shall not rule on any
other grounds for the motion to dismiss. Second, the rule would be
amended to require that if the panel grants the motion to dismiss on
eligibility grounds, on some, but not all claims, and the non-moving
party elects to move the case to court, the panel shall not rule on any
other ground for dismissal for 15 days from the date of service of the
panel's decision to grant the motion to dismiss on eligibility grounds.
Third, the rule would be amended to require that, when arbitrators
dismiss any claim on eligibility grounds, that fact must be stated on
the face of their order and any subsequent award the panel may issue.
And fourth, if the panel denies the motion to dismiss on the basis of
eligibility, it shall rule on the other bases for the motion to dismiss
the remaining claims in accordance with the motions to dismiss rule.
FINRA believes that the proposed amendments will close a loophole that
has resulted from implementing the rule by eliminating the res judicata
defense that claimants could face when they attempt to pursue claims in
court that were dismissed in arbitration on eligibility grounds.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act, which requires, among other
things, that FINRA rules must be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the proposed rule change would
enhance investor confidence in the fairness and neutrality of FINRA's
arbitration forum by ensuring that non-moving parties have their claims
heard in arbitration, while preserving the moving parties' rights to
challenge the necessity of a hearing in certain limited circumstances.
Further, the proposed changes to the eligibility rule would help
prevent manipulative practices by closing a loophole in the rule, so
that parties may pursue their claims in court without facing an
unintended legal impediment, in the event their claims are dismissed in
arbitration on eligibility grounds.

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

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

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

    Written comments were neither solicited nor received by FINRA. The
SEC received 63 comments on the prior dispositive motion proposal that
was published for comment on August 31, 2006.\15\ In general, most
commenters

opposed the prior proposal and argued that it would, among other
things, encourage, rather than discourage, the making of dispositive
motions; have a chilling effect on the ability of investors to have all
evidence judged and the credibility and veracity of witnesses weighed;
and result in a loss of the major benefits of the arbitration process--
cost effectiveness and expediency.
---------------------------------------------------------------------------

    \15\ Comment letters were submitted by Paul R. Meyer, Esq.,
dated July 26, 2006 (``Meyer Letter''); Seth E. Lipner, Professor of
Law, Zicklin School of Business, dated August 29, 2006 (``Lipner
Letter''); Kevin Thomas Hoffman, Esq., dated September 8, 2006
(``Hoffman Letter''); Randall R. Heiner, Esq., dated September 12,
2006 (``Heiner Letter''); Joseph C. Korsak, Esq., dated September
13, 2006 (``Korsak Letter''); Philip M. Aidikoff, Esq., Aidikoff,
Uhl Bakhtiari, dated September 13, 2006 (``Aidikoff Letter''); Barry
D. Estell, Esq., dated September 13, 2006 (``Estell Letter'');
Daniel A. Ball, Esq., Ball Associates, dated September 14, 2006
(``Ball Letter''); Stuart E. Finer, Esq., dated September 21, 2006
(``Finer Letter''); Barbara Black, Director, University of
Cincinnati College of Law and Jill I. Gross, Director, Pace
University School of Law, dated September 21, 2006 (``Black and
Gross Letter''); Robert S. Banks, Jr., President, Public Investors
Arbitration Bar Association, dated September 21, 2006 (``PIABA
Letter''); Tim Canning, Esq., Law Offices of Timothy A. Canning,
dated September 21, 2006 (``Canning Letter''); Gary Pieples,
Director, Syracuse University Securities Arbitration and Consumer
Clinic, dated September 22, 2006 (``Pieples Letter''); Scot D.
Bernstein, Esq., dated September 24, 2006; Robert C. Port, Esq.,
Cohen Goldstein Port & Gottlieb, LLP, dated September 25, 2006
(``Port Letter''); William P. Torngren, Esq., dated September 25,
2006 (``Torngren Letter''); Laurence S. Schultz, Esq., Driggers
Schultz and Herbst; dated September 25, 2006 (``Schultz Letter'');
Al Van Kampen, Esq., Rohde & Van Kampen PLLC, dated September 25,
2006 (``Van Kampen Letter''); Allan J. Fedor, Esq., dated September
26, 2006 (``Fedor Letter''); A. Daniel Woska, Esq., Woska & Hayes,
LLP, dated September 25, 2006 (``Woska Letter''); Cliff Palefsky,
Co-Chair ADR Committee, National Employment Lawyers Association,
dated September 26, 2006 (``Palefsky Letter''); Steven B. Caruso,
Esq., Maddox Hargett Caruso, P.C., dated September 27, 2006
(``Caruso Letter''); Dale Ledbetter, Esq., Adorno & Yoss, dated
September 27, 2006 (``Ledbetter Letter''); Noah H. Simpson, Esq.,
dated September 28, 2006 (``Simpson Letter I''); Stephen P. Meyer,
Esq., PIABA, dated September 29, 2006 (``Meyer Letter''); Edward G.
Turan, Chair, Arbitration and Litigation Committee, Securities
Industry Association, dated September 29, 2006 (``SIA Letter'');
Joseph Fogel, Esq., Fogel & Associates, dated September 30, 2006
(``Fogel Letter''); Henry Simpson, III, Simpson Woolley McConachie,
L.L.P, dated October 2, 2006 (``Simpson Letter II''); Michael J.
Willner, Esq., Miller Faucher and Cafferty LLP, dated October 3,
2006 (``Willner Letter''); T. Michael Kennedy, P.C., dated October
3, 2006 (``Kennedy Letter''); Richard A. Lewins, Burg Simpson
Eldredge Hersh & Jardine P.C., dated October 3, 2006 (``Lewins
Letter''); Val Hornstein, Esq., Hornstein Law Offices, dated October
3, 2006 (``Hornstein Letter''); Steve Buchwalter, Esq., Law Offices
of Steve A. Buchwalter, P.C., dated October 3, 2006 (``Buchwalter
Letter''); W. Scott Greco, Esq., Greco & Greco, P.C., dated October
3, 2006 (``Greco Letter''); Jeffrey B. Kaplan, Esq., dated October
3, 2006 (``Kaplan Letter''); Jan Graham, Esq., Graham Law Offices,
dated October 3, 2006 (``Graham Letter''); Thomas C. Wagner, Esq.,
Van Deusen & Wagner, LLC, dated October 3, 2006 (``Wagner Letter'');
Scott R. Shewan, Esq., Born, Pape & Shewan LLP, dated October 3,
2006 (``Shewan Letter''); Jeffrey S. Kruske, Esq., dated October 3,
2006 (``Kruske Letter''); Gail E. Boliver, Esq., Boliver Law Firm,
dated October 3, 2006 (``Boliver Letter''); Sarah G. Anderson, dated
October 3, 2006 (``Anderson Letter''); Rob Bleecher, Esq., Pecht &
Associates, PC, dated October 4, 2006 (``Bleecher Letter''); Robert
Goehring, Esq., dated October 4, 2006 (``Goehring Letter''); Herbert
E. Pounds, Jr., Esq., dated October 4, 2006 (``Pounds Letter'');
Leonard Steiner, Esq., Steiner & Libo, Professional Corporation,
dated October 4, 2006 (``Steiner Letter''); Harry S. Miller, Esq.,
Burns & Levenson LLP, dated October 4, 2006 (``Miller Letter'');
Jonathan W. Evans, Esq., Jonathan W. Evans & Associates, dated
October 4, 2006 (``Evans Letter''); Henry Simpson, Esq., Simpson
Woolley McConachie, LLP, dated October 4, 2006 (``Simpson Letter
III''); Eliot Goldstein, Esq., Law Offices of Eliot Goldstein LLP,
dated October 4, 2006 (``Goldstein Letter''); Kyle M. Kulzer, Esq.,
Alan L. Frank Law Associates, P.C., dated October 4, 2006 (``Kulzer
Letter''); Adam S. Doner, Esq., dated October 4, 2006 (``Doner
Letter''); Brian N. Smiley, Esq., Gard Smiley Bishop & Porter LLP,
dated October 4, 2006 (``Smiley Letter''); Frederick W. Rosenberg
JD, dated October 4, 2006 (``Rosenberg Letter''); Theodore M. Davis,
Esq., dated October 5, 2006 (``Davis Letter''); James D. Keeney,
Esq., James D. Keeney, P.A., dated October 5, 2006 (``Keeney
Letter''); Jorge A. Lopez, Esq., dated October 5, 2006 (``Lopez
Letter''); Michael B. Lynch, Esq., Levin Papantonio Thomas Mitchell
Echsner & Proctor P.A., dated October 5, 2006 (``Lynch Letter'');
John Miller, Esq., dated October 10, 2006 (``Miller Letter'');
Jenice L. Malecki, Esq., dated October 11, 2006 (``Malecki
Letter''); Stuart Meissner, Esq., The Law Offices of Stuart D.
Meissner LLC, dated October 13, 2006 (``Meissner Letter''); Howard
Rosenfield, Esq., Law Offices of Howard M Rosenfield, dated December
12, 2006 (``Rosenfield Letter''); Richard P. Ryder, Esq., Securities
Arbitration Commentator, dated June 16, 2007 (``Ryder Letter''); and
Bryan Lantagne, Chair, North American Securities Administrators
Association, Inc. Broker-Dealer Arbitration Project Group, dated
July 19, 2006 (``NASAA Letter'')(submitted as comment on SR-NASD-
2003-158).
---------------------------------------------------------------------------

    Some commenters who opposed the prior proposal argued that FINRA
should adopt a rule that would prohibit all dispositive motions in
arbitration. These commenters contended that the prior proposal would
establish a procedure that would deprive investors of their fundamental
right to a hearing in arbitration--a policy, they believe, is
antithetical to the goals of arbitration.\16\ Another group of
commenters indicated that they would support a modified version of the
prior proposal if it included some safeguards. Some of the safeguards
suggested by these commenters included prohibiting a panel from
deciding a claim before a hearing until all documents have been
produced by the parties; requiring a panel to deny a dispositive motion
if there are disputed facts; requiring a panel to award costs and
attorneys' fees to the party defending a dispositive motion if it is
denied; and requiring a written explanation from the panel if the
dispositive motion is granted.\17\
---------------------------------------------------------------------------

    \16\ See, e.g., Estell, Finer, and Woska Letters.
    \17\ See, e.g., Ledbetter, Schultz and Torngren Letters.
---------------------------------------------------------------------------

    Based on the concerns raised by the commenters, FINRA realized that
the prior proposal did not convey its position on dispositive motions
effectively; and did not provide guidance on how the dispositive motion
rule and noncompliance with the rule should be handled in its
arbitration forum. Because the comments indicated that these positions
were unclear, FINRA withdrew the prior proposal and filed this new
proposal to replace it.

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

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period: (i) As the Commission
may designate up to 90 days of such date if it finds such longer period
to be appropriate and publishes its reasons for so finding or (ii) as
to which the self-regulatory organization consents, the Commission
will:
(A) By order approve such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change
should be disapproved.

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-2007-021 on the subject line.

Paper Comments

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

    All submissions should refer to File Number SR-FINRA-2007-021. 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 inspection
and copying in the Commission's Public Reference Room, 100 F Street,
NE., Washington, DC 20549, 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 available
publicly. All submissions should refer to the File Number SR-INRA-2007-
021 and should be submitted on or before April 10, 2008.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon.
Deputy Secretary.
 [FR Doc. E8-5571 Filed 3-19-08; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 11 (Tuesday, January 19, 2016)]
[Notices]
[Pages 2853-2854]
[FR Doc No: 2016-00812]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER16-700-000]

CPV Towantic, LLC; Supplemental Notice That Initial Market-Based
Rate Filing Includes Request for Blanket Section 204 Authorization

    This is a supplemental notice in the above-referenced proceeding of
CPV Towantic, LLC's application for market-based rate authority, with
an accompanying rate tariff, noting that such application includes a
request for blanket authorization, under 18 CFR part 34, of future
issuances of securities and assumptions of liability.
    Any person desiring to intervene or to protest should file with the
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426, in accordance with Rules 211 and 214 of the Commission's
Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone
filing a motion to intervene or protest must serve a copy of that
document on the Applicant.

    Notice is hereby given that the deadline for filing protests with
regard to the applicant's request for blanket authorization, under 18
CFR part 34, of future issuances of securities and assumptions of
liability, is February 1, 2016.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with Internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically should submit an original and
5 copies of the intervention or protest to the Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426.
    The filings in the above-referenced proceeding are accessible in
the Commission's eLibrary system by clicking on the appropriate link in
the above list. They are also available for electronic review in the
Commission's Public Reference Room in Washington, DC. There is an
eSubscription link on the Web site that enables subscribers to receive
email notification when a document is added to a subscribed docket(s).
For assistance with any FERC Online service, please email
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For
TTY, call<PHONE_NUMBER>.

    Dated: January 12, 2016.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2016-00812 Filed 1-15-16; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 77, Number 81 (Thursday, April 26, 2012)]
[Notices]
[Pages 24950-24952]
[FR Doc No: 2012-10064]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket Nos. ER12-678-000; ER12-679-000]

Midwest Independent Transmission, System Operator, Inc.;
Supplemental Notice of Technical Conference

    As announced in the Notice of Technical Conference issued on April
4, 2012, and as required in the Commission's March 30, 2012 order in
these dockets,\1\ there will be a technical conference in these
proceedings on May 15, 2012 at the Federal Energy Regulatory
Commission, 888 First Street NE., Washington, DC, Room 3M-2A&B. The
technical conference will be led by staff, and will be open for the
public to attend. Attendees may register in advance at the following
Web page: https://www.ferc.gov/whats-new/registration/midwest-independent-5-15-12-form.asp. Advance registration is not required, but
is encouraged. Parties attending in person should still allow time to
pass through building security procedures before the 9:00 a.m. start
time of the conference.
---------------------------------------------------------------------------

    \1\ Midwest Independent Transmission System Operator, Inc., 138
FERC ] 61,235 (2012).
---------------------------------------------------------------------------

    The conference will not be webcast, but will be accessible via
telephone. Parties wishing to participate by phone should fill out the
registration form and check the box indicating that they wish to
participate by conference call, and do so no later than 5:00 p.m.
(Eastern Time) on Wednesday, May 9. Parties selecting this option will
receive a confirmation email containing a dial-in number and a password
before the conference. To the extent possible, individuals calling from
the same location share a single telephone line.
    FERC conferences are accessible under section 508 of the
Rehabilitation Act of 1973. For accessibility accommodations please
send an email to<EMAIL_ADDRESS>or call toll free<PHONE_NUMBER>
(voice) or<PHONE_NUMBER> (TTY), or send a FAX to<PHONE_NUMBER> with the
required accommodations.
    For further information regarding this conference, contact Stephen
Pointer at<EMAIL_ADDRESS>or<PHONE_NUMBER>, Adam Pollock at
<EMAIL_ADDRESS>or<PHONE_NUMBER>, or Katherine Waldbauer at
<EMAIL_ADDRESS>or<PHONE_NUMBER>.
    I. Questions to be Addressed Prior to Technical Conference. The
Midwest Independent Transmission System Operator, Inc. (MISO) and/or
Potomac Economics, Inc., MISO's Independent Market Monitor (IMM), are
requested to file written responses to each of the questions below by
Thursday, May 10, 2012, so that the responses may be discussed at the
technical conferences.
    1. Provide monthly information (from 2009 forward) on how many
units were committed for VLR and the percentage of those units that
were committed on transmission lines of less than 100 kV. Provide
information on where in the MISO region these VLR units were committed.
Does MISO expect VLR commitments in the future, and if so, where?
Please explain.
    2. How many VLR units (from 2009 forward) were economically
dispatched?
    3. With regard to the IMM's testimony in Docket No. ER12-678 at ]
15-22,\2\ for the period from January 2010 to September 2011:
---------------------------------------------------------------------------

    \2\ Docket No. ER12-678-000 Filing, Tab E, Affidavit of David B.
Patton.
---------------------------------------------------------------------------

    a. Were VLR units economically dispatched during any of these
hours? Provide data on the number of hours VLR units were economically
dispatched.
    b. Did these units have headroom? If so, how many MWs?
    4. MISO states that ``[i]n principle, voltage issues would be
modeled using thermal constraints as a proxy in the commitment and
dispatch'' \3\ and ``[i]n fact, these commitments are made per
operating procedures and guidelines regardless of expected or actual
deviation volumes.'' \4\
---------------------------------------------------------------------------

    \3\ Analysis of Market Results at 1.
    \4\ Id. at 8.
---------------------------------------------------------------------------

    a. Please provide the Operating Procedures and guidelines.

    b. Please identify all Business Practice Manuals that are relevant
to Voltage and Local Reliability commitments.
    5. The IMM explains that the proposed mitigation thresholds in
section 64.1.3 are intended to address inflexible physical parameters
for VLR units that can increase Revenue Sufficiency Guarantee
payments.\5\
---------------------------------------------------------------------------

    \5\ Docket No. ER12-679-000 Filing, Tab D, Affidavit of David B.
Patton at ]] 22-25.
---------------------------------------------------------------------------

    a. The proposed mitigation thresholds for identifying uneconomic
production in sections 64.1.3.a.i(a), (b) and (c) apply to all
resources, not only to VLRs. Explain in detail why each threshold is
appropriate for all resources, including VLRs.
    b. Neither the MISO submittal nor the IMM's testimony addresses the
proposed threshold in section 64.1.3.a.i(a) of an incremental energy
offer price for a resource that is less than 50 percent of the
applicable Reference Level. Provide a justification for this threshold.
    c. With regard to proposed section 64.1.3.a.i(c), please explain
why the existing thresholds for identifying economic withholding in
sections 64.1.2.a.v and 64.1.2.a.vi should also be used to identify
uneconomic production.
    6. Table 1 of the Analysis of Market Results \6\ indicates that it
represents real-time Revenue Sufficiency Guarantee costs.
---------------------------------------------------------------------------

    \6\ Analysis of Market Results.
---------------------------------------------------------------------------

    a. Were all costs incurred in real time?
    b. If not, what costs were incurred in the day-ahead markets?
    7. Referencing the IMM's testimony in Docket No. ER12-678-000 at ]
17-19,\7\ please explain the following.
---------------------------------------------------------------------------

    \7\ Id.
---------------------------------------------------------------------------

    a. How does the IMM determine the ``* * * available offline
resources that MISO could have committed to replace the capacity
provided by the local commitments and identified the least-cost
resource that MISO would likely have committed.''
    b. Please describe all elements of the calculation of the avoided
Day-Ahead and Real-Time Revenue Sufficiency Guarantee Credits that
would have been paid to Resources that may have been committed to meet
the Capacity needs in the absence of the Voltage and Local Reliability
Commitments, as specified in proposed section 40.3.3.xviii(3).
    c. Why did the IMM base market-wide share on avoided Revenue
Sufficiency Guarantee costs, rather than avoided MW?
* * * * *
    II. Questions to Be Discussed at the Conference. The conference
will consist of three sessions, as detailed below. For each session, a
representative of MISO and a representative of the IMM should be
prepared to make opening statements that address the questions below.
After statements by the MISO and IMM representatives, Commission staff
will ask questions; as time permits, other attendees (including
telephone participants) may also ask questions.

Session 1: Voltage and Local Reliability (VLR) Commitments (Docket Nos.
ER12-678-000 and ER12-679-000) (9 a.m.-11 a.m.)

    8. MISO concludes that ``[a] significant increase in the Real-Time
[Revenue Sufficiency Guarantee] Make Whole Payments associated with
Voltage and Local Reliability Commitments has occurred, starting in
early 2010. The increase has been evident and sustained through
November 2011 based on recurring transmission issues at specific
locations in the MISO footprint.'' \8\ Discuss the transmission
reliability issues that have been occurring and what changed in 2010
such that VLR commitments were not needed in 2009 but were required in
2010. In the discussion, please indicate the extent to which the
increase in Revenue Sufficiency Guarantee costs can be attributed to
increased frequency of VLR commitments for specific units or to an
increased number of different units committed for VLR.
---------------------------------------------------------------------------

    \8\ Analysis of Market Results--Constraint Management
Commitments, attached to both the Docket No. ER12-678-000 filing and
the Docket No. ER12-679-000 filing as Tab C (Analysis of Market
Results) at 7-8.
---------------------------------------------------------------------------

    9. How are voltage constraints modeled in the Security Constrained
Unit Commitment (SCUC) and Security Constrained Economic Dispatch
(SCED)? For voltage constraints that are not modeled in the SCUC and
SCED, why aren't they included? What models or other tools aside from
the SCUC and SCED does MISO use to make VLR commitments?
    10. Explain how VLR units are committed and when they are committed
in the operating and planning cycle. For all responses, provide
objective criteria to the extent possible.
    a. Please explain when and how VLR requirements are determined.
    b. Are VLR commitments made for a specific MW amount, the total
capacity of the generation unit, or on another basis? Please explain.
    c. Do MISO and the IMM coordinate their VLR determinations, or do
they make those determinations separately?
    11. MISO states that ``VLR Commitments may be issued at various
points in the sequence of administering the [Reliability Assessment
Commitment (RAC)] process, depending on when the needed requirements
are known.'' \9\ Explain this statement, and describe what information
MISO is relying on to indicate that VLRs are required.
---------------------------------------------------------------------------

    \9\ MISO Answer, Docket No. ER12-678-000, at 7.
---------------------------------------------------------------------------

    a. As part of the RAC process, explain each of the roles for the
following tools in determining the needs for resources committed for
VLR: Forward Reliability Assessment Commitment, Intra-day Reliability
Assessment Commitment, and Look Ahead Commitment.
    b. Does MISO consider a VLR commitment several days before the
operating day to be part of a RAC process? Please explain.
    12. Are market participants informed that their units are VLR
commitments when committed? If not, when are they informed? Are VLR
units designated as such prior to when their offers are submitted?
Describe the VLR designation process. Does MISO change a unit's VLR
designation after the commitment is made? Is there a ``final''
designation after the fact (during the settlement accounting process)?
    13. Wisconsin Electric Power Company (WEPCO) argues that certain
resource commitments should be exempt from the definition of VLR
commitments, as follows: ``Resource commitments that, absent an
Operating Guide to address [VLR] requirements, would have resulted from
a [SCUC] in the Day-Ahead Energy and Operating Reserve Market or any
[RAC], shall not be designated in this category.'' \10\
---------------------------------------------------------------------------

    \10\ WEPCO Protest, Docket No. ER12-678-000, at 4-5.
---------------------------------------------------------------------------

    a. Does WEPCO's proposed exclusion of SCUC commitments accurately
depict how VLRs are committed? Please explain.
    b. Can units committed based on economics in the SCUC and SCED
processes be classified as VLR commitments? If yes, provide examples.
    c. Can VLR units be declassified and become economic-only units?
Please explain response.
    d. Is it possible for MISO to incorporate local reliability issues
in the SCUC or SCED processes? Please explain.

Session 2: Cost Allocation (Docket No. ER12-678-000) (11:30 a.m.-1:30
p.m.)

    14. MISO states that ``it does not anticipate any significant
instances of pseudo-tied load modeling throughout the footprint that
would exacerbate or

result in cost shifts.'' \11\ On what basis does MISO make that claim?
Has MISO performed any studies to draw that conclusion? If so, please
explain the results of the study.
---------------------------------------------------------------------------

    \11\ MISO Answer in Docket No. ER12-678-000 at 9.
---------------------------------------------------------------------------

    15. Could MISO include voltage management as a constraint in an
SCED/SCUC model that would allow for cost allocation in the same way
that the constraint management charge is derived?
    16. Please explain any objections MISO may have with regard to
allowing Local Balancing Authority (LBA) Area participation in studies
that result in costs being allocated to those LBAs.
    17. Referencing the transmittal letter in Docket No. ER12-678-000
at 11, indicate objective criteria MISO would use that would form the
basis for a broader allocation beyond the LBA Area.
    18. Referencing the discussion in the transmittal letter in Docket
No. ER12-678-000 at 15 of ``Commercially Significant'' voltage and
local reliability issues, explain all the criteria that MISO will use
to determine if a VLR is commercially significant.

Session 3: Mitigation (Docket No. ER12-679-000) (2 p.m.-4 p.m.)

    19. The IMM's testimony describes voltage support commitments and
reasons for those commitments, stating that ``local reliability and
voltage support needs generally pertain to a very limited geographic
area where the resources available to satisfy the reliability needs are
owned by a very small number of suppliers, often only a single
supplier.'' \12\ How will the IMM determine which units are VLR
commitments? How will the IMM monitor for units committed for VLR and
for economics (and which mitigation thresholds will apply)?
---------------------------------------------------------------------------

    \12\ Docket No. ER12-679-000 Filing, Tab D, Affidavit of David
B. Patton at ] 10.
---------------------------------------------------------------------------

    20. To what extent do MISO and/or the IMM expect VLR mitigation to
stem increasing Revenue Sufficiency Guarantee costs?
    21. Explain the interplay between VLR mitigation and existing
mitigation measures within Broad Constrained Areas (BCAs) and Narrow
Constrained Areas (NCAs). Could a resource be mitigated under both sets
of mitigation thresholds? If so, under what circumstances?
    22. Please describe how MISO will determine reference levels for
units committed for VLR. Given the specific market power concerns
associated with VLRs, is it appropriate to use historical offer
information to determine their initial reference levels?

Conference Conclusion: Next Steps (4 p.m.-4:30 p.m.)

    Staff will conclude the conference and outline next steps.

    Dated: April 20, 2012.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2012-10064 Filed 4-25-12; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 80, Number 209 (Thursday, October 29, 2015)]
[Proposed Rules]
[Pages 66482-66485]
[FR Doc No: 2015-27571]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2015-4803; Directorate Identifier 2015-CE-034-AD]
RIN 2120-AA64

Airworthiness Directives; B-N Group Ltd. Airplanes

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

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: We propose to adopt a new airworthiness directive (AD) for B-N
Group Ltd. Models BN-2, BN-2A, BN-2A-2, BN-2A-3, BN-2A-6, BN-2A-8, BN-
2A-9, BN-2A-20, BN-2A-21, BN-2A-26, BN-2A-27, BN-2B-20, BN-2B-21, BN-
2B-26, BN-2B-27, BN2A MK. III, BN2A MK. III-2, and BN2A MK. III-3
airplanes that would supersede AD 2014-03-18. This proposed AD results
from mandatory continuing airworthiness information (MCAI) originated
by an aviation authority of another country to identify and correct an
unsafe condition on an aviation product. The MCAI describes the unsafe
condition as damage of the cable sliding end assembly and installation
of the incorrect end fitting on engine control cable assemblies. We are
issuing this proposed AD to require actions to address the unsafe
condition on these products.

DATES: We must receive comments on this proposed AD by December 14,
2015.

ADDRESSES: You may send comments by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations,

M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue
SE., Washington, DC 20590.
     Hand Delivery: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays.
    For service information identified in this proposed AD, contact
Britten-Norman Aircraft Limited, Commodore House, Mountbatten Business
Centre, Millbrook Road East, Southampton SO15 1HY, United Kingdom;
telephone: +44 20 3371 4000; fax: +44 20 3371 4001; email:
<EMAIL_ADDRESS>Internet: http://www.britten-norman.com/customer-support/. You may review copies of the referenced service information
at the FAA, Small Airplane Directorate, 901 Locust, Kansas City,
Missouri 64106. For information on the availability of this material at
the FAA, call<PHONE_NUMBER>. It is also available on the Internet at
http://www.regulations.gov by searching for Docket No. FAA-2015-4803.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-
4803; 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 proposed AD, the regulatory evaluation, any comments
received, and other information. The street address for the Docket
Office (telephone<PHONE_NUMBER>) is in the ADDRESSES section. Comments
will be available in the AD docket shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Raymond Johnston, Aerospace Engineer,
FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City,
Missouri 64106; telephone:<PHONE_NUMBER>; fax:<PHONE_NUMBER>; email:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to send any written relevant data, views, or
arguments about this proposed AD. Send your comments to an address
listed under the ADDRESSES section. Include ``Docket No. FAA-2015-4803;
Directorate Identifier 2015-CE-034-AD'' at the beginning of your
comments. We specifically invite comments on the overall regulatory,
economic, environmental, and energy aspects of this proposed AD. We
will consider all comments received by the closing date and may amend
this proposed AD because of those comments.
    We will post all comments we receive, without change, to http://regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact we
receive about this proposed AD.

Discussion

    On February 6, 2014, we issued AD 2014-03-18, Amendment 39-17755
(79 FR 10340; February 25, 2014). That AD required actions intended to
address an unsafe condition on B-N Group Ltd. BN-2, BN-2A, BN-2A-2, BN-
2A-3, BN-2A-6, BN-2A-8, BN-2A-9, BN-2A-20, BN-2A-21, BN-2A-26, BN-2A-
27, BN-2B-20, BN-2B-21, BN-2B-26, BN-2B-27, BN2A MK. III, BN2A MK. III-
2, and BN2A MK. III-3 airplanes and was based on mandatory continuing
airworthiness information (MCAI) originated by an aviation authority of
another country.
    Since we issued AD 2014-03-18, it was found that the service
information did not correctly identify the parts to be inspected on the
Trislander (BN2A MK III) series airplanes. The service information has
been revised to correctly identify the parts to be inspected on those
airplanes.
    The European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Community, has issued AD
No.: 2015-0184, dated September 1, 2015 (referred to after this as
``the MCAI''), to correct an unsafe condition for the specified
products. The MCAI states:

    Britten-Norman Aircraft Limited was made aware of two
occurrences where a failure of engine control cable assemblies has
caused engine control difficulties. In both reported cases, the
cable sliding end assemblies were in poor condition and in both
cases, an incorrect end-fitting was installed, which may have
contributed to the failures.
    This condition, if not detected and corrected, could result in
reduced engine control, possibly resulting in reduced control of the
aeroplane.
    To address this potential unsafe condition, Britten-Norman
Aircraft issued Service Bulletin (SB) 334 to provide inspection
instructions, and EASA issued AD 2013-0215 to require a one-time
inspection and functional test of the engine control cables and,
depending on findings, replacement of the cables.
    Subsequently, as it was found that BN2 ``Islander'' aeroplanes
were mistakenly omitted from the AD applicability, EASA issued AD
2013-0263, retaining the requirements of EASA AD 2013-0215, which
was superseded, and extending the applicability to BN2 aeroplanes.

    You may examine the MCAI on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-
4803.

Related Service Information Under 1 CFR Part 51

    We reviewed Britten-Norman Aircraft Limited Service Bulletin No. SB
334, Issue 1, dated August 30, 2013, and Britten-Norman Aircraft
Limited Service Bulletin No. SB 334, Issue 2, dated July 17, 2015. The
service information describes procedures for inspection and replacement
if necessary of the engine control cable assemblies. This service
information is reasonably available because the interested parties have
access to it through their normal course of business or by the means
identified in the ADDRESSES section of this NPRM.

FAA's Determination and Requirements of the Proposed AD

    This product has been approved by the aviation authority of another
country, and is approved for operation in the United States. Pursuant
to our bilateral agreement with this State of Design Authority, they
have notified us of the unsafe condition described in the MCAI and
service information referenced above. We are proposing this AD because
we evaluated all information and determined the unsafe condition exists
and is likely to exist or develop on other products of the same type
design.

Costs of Compliance

    We estimate that this proposed AD will affect 96 products of U.S.
registry. We also estimate that it would take about 1 work-hour per
product to comply with the basic requirements of this proposed AD. The
average labor rate is $85 per work-hour.
    Based on these figures, we estimate the cost of the proposed AD on
U.S. operators to be $8,160 or $85 per product.
    In addition, we estimate that any necessary follow-on actions would
take about 10 work-hours and require parts costing $6,000), for a cost
of $6,850 per product. We have no way of determining the number of
products that may need these actions.

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, section 106, describes the
authority of the FAA Administrator. ``Subtitle VII: Aviation
Programs,'' describes in more

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

Regulatory Findings

    We determined that this proposed AD would not have federalism
implications under Executive Order 13132. This proposed AD would not
have a substantial direct effect on the States, on the relationship
between the national Government and the States, or on the distribution
of power and responsibilities among the various levels of government.
    For the reasons discussed above, I certify this proposed
regulation:
    (1) Is not a ``significant regulatory action'' under Executive
Order 12866,
    (2) Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979),
    (3) Will not affect intrastate aviation in Alaska, and
    (4) 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.

List of Subjects in 14 CFR Part 39

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

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

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

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by removing Amendment 39-17755 (79 FR
10340; February 25, 2014), and adding the following new AD:

B-N Group Ltd.: Docket No. FAA-2015-4803; Directorate Identifier
2015-CE-034-AD.

(a) Comments Due Date

    We must receive comments by December 14, 2015.

(b) Affected ADs

    This AD supersedes AD 2014-03-18, Amendment 39-17755 (79 FR
10340; February 25, 2014).

(c) Applicability

    This AD applies to B-N Group Ltd. Models BN-2, BN-2A, BN-2A-2,
BN-2A-3, BN-2A-6, BN-2A-8, BN-2A-9, BN-2A-20, BN-2A-21, BN-2A-26,
BN-2A-27, BN-2B-20, BN-2B-21, BN-2B-26, BN-2B-27, BN2A MK. III, BN2A
MK. III-2, and BN2A MK. III-3 airplanes, all serial numbers,
certificated in any category.

(d) Subject

    Air Transport Association of America (ATA) Code 76: Engine
Controls.

(e) Reason

    This AD was prompted by possible damage of the cable sliding end
assembly and installation of the incorrect end fitting on engine
control cable assemblies. We are issuing this proposed AD to detect
and correct damage of the cable sliding end assembly (cracking,
distortion, corrosion) and incorrect end fittings on the engine
control assemblies, which could lead to reduced engine control with
consequent loss of control, and to incorporate revised service
information with updated information on applicability and on the
identity of parts to be inspected on some airplanes.

 (f) Actions and Compliance

    Unless already done, do the actions in paragraphs (f)(1) through
(f)(6) of this AD:
    (1) For all airplanes except the Trislander Models BN2A MK. III,
BN2A MK. III-2, and BN2A MK. III-3: Within the next 6 months after
April 1, 2014 (the effective date retained from AD 2014-03-18), do a
one-time inspection of the engine control cable assemblies, part
number (P/N) 137835, P/N 172449-1, P/N 172450, and P/N 172451, and
surrounding areas for damage (cracking, distortion, corrosion); for
the correct cable end-fitting; and to assure the wire locking is
intact following Britten-Norman Aircraft Limited Service Bulletin
No. SB 334, Issue 1, dated August 30, 2013, or Britten-Norman
Aircraft Limited Service Bulletin No. SB 334, Issue 2, dated July
17, 2015.
    (2) For the Trislander Models BN2A MK. III, BN2A MK. III-2, and
BN2A MK. III-3 airplanes: Within the next 3 months after the
effective date of this AD, do a one-time inspection of the engine
control cable assemblies, P/N 80468 and P/N NB-45-2883, and
surrounding areas for damage (cracking, distortion, corrosion); for
the correct cable end-fitting; and to assure the wire locking is
intact following Britten-Norman Aircraft Limited Service Bulletin
No. SB 334, Issue 2, dated July 17, 2015.
    (3) For all airplanes except the Trislander Models BN2A MK. III,
BN2A MK. III-2, and BN2A MK. III-3: If no discrepancies are found
during the inspection required in paragraph (f)(1) of this AD,
before further flight, inspect the control linkages for proper
adjustment and make any necessary changes following Britten-Norman
Aircraft Limited Service Bulletin No. SB 334, Issue 1, dated August
30, 2013, or Britten-Norman Aircraft Limited Service Bulletin No. SB
334, Issue 2, dated July 17, 2015.
    (4) For the Trislander Models BN2A MK. III, BN2A MK. III-2, and
BN2A MK. III-3 airplanes: If no discrepancies are found during the
inspection required in paragraph (f)(2) of this AD, before further
flight, inspect the control linkages for proper adjustment and make
any necessary changes following Britten-Norman Aircraft Limited
Service Bulletin No. SB 334, Issue 2, dated July 17, 2015.
    (5) For all airplanes except the Trislander Models BN2A MK. III,
BN2A MK. III-2, and BN2A MK. III-3: If any discrepancies are found
during the inspection required in paragraph (f)(1) of this AD and/or
the control linkages cannot be properly adjusted as specified in
paragraph (f)(3) of this AD, before further flight, replace the
engine control cable assembly with a serviceable unit following
Britten-Norman Aircraft Limited Service Bulletin No. SB 334, Issue
1, dated August 30, 2013, or Britten-Norman Aircraft Limited Service
Bulletin No. SB 334, Issue 2, dated July 17, 2015.
    (6) For the Trislander Models BN2A MK. III, BN2A MK. III-2, and
BN2A MK. III-3 airplanes: If any discrepancies are found during the
inspection required in paragraph (f)(2) of this AD and/or the
control linkages cannot be properly adjusted as specified in
paragraph (f)(4) of this AD, before further flight, replace the
engine control cable assembly with a serviceable unit following
Britten-Norman Aircraft Limited Service Bulletin No. SB 334, Issue
2, dated July 17, 2015.
    (7) For all airplanes except the Trislander Models BN2A MK. III,
BN2A MK. III-2, and BN2A MK. III-3: After April 1, 2014 (the
effective date retained from AD 2014-03-18), do not install on any
airplane engine control cable assemblies, P/N 137835, P/N 172449-1,
P/N 172450, and P/N 172451, unless they are new or have been
inspected as required in paragraphs (f)(1) and (f)(3) of this AD and
found free of any discrepancies and have proper adjustment.
    (8) For the Trislander Models BN2A MK. III, BN2A MK. III-2, and
BN2A MK. III-3 airplanes: After the effective date of this AD, do
not install on any airplane engine control cable assemblies P/N
80468 and/or P/N NB-45-2883, unless they are new or have been
inspected as required in paragraphs (f)(2) and (f)(4) of this AD and
found free of any discrepancies and have proper adjustment.

(g) Other FAA AD Provisions

    The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager,
Standards Office, FAA, has the authority to approve AMOCs for this
AD, if requested using the procedures found in 14 CFR 39.19. Send
information to ATTN: Raymond Johnston, Aerospace Engineer, FAA,
Small Airplane Directorate,

901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816)
329-4159; fax:<PHONE_NUMBER>; email<EMAIL_ADDRESS>
Before using any approved AMOC on any airplane to which the AMOC
applies, notify your appropriate principal inspector (PI) in the FAA
Flight Standards District Office (FSDO), or lacking a PI, your local
FSDO.
    (2) Airworthy Product: For any requirement in this AD to obtain
corrective actions from a manufacturer or other source, use these
actions if they are FAA-approved. Corrective actions are considered
FAA-approved if they are approved by the State of Design Authority
(or their delegated agent). You are required to assure the product
is airworthy before it is returned to service.

(h) Related Information

    Refer to MCAI European Aviation Safety Agency (EASA) AD No.:
2015-0184, dated September 1, 2015; for related information. You may
examine the MCAI on the Internet at http://www.regulations.gov by
searching for and locating Docket No. FAA-2015-4803. For service
information related to this AD, contact Britten-Norman Aircraft
Limited, Commodore House, Mountbatten Business Centre, Millbrook
Road East, Southampton SO15 1HY, United Kingdom; telephone: +44 20
3371 4000; fax: +44 20 3371 4001; email<EMAIL_ADDRESS>
Internet: http://www.britten-norman.com/customer-support/. You may
review copies of the referenced service information at the FAA,
Small Airplane Directorate, 901 Locust, Kansas City, Missouri 64106.
For information on the availability of this material at the FAA,
call<PHONE_NUMBER>.

    Issued in Kansas City, Missouri on October 22, 2015.
Melvin Johnson,
Acting Manager, Small Airplane Directorate, Aircraft Certification
Service.

[FR Doc. 2015-27571 Filed 10-28-15; 8:45 am]
BILLING CODE 4910-13-P