[Federal Register Volume 80, Number 167 (Friday, August 28, 2015)]
[Notices]
[Pages 52357-52358]
[FR Doc No: 2015-21418]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Meeting: RTCA Program Management Committee (PMC)

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

ACTION: Notice of RTCA Program Management Committee Meeting.

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SUMMARY: The FAA is issuing this notice to advise the public of a RTCA
Program Management Committee meeting.

DATES: The meeting will be held September 22nd from 8:30 a.m.-4:30 p.m.

ADDRESSES: The meeting will be held at RTCA Headquarters, 1150 18th
Street NW., Suite 910, Washington, DC 20036, Tel:<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: The RTCA Secretariat, 1150 18th Street
NW., Suite 910, Washington, DC 20036, or by telephone at (202) 833-
9339, fax at<PHONE_NUMBER>, or Web site at http://www.rtca.org or
Karan Hofmann, Program Director, RTCA, Inc<EMAIL_ADDRESS>(202)
330-0680.

SUPPLEMENTARY INFORMATION: Pursuant to section 10(a) (2) of the Federal
Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App.), notice is
hereby given for a meeting of the RTCA Program Management Committee.
The agenda will include the following:

Tuesday, September 22, 2015

1. WELCOME AND INTRODUCTIONS
2. REVIEW/APPROVE

    a. Meeting Summary June 18, 2015, RTCA Paper No. 181-15/PMC-1362
    b. Administrative SC TOR Revisions
    i. SC-224--Airport Security Access Control Systems--New Co-Chair
    ii. SC-235--Non-Rechargeable Lithium Batteries--New Chair
3. PUBLICATION CONSIDERATION/APPROVAL
    a. Final Draft, Revised Document, DO-328--Safety, Performance and
Interoperability Requirements Document for Airborne Spacing--Flight-
deck Interval Management (ASPA-FIM), prepared by SC-186
    b. Final Draft, New Document, MOPS for Flight-deck Interval
Management (FIM), prepared by SC-186
    c. Final Draft, Revised Document, DO-272C--User Requirements for
Aerodrome Mapping Information, prepared by SC-217
    d. Final Draft, Revised Document, DO-276B--User Requirements for
Terrain and Obstacle Data, prepared by SC-217
    e. Final Draft, Revised Document, DO-291B--Interchange Standards
for Terrain, Obstacle and Aerodrome Mapping Data, prepared by SC-217
    f. Final Draft, White Paper, Standards Development Activities for
using Near Real-Time Aircraft-Derived Data in Future Applications,
prepared by Wake Vortex Tiger Team
4. INTEGRATION and COORDINATION COMMITTEE (ICC)
    a. ICC Membership--Update/Approval--Discussion
5. ACTION ITEM REVIEW
    a. Workshop--Integrated Cockpit--Integrated Standards: Cross-
Cutting Committee--Update
    b. PMC Ad-Hoc to provide SC-225 perceived shortfalls in DO-311
revision--Update
    c. PMC Ad-Hoc MASPS vs. guidance ``discontinuity'' between RTCA and
EUROCAE documentation--Discussion
    d. Response to Lockheed Martin's input to speed up MOPS in SC-159
TOR--Discussion
    e. Follow up discussion with FAA on cybersecurity concerns to be
included in SC-159 TOR--Discussion
    f. Industry Interest in Runway Overrun Alerting--possible new
Special Committee (SC)--Discussion
    g. UPS GPS issue--Update
6. DISCUSSION
    a. SC-147--MOPS for Traffic Alert and Collision Avoidance Systems
Airborne Equipment--Discussion--Revised TOR
    b. SC-217--Aeronautical Databases--Discussion--Revised TOR
    c. SC-223--Aeronautical Mobile Airport Communication System--
Discussion--Revised TOR
    d. SC-228--Minimum Operational Performance Standards (MOPS) for
Unmanned Aircraft Systems, initial release, MOPS for Unmanned Aircraft
Systems (UAS) Command and Control (C2)--Discussion
    e. SC-228--MOPS for Unmanned Aircraft Systems, initial release,
MOPS for Unmanned Aircraft Systems (UAS) Detect and Avoid (DAA)
Systems--Discussion
    f. SC-228--MOPS for Unmanned Aircraft Systems, initial release,
MOPS for Air-to-Air Radar for Detect and Avoid--Discussion
    g. SC-230--Airborne Weather Detection Systems--Discussion--Revised
TOR
    h. SC-234--Portable Electronic Devices--Discussion--Status Update
    i. Design Assurance Guidance for Airborne Electronic Hardware--
Status--Possible New Special Committee to Update RTCA DO-254
    j. NAC--Status Update
    k. TOC--Status Update
    l. FAA Actions Taken on Previously Published Documents--Report
    m. Special Committees--Chairmen's Reports and Active Inter-Special
Committee Requirements Agreements (ISRA)--Review
    n. European/EUROCAE Coordination--Status Update
    o. Planning Forward--Discussion
7. OTHER BUSINESS
8. SCHEDULE for COMMITTEE DELIVERABLES and NEXT MEETING DATE
    Attendance is open to the interested public but limited to space
availability. With the approval of the chairman, members of the public
may present oral statements at the meeting. Persons wishing to present
statements or obtain information should contact the person listed in
the FOR FURTHER INFORMATION CONTACT section. Members of the public may
present a written statement to the committee at any time.

    Issued in Washington, DC, on August 25, 2015.
Latasha Robinson,
Management & Program Analyst, Next Generation, Enterprise Support
Services Division, Federal Aviation Administration.
[FR Doc. 2015-21418 Filed 8-27-15; 8:45 am]
 BILLING CODE 4910-13-P


[Federal Register Volume 76, Number 86 (Wednesday, May 4, 2011)]
[Notices]
[Pages 25392-25394]
[FR Doc No: 2011-10771]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64354; File No. SR-CBOE-2011-041]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of Proposed Rule Change Establishing
Qualified Contingent Cross Orders

April 27, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on April 18, 2011, the Chicago Board Options Exchange,
Incorporated (``Exchange'' or ``CBOE'') filed with the Securities and
Exchange Commission (the ``Commission'') the proposed rule change as
described in Items I and II below, which Items have been prepared by
the Exchange. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is proposing rules to create a new order type referred
to as a qualified contingent cross order (``QCC Order''). The text of
the rule proposal is available on the Exchange's Web site (http://www.cboe.org/legal), at the Exchange's Office of the Secretary and at
the Commissions Public Reference Room.

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

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

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

1. Purpose
    The International Securities Exchange, LLC (``ISE'') recently
received Commission approval of a proposed rule change which adopted a
qualified contingent cross order type (the ``ISE Proposal''). CBOE has
opposed the ISE Proposal, but believes we now need to adopt rules to
introduce a similar order type for competitive reasons, as indicated in
our qualified contingent order briefs and comment letters responding to
the ISE Proposal.\3\ Therefore, CBOE is proposing to adopt rules
related to a new QCC Order type.
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    \3\ ISE first proposed to adopt a qualified contingent cross
order type through SR-ISE-2009-35. This proposal was approved by the
Commission's Division of Trading and Markets (the ``Division'')
pursuant to delegated authority on August 28, 2009, Securities
Exchange Act Release No. 60584 (August 28, 2009), 74 FR 45663
(September 3, 2009) (SR-ISE-2009-35), but this approval was stayed
by a CBOE petition seeking full Commission review. See Letters from
Joanne Moffic-Silver, General Counsel and Corporate Secretary, CBOE,
dated September 4 and 14, 2009. ISE thereafter submitted its
modified rule change, SR-ISE-2010-73, and a letter requesting that
the Commission vacate the Division's approval of SR-ISE-2009-35
simultaneous with the approval of SR-ISE-2010-73. CBOE submitted
numerous letters objecting to ISE's original and modified qualified
contingent cross proposals, however, the Commission approved SR-ISE-
2010-73 and set aside SR-ISE-2009-35 on February 24, 2011. See
Securities Exchange Act Release Nos. 62523 (July 16, 2010), 75 FR
43211 (July 23, 2010) (SR-ISE-2010-73) (ISE Proposal), 63955
(February 24, 2011) (SR-ISE-2010-73) (ISE Approval), and 69354
(February 24, 2011) (SR-ISE-2009-35); see also, e.g., CBOE comment
letters and materials dated July 16, 2009, September 4, 2009,
September 14, 2009, September 17, 2009, December 3, 2009, January
20, 2010, April 7, 2010, and April 9, 2010, which can be viewed at
the following links: http://www.sec.gov/comments/sr-ise-2009-35/ise200935.shtml#notice; http://www.sec.gov/rules/sro/ise/isearchive/isearchive2009.shtml#SR-ISE-2009-35; and http://www.sec.gov/comments/sr-ise-2010-73/ise201073.shtml. As a result, CBOE is
submitting the instant rule change proposal as a competitive
response to SR-ISE-2010-73.
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    Background
    The Exchange is currently a party to the Options Order Protection
and Locked/Crossed Market Plan (``Distributive Linkage Plan''),\4\ and
has implemented Exchange rules in conjunction with that plan (the
``Distributive Linkage Rules'').\5\ Similar to Regulation NMS under the
Act, the Distributive Linkage Plan requires,

among other things, that the Exchange establish, maintain and enforce
written policies and procedures that are reasonably designed to prevent
``Trade-Throughs.'' \6\ A Trade-Through is a transaction in an option
series at a price that is inferior to the best price available in the
market.\7\
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    \4\ See Securities Exchange Act Release No. 60405 (July 30,
2009), 74 FR 39362 (August 6, 2009) (File No. 4-546).
    \5\ See Securities Exchange Act Release No. 60551 (August 20,
2009), 74 FR 43196 (August 26, 2009) (SR-CBOE-2009-040).
    \6\ Section 5(a) of the Distributive Linkage Plan.
    \7\ Section 2(21) of the Distributive Linkage Plan.
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    The Distributive Linkage Plan replaced the Plan for the Purpose of
Creating and Operating an Intermarket Option Linkage (``Old Linkage
Plan''), and the Distributive Linkage Rules replaced the then-existing
CBOE rules implementing the Old Linkage Plan (``Old Linkage Rules'').
The Old Linkage Plan and the Old Linkage Rules provided a limited
Trade-Through exemption for ``Block Trades,'' defined to be trades of
500 or more contracts with a premium value of at least $150,000.\8\
However, as with Regulation NMS, the Distributive Linkage Plan does not
provide a Block Trade exemption.
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    \8\ Old Linkage Plan Sections 2(3) and 8(c)(i)(C); and former
CBOE Rule 6.80(2).
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    The ISE Proposal stated that the loss of the Block Trade exemption,
among other things, adversely affects the ability of its members to
effect large trades that are tied to stock,\9\ and therefore proposed a
QCC as a limited substitute for the Block Trade exemption. While we
continue to disagree with the premise that QCC serves as a limited
substitute for the Block Trade exemption (e.g., the Block Trade
exemption is designed to provide Trade-Through relief, as discussed
above; whereas QCC does not provide Trade-Through relief, as discussed
below) and our views with respect to the potential impact that the ISE
Proposal may have on market structure remain unchanged,\10\ we
nonetheless are proposing to adopt rules related to QCC Orders in order
to permit the Exchange to remain competitive with ISE, and the other
options exchanges that may also adopt rules for QCCs, by making QCC
Orders available to CBOE Trading Permit Holders (``TPHs'') and their
customers through the Exchange.
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    \9\ See ISE Proposal at 43212.
    \10\ See note 3, supra.
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Proposal

    The Exchange is proposing to amend CBOE Rule 6.53, Certain Types of
Orders Defined, to include a new QCC Order type. When a CBOE TPH
effects a qualified contingent trade (``QCT'') \11\ in a Regulation NMS
stock,\12\ the TPH will be permitted to cross the options leg(s) of the
trade on CBOE immediately without exposure if the order is for at least
1000 contracts, is part of a QCT,\13\ is executed at a price at least
equal to the national best bid or offer (``NBBO''), and there are no
public customer orders resting in the Exchange's electronic book at the
same price.
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    \11\ The Commission, by order, has provided Trade-Through relief
for QCTs from Rule 611(a) of Regulation NMS, 17 CFR 242.611(a). See
Securities Exchange Act Release No. 57620 (April 4, 2008) (the ``QCT
Release,'' which supersedes a release initially granting the QCT
exemption, Securities Exchange Act Release No. 54389 (August 31,
2006)). The QCT Release provides an exemption from Trade-Through
liability in the equity market for multi-component, fully-hedged
trades where one order is contingent on the execution of one or more
additional orders.
    \12\ An ``NMS stock'' is defined in Rule 600 of Regulation NMS
under the Exchange Act, 17 CFR 242.600.
    \13\ The Exchange is proposing to define a qualified contingent
cross trade substantively identical to the Commission's definition
in the QCT Release. A qualified contingent cross trade must meet the
following conditions: (i) At least one component must be an NMS
stock, as defined in Rule 600 of Regulation NMS, 17 CFR 242.600;
(ii) all components must be effected with a product or price
contingency that either has been agreed to by all the respective
counterparties or arranged for by a broker-dealer as principal or
agent; (iii) the execution of one component must be contingent upon
the execution of all other components at or near the same time; (iv)
the specific relationship between the component orders (e.g., the
spread between the prices of the component orders) is determined by
the time the contingent order is placed; (v) the component orders
must bear a derivative relationship to one another, represent
different classes of shares of the same issuer, or involve the
securities of participants in mergers or with intentions to merge
that have been announced or cancelled; and (vi) the transaction must
be fully hedged (without regard to any prior existing position) as a
result of other components of the contingent trade. Consistent with
the QCT Release and the ISE Proposal, TPHs must demonstrate that the
transaction is fully hedged using reasonable risk-valuation
methodologies. See QCT Release, supra note 11, at footnote 9.
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    The QCC Order type would permit TPHs to provide their customers a
net price for the entire trade, and then allow the TPH to execute the
options leg(s) of the trade on CBOE at a price at least equal to the
NBBO while using the QCT exemption to effect the trade in the equities
leg at a price necessary to achieve the net price.\14\ Under the
proposal, CBOE will not permit the options component(s) of a QCC Order
to trade through the NBBO.\15\
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    \14\ CBOE will adopt policies and procedures to ensure that TPHs
use the QCC Order properly. First, we will require TPHs to properly
mark all QCC Orders as such. In addition, CBOE will implement an
examination and surveillance program to assess TPH compliance with
the requirements applicable to QCC Orders, including the requirement
that the stock leg of the transaction be executed at or near the
same time as the options leg. We believe that ISE and other
exchanges adopting a QCC-type order are also required to adopt
similar policies and procedures.
    \15\ While the QCC Order type does not provide exposure for
price improvement for the options leg(s) of a stock-option order,
the options leg(s) must be executed at the NBBO or better. The
Commission has previously approved crossing transactions with no
opportunity for price improvement. See, e.g., ISE Rules 715 and 721,
and Interpretation and Policy .08 of CBOE Rule 6.74A.
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    Under this proposal, CBOE would permit QCC Orders to be submitted
electronically from on or off the floor through the CBOE Hybrid Trading
System. In this regard, we note that, in order to effect proprietary
orders (including QCC Orders) electronically from on the floor of the
Exchange, TPHs must ensure that they qualify for an exemption from
Section 11(a)(1) of the Act,\16\ which concerns proprietary trading on
an exchange by an exchange member. Generally, Section 11(a)(1) of the
Act restricts any member of a national securities exchange from
effecting any transaction on such exchange for (i) the member's own
account, (ii) the account of a person associated with the member, or
(iii) an account over which the member or a person associated with the
member exercises discretion, unless a specific exemption is available.
Examples of common exemptions include the exemption for transactions by
broker dealers acting in the capacity of a market maker under Section
11(a)(1)(A),\17\ the ``G'' exemption for yielding priority to non-
members under Section 11(a)(1)(G) of the Act and Rule 11a1-1(T)
thereunder,\18\ and ``Effect vs. Execute'' exemption under Rule 11a2-
2(T) under the Act.\19\ In this regard, we note that, consistent with
existing Exchange Rules for effecting proprietary orders from on the
floor of the Exchange, TPHs effecting QCC Orders and relying on the G
exemption would be required to yield priority to any interest in the
electronic book at the same price (not just public customer orders) to
ensure that non-member interest is protected.\20\
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    \16\ 15 U.S.C. 78k(a)(1).
    \17\ 15 U.S.C. 78k(a)(1)(A).
    \18\ 15 U.S.C. 78k(a)(1)(G) and 17 CFR 240.11a1-1(T).
    \19\ 17 CFR 240.11a2-2(T).
    \20\ See, e.g., Securities Exchange Act Release No. 59546 (March
10, 2009), 74 FR 11144 (March 16, 2009)(SR-CBOE-2009-016) and
related CBOE Regulatory Circular RG09-35 (regulatory circular
provides TPHs guidance on the application of Section 11(a)(1) to
trading on CBOE's Hybrid Trading System; the circular describes
Section 11(a)(1) and certain of the exemptions to Section 11(a)(1)
as well as the application of the (G) Order exemption and the Effect
vs. Execute exemption (Rule 11a2-2(T)) to trading on the Hybrid
Trading System).
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    The Exchange's proposal addresses the mechanics of executing the
stock and options components of a net-price transaction. The Exchange
believes that it is necessary that it provide TPHs and their customers
with the same trading capabilities available on other exchanges with
respect to QCCs,

including the change proposed herein, which would permit TPHs to
execution the options leg(s) of large complex orders on the Exchange.
This rule change is being proposed as a competitive response, and is
substantially similar in all material respects, to the ISE Proposal
that was recently approved by the Commission.\21\
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    \21\ See note 3, supra.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the
Act,\22\ in general, and furthers the objectives of Section 6(b)(5) of
the Act,\23\ in particular, in that an exchange should have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest. In particular, the proposed QCC Order type will
prevent executions from occurring when there is a public customer order
resting in the electronic book at the same price and will assure that
only large-size orders (i.e., orders of at least 1000 contracts) are
eligible. The proposed rule will facilitate the ability of CBOE TPHs to
execute large options orders that are tied to stock in an efficient
manner, while also protecting the national market system against Trade-
Throughs.
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    \22\ 15 U.S.C. 78f(b).
    \23\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

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

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

    The Exchange neither solicited nor received comments on the
proposal.

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

    Within 45 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 or disapprove 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-CBOE-2011-041 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOE-2011-041. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 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 the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-CBOE-2011-041 and should be
submitted on or before May 25, 2011.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-10771 Filed 5-3-11; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 56 (Monday, March 24, 2014)]
[Notices]
[Pages 15985-15986]
[FR Doc No: 2014-06314]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 2110-031]

Consolidated Water Power Company; Notice of Application Accepted
for Filing and Soliciting Comments, Motions To Intervene, and Protests

    Take notice that the following hydroelectric application has been
filed with the Commission and is available for public inspection:
    a. Application Type: Change in Land Rights.
    b. Project No: 2110-031.
    c. Date Filed: January 29, 2014.
    d. Applicant: Consolidated Water Power Company.
    e. Name of Project: Stevens Point Hydroelectric Project.
    f. Location: Wisconsin River in Portage County, Wisconsin.
    g. Filed Pursuant to: Federal Power Act, 16 U.S.C. 791a-825r.
    h. Applicant Contact: Thomas J. Witt, 610 High Street P.O. Box
8050, Wisconsin Rapids, WI 54495-8050,<PHONE_NUMBER>.
    i. FERC Contact: Jon Cofrancesco at<PHONE_NUMBER>, or email:
<EMAIL_ADDRESS>    j. Deadline for filing comments, motions to intervene, and
protests: April 14, 2014.
    All documents may be filed electronically via the Internet. See 18
CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web
site at http://www.ferc.gov/docs-filing/efiling.asp. Commenters can
submit brief comments up to 6,000 characters, without prior
registration, using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and contact information
at the end of your comments. For assistance, please contact FERC Online
Support at<EMAIL_ADDRESS>or toll free at 1-866-208-3676,
or for TTY,<PHONE_NUMBER>. Although the Commission strongly encourages
electronic filing, documents may also be paper-filed. To paper-file,
mail an original and seven copies to: Secretary, Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426.
Please include the project number (P-2110-031) on any comments,
motions, or recommendations filed.
    The Commission's Rules of Practice and Procedure require all
intervenors filing documents with the Commission to serve a copy of
that document on each person whose name appears on the official service
list for the project. Further, if an intervenor files comments or
documents with the Commission relating to the merits of an issue that
may affect the responsibilities of a particular resource agency, they
must also serve a copy of the document on that resource agency.
    k. Description of Request: Consolidated Water Power Company
(licensee) requests Commission approval to transfer certain interests
in licensee-owned lands within the project boundary to New Page
Wisconsin System, Inc. (New Page) to memorialize historic uses of the
property by a paper company, currently owned by New Page, for continued
use of the property by existing paper mill facilities and operations.
The application would separate and more precisely delineate the
licensee's hydropower and utility assets from New Page's paper mill
assets. The proposed change in land rights does not involve any changes
in project facilities, operations, or project boundaries. In addition
to the proposed change in land rights for the existing uses, the
licensee proposes to grant an easement to New Page for a single, future
water intake structure. This new proposed use will be considered by the
Commission under a separate proceeding.
    l. Locations of the Application: A copy of the application is
available for inspection and reproduction at the Commission's Public
Reference Room, located at 888 First Street NE., Room 2A, Washington,
DC 20426, or by calling<PHONE_NUMBER>. This filing may also be viewed
on the Commission's Web site at http://www.ferc.gov using the
``eLibrary'' link. Enter the docket number excluding the last three
digits in the docket number field (P-2110) to access the document. You
may also register online at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and issuances
related to this or other pending projects. For assistance, call 1-866-
208-3676 or email<EMAIL_ADDRESS>for TTY, call (202) 502-
8659. A copy is also available for inspection and reproduction at the
address in item (h)

above. Agencies may obtain copies of the application directly from the
applicant.
    m. Individuals desiring to be included on the Commission's mailing
list should so indicate by writing to the Secretary of the Commission.
    n. Comments, Protests, or Motions to Intervene: Anyone may submit
comments, a protest, or a motion to intervene in accordance with the
requirements of Rules of Practice and Procedure, 18 CFR 385.210, .211,
.214, respectively. In determining the appropriate action to take, the
Commission will consider all protests or other comments filed, but only
those who file a motion to intervene in accordance with the
Commission's Rules may become a party to the proceeding. Any comments,
protests, or motions to intervene must be received on or before the
specified comment date for the particular application.
    o. Filing and Service of Documents: Any filing must (1) bear in all
capital letters the title ``COMMENTS'', ``PROTEST'', or ``MOTION TO
INTERVENE'' as applicable; (2) set forth in the heading the name of the
applicant and the project number of the application to which the filing
responds; (3) furnish the name, address, and telephone number of the
person commenting, protesting or intervening; and (4) otherwise comply
with the requirements of 18 CFR 385.2001 through 385.2005. All
comments, motions to intervene, or protests must set forth their
evidentiary basis. Any filing made by an intervenor must be accompanied
by proof of service on all persons listed in the service list prepared
by the Commission in this proceeding, in accordance with 18 CFR
385.2010.

    Dated: March 14, 2014.
Kimberly D. Bose,
Secretary.
[FR Doc. 2014-06314 Filed 3-21-14; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register: March 4, 2010 (Volume 75, Number 42)]
[Notices]
[Page 9988]
[DOCID:fr04mr10-123]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61590; File No. SR-Phlx-2009-113]

Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Order
Granting Approval of Proposed Rule Change Relating to Index Option
Position Limits

February 25, 2010.
    On December 29, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to increase the position limits for certain
narrow-based (industry) index option contracts. The Commission
published the proposed rule change for comment in the Federal Register
on January 19, 2010.\3\ The Commission received no comments on the
proposed rule change. This order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 61326 (January 11,
2010), 75 FR 2902 (``Notice'').
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    The Exchange proposes to revise the three tiered levels of position
limits that are set forth in Phlx Rule 1001A by increasing those limits
for options on the PHLX Oil Service Sector, PHLX Semiconductor Sector,
PHLX Utility Sector, PHLX Gold/Silver Sector, PHLX Housing Sector, SIG
Energy MLP Index, SIG Oil Exploration & Production Index, and the
NASDAQ China Index (collectively, the ``Specified Index Options'').\4\
Currently, the Specified Index Options are subject to position limits
of 18,000, 24,000, or 31,500 contracts based generally on the degree of
concentration of a single component stock or groups of component stocks
comprising the index.\5\ The Exchange proposes to increase these limits
to 54,000, 72,000, and 94,500 contracts, respectively, for the
Specified Index Options. In addition, the Exchange proposes to delete
certain obsolete references in Rule 1001A.\6\
---------------------------------------------------------------------------

    \4\ The SIG Indexes noted herein are trademarks of SIG Indices,
LLLP.
    \5\ Specifically, Phlx Rule 1001A(b)(i) currently provides for
the following position limits for narrow-based index options: (1)
18,000 contracts if the Exchange determines that any single
underlying stock accounted, on average, for 30% or more of the index
value during the 30-day period immediately preceding the semi-annual
review of the pertinent index option required by Phlx Rule
1001A(b)(ii); (2) 24,000 contracts if the Exchange determines, at
the time of the required semi-annual review, that any single
underlying stock accounted, on average, for 20% or more of the index
value or that any five underlying stocks together accounted, on
average, for more than 50% of the index value, but that no single
stock in the group accounted, on average, for 30% or more of the
index value, during the 30-day period immediately preceding the
review; or (3) 31,500 contracts if the Exchange determines that the
conditions specified above which would require the establishment of
a lower limit have not occurred. In addition, the rule provides that
position limits with respect to options on the KBW Bank Index are
44,000 contracts.
    \6\ Phlx exercise limits in Phlx Rule 1002A, Exercise Limits,
are established by reference to position limits. The proposed
increase in position limits for the Specified Index Options would
therefore effectively increase exercise limits for these options.
See Phlx Rule 1002A.
---------------------------------------------------------------------------

    The Exchange states that it recognizes that the purpose of position
limits is to prevent manipulation and protect against disruption of the
markets for both the option as well as the underlying security. The
Exchange states that it has considered the effects of increased
position limits for the Specified Index Options on the marketplace, and
believes that manipulation and disruption concerns are addressed by a
combination of existing surveillance functions and the implementation
of tiered position limits.
    The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder that are applicable to a national securities exchange.\7\ In
particular, the Commission believes that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\8\ which requires, among
other things, that the rules of a national securities exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest.
---------------------------------------------------------------------------

    \7\ In approving this rule, the Commission notes that it has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the Exchange's proposal to increase
the three tiered levels of position limits for the Specified Index
Options is reasonable. Specifically, the Commission believes that
increasing the three tiered levels of position limits for the Specified
Index Options may bring additional depth and liquidity to these index
options classes without significantly increasing concerns regarding
manipulation or disruption of the market for index options or the
underlying component securities.\9\
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    \9\ The Exchange states that it dedicates substantial resources
to monitoring the markets for evidence of manipulation or disruption
caused by investors with positions at or near current position or
exercise limits, and that the proposed increased position limits
would not diminish the surveillance function in this regard. See
Notice, supra note 3.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-Phlx-2009-113) be, and it
hereby is, approved.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-4458 Filed 3-3-10; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: January 27, 2010 (Volume 75, Number 17)]
[Proposed Rules]
[Page 4310-4316]
[DOCID:fr27ja10-26]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM10-13-000]

Credit Reforms in Organized Wholesale Electric Markets

Issued January 21, 2010.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is
proposing, pursuant to section 206 of the Federal Power Act, to amend
its regulations to reform credit practices in organized wholesale
electric markets to ensure that credit practices result in
jurisdictional rates that are just and reasonable. The Commission seeks
public comment on the proposed regulations.

DATES: Comments are due March 29, 2010.

ADDRESSES: You may submit comments identified in Docket No. RM10-13-
000, by one of the following methods:
    Agency Web Site: http://www.ferc.gov. Follow the instructions for
submitting comments via the eFiling link found in the Comment
Procedures section of the preamble.
    Mail: Commenters unable to file comments electronically must mail
or hand deliver an original and 14 copies of their comments to the
Federal Energy Regulatory Commission, Secretary of the Commission, 888
First Street, NE., Washington, DC 20426. Please refer to the Comment
Procedures section of the preamble for additional information on how to
file paper comments.

FOR FURTHER INFORMATION CONTACT: Christina Hayes (Legal Information),
Office of the General Counsel, Federal Energy Regulatory Commission,
888 First Street, NE., Washington, DC 20426,<PHONE_NUMBER>.

Lawrence Greenfield (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426,<PHONE_NUMBER>.
Scott Miller (Technical Information), Office of Energy Policy and
Innovation, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Introduction

    1. Pursuant to section 206 of the Federal Power Act (FPA),\1\ the
Commission is proposing to revise Part 35 of Title 18 of the Code of
Federal Regulations (CFR) to reform credit practices in organized
wholesale electric markets.\2\ While this matter has been one of
ongoing Commission interest, the recent turmoil in financial markets
has emphasized the importance of sound credit practices that provide
competitive markets with adequate access to capital without excessive
risk and without excessive cost. Credit policies are particularly
important in the organized energy markets, in which regional
transmission organizations (RTOs) and independent system operators
(ISOs) must balance the need for market liquidity against corresponding
risk. In order to ensure that credit policies result in jurisdictional
rates that are just and reasonable, the Commission proposes to require
RTOs and ISOs to adopt tariff revisions reflecting these proposed
credit reforms. The Commission seeks public comment on these proposed
reforms.
---------------------------------------------------------------------------

    \1\ 16 U.S.C. 824e. Accord 16 U.S.C. 824d (providing that rates
must be just and reasonable).
    \2\ For purposes of this Notice of Proposed Rulemaking,
organized wholesale electric markets include energy, transmission
and ancillary service markets operated by independent system
operators and regional transmission organizations. These entities
are responsible for administering electric energy and financial
transmission rights markets. As public utilities, they have on file
as jurisdictional tariffs the rules governing such markets.
---------------------------------------------------------------------------

II. Background

    2. The Commission has long been interested in credit policies in
wholesale electric markets. The Commission considered issues related to
credit practices in 1996 in crafting the pro forma Open Access
Transmission Tariff (OATT) in Order No. 888,\3\ where it directed that
each transmission provider's tariff include reasonable creditworthiness
provisions, and again in 2004 in a subsequent policy statement that
provided additional guidance regarding creditworthiness.\4\ Since then,
the individual organized wholesale electric markets have developed
credit practices on a case-by-case basis, in response to individual
concerns and issues and with varying levels of stakeholder support.
More recently, some in the industry have expressed concern that these
credit practices may no longer be adequate to protect the integrity of
these markets and, in turn, to protect consumers from the high costs
that would flow from excessive defaults and associated risks in the
markets.
---------------------------------------------------------------------------

    \3\ Promoting Wholesale Competition Through Open Access Non-
Discriminatory Transmission Services by Public Utilities; Recovery
of Stranded Costs by Public Utilities and Transmitting Utilities,
Order No. 888, 61 FR 21540 (May 10, 1996), FERC Stats. & Regs. ]
31,036, at 31,937 (1996) (pro forma OATT, section 11
(Creditworthiness)), order on reh'g, Order No. 888-A, 62 FR 12,274
(Mar. 14, 1997), FERC Stats. & Regs. ] 31,048, order on reh'g, Order
No. 888-B, 81 FERC ] 61,248 (1997), order on reh'g, Order No. 888-C,
82 FERC ] 61,046 (1998), aff'd in relevant part sub nom.
Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (DC
Cir. 2000), aff'd sub nom. New York v. FERC, 535 U.S. 1 (2002).
    \4\ Policy Statement on Electric Creditworthiness, 109 FERC ]
61,186 (2004) (Policy Statement).
---------------------------------------------------------------------------

    3. Credit practices and related risk management tools within
organized wholesale electric markets have developed incrementally.
Until the 1980s, electricity was generally produced and consumed within
a single utility system, or bought from neighboring traditional utility
suppliers. Because the risk of non-performance was deemed minimal,
collateral requirements and other credit practices were not rigidly
managed. Credit practices began to evolve with the development of
independent generators and then with increased bulk trading between
traditional utilities and independent generators and marketers in the
1990s. Credit practices further progressed in this decade, as power
trading with multiple counterparties became a recognized multi-billion
dollar industry.
    4. Today, parties operating outside the organized wholesale
electricity markets typically use bilateral contracts such as the
Western Systems Power Pool (WSPP) standard contract and the Edison
Electric Institute (EEI) standard contract to sell power, managing
credit risk within the terms of those agreements. However, the majority
of transactions based on quantity and volume is in the organized
wholesale electric markets.\5\ Individual RTOs and ISOs developed their
own individual processes for assessing risk, extending unsecured
credit, and settling accounts.
---------------------------------------------------------------------------

    \5\ FERC Staff, 2008 State of the Markets Report, 51 (Sept.
2009).
---------------------------------------------------------------------------

    5. To a large degree, early credit policies in the organized
wholesale electric markets were based on the practices of their
transmission owning members. In Order No. 888, the Commission required
each transmission provider to have ``reasonable credit review
procedures * * * in accordance with standard commercial practices,''
\6\ but otherwise allowed the transmission provider to develop its own
individual credit practices.\7\ As the organized markets were being
formed, they tended to use practices based on those of their
transmission-owning members.
---------------------------------------------------------------------------

    \6\ Order No. 888, FERC Stats. & Regs. ] 31,036 at 31,937.
    \7\ While the OATT applies to transmission providers, since 1996
a number of transmission providers have developed RTOs and ISOs.
---------------------------------------------------------------------------

    6. Over time, the credit policies in each RTO and ISO have evolved
and, in November 2004, the Commission issued its Policy Statement on
Electric Creditworthiness to encourage consideration of specific
reforms.\8\ In particular, the Commission recommended that transmission
providers establish qualitative and quantitative measures to assess
credit risk and post those measures on their Open Access Same-Time
Information System (OASIS) Web sites or in their tariffs. Further, the
Commission recommended that organized wholesale electric markets seek
to minimize the risk of default by shortening the settlement period,
netting obligations owed by and to market participants wherever
possible, and adopting other measures.
---------------------------------------------------------------------------

    \8\ See supra note 4.
---------------------------------------------------------------------------

    7. Subsequent to the Policy Statement, various proposals to amend
credit policies have been filed by RTOs and ISOs and accepted by the
Commission. PJM Interconnection, LLC (PJM), for example, has made
several filings revising its tariff to modify its credit practices. The
Commission recently accepted PJM's proposal to revise its tariff to
reduce its settlement cycle from 30 days to seven days, reduce the
amount of unsecured credit allowed to $50 million for a member company
and $150 million for an affiliated group, and eliminate unsecured
credit in the financial transmission rights market.\9\ Earlier, the
Commission accepted a shortened period to cure defaults and other
tariff revisions intended to improve credit practices.\10\
---------------------------------------------------------------------------

    \9\ PJM Interconnection, LLC, 127 FERC ] 61,017, at P 4 (2009).
    \10\ PJM Interconnection, LLC, 126 FERC ] 61,084 (2009).
---------------------------------------------------------------------------

    8. Likewise, the Commission has accepted recent tariff revisions
filed by California Independent System Operator Corporation (CAISO),
reducing the level of unsecured credit that may be obtained by a market
participant from $250 million to $150 million,\11\ and eventually to
$50 million.\12\ The Commission has also accepted CAISO's proposal to
shorten its ``settlement and

payment period'' from more than 80 days to approximately 25 days.\13\
---------------------------------------------------------------------------

    \11\ California Independent System Operator Corp., 126 FERC ]
61,285 (2009).
    \12\ California Independent System Operator Corp., 129 FERC ]
61,142 (2009).
    \13\ California Independent System Operator Corp., 128 FERC ]
61,265, at P 4 (2009).
---------------------------------------------------------------------------

    9. Notwithstanding the progress that has been made in some of the
organized wholesale electric markets in reforming credit practices, the
Commission is concerned that more needs to be done to ensure that rates
for service in those markets are just and reasonable. Past experience
in the markets has highlighted aspects of the credit management tools
that require modification,\14\ as was emphasized at a technical
conference on credit and capital issues held by the Commission in
January 2009.\15\ Concerns of default, especially large defaults that
have not been minimized by market safeguards, are troubling in the
organized wholesale electric markets, in which losses due to default
are borne among all market participants.\16\ As part of our continuing
oversight and assessment of these markets, the Commission is acting
today to ensure that the credit policies in place in those markets are
sufficient to reasonably protect consumers against the adverse effects
of default.
---------------------------------------------------------------------------

    \14\ See New England Power Pool, 97 FERC ] 61,387 (2001)
(accepting alternative payment and financial assurance arrangements
filed by NEPOOL in response to defaults associated with the
bankruptcy of Enron).
    \15\ Testimony in Technical Conference on Credit and Capital
Issues, Docket No. AD09-2-000, Tr. 91:23-25 (Mr. Robert Ludlow, Vice
President and Chief Financial Officer, ISO-NE) (Jan. 13, 2009);
Testimony in Technical Conference on Credit and Capital Issues,
Docket No. AD09-2-000, Tr. 101:3-5 (Mr. Philip Leiber, Chief
Financial Officer and Treasurer, CAISO) (Jan. 13, 2009).
    \16\ Policy Statement, 109 FERC ] 61,186 at P 17 (``If
collateral posted by a defaulting party is not sufficient to cover
the amount of its default, the remaining credit risk exposure and
costs are socialized across an ISO's/RTO's members.'').
---------------------------------------------------------------------------

III. Discussion

    10. Given a decade or more of experience and evolution by the
markets with credit practices, the Commission believes that it is
appropriate to now consider adoption of specific requirements regarding
credit practices for organized wholesale electric markets, to be set
forth in the Commission's regulations. To promote confidence in the
markets, the Commission proposes reforming credit practices of the
organized wholesale electric markets to limit potential future market
disruptions and to dampen the possible ripple effect of such
disruptions. These reforms include shortening settlement periods and
reducing the amount of unsecured credit, as described below. The
Commission believes that these reforms, if adopted, will enhance
certainty and stability in the markets and, in turn, ensure that costs
associated with market participant defaults do not result in unjust or
unreasonable rates.
    11. The Commission also notes that some market participants may
pose different credit risks than others. For instance, Mr. Robert Levin
stated that, in his experience, ``[in] discussing it with a number of
the ISOs and RTOs, and it was certainly brought to our attention, that
[municipalities] are pretty good credit risks.'' \17\ Thus, the
Commission requests comment on whether the credit practices discussed
below should be applied in the same way to all market participants or
whether they should be applied differently to certain market
participants depending on their characteristics.
---------------------------------------------------------------------------

    \17\ Testimony in Technical Conference on Credit and Capital
Issues, Docket No. AD09-2-000, Tr. 133:12-14 (Mr. Robert Levin,
Managing Director, Energy Research, Chicago Mercantile Exchange)
(Jan. 13, 2009).
---------------------------------------------------------------------------

    12. While the Commission proposes that the tariff changes be
submitted no later than June 30, 2011, to go into effect no later than
60 days after filing, the Commission also requests comment on whether
the changes proposed should be put in place earlier. In proposing this
deadline, the Commission seeks to balance the needs of the organized
wholesale electric markets to modify their practices to comply with the
proposed reforms against the benefits to the markets and consumers of
having the reforms in place before the winter peak season in 2011-2012.
In addition, the Commission specifically requests the views of the
ISO's and RTO's managements, as the entities responsible for
administering these markets, on each of the proposals set forth
below.\18\
---------------------------------------------------------------------------

    \18\ The views of management may be expressed through the ISO-
RTO Council (IRC).
---------------------------------------------------------------------------

A. Shortening the Settlement Cycle

    13. The length of the settlement (i.e., billing) period raises both
cash management and risk issues. As discussed in our Policy Statement,
the size of credit risk exposure is, in large part, a function of the
length of time between completion of the various parts of electricity
transactions, i.e., the provision of service, the billing for service,
and the payment for service. Since the risk of default begins at the
time the product or service is committed for delivery and continues
until the account payable is ultimately extinguished, reductions in
settlement periods would serve to: (1) lower the level of financial
assurances required (i.e., collateral requirement provided by
individual participants); (2) reduce the quantity of the aggregate
level of payables outstanding at any point in time, thereby reducing
the potential exposure of a defaulting entity; (3) enable updated
transaction prices and charges to be utilized in a timely manner in
determining credit risk exposure; and (4) provide earlier
identification of default situations by lessening the opportunity for
an unrecognized default and its severity. Accordingly, the Commission
believes that ISOs/RTOs can minimize the exposure period and
significantly reduce the credit risk to all market participants by
reducing the time between when a cost is incurred and when payment is
ultimately received by an ISO/RTO (i.e., shortening the settlement
period).\19\
---------------------------------------------------------------------------

    \19\ Policy Statement, 109 FERC ] 61,186 at P 21.
---------------------------------------------------------------------------

    14. PJM has since commissioned a study that concluded, among other
things, that shorter settlement periods would reduce default exposures.
Based on this analysis, PJM estimated when it filed for weekly billing
that the total credit risk exposure would be reduced by $2.1 billion
(68 percent) and the necessary financial security provided by members
would be reduced by $700 million (73 percent).\20\
---------------------------------------------------------------------------

    \20\ PJM Credit & Clearing Analysis Project: Findings &
Recommendations (June 2008) (found on Dec. 31, 2009 at: http://
www.pjm.com/~/media/committees-groups/committees/mc/20080626-item-
03d-crmsc-market-reform-credit-recommendations.ashx).
---------------------------------------------------------------------------

    15. The Commission proposes to revise its regulations to require
that each RTO and ISO include in the credit provisions of its tariff
revisions to implement a settlement cycle of no more than seven
calendar days with no more than an additional seven calendar days for
final payment. The Commission recognizes that software system
adjustments may be necessary and is also aware that similar system
changes have resulted in significant delays of other market
changes.\21\ The Commission further requests comment on the
practicality of organized wholesale electric markets implementing daily
settlement periods within one year of implementation of weekly
settlement periods.
---------------------------------------------------------------------------

    \21\ To the extent possible, the Commission encourages use of
software already used in markets that are currently operating on a
seven-day settlement timeframe. For example, PJM and ISO-NE already
use a seven day settlement timeframe. PJM Interconnection, LLC, 127
FERC ] 61,017 at P 4; New England Power Pool, 107 FERC ] 61,201, at
P 10-12 (2004).
---------------------------------------------------------------------------

    16. We recognize that net wholesale buyers in organized wholesale
electric markets may incur cash management costs by paying within the
shortened timeframe, given that they receive

revenues from their own retail buyers on a 30-day basis.\22\ To
reconcile the discrepancy in cash flow, a market participant may need
to arrange cash management facilities to manage the more frequent
payments. The Commission invites comments on this proposal, and whether
it would involve a one-time cost to establish such a facility or
ongoing costs that could significantly affect liquidity and rates.
---------------------------------------------------------------------------

    \22\ See Testimony in Technical Conference on Credit and Capital
Issues, Docket No. AD09-2-000, Tr. 146:3-9 (Mr. Daniel Sarti, Credit
Risk Manager, Arizona Public Service Company) (Jan. 13, 2009).
---------------------------------------------------------------------------

B. Use of Unsecured Credit

    17. As suggested above, as the timeframe of settlement shrinks, so
does the amount of unsecured credit that a participant may need. This
is because the number of outstanding transactions and the size of the
amounts outstanding become smaller, thus minimizing the credit exposure
to any market participant.\23\
---------------------------------------------------------------------------

    \23\ See California Independent System Operator Corp., 129 FERC
] 61,142 at P 14 (adopting limit of $50 million of unsecured credit
per market participant); PJM Interconnection, LLC, 127 FERC ] 61,017
at P 5 (adopting limit of $50 million for a member company and $150
million for an affiliated group).
---------------------------------------------------------------------------

    18. While RTOs and ISOs have tightened risk and credit standards
over the years, the vestiges of the practices historically used for
unsecured credit are still substantial in some markets. Following those
practices, RTOs and ISOs, after credit analysis, generally allow
significant amounts of unsecured credit. The Commission understands
that the level of unsecured credit allowed has also varied widely among
the organized wholesale electric markets (during the financial crisis
in fall 2008, ranging from 50 to 80 percent).
    19. The Commission proposes to revise its regulations to require
that each RTO and ISO include in the credit provisions of its tariff
revisions to reduce the extension of unsecured credit to no more than
$50 million per market participant. The Commission seeks comment on
whether there should be a further aggregate cap to cover an entire
corporate family (e.g., holding company, subsidiaries, associates, and
affiliates) and also whether the cap should be different for markets of
different sizes. Reducing the level of unsecured credit combined with
shortening the settlement timeframe should reduce the risk of default
and consequently reduce the cost of default that is shared among market
participants.
    20. The Commission further requests comment on the practicality of
eliminating unsecured credit in connection with adopting daily
settlement within one year of implementation of weekly settlement
periods.

C. Financial Transmission Rights Markets

    21. The above-proposed reforms are not directly applicable to
markets for financial transmission rights, because financial
transmission rights have a longer-dated obligation to perform which can
run from a month to a year or more. The Commission has also noted that
financial transmission rights markets have unique risks that
distinguish them from other wholesale electric markets, and that the
value of a financial transmission right depends on unforeseeable
events, including unplanned outages and unanticipated weather
conditions.\24\ Moreover, financial transmission rights are relatively
illiquid, adding to the inherent risk in their valuation.\25\
---------------------------------------------------------------------------

    \24\ For a financial transmission right, an unexpected outage
can cause unforeseen congestion or movement in flows and the
resulting charges or credits can swing very substantially either
way.
    \25\ PJM Interconnection, LLC, 127 FERC ] 61,017 at P 36.
---------------------------------------------------------------------------

    22. For example, PJM suffered a significant default in December
2007 in its financial transmission rights market \26\ and moved to
eliminate the use of unsecured credit in that market due to its
risk.\27\ That default illustrates the unique risk of financial
transmission rights. Given a change in market conditions, a set of
financial transmission rights positions became highly unprofitable.
Because financial transmission rights obligations cannot be terminated
prior to the expiration of the contract, from one month to several
years, losses can mount to the point that the financial transmission
right holder goes bankrupt.
---------------------------------------------------------------------------

    \26\ PJM Interconnection, LLC, 122 FERC ] 61,279, at P 26 n.10
(2008) (citing defaults by Exel and Power Edge in PJM's financial
transmission rights market).
    \27\ PJM Interconnection, LLC, 127 FERC ] 61,017 at P 8, 36.
---------------------------------------------------------------------------

    23. Given the unique characteristics of and risks inherent in
financial transmission rights markets, the Commission therefore
proposes to revise its regulations to require that each RTO and ISO
include in the credit provisions of its tariff provisions that
eliminate unsecured credit in financial transmission rights markets.

D. Ability To Offset Market Obligations

    24. Organized wholesale electric markets typically arrange for
settlement and netting of transactions entered into between market
participants and the market administrator, but do not take title to the
underlying contract position of a participant at the time of
settlement. This practice became an issue during the Mirant bankruptcy
and its resulting default in the CAISO market. Because CAISO had not
``taken title'' of the transactions, CAISO could not net payments owed
to Mirant against payments owed by Mirant.\28\ As a result, all of
Mirant's creditors had a claim to revenues owed to Mirant by CAISO
market participants, but CAISO market participants bore the loss for
money owed and not paid by Mirant.
---------------------------------------------------------------------------

    \28\ Memorandum by Wachtell, Lipton, Rosen & Katz to PJM
regarding Setoffs and Credit Risk of PJM in Member Bankruptcies at
7, 10-11 (Mar. 17, 2008) (found on Dec. 31, 2009 at http://
www.pjm.com/~/media/committees-groups/committees/crmsc/20080423/
20080423-wachtell-netting-memo.ashx).
---------------------------------------------------------------------------

    25. The Commission therefore proposes to revise its regulations to
require that each RTO and ISO include in the credit provisions of its
tariff revisions to clarify their status as a party to each transaction
so as to eliminate any ambiguity or question as to their ability to
manage defaults and to offset market obligations. The Commission seeks
comment on whether this clarification of status would have
ramifications beyond addressing the risk highlighted here.

E. Minimum Criteria for Market Participation

    26. The Commission recognizes that trading helps provide market
liquidity, but trading by undercapitalized entities without adequate
risk management procedures in place poses an unwarranted risk to
organized wholesale electric markets and to their market participants.
Minimum criteria for market participation, such as the capability to
engage in risk management or hedging or to out-source this capability
with periodic compliance verification, are intended to make sure that
each market participant has at its disposal adequate risk management
capabilities and adequate capital to engage in trading with minimal
risk, and related costs, to the market as a whole. Minimum criteria
should not be onerous, however, and should allow most traditional
market participants--including small load-serving entities,
municipalities, cooperatives, and other similar participants in
organized wholesale electric markets--to participate.
    27. The Commission therefore proposes to revise its regulations to
require that each RTO and ISO include in the credit provisions of its
tariff language to specify minimum participation criteria for all
market

participants. The Commission requests comment on what the minimum
criteria should be, as well as the process by which the organized
wholesale electric markets adopt such criteria.

F. ``Material Adverse Change''

    28. Many wholesale market tariffs allow a market administrator to
require additional collateral if there is a ``material adverse change''
in the market participant's credit status. However, this phrase is
ambiguous and could lead to uncertainty as to when a market
administrator can require the posting of additional collateral, at
potentially great cost to the market participant. Additionally, this
ambiguity may have the practical effect of delaying a market
administrator's request for additional collateral until the last
minute, by which time the market participant may find it difficult or
impossible to obtain and provide such collateral. The mere request for
collateral at such a late date could even lead to reactions from other
market participants that result in defaults.
    29. The Commission therefore proposes to revise its regulations to
require that each RTO and ISO include in the credit provisions of its
tariff language to specify under what circumstances a market
administrator may invoke a ``material adverse change'' as a
justification for requiring additional collateral. The Commission
requests comment as to specific language regarding the circumstances
under which a market administrator may invoke the ``material adverse
change'' provision and the process by which the organized wholesale
electric markets would adopt such language.

G. Grace Period to ``Cure'' Collateral Posting

    30. RTOs and ISOs have also adopted timeframes in which a party may
``cure'' its changed credit position by posting additional collateral.
The standardized timeframe helps eliminate uncertainty for other market
participants during periods of credit stress. PJM, for example, has
adopted a period of two business days to cure.\29\ The Commission
understands that demanding additional collateral from a participant can
complicate that participant's financial position and that the
participant may need time to ``cure,'' including consulting with
potential lenders and others. On the other hand, the Commission is also
aware that the time period to ``cure'' the position of the participant
must be short enough to minimize uncertainty for other market
participants and to stem accumulation of debt and potentially erratic
market behavior.
---------------------------------------------------------------------------

    \29\ PJM Interconnection, LLC, 126 FERC ] 61,084 at P 12.
---------------------------------------------------------------------------

    31. For these reasons, the Commission proposes to revise its
regulations to require that each RTO and ISO include in the credit
provisions of its tariff language to limit the time period allowed to
post additional collateral when additional collateral is requested by
the organized wholesale electric market. The Commission requests
comment on the appropriate time period to post additional collateral,
e.g., two business days, as PJM has adopted, and whether the time
period should be standardized among organized wholesale electric
markets.

IV. Environmental Analysis

    32. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\30\ The
Commission has categorically excluded certain actions from this
requirement as not having a significant effect on the human
environment.\31\ The proposed regulations are categorically excluded as
they address rate filings submitted under section 206 of the FPA and
the establishment of just and reasonable rates, terms and conditions of
jurisdictional service under this section of the FPA.\32\ Accordingly,
no environmental assessment is necessary and none has been prepared for
this NOPR.
---------------------------------------------------------------------------

    \30\ Regulations Implementing the National Environmental Policy
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. &
Regs., Regulations Preambles 1986-1990, ] 30,783 (1987).
    \31\ 18 CFR 380.4.
    \32\ See 18 CFR 380.4(a)(15).
---------------------------------------------------------------------------

V. Information Collection Statement

    33. The Office of Management and Budget's (OMB) regulations require
approval of certain information collection requirements imposed by
agency rules. Upon approval of a collection(s) of information, OMB will
assign an OMB control number and an expiration date. Respondents
subject to the filing requirements of a rule will not be penalized for
failing to respond to these collections of information unless the
collections of information display a valid OMB control number.
    34. This NOPR proposes to amend the Commission's regulations
pursuant to section 206 of the Federal Power Act, to reform credit
practices of organized wholesale electric markets to limit potential
future market disruptions. To accomplish this, the Commission proposes
to require RTOs and ISOs to adopt tariff revisions reflecting these
credit reforms. Such filings would be made under Part 35 of the
Commission's regulations. The information provided for under Part 35 is
identified as FERC-516.
    35. The Commission is submitting these reporting requirements to
OMB for its review and approval under section 3507(d) of the Paperwork
Reduction Act. Comments are solicited on the Commission's need for this
information, whether the information will have practical utility, the
accuracy of provided burden estimates, ways to enhance the quality,
utility, and clarity of the information to be collected, and any
suggested methods for minimizing the respondent's burden, including the
use of automated information techniques.
    Burden Estimate: The Public Reporting burden for the requirements
contained in the NOPR is as follows:

----------------------------------------------------------------------------------------------------------------
                                                     Number of        No. of         Hours per     Total annual
                 Data collection                    respondents      responses       response          hours
----------------------------------------------------------------------------------------------------------------
FERC-516:
    Transmission Organizations with Organized                  6               1              60             360
     Electricity Markets........................
----------------------------------------------------------------------------------------------------------------

    Information Collection Costs: The Commission seeks comments on the
costs to comply with these requirements. The Commission has projected
the average annualized cost of all respondents to be the following: 360
hours @ $300 per hour = $108,000 for respondents. No capital costs are
estimated to be incurred by respondents.
    Title: FERC-516 ``Electric Rate Schedule Tariff Filings''
    Action: Proposed Collections
    OMB Control No: 1902-0096

    Respondents: Business or other for profit, and/or not for profit
institutions.
    Frequency of Responses: One time to initially comply with the rule,
and then on occasion as needed to revise or modify.
    36. Necessity of the Information: The information from FERC-516
enables the Commission to exercise its wholesale electric power and
transmission oversight responsibilities in accordance with the Federal
Power Act. The Commission needs sufficient detail to make an informed
and reasonable decision concerning the appropriate level of rates, and
the appropriateness of non-rate terms and conditions, and to aid
customers and other parties who may wish to challenge the rates, terms,
and conditions proposed by the utility.
    37. This proposed rule, if adopted, would amend the Commission's
regulations to ensure that credit practices currently in place in
markets reasonably protect consumers against the adverse effects of
default. To promote confidence in the markets, the Commission believes
it is appropriate to consider adoption of specific requirements
regarding credit practices for organized wholesale electric markets.
These requirements include shortening of settlement periods and
reducing the amount of unsecured credit. The Commission believes these
actions, if they are adopted, will enhance certainty and stability in
the markets, and in turn, ensure that costs associated with market
participant defaults do not result in unjust or unreasonable rates.
    38. Internal review: The Commission has reviewed the requirements
pertaining to organized wholesale electric markets and determined the
proposed requirements are necessary to its responsibilities under
section 206 of the Federal Power Act.
    39. These requirements conform to the Commission's plan for
efficient information collection, communication and management within
the energy industry. The Commission has assured itself, by means of
internal review, that there is specific, objective support for the
burden estimates associated with the information requirements.
    40. Interested persons may obtain information on the reporting
requirements by contacting: Federal Energy Regulatory Commission, 888
First Street, NE., Washington, DC 20426 [Attention: Michael Miller,
Office of the Executive Director, Phone:<PHONE_NUMBER>, fax: (202)
273-0873, e-mail<EMAIL_ADDRESS>Comments on the
requirements of the proposed rule may also be sent to the Office of
Information and Regulatory Affairs, Office of Management and Budget,
Washington, DC 20503 [Attention: Desk Officer for the Federal Energy
Regulatory Commission], e-mail<EMAIL_ADDRESS>
VI. Regulatory Flexibility Act Certification

    41. The Regulatory Flexibility Act of 1980 (RFA) \33\ requires
agencies to prepare certain statements, descriptions, and analyses of
proposed rules that will have significant economic impact on a
substantial number of small entities.\34\ Agencies are not required to
make such an analysis if a rule would not have such an effect.
---------------------------------------------------------------------------

    \33\ 5 U.S.C. 601-12.
    \34\ The RFA definition of ``small entity'' refers to the
definition provided in the Small Business Act, which defines a
``small business concern'' as a business that is independently owned
and operated and that is not dominant in its field of operation. 15
U.S.C. 632. The Small Business Size Standards component of the North
American Industry Classification System defines a small electric
utility as one that, including its affiliates, is primarily engaged
in the generation, transmission, and/or distribution of electric
energy for sale and whose total electric output for the preceding
fiscal year did not exceed 4 million MWh. 13 CFR 121.201.
---------------------------------------------------------------------------

    42. The RTOs and ISOs regulated by the Commission do not fall
within the RFA's definition of small entity.\35\ In addition, the vast
majority of market participants in RTOs and ISOs are, either alone or
as part of larger corporate families, not small entities. And the
protections proposed here will protect all market participants,
including small market participants, by reducing the likelihood of
defaults and minimizing the impact of any defaults.
---------------------------------------------------------------------------

    \35\ 5 U.S.C. 601(3), citing to section 3 of the Small Business
Act, 15 U.S.C. 632. Section 3 of the Small Business Act defines a
``small-business concern'' as a business which is independently
owned and operated and which is not dominant in its field of
operation.
---------------------------------------------------------------------------

    43. California Independent Service Operator Corp. is a nonprofit
organization comprised of more than 90 electric transmission companies
and generators operating in its markets and serving more than 30
million customers.
    44. New York Independent System Operator, Inc. (NYISO) is a
nonprofit organization that oversees wholesale electricity markets
serving 19.2 million customers. NYISO manages a 10,775-mile network of
high-voltage lines.
    45. PJM Interconnection, LLC is comprised of more than 450 members
including power generators, transmission owners, electricity
distributors, power marketers and large industrial customers and
serving 13 states and the District of Columbia.
    46. Southwest Power Pool, Inc. is comprised of 50 members serving
4.5 million customers in eight states and has 52,301 miles of
transmission lines.
    47. Midwest Independent Transmission System Operator, Inc. (Midwest
ISO) is a non-profit organization with over 131,000 megawatts of
installed generation. Midwest ISO has 93,600 miles of transmission
lines and serves 15 states and one Canadian province.
    48. ISO New England Inc. (ISO-NE) is a regional transmission
organization serving six states in New England. The system is comprised
of more than 8,000 miles of high voltage transmission lines and several
hundred generating facilities of which more than 350 are under ISO-NE's
direct control.
    49. Therefore, the Commission certifies the proposed rule will not
have a significant economic impact on a substantial number of small
entities. As a result, no regulatory flexibility analysis is required.

VII. Comment Procedures

    50. The Commission invites interested persons to submit comments on
the matters and issues proposed in this notice, including any related
matters or alternative proposals that commenters may wish to discuss.
Comments are due March 29, 2010. Comments must refer to Docket No.
RM10-13-000, and must include the commenter's name, the organization
they represent, if applicable, and their address in their comments.
Comments may be filed either in electronic or paper format.
    51. Comments may be filed electronically via the eFiling link on
the Commission's web site at http://www.ferc.gov. The Commission
accepts most standard word processing formats, but requests commenters
to submit comments in a text-searchable format rather than a scanned
image format. Commenters filing electronically do not need to make a
paper filing. Commenters that are not able to file comments
electronically must send an original and 14 copies of their comments
to: Federal Energy Regulatory Commission, Secretary of the Commission,
888 First Street, NE., Washington, DC, 20426.
    52. All comments will be placed in the Commission's public files
and may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commenters on this proposal are
not required to serve copies of their comments on other commenters.

VIII. Document Availability

    53. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this

document via the Internet through the Commission's Home Page (http://
www.ferc.gov) and in the Commission's Public Reference Room during
normal business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888
First Street, NE., Room 2A, Washington DC 20426.
    54. From the Commission's Home Page on the Internet, this
information is available in the Commission's document management
system, eLibrary. The full text of this document is available on
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or
downloading. To access this document in eLibrary, type the docket
number (excluding the last three digits of the docket number), in the
docket number field.
    55. User assistance is available for eLibrary and the Commission's
Web site during normal business hours. For assistance, please contact
FERC Online Support at<PHONE_NUMBER> (toll-free at 1-866-208-3676) or
e-mail at<EMAIL_ADDRESS>or the Public Reference Room at
(202) 502-8371, TTY<PHONE_NUMBER>. E-mail the Public Reference Room at
<EMAIL_ADDRESS>
List of Subjects in 18 CFR Part 35

    Electric power rates, Electric utilities, Reporting and
recordkeeping requirements.

    By direction of the Commission. Commissioner Norris voting
present.
Kimberly D. Bose,
Secretary.
    In consideration of the foregoing, the Commission proposes to amend
part 35, Chapter J, Title 18, Code of Federal Regulations, as follows:

PART 35--FILING OF RATE SCHEDULES AND TARIFFS.

    1. The authority citation for part 35 continues to read as follows:

    Authority: 16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42
U.S.C. 7101-7352.

    2. Subpart J is added to read as follows:
Subpart J--Credit Practices In Organized Wholesale Electric Markets
Sec.
35.45 Applicability.
35.46 Definitions.
35.47 Tariff provisions governing credit practices in organized
wholesale electric markets.

Subpart J--Credit Practices In Organized Wholesale Electric Markets

Sec.  35.45  Applicability.

    This part establishes credit practices for organized wholesale
electric markets for the purpose of minimizing risk to market
participants.

Sec.  35.46  Definitions.

    (a) Market Participant means an entity that qualifies as a Market
Participant under 18 CFR 35.34.
    (b) Organized Wholesale Electric Market includes an independent
system operator and a regional transmission organization.
    (c) Regional Transmission Organization means an entity that
qualifies as a Regional Transmission Organization under 18 CFR 35.34.
    (d) Independent System Operator means an entity operating a
transmission system and found by the Commission to be an Independent
System Operator.

Sec.  35.47  Tariff provisions regarding credit practices in organized
wholesale electric markets.

    Each organized wholesale electric market must have tariff
provisions that:
    (a) Limit the amount of unsecured credit extended to any market
participant to no more than $50 million.
    (b) Adopt a settlement period of no more than seven days and allow
no more than an additional seven days to receive payment.
    (c) Eliminate unsecured credit in the financial transmission rights
market.
    (d) Allow it to offset market obligations owed to market
participants against market obligations owed by market participants.
    (e) Limit to no more than two days the time period provided to post
additional collateral when additional collateral is requested by the
organized wholesale electric market.
    (f) Provide minimum participation criteria required of market
participants to be eligible to receive credit from the organized
wholesale electric market.
    (g) Specify when a market administrator may invoke the ``material
adverse change'' as a justification for requiring additional
collateral.

[FR Doc. 2010-1537 Filed 1-26-10; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 85, Number 101 (Tuesday, May 26, 2020)]
[Rules and Regulations]
[Pages 31359-31361]
[FR Doc No: 2020-11157]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2020-0064; Project Identifier 2019-SW-096-AD; Amendment
39-21132; AD 2020-11-07]
RIN 2120-AA64

Airworthiness Directives; MD Helicopter Inc., Helicopters

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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

SUMMARY: The FAA is adopting a new airworthiness directive (AD) for MD
Helicopters Inc., (MDHI) Model 369D, 369E, 369FF, 369H, 369HE, 369HM,
369HS, 500N, and 600N helicopters. This AD was prompted by a report of
non-conforming main rotor (M/R) hub lead-lag bolts (bolts). This AD
requires removing certain bolts from service. The FAA is issuing this
AD to address the unsafe condition on these products.

DATES: This AD is effective June 30, 2020.
    The Director of the Federal Register approved the incorporation by
reference of certain publications listed in this AD as of June 30,
2020.

ADDRESSES: For service information identified in this final rule,
contact MD Helicopters, Inc., Attn: Customer Support Division, 4555 E.
McDowell Rd., Mail Stop M615, Mesa, AZ 85215-9734; telephone 1-800-388-
3378; fax<PHONE_NUMBER>; or at https://www.mdhelicopters.com. You may
view this service information at the FAA, Office of the Regional
Counsel, Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort
Worth, TX 76177. 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 and locating Docket No.
FAA-2020-0064.

Examining the AD Docket

    You may examine the AD docket on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2020-

0064; or in person at Docket Operations between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays. The AD docket contains
this final rule, any comments received, and other information. The
address for Docket Operations is Docket Operations, U.S. Department of
Transportation, Docket Operations, M-30, West Building Ground Floor,
Room W12-140, 1200 New Jersey Avenue SE, Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Payman Soltani, Aerospace Engineer,
Los Angeles ACO Branch, FAA, 3960 Paramount Blvd., Lakewood, California
90712; telephone<PHONE_NUMBER>; email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Discussion

    The FAA issued a notice of proposed rulemaking (NPRM) to amend 14
CFR part 39 by adding an AD that would apply to MDHI Model 369D, 369E,
369FF, 369H, 369HE, 369HM, 369HS, 500N, and 600N helicopters, with
certain serial-numbered bolts part number (P/N) 369D21220 installed.
The NPRM published in the Federal Register on February 7, 2020 (85 FR
7256). The NPRM was prompted by a report of non-conforming bolts.
Certain serial-numbered bolts had an unauthorized repair of their
cadmium plating performed between April 2004 and October 2018. Analysis
has shown that these bolts have a lower fatigue life compared to bolts
used during manufacturing batch testing. The NPRM proposed to require
removing the affected bolts from service.
    This condition, if not addressed, could result in loss of an M/R
blade and subsequent loss of control of the helicopter. The FAA is
issuing this AD to address the unsafe condition on these products.

Comments

    The FAA gave the public the opportunity to participate in
developing this final rule. The FAA a received comment from one
commenter. The following presents the comment received on the NPRM and
the FAA's response to the comment.

Request

    The commenter stated that the labor hours provided in the NPRM to
replace a bolt are underestimated because bolt replacement cannot be
performed while the M/R is installed on the rotorcraft. The cost
estimation should include removal of the M/R blades, M/R driveshaft,
and M/R head.
    The FAA agrees and has updated the Costs of Compliance for this AD.

Conclusion

    The FAA reviewed the relevant data, considered the comments
received, and determined that air safety and the public interest
require adopting this final rule as proposed except for adjusting the
labor hours to replace a bolt. The FAA has determined that this change:
     Is consistent with the intent that was proposed in the
NPRM for addressing the unsafe condition; and
     Does not add any significant burden upon the public than
was already proposed in the NPRM.

Related Service Information Under 1 CFR Part 51

    The FAA reviewed MD Helicopters Service Bulletin No. SB369D-223 for
Model 369D helicopters, No. SB369E-122 for Model 369E helicopters, No.
SB369F-110 for Model 369FF helicopters, No. SB369H-259 for Model 369H,
369HE, 369HS, and 369HM helicopters, No. SB500N-060 for Model 500N
helicopters, and No. SB600N-073 for Model 600N helicopters, each dated
April 19, 2019. These service bulletins are co-published as one
document. This service information specifies determining the serial
number of bolt P/N 369D21220, and if certain serial-numbered bolts are
installed on a helicopter, contacting MDHI to schedule replacement of
each affected bolt and reporting information. This service information
also specifies returning removed parts to MDHI along with a completed
Service Operation Report.
    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.

Differences Between This AD and the Service Information

    The service information specifies reporting information and
returning removed parts to MDHI, whereas this AD does not require
either of those actions. The service information specifies replacing
the affected bolts within 12 months, whereas this AD requires replacing
the affected bolts within three months of the effective date of this
AD.

Costs of Compliance

    The FAA estimates that this AD affects 767 helicopters of U.S.
registry. Labor rates are estimated at $85 per work-hour. Based on
these numbers, the FAA estimates the following costs to comply with
this AD.
    Replacing a bolt takes about 1.75 work-hours and parts cost about
$178 for an estimated cost of $327 per bolt.
    According to MDHI, some of the costs of this AD may be covered
under warranty, thereby reducing the cost impact on affected
individuals. The FAA does not control warranty coverage for affected
individuals. As a result, the FAA has included all costs in this cost
estimate.

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

Regulatory Findings

    This AD will not have federalism implications under Executive Order
13132. This AD will not have a substantial direct effect on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government.
    For the reasons discussed above, I certify that this AD:
    (1) Is not a ``significant regulatory action'' under Executive
Order 12866,
    (2) Will not affect intrastate aviation in Alaska, 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.

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new airworthiness
directive (AD):

2020-11-07 MD Helicopter Inc. (MDHI): Amendment 39-21132; Docket No.
FAA-2020-0064; Project Identifier 2019-SW-096-AD.

(a) Effective Date

    This AD is effective June 30, 2020.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to MDHI Model 369D, 369E, 369FF, 369H, 369HE,
369HM, 369HS, 500N, and 600N helicopters, certificated in any
category, with a main rotor (M/R) hub lead-lag bolt (bolt) part
number (P/N) 369D21220 with a serial number (S/N) listed in
paragraph 1.B. of MD Helicopters Service Bulletin No. SB369D-223,
SB369E-122, SB369F-110, SB369H-259, SB500N-060, or SB600N-073, each
dated April 19, 2019, installed.

(d) Subject

    Joint Aircraft System Component (JASC): 6200, Main Rotor System.

(e) Unsafe Condition

    This AD was prompted by a report of non-conforming bolts. The
FAA is issuing this AD to prevent failure of a bolt. The unsafe
condition, if not addressed, could result in loss of an M/R blade
and subsequent loss of control of the helicopter.

(f) Compliance

    Comply with this AD within the compliance times specified,
unless already done.

(g) Required Actions

    (1) At the next overhaul of the M/R assembly or within 3 months,
whichever occurs first, remove from service each bolt with a P/N and
S/N listed in paragraph (c) of this AD.
    (2) After the effective date of this AD, do not install on any
helicopter a bolt with a P/N and S/N listed in paragraph (c) of this
AD.

(h) Special Flight Permit

    A special flight permit may be permitted for a one-time ferry
flight to an authorized repair facility.

(i) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Los Angeles ACO Branch, FAA, has the authority
to approve AMOCs for this AD, if requested using the procedures
found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your
request to your principal inspector or local Flight Standards
District Office, as appropriate. If sending information directly to
the manager of the certification office, send it to the attention of
the person identified in paragraph (j) of this AD. Information may
be emailed to<EMAIL_ADDRESS>    (2) Before using any approved AMOC, notify your appropriate
principal inspector, or lacking a principal inspector, the manager
of the local flight standards district office/certificate holding
district office.

(j) Related Information

    For more information about this AD, contact Payman Soltani,
Aerospace Engineer, Los Angeles ACO Branch, FAA, 3960 Paramount
Blvd., Lakewood, California 90712; telephone<PHONE_NUMBER>; email
<EMAIL_ADDRESS>
(k) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the
incorporation by reference (IBR) of the service information listed
in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
    (2) You must use this service information as applicable to do
the actions required by this AD, unless the AD specifies otherwise.
    (i) MD Helicopters Service Bulletin (SB) No. SB369D-223, dated
April 19, 2019.
    (ii) MD Helicopters SB No. SB369E-122, dated April 19, 2019.
    (iii) MD Helicopters SB No. SB369F-110, dated April 19, 2019.
    (iv) MD Helicopters SB No. SB369H-259, dated April 19, 2019.
    (v) MD Helicopters SB No. SB500N-060, dated April 19, 2019.
    (vi) MD Helicopters SB No. SB600N-073, dated April 19, 2019.

    Note 1 to paragraph (k)(2):  MD Helicopters SB No. SB369D-223,
No. SB369E-122, No. SB369F-110, No. SB369H-259, No. SB500N-060, and
No. SB600N-073, each dated April 19, 2019, are co-published as one
document.

    (3) For MD Helicopters service information identified in this
AD, contact MD Helicopters, Inc., Attn: Customer Support Division,
4555 E. McDowell Rd., Mail Stop M615, Mesa, AZ 85215-9734; telephone
1-800-388-3378; fax<PHONE_NUMBER>; or at https://www.mdhelicopters.com.
    (4) You may view this service information at the FAA, Office of
the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy, Room
6N-321, Fort Worth, TX 76177. For information on the availability of
this material at the FAA, call<PHONE_NUMBER>. (5) You may view this
service information that is incorporated by reference at the
National Archives and Records Administration (NARA). For information
on the availability of this material at NARA, email
<EMAIL_ADDRESS>or go to: https://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued on May 19, 2020.
Gaetano A. Sciortino,
Deputy Director for Strategic Initiatives, Compliance & Airworthiness
Division, Aircraft Certification Service.
[FR Doc. 2020-11157 Filed 5-22-20; 8:45 am]
 BILLING CODE 4910-13-P