[Federal Register Volume 78, Number 140 (Monday, July 22, 2013)]
[Proposed Rules]
[Pages 43839-43842]
[FR Doc No: 2013-17412]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2013-0625; Directorate Identifier 2013-NM-013-AD]
RIN 2120-AA64

Airworthiness Directives; the Boeing Company

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: We propose to supersede an existing airworthiness directive
(AD) that applies to certain The Boeing Company Model 747 series
airplanes. The existing AD currently requires repetitive detailed
inspections to detect cracking in certain fuselage upper deck tension
ties, repair or modification of any cracked tension ties, and
repetitive inspections of repaired and modified tension ties and repair
or modification if necessary. The existing AD also provides for
optional terminating action for the repetitive detailed inspections of
tension ties that have not been repaired or modified. This proposed AD
was prompted by an evaluation by the design approval holder indicating
that the upper deck tension ties of the fuselage are subject to
widespread fatigue damage. This proposed AD would retain the repetitive
inspections, mandate the previously optional terminating modification,
and add, for tension ties that have not been repaired or modified,
repetitive inspections that must be done concurrently with the existing
repetitive inspections. We are proposing this AD to prevent widespread
fatigue damage of certain fuselage upper deck tension ties, which could
result in reduced structural integrity of the airplane.

DATES: We must receive comments on this proposed AD by September 5,
2013.

ADDRESSES: You may send comments, using the procedures found in 14 CFR
11.43 and 11.45, by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590.
     Hand Delivery: Deliver to Mail address above between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
    For service information identified in this AD, contact Boeing
Commercial Airplanes, Attention: Data & Services Management, P. O. Box
3707, MC 2H-65, Seattle, WA 98124-2207; telephone<PHONE_NUMBER>,
extension 1; fax<PHONE_NUMBER>; Internet https://www.myboeingfleet.com.
You may review copies of the referenced service information at the FAA,
Transport Airplane Directorate, 1601 Lind Ave. SW., Renton, Washington.
For information on the availability of this material at the FAA, call
425-227-1221.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov; or in person at the Docket Management Facility
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays. The AD docket contains this proposed AD, the regulatory
evaluation, any comments received, and other information. The street
address for the Docket Office (phone:<PHONE_NUMBER>) is in the ADDRESSES
section. Comments will be available in the AD docket shortly after
receipt.

FOR FURTHER INFORMATION CONTACT: Nathan Weigand, Aerospace Engineer,
Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office,
1601 Lind Avenue SW., Renton, Washington 98057-3356; phone: (425) 917-
6428; fax:<PHONE_NUMBER>; email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to send any written relevant data, views, or
arguments about this proposed AD. Send your comments to an address
listed under the ADDRESSES section. Include ``Docket No. FAA-2013-0625;
Directorate Identifier 2013-NM-013-AD'' at the beginning of your
comments. We specifically invite comments on the overall regulatory,
economic, environmental, and energy aspects of this proposed AD. We
will consider all comments received by the closing date and may amend
this proposed AD because of those comments.
    We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact we
receive about this proposed AD.

Discussion

    On June 14, 1994, we issued AD 94-13-06, Amendment 39-8946 (59 FR
32879, June 27, 1994), for certain Boeing Model 747 series airplanes.
That AD requires inspections to detect cracking in certain fuselage
upper deck tension ties, and repair or modification of any cracked
tension ties. That AD resulted from reports of fatigue cracking in
tension ties. We issued that AD to prevent failure of two or more
tension ties and the resultant rapid decompression of the airplane.

Actions Since Existing AD (59 FR 32879, June 27, 1994) Was Issued

    AD 94-13-06, Amendment 39-8946 (59 FR 32879, June 27, 1994),
provides a terminating modification as an option. We have determined
that it is necessary to mandate this modification to adequately address
the identified unsafe condition.
    We can better ensure long-term continued operational safety by
design changes to remove the source of the problem, rather than by
repetitive inspections. Long-term inspections may not provide the
degree of safety necessary for the transport airplane fleet. This
determination, along with a better understanding of the human factors
associated with numerous continual inspections, has led us to consider
placing less emphasis on inspections and more emphasis on

design improvements. The proposed modification requirement is
consistent with these conditions.

WFD Program

    Structural fatigue damage is progressive. It begins as minute
cracks, and those cracks grow under the action of repeated stresses.
This can happen because of normal operational conditions and design
attributes, or because of isolated situations or incidents such as
material defects, poor fabrication quality, or corrosion pits, dings,
or scratches. Fatigue damage can occur locally, in small areas or
structural design details, or globally. Global fatigue damage is
general degradation of large areas of structure with similar structural
details and stress levels. Multiple-site damage is global damage that
occurs in a large structural element such as a single rivet line of a
lap splice joining two large skin panels. Global damage can also occur
in multiple elements such as adjacent frames or stringers. Multiple-
site-damage and multiple-element-damage cracks are typically too small
initially to be reliably detected with normal inspection methods.
Without intervention, these cracks will grow, and eventually compromise
the structural integrity of the airplane, in a condition known as
widespread fatigue damage (WFD). As an airplane ages, WFD will likely
occur, and will certainly occur if the airplane is operated long enough
without any intervention.
    The FAA's WFD final rule (75 FR 69746, November 15, 2010) became
effective on January 14, 2011. The WFD rule requires certain actions to
prevent structural failure due to WFD throughout the operational life
of certain existing transport category airplanes and all of these
airplanes that will be certificated in the future. For existing and
future airplanes subject to the WFD rule, the rule requires that design
approval holders (DAHs) establish a limit of validity (LOV) of the
engineering data that support the structural maintenance program.
Operators affected by the WFD rule may not fly an airplane beyond its
LOV, unless an extended LOV is approved.
    The WFD rule (75 FR 69746, November 15, 2010) does not require
identifying and developing maintenance actions if the DAHs can show
that such actions are not necessary to prevent WFD before the airplane
reaches the LOV. Many LOVs, however, do depend on accomplishment of
future maintenance actions. As stated in the WFD rule, any maintenance
actions necessary to reach the LOV will be mandated by airworthiness
directives through separate rulemaking actions.
    In the context of WFD, this action is necessary to enable DAHs to
propose LOVs that allow operators the longest operational lives for
their airplanes, and still ensure that WFD will not occur. This
approach allows for an implementation strategy that provides
flexibility to DAHs in determining the timing of service information
development (with FAA approval), while providing operators with
certainty regarding the LOV applicable to their airplanes.

Relevant Service Information

    We reviewed Boeing Alert Service Bulletin 747-53A2371, Revision 2,
dated December 11, 2012. For information on the procedures and
compliance times, see this service information at http://www.regulations.gov by searching for Docket No. FAA-2013-0625.

FAA's Determination

    We are proposing this AD because we evaluated all the relevant
information and determined the unsafe condition described previously is
likely to exist or develop in other products of the same type design.

Proposed AD Requirements

    Although this proposed AD does not explicitly restate the
requirements of AD 94-13-06, Amendment 39-8946 (59 FR 32879, June 27,
1994), this proposed AD would retain all of the requirements of AD 94-
13-06. Those requirements are referenced in the service information
identified previously, which, in turn, is referenced in paragraphs (g)
and (i) of this proposed AD. Paragraph (h) of this proposed AD would
mandate the previously optional terminating modification for the
inspections of tension ties that have not been repaired or modified.
Paragraph (g) of this proposed AD would also add, for tension ties that
have not been repaired or modified, repetitive high frequency eddy
current inspections to be done concurrently with the existing detailed
inspections specified in for tensions ties that have not been repaired
or modified. This proposed AD would require accomplishing the actions
specified in the service information described previously, except as
discussed under ``Differences Between the Proposed AD and the Service
Information.''
    In addition, the phrase ``corrective actions'' is used in this
proposed AD. ``Corrective actions'' are actions that correct or address
any condition found. Corrective actions in an AD could include, for
example, repairs.

Differences Between the Proposed AD and the Service Information

    Table 3 in paragraph 1.E., ``Compliance,'' of Boeing Alert Service
Bulletin 747-53A2371, Revision 2, dated December 11, 2012, specifies
repeating the detailed inspection for cracks in the tension ties;
however, that inspection is incorrect. This section of the service
information should specify a high frequency eddy current inspection
(HFEC) inspection, as specified in the other related sections.
Therefore, the inspection required by this proposed AD is an HFEC
inspection, performed in accordance with Part 4 and Figure 8 of this
service bulletin. This service information is being revised to specify
the correct inspection type. This difference has been coordinated with
Boeing.
    The service bulletin specifies to contact the manufacturer for
instructions on how to repair certain conditions, but this proposed AD
would require repairing those conditions in one of the following ways:
     In accordance with a method that we approve; or
     Using data that meet the certification basis of the
airplane, and that have been approved by the Boeing Commercial
Airplanes Organization Designation Authorization (ODA) whom we have
authorized to make those findings.

Explanation of Compliance Time

    The compliance time for the modification specified in this proposed
AD for addressing WFD was established to ensure that discrepant
structure is modified before WFD develops in airplanes. Standard
inspection techniques cannot be relied on to detect WFD before it
becomes a hazard to flight. We will not grant any extensions of the
compliance time to complete any AD-mandated service bulletin related to
WFD without extensive new data that would substantiate and clearly
warrant such an extension.

Clarification of Applicability

    We have revised the applicability of existing AD 94-13-06,
amendment 39-8946 (59 FR 32879, June 27, 1994), to identify model
designations as published in the most recent type certificate data
sheet for the affected models.

Costs of Compliance

    We estimate that this proposed AD affects 113 airplanes of U.S.
registry.
    We estimate the following costs to comply with this proposed AD:

                                                 Estimated Costs
----------------------------------------------------------------------------------------------------------------
                                                                                Cost on U.S.
              Action                    Labor cost        Parts cost      Cost per product        operators
----------------------------------------------------------------------------------------------------------------
Detailed inspections [retained     5 work-hours x $85               $0  $425 per inspection  $48,025 per
 action from existing AD 94-13-     per hour = $425.                     cycle.               inspection cycle.
 06, amendment 39-8946 (59 FR
 32879, June 27, 1994)].
Post-mod/repair inspections......  1 work-hour x $85                 0  $85................  $9,605.
                                    per hour = $85.
Modification [new proposed         Up to 112 work-                   0  Up to $9,520.......  Up to $1,075,760.
 action].                           hours x $85 per
                                    hour = up to
                                    $9,520.
----------------------------------------------------------------------------------------------------------------

    We have received no definitive data that would enable us to provide
cost estimates for the on-condition actions specified in this proposed
AD.

Authority for This Rulemaking

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

Regulatory Findings

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

List of Subjects in 14 CFR Part 39

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

The Proposed Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by removing airworthiness directive (AD)
94-13-06, Amendment 39-8946 (59 FR 32879, June 27, 1994), and adding
the following new AD:

The Boeing Company: Docket No. FAA-2013-0625; Directorate Identifier
2013-NM-013-AD.

(a) Comments Due Date

    The FAA must receive comments on this AD action by September 5,
2013.

(b) Affected ADs

    This AD supersedes AD 94-13-06, Amendment 39-8946 (59 FR 32879,
June 27, 1994).

(c) Applicability

    This AD applies to The Boeing Company Model 747-100, 747-200B,
and 747-200F series airplanes, certificated in any category, as
listed in Boeing Alert Service Bulletin 747-53A2371, Revision 2,
dated December 11, 2012.

(d) Subject

    Joint Aircraft System Component (JASC)/Air Transport Association
(ATA) of America Code 53, Fuselage.

(e) Unsafe Condition

    This AD was prompted by an evaluation by the design approval
holder indicating that the upper deck tension ties of the fuselage
are subject to widespread fatigue damage. We are issuing this AD to
prevent widespread fatigue damage of certain fuselage upper deck
tension ties, which could result in reduced structural integrity of
the airplane.

(f) Compliance

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

(g) Inspections and Repair/Modification

    Except as required by paragraph (k)(3) of this AD, at the
applicable time specified in Tables 1 and 3 of paragraph 1.E.,
``Compliance'' of Boeing Alert Service Bulletin 747-53A2371,
Revision 2, dated December 11, 2012: Do detailed and surface high
frequency eddy current (HFEC) inspections for cracks in the tension
ties, as applicable, and do all applicable corrective actions, in
accordance with the Accomplishment Instructions of Boeing Alert
Service Bulletin 747-53A2371, Revision 2, dated December 11, 2012,
except as required by paragraph (k)(2) of this AD. The effective
date of AD 94-13-06, Amendment 39-8946 (59 FR 32879, June 27, 1994)
is July 27, 1994. Do all applicable corrective actions before
further flight. Repeat the detailed and HFEC inspection thereafter
at the time specified in paragraph 1.E., ``Compliance,'' of Boeing
Alert Service Bulletin 747-53A2371, Revision 2, dated December 11,
2012, except as specified in paragraph (k)(1) of this AD. Repair of
a tension tie, in accordance with the Accomplishment Instructions of
Boeing Alert Service Bulletin 747-53A2371, Revision 2, dated
December 11, 2012, except as required by paragraph (k)(2) of this
AD, terminates the requirements of this paragraph for that tension
tie only.

(h) Modification

    Except as provided by paragraph (k)(3) of this AD, at the
applicable time specified in Table 3 of paragraph 1.E.,
``Compliance,'' of Boeing Alert Service Bulletin 747-53A2371,
Revision 2, dated December 11, 2012: Modify the tension ties,
including doing an open-hole HFEC inspection for cracks before
enlarging the hole, in accordance with the Accomplishment
Instructions of Boeing Alert Service Bulletin 747-53A2371, Revision
2, dated December 11, 2012. Modification of the tension ties
terminates the requirements of paragraph (g) of this AD. If any
cracking is found, before further flight, do the repair using a
method approved in accordance with the procedures specified in
paragraph (l) of this AD.

(i) Post-Repair/Modification Inspections

    At the applicable time specified in Table 2 of paragraph 1.E.,
``Compliance,'' of Boeing Alert Service Bulletin 747-53A2371,
Revision 2, dated December 11, 2012: Do a detailed inspection of all
repaired and modified tension ties, and do all applicable corrective
actions, except as required by paragraph (k)(2) of this AD, in
accordance with the Accomplishment Instructions of Boeing Alert
Service Bulletin 747-53A2371, Revision 2, dated December 11, 2012,
except as required by paragraph (k)(2) of this AD. Repeat the
inspection thereafter at the times specified in paragraph 1.E.,
``Compliance,'' of Boeing Alert Service Bulletin 747-53A2371,
Revision 2, dated December 11, 2012. Do all applicable corrective
actions before further flight.

(j) Credit for Previous Actions

    This paragraph provides credit for the modification required by
paragraphs (g) and (h) of this AD if that modification was done
before the effective date of this AD using Boeing Service Bulletin
747-53-2371, dated July 29, 1993; or Boeing Alert Service Bulletin
747-53A2371, Revision 1, dated April 27, 1995; which are not
incorporated by reference in this AD.

(k) Exception to Service Information

    (1) Where Row 2 of Table 3 of paragraph 1.E., ``Compliance,'' of
Boeing Alert Service Bulletin 747-53A2371, Revision 2, dated
December 11, 2012, specifies repeating a ``detailed'' inspection,
``as given in Part 4'' of this service information, the repetitive
inspections required by this AD are ``HFEC'' inspections, done in
accordance with Part 4 and Figure 8 of Boeing Alert Service Bulletin
747-53A2371, Revision 2, dated December 11, 2012.
    (2) Where Boeing Alert Service Bulletin 747-53A2371, Revision 2,
dated December 11, 2012, specifies contacting Boeing for repair
instructions, or does not include repair instructions for a crack
found in an area other than the aft tension tie area: Before further
flight, do the repair using a method approved in accordance with the
procedures specified in paragraph (l) of this AD.
    (3) Where Boeing Alert Service Bulletin 747-53A2371, Revision 2,
dated December 11, 2012 specifies a compliance time of ``after the
Revision 2 date of this service bulletin,'' this AD requires
compliance within the specified compliance time after the effective
date of this AD.

(l) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Seattle Aircraft Certification Office (ACO),
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 ACO, send it to the attention of the
person identified in the Related Information section 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.
    (3) An AMOC that provides an acceptable level of safety may be
used for any repair required by this AD if it is approved by the
Boeing Commercial Airplanes ODA that has been authorized by the
Manager, Seattle ACO to make those findings. For a repair method to
be approved, the repair must meet the certification basis of the
airplane, and the approval must specifically refer to this AD.
    (4) AMOCs approved for AD 94-13-06, Amendment 39-8946 (59 FR
32879, June 27, 1994), are approved as AMOCs for the corresponding
actions required by paragraphs (g), (h), and (i) of this AD.

(m) Related Information

    (1) For more information about this AD, contact Nathan Weigand,
Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft
Certification Office, 1601 Lind Avenue SW., Renton, Washington
98057-3356; phone:<PHONE_NUMBER>; fax:<PHONE_NUMBER>; email:
<EMAIL_ADDRESS>    (2) For service information identified in this AD, contact
Boeing Commercial Airplanes, Attention: Data & Services Management,
P.O. Box 3707, MC 2H-65, Seattle, Washington 98124-2207; telephone
206-544-5000, extension 1; fax<PHONE_NUMBER>; Internet https://www.myboeingfleet.com.
    You may review copies of the referenced service information at
the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW.,
Renton, Washington. For information on the availability of this
material at the FAA, call<PHONE_NUMBER>.

    Issued in Renton, Washington, on July 12, 2013.
Jeffrey E. Duven,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 2013-17412 Filed 7-19-13; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register: April 2, 2009 (Volume 74, Number 62)]
[Notices]
[Page 15047-15048]
[DOCID:fr02ap09-102]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

[Summary Notice No. PE-2009-14]

Petitions for Exemption; Summary of Petitions Received

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of petitions for exemption received.

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SUMMARY: This notice contains a summary of a petition seeking relief
from specified requirements of 14 CFR. The purpose of this notice is to
improve the public's awareness of, and participation in, this aspect of
FAA's regulatory activities. Neither publication of this notice nor the
inclusion or omission of information in the summary is intended to
affect the legal status of any petition or its final disposition.

DATE: Comments on petitions received must identify the petition docket
number involved and must be received on or before April 22, 2009.

ADDRESSES: You may send comments identified by Docket Number FAA-2006-
25156 using any of the following methods:
     Government-wide rulemaking Web site: Go to http://
www.regulations.gov and follow the instructions for sending your
comments electronically.
     Mail: Send comments to the Docket Management Facility;
U.S. Department of Transportation, 1200 New Jersey Avenue, SE., West
Building Ground Floor, Room W12-140, Washington, DC 20590.
     Fax: Fax comments to the Docket Management Facility at
202-493-2251.
     Hand Delivery: Bring comments to the Docket Management
Facility in Room W12-140 of the West Building Ground Floor at 1200 New
Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
    Privacy: We will post all comments we receive, without change, to
http://www.regulations.gov, including any personal information you
provide. Using the search function of our docket Web site, anyone can
find and read the comments received into any of our dockets, including
the name of the individual sending the comment (or signing the comment
for an association, business, labor union, etc.). You may review DOT's
complete Privacy Act Statement in the Federal Register published on
April 11, 2000 (65 FR 19477-78).
    Docket: To read background documents or comments received, go to
http://www.regulations.gov at any time or to the Docket Management
Facility in Room W12-140 of the West Building Ground Floor at 1200 New
Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Jan Thor<PHONE_NUMBER>), Transport
Standards Staff, Federal Aviation Administration, 1601 Lind Avenue SW.,
Renton, WA 98057-3356.
    This notice is published pursuant to 14 CFR 11.85.

    Issued in Washington, DC, on March 30, 2009.
Pamela Hamilton-Powell,
Director, Office of Rulemaking.

Petitions for Exemption

    Docket No.: FAA-2006-25156.
    Petitioner: Hawker Beechcraft Corporation.
    Section of 14 CFR Affected: 14 CFR 25.981(a)(3).
    Description of Relief Sought: Hawker Beechcraft petitions for an
amendment to Exemption No. 8761A from the fuel tank safety provisions
of Sec.  25.981(a)(3), as amended by Amendment 25-102, regarding the
structural lightning protection of wing fasteners. They

request to extend the compliance dates in Exemption 8761A because Sec.
25.981 mandated new design changes, and they are in the process of
testing and qualifying components to be incorporated into their design.

[FR Doc. E9-7420 Filed 4-1-09; 8:45 am]

BILLING CODE 4910-13-P


[Federal Register Volume 85, Number 48 (Wednesday, March 11, 2020)]
[Proposed Rules]
[Pages 14178-14180]
[FR Doc No: 2020-04972]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2020-0239; Product Identifier 2018-SW-073-AD]
RIN 2120-AA64

Airworthiness Directives; Airbus Helicopters

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: The FAA proposes to adopt a new airworthiness directive (AD)
for all Airbus Helicopters Model EC120B helicopters. This proposed AD
was prompted by a report that a changed manufacturing process for the
tail rotor blades (TRB) was implemented, affecting the structural
characteristics of the blades and generating a new part number for
these blades. This proposed AD would require re-identifying each
affected TRB having a certain part number and serial number and
establishing a life limit for the new part numbers. This AD also
prohibits installation of any affected TRB identified with the old part
number on any helicopter. The FAA is proposing this AD to address the
unsafe condition on these products.

DATES: The FAA must receive comments on this proposed AD by April 27,
2020.

ADDRESSES: You may send comments, using the procedures found in 14 CFR
11.43 and 11.45, by any of the following methods:
     Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE, Washington, DC 20590.
     Hand Delivery: Deliver to Mail address above between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
    For service information identified in this NPRM, contact Airbus
Helicopters,

2701 N. Forum Drive, Grand Prairie, TX 75052; telephone<PHONE_NUMBER> or
800-232-0323; fax<PHONE_NUMBER>; or at https://www.airbus.com/helicopters/services/technical-support.html. 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 817-
222-5110.

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-
0239; 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 NPRM, the Mandatory Continuing Airworthiness Information (MCAI),
any comments received, and other information. The street address for
Docket Operations is listed above. Comments will be available in the AD
docket shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Kristi Bradley, Aviation Safety
Engineer, Safety Management Section, Rotorcraft Standards Branch, FAA,
10101 Hillwood Pkwy., Fort Worth, TX 76177; telephone<PHONE_NUMBER>;
email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Comments Invited

    The FAA invites you to send any written relevant data, views, or
arguments about this proposal. Send your comments to an address listed
under the ADDRESSES section. Include ``Docket No. FAA-2020-0239;
Product Identifier 2018-SW-073-AD'' at the beginning of your comments.
The FAA specifically invites comments on the overall regulatory,
economic, environmental, and energy aspects of this NPRM. The FAA will
consider all comments received by the closing date and may amend this
NPRM because of those comments.
    The FAA will post all comments received, without change, to https://www.regulations.gov, including any personal information you provide.
The FAA will also post a report summarizing each substantive verbal
contact received about this NPRM.

Discussion

    The European Union Aviation Safety Agency (previously European
Aviation Safety Agency) (EASA), which is the Technical Agent for the
Member States of the European Union, has issued EASA AD 2018-0183,
dated August 28, 2018 (referred to after this as ``the MCAI''), to
correct an unsafe condition for all Airbus EC120 B helicopters. EASA
advises that a changed manufacturing process for TRBs was implemented,
affecting the structural characteristic of the TRBs and generating a
new part number for these blades. Because this is a newly established
part number, no service life limit currently exists for this part. This
EASA AD identifies a service life limit for the new TRB part numbers,
which, if not required, might result in TRBs exceeding their service
life limit. This condition, if not corrected, could lead to loss of the
TRB and subsequent loss of control of the helicopter. The EASA AD also
prohibits installation of any affected TRB identified with the old part
number on any helicopter and prohibits rework, repair, or modification
of any affected part.
    You may examine the MCAI in the AD docket on the internet at
https://www.regulations.gov by searching for and locating Docket No.
FAA-2020-0239.

Related Service Information Under 1 CFR Part 51

    Airbus Helicopters has issued Alert Service Bulletin EC120-04A008,
dated July 18, 2018 (``ASB EC120-04A008''). This service information
describes procedures for re-identifying a TRB with P/N C642A0300103 for
certain serial numbers as specified in ASB EC120-04A008.
    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.

FAA's Determination

    This product has been approved by the aviation authority of another
country, and is approved for operation in the United States. Pursuant
to the FAA's bilateral agreement with the State of Design Authority,
the FAA has been notified of the unsafe condition described in the MCAI
and service information referenced above. The FAA is proposing this AD
because the FAA evaluated all the relevant information and determined
the unsafe condition described previously is likely to exist or develop
on other products of the same type design.

Proposed Requirements of This NPRM

    This proposed AD would require re-identifying each affected TRB
with a new part number, establishing a life limit for the new TRB part
number, and prohibiting installation of any affected TRB having the old
part number.

Costs of Compliance

    The FAA estimates that this proposed AD affects 94 helicopters of
U.S. registry. The FAA estimates the following costs to comply with
this proposed AD:

                                     Estimated Costs for Required Actions *
----------------------------------------------------------------------------------------------------------------
                                                                                Cost per       Cost on U.S.
                          Labor cost                              Parts cost        product         operators
----------------------------------------------------------------------------------------------------------------
1 work-hour x $85 per hour = $85.............................           ** $0              $85         * $7,990
----------------------------------------------------------------------------------------------------------------
* The FAA has received no definitive data that would enable providing cost estimates for the additional
  applicable maintenance instructions specified in this proposed AD.
** The FAA has received no definitive data on the parts cost.

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

    The FAA determined that this proposed AD would not have federalism
implications under Executive Order 13132. This proposed AD would not
have a substantial direct effect on the States, on the relationship
between the national Government and the States, or on the distribution
of power and responsibilities among the various levels of government.
    For the reasons discussed above, I certify this proposed
regulation:
    (1) Is not a ``significant regulatory action'' under Executive
Order 12866,
    (2) 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.

The Proposed Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

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

Airbus Helicopters: Docket No. FAA-2020-0239; Product Identifier
2018-SW-073-AD.

(a) Comments Due Date

    The FAA must receive comments by April 27, 2020.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to all Airbus Helicopters Model EC120B
helicopters, certificated in any category.

(d) Subject

    The Joint Aircraft System/Component (JASC) Code 6410, Tail rotor
blades.

(e) Reason

    This AD was prompted by a report that a new manufacturing
process for the tail rotor blades (TRBs) has been implemented,
affecting the structural characteristics of the TRB and generating a
new part number (P/N) for these blades. It was determined that a new
life limit is needed for the new P/N TRBs. The FAA is issuing this
AD to ensure the new P/N TRBs do not exceed their life limit, which
could lead to loss of the TRB and subsequent loss of control of the
helicopter.

(f) Compliance

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

(g) Definition of an Affected Part for Re-identification and Validation
of Rework/Repair/Modification

    An ``affected part'' is a TRB having P/N C642A0300103 and a
serial number specified in Appendix 4.A. of Airbus Helicopters Alert
Service Bulletin EC120-04A008, dated July 18, 2018 (``ASB EC120-
04A008'').

(h) Part Replacement (Life Limit Implementation)

    Before exceeding 8,500 hours time-in-service (TIS) since first
installation on a helicopter: Remove from service each TRB having P/
N C642A0300104 or P/N C642A0300105.

(i) Part Re-Identification and Validation of Rework/Repair/Modification

    (1) Within 1,000 hours TIS after the effective date of this AD:
Re-identify each affected part in accordance with 3.B. of the
Accomplishment Instructions of ASB EC120-04A008.
    (2) Within 6 months after the effective date of this AD, for
each affected part which has been subject to rework, repair, or
modification before the re-identification as required by paragraph
(i)(1) of this AD, contact the Manager, Safety Management Section,
Rotorcraft Standards Branch, FAA, for additional applicable
maintenance instructions and, within the compliance time identified
in those instructions, accomplish those instructions accordingly.

(j) Parts Installation Prohibition and Rework/Repair/Modification
Limitation

    (1) As of the effective date of this AD, no person may install a
TRB having P/N C642A0300103 and a serial number specified in
Appendix 4.A. of ASB EC120-04A008 on any helicopter.
    (2) As of the effective date of this AD, no person may
accomplish any rework, repair, or modification of an affected part,
unless it has been determined that the rework, repair, or
modification is FAA-approved for P/N C642A0300105.

(k) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Safety Management Section, Rotorcraft Standards
Branch, FAA, may approve AMOCs for this AD. Send your proposal to:
Kristi Bradley, Aviation Safety Engineer, Safety Management Section,
Rotorcraft Standards Branch, FAA, 10101 Hillwood Pkwy., Fort Worth,
TX 76177; telephone<PHONE_NUMBER>; email<EMAIL_ADDRESS>    (2) For operations conducted under a 14 CFR part 119 operating
certificate or under 14 CFR part 91, subpart K, notify your
principal inspector or lacking a principal inspector, the manager of
the local flight standards district office or certificate holding
district office, before operating any aircraft complying with this
AD through an AMOC.

(l) Related Information

    (1) The subject of this AD is addressed in European Union
Aviation Safety Agency (previously European Aviation Safety Agency)
(EASA) AD 2018-0183, dated August 28, 2018. This EASA AD may be
found in the AD docket on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-
2020-0239.
    (2) For service information identified in this AD, contact
Airbus Helicopters, 2701 N Forum Drive, Grand Prairie, TX 75052;
telephone<PHONE_NUMBER> or<PHONE_NUMBER>; fax<PHONE_NUMBER>; or at
https://www.airbus.com/helicopters/services/technical-support.html.
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>.

    Issued on March 4, 2020.
Gaetano A. Sciortino,
Deputy Director for Strategic Initiatives, Compliance & Airworthiness
Division, Aircraft Certification Service.
[FR Doc. 2020-04972 Filed 3-10-20; 8:45 am]
 BILLING CODE 4910-13-P


[Federal Register: December 30, 2008 (Volume 73, Number 250)]
[Notices]
[Page 79940-79943]
[DOCID:fr30de08-140]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59133]

Order Granting Application for a Temporary Conditional Exemption
Pursuant to Section 36(a) of the Exchange Act by the International
Securities Exchange, LLC Relating to the Acquisition by International
Securities Exchange Holdings, Inc. of an Electronic Communications
Network

December 22, 2008.

I. Introduction

    On December 3, 2008, the International Securities Exchange, LLC
(``ISE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to Rule 0-12 \1\ under the
Securities Exchange Act of 1934 (``Exchange Act''), an application for
an exemption under Section 36(a)(1) of the Exchange Act \2\ from the
rule filing requirements of Section 19(b) of the Exchange Act \3\ with
respect to the acquisition by International Securities Exchange
Holdings, Inc. (``ISE Holdings''), the parent of ISE, of an equity
interest in Direct Edge Holdings, LLC (``DE Holdings'').\4\ DE Holdings
is the sole owner of Direct Edge ECN LLC (``DECN''), a registered
broker-dealer and electronic communications network (``ECN''). This
order grants the request for temporary exemptive relief, subject to the
satisfaction of certain conditions, which are outlined below.
---------------------------------------------------------------------------

    \1\ 17 CFR 240.0-12.
    \2\ 15 U.S.C. 78mm(a)(1).
    \3\ 15 U.S.C. 78s(b).
    \4\ See letter from Michael J. Simon, General Counsel and
Secretary, ISE, to Florence Harmon, Acting Secretary, Commission,
dated December 3, 2008 (``Exemption Request'').
---------------------------------------------------------------------------

II. Application for Temporary Conditional Exemption From Section 19(b)
Rule Filing Requirements

    On December 3, 2008, the ISE requested that the Commission grant a
temporary exemption, subject to certain conditions, under Section 36 of
the Exchange Act from the rule filing procedures of Section 19(b) of
the Exchange Act in connection with ISE Holdings' acquisition of an
equity interest in DE Holdings and the operation of DECN as a facility
of ISE.\5\
---------------------------------------------------------------------------

    \5\ See Section 3(a)(2) of the Exchange Act, 15 U.S.C.
78c3(a)(2) (definition of ``facility'').
---------------------------------------------------------------------------

    According to the Exemption Request, on August 22, 2008, ISE
Holdings, DE Holdings, ISE Stock Exchange, LLC (``ISE Stock''), a
Delaware limited liability company that operates a marketplace for the
trading of U.S. cash equity securities by Equity Electronic Access
Members (``Equity EAMs'') of ISE (the ``Facility''),\6\ and certain
other parties entered into a Transaction Agreement whereby, among other
things: (1) ISE Holdings will purchase a 31.54% equity interest in DE
Holdings, the sole owner of DECN, a registered broker-dealer and ECN;
and (2) ISE Stock will merge into Maple Merger Sub, a wholly-owned
subsidiary of DE Holdings (``Merger Sub''), which will operate the
Facility following the closing of the transaction (the ``Closing'').
After the Closing, the Facility will continue to be a facility of ISE.
---------------------------------------------------------------------------

    \6\ ISE Stock operates the Facility under the rules of the ISE
as a facility, as defined in Section 3(a)(2) of the Exchange Act, of
ISE.
---------------------------------------------------------------------------

    DECN's current relationship with ISE is limited to participating in
ISE as an Equity EAM of ISE, and DECN displays its limit orders on the
Facility in the same manner as other ECNs that display their limit
orders on the Facility. Neither ISE Holdings nor ISE currently has an
ownership interest in DECN. After the Closing, DECN will continue to
operate as an ECN and to submit limit orders to the Facility for
display and execution.
    Following the Closing, DECN also will become a facility, as defined
in Section 3(a)(2) of the Exchange Act, of ISE

because it will be an affiliate of ISE used for the purpose of
effecting and reporting securities transactions. Specifically, (1) DECN
will continue to operate as an ECN and will continue to submit its
limit orders to the Facility for display and execution; \7\ and (2)
DECN will become an affiliate of ISE through ISE Holdings' equity
interest in DE Holdings. Because DECN will be a facility of ISE, ISE
would be obligated, under Section 19(b) of the Exchange Act, to file
with the Commission proposed rules governing the operation of DECN's
systems and subscriber fees. In its Exemption Request, ISE states that
if the Commission does not grant the exemption, ISE will be forced to
terminate DECN's operations upon Closing because DECN may not operate
as a facility of ISE without the ISE's filing with the Commission
proposed rules governing the operation of DECN's systems and subscriber
fees.\8\ ISE also stated that it would be unduly burdensome and
inefficient to require DECN's operating rules to be separately
subjected to the Section 19(b) rule filing and approval process because
DECN would operate only temporarily as a facility of ISE while the
Commission considers the Form 1 Applications, as discussed below.
---------------------------------------------------------------------------

    \7\ In its Exemption Request, ISE stated that it would be
impracticable for DECN to display its limit orders other than on the
Facility. See Exemption Request at 3.
    \8\ See Exemption Request at 3.
---------------------------------------------------------------------------

    In its Exemption Request, ISE noted that DECN's average daily
``touched'' volume in U.S. listed equity securities accounts for 10% of
the average daily U.S. traded volume in such securities.\9\
Accordingly, ISE believes that the termination of DECN's operations
potentially could harm investors, disrupt the functioning of an orderly
market, and eliminate a point of access to the markets.\10\
---------------------------------------------------------------------------

    \9\ Average daily touched volume includes trades matched on DECN
and orders routed to other market centers for execution. See
Exemption Request at note 4 and accompanying text.
    \10\ See Exemption Request at 3.
---------------------------------------------------------------------------

    ISE noted, further, that DE Holdings has been engaged with the
Commission in the filing of two Form 1 applications (the ``Form 1
Applications'') to register two of DE Holdings' wholly-owned
subsidiaries (the ``Exchange Subsidiaries'') as national securities
exchanges.\11\ According to ISE, DECN intends to file a ``Cessation of
Operations Report'' with the Commission and to cease operations as an
ECN shortly following any Commission approval of the Form 1
Applications.\12\ Also, according to the ISE, approval of the Form 1
Applications would allow the Exchange Subsidiaries to operate in place
of DECN.\13\ Because DECN would cease to operate as an ECN if the
Commission approves the Form 1 Applications, ISE expects that DECN
would operate as a facility of ISE for a relatively brief period of
time.\14\
---------------------------------------------------------------------------

    \11\ See Exemption Request at 2.
    \12\ Id.
    \13\ Id. If the Commission approves the Form 1 Applications,
each of the Exchange Subsidiaries would be registered as a national
securities exchange under Section 6 of the Exchange Act. In
addition, following any Commission approval of the Form 1
Applications and the Exchange Subsidiaries' commencement of
operations as national securities exchanges, DE Holdings would no
longer operate DECN as an ECN and the Facility would cease
operations.
    \14\ Id.
---------------------------------------------------------------------------

    ISE has asked the Commission to exercise its authority under
Section 36 of the Exchange Act and grant the ISE a temporary, 180-day
exemption from the Section 19(b) rule filing requirements that would
apply to DECN as a facility of ISE. The temporary exemption would
commence immediately upon the Closing and would allow DECN to continue
to operate following the Closing, subject to certain conditions, while
DE Holdings prepares the Form 1 Applications. ISE believes that the
temporary exemption will help to ensure an orderly transition from DECN
to the proposed Exchange Subsidiaries.\15\
---------------------------------------------------------------------------

    \15\ Id.
---------------------------------------------------------------------------

    ISE stated, in addition, that the exemption will not diminish the
Commission's ability to monitor ISE and DECN. In this regard, ISE noted
that to the extent that ISE makes changes to its systems, including the
Facility, during the exemption period, or thereafter, it remains
subject to Section 19(b) and thus obligated to file proposed rule
changes with the Commission.\16\ Further, in the Exemption Request, ISE
committed to satisfying certain conditions, which are outlined below.
For example, as a condition to the exemption, ISE will be required to
submit proposed rule changes with respect to any material changes to
DECN's functions during the exemption period.\17\ ISE noted, however,
that neither ISE nor DECN anticipates any material changes to DECN's
functionality during the exemption period.\18\
---------------------------------------------------------------------------

    \16\ See Exemption Request at 3.
    \17\ Id.
    \18\ See Exemption Request at note 3.
---------------------------------------------------------------------------

III. Order Granting Temporary Conditional Section 36 Exemption

    In 1996, Congress gave the Commission greater flexibility to
regulate trading systems, such as DECN, by granting the Commission
broad authority to exempt any person from any of the provisions of the
Exchange Act and to impose appropriate conditions on their
operation.\19\ Specifically, NSMIA added Section 36(a)(1) to the
Exchange Act, which provides that ``the Commission, by rule,
regulation, or order, may conditionally or unconditionally exempt any
person, security, or transaction, or any class or classes of persons,
securities, or transactions, from any provision or provisions of [the
Exchange Act] or of any rule or regulation thereunder, to the extent
that such exemption is necessary or appropriate in the public interest,
and is consistent with the protection of investors.'' \20\ In enacting
Section 36, Congress indicated that it expected that ``the Commission
will use this authority to promote efficiency, competition and capital
formation.'' \21\ It particularly intended to give the Commission
sufficient flexibility to respond to changing market and competitive
conditions:
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78mm(a). Section 36 of the Exchange Act was
enacted as part of the National Securities Markets Improvements Act
1996, Public Law No. 104-290 (``NSMIA'').
    \20\ 15 U.S.C. 78mm(a)(1).
    \21\ H.R. Rep. No. 104-622, 104th Cong., 2d Sess. 38 (1996).

    The Committee recognizes that the rapidly changing marketplace
dictates that effective regulation requires a certain amount of
flexibility. Accordingly, the bill grants the SEC general exemptive
authority under both the Securities Act and the Securities Exchange
Act. This exemptive authority will allow the Commission the
flexibility to explore and adopt new approaches to registration and
disclosure. It will also enable the Commission to address issues
relating to the securities markets more generally. For example, the
SEC could deal with the regulatory concerns raised by the recent
proliferation of electronic trading systems, which do not fit neatly
into the existing regulatory framework.\22\
---------------------------------------------------------------------------

    \22\ S. Rep. No. 104-293, 104th Cong., 2d Sess. 15 (1996).

    In 2004, the Commission exercised its Section 36 exemptive
authority to grant a temporary exemption, subject to certain
conditions, from the Section 19(b) rule filing requirements in
connection with the acquisition by The Nasdaq Stock Market, Inc.
(``Nasdaq'') of Brut, LLC, the operator of the Brut

ECN.\23\ ISE's requested relief for a temporary exemption from the
Section 19(b) rule filing requirements in connection with ISE Holdings'
acquisition of an equity interest in DE Holdings is subject to certain
conditions, as set forth below, that are substantially similar to the
conditions included in the Nasdaq Order.
---------------------------------------------------------------------------

    \23\ See Securities Exchange Act Release No. 50311 (September 3,
2004), 69 FR 54818 (September 10, 2004) (``Nasdaq Order'').
---------------------------------------------------------------------------

    Section 19(b)(1) of the Exchange Act requires a self-regulatory
organization (``self-regulatory organization'' or ``SRO''), including
ISE, to file with the Commission its proposed rule changes accompanied
by a concise general statement of the basis and purpose of the proposed
rule change. Once a proposed rule change has been filed with the
Commission, the Commission is required to publish notice of it and
provide an opportunity for public comment. The proposed rule change may
not take effect unless approved by the Commission by order, unless the
rule change is within the class of rule changes that are effective upon
filing pursuant to Section 19(b)(3)(A) of the Act.\24\
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78s(b)(3)(A).
---------------------------------------------------------------------------

    Section 19(b)(1) of the Exchange Act defines the term ``proposed
rule change'' to mean ``any proposed rule or rule change in, addition
to, or deletion from the rules of [a] self-regulatory organization.''
Pursuant to Section 3(a)(27) and 3(a)(28) of the Exchange Act, the term
``rules of a self-regulatory organization'' means (1) the constitution,
articles of incorporation, bylaws and rules, or instruments
corresponding to the foregoing, of an SRO, and (2) such stated
policies, practices and interpretations of an SRO (other than the
Municipal Securities Rulemaking Board) as the Commission, by rule, may
determine to be necessary or appropriate in the public interest or for
the protection of investors to be deemed to be rules. Rule 19b-4(b)
under the Exchange Act,\25\ defines the term ``stated policy, practice,
or interpretation'' to mean generally ``any material aspect of the
operation of the facilities of the self-regulatory organization or any
statement made available to the membership, participants, or specified
persons thereof that establishes or changes any standard, limit, or
guideline with respect to rights and obligations of specified persons
or the meaning, administration, or enforcement of an existing rule.''
---------------------------------------------------------------------------

    \25\ 17 CFR 240.19b-4(b).
---------------------------------------------------------------------------

    The term ``facility'' is defined in Section 3(a)(2) of the Exchange
Act, with respect to an exchange, to include ``its premises, tangible
or intangible property whether on the premises or not, any right to use
such premises or property or any service thereof for the purpose of
effecting or reporting a transaction on an exchange (including, among
other things, any system of communication to or from the exchange, by
ticker or otherwise, maintained by or with the consent of the
exchange), and any right of the exchange to the use of any property or
service.''
    In its Exemption Request, ISE acknowledged that following the
Closing, DECN will become a facility of ISE because it will be an
affiliate of ISE used for the purpose of effecting and reporting
securities transactions.\26\ Specifically, (1) DECN will continue to
operate as an ECN and will continue to submit limit orders to the
Facility, a facility of ISE, for display and execution; and (2) DECN
will become an affiliate of ISE through ISE Holdings' equity interest
in DE Holdings.\27\ Absent an exemption, Section 19(b) of the Exchange
Act and Rule 19b-4 thereunder would require ISE to file proposed rules
with the Commission to allow ISE to operate DECN as a facility.
---------------------------------------------------------------------------

    \26\ See Exemption Request at 1.
    \27\ See Exemption Request at 1-2.
---------------------------------------------------------------------------

    ISE noted in its Exemption Request that DE Holdings is preparing
Form 1 Applications for the Exchange Subsidiaries and that DECN would
cease operations as an ECN shortly after any Commission approval of the
Form 1 Applications and the Exchange Subsidiaries' commencement of
operations as national securities exchanges.\28\ Accordingly, ISE
expects that DECN would operate as a facility of ISE for a relatively
brief period of time.\29\
---------------------------------------------------------------------------

    \28\ See Exemption Request at 2.
    \29\ Id.
---------------------------------------------------------------------------

    The Commission believes that it is appropriate to issue a temporary
exemption, subject to the conditions described below, to allow DECN to
operate as a facility of ISE without being subject to the rule filing
requirements of Section 19(b) of the Exchange Act for a temporary
period.\30\ Accordingly, the Commission has determined to grant ISE's
request for a temporary exemption, subject to certain conditions, for a
period not to exceed 180 days from the date of the Closing. The
Commission finds that the temporary conditional exemption from the
provisions of Section 19(b) of the Exchange Act is appropriate in the
public interest and is consistent with the protection of investors. In
particular, the Commission believes that the temporary exemption should
help promote efficiency and competition in the market by allowing DECN
to continue to operate as an ECN for a limited period of time while DE
Holdings prepares the Form 1 Applications. In this regard, the
Commission notes ISE's belief that it would be unduly burdensome and
inefficient to require DECN's operating rules to be separately
subjected to the Section 19(b) rule filing and approval process because
DECN would operate only temporarily as a facility of ISE while the
Commission considers the Form 1 Applications.\31\ To provide the
Commission with the opportunity to review and act upon any proposal to
change DECN's fees or to make material changes to DECN's operations as
an ECN during the period covered by the temporary exemption, as well as
to ensure that the Commission's ability to monitor ISE and DECN is not
diminished by the temporary exemption, the Commission is imposing the
following conditions while the temporary exemption is in effect.\32\
The Commission believes such conditions are necessary and appropriate
in the public interest for the protection of investors. Therefore, the
Commission is granting to ISE a temporary exemption, pursuant to
Section 36 of the Exchange Act, from the rule filing requirements
imposed by Section 19(b) of the Exchange Act as set forth above,
provided that ISE and DECN comply with the following conditions:
---------------------------------------------------------------------------

    \30\ In granting this relief, the Commission makes no finding
regarding whether ISE's operation of DECN as a facility would be
consistent with the Exchange Act.
    \31\ In addition, the Commission notes that the rules governing
the operation of the Exchange Subsidiaries will be subjected to
public comment and Commission review and approval as part of the
exchange registration process.
    \32\ See Exemption Request at 3.
---------------------------------------------------------------------------

    (1) DECN remains a registered broker-dealer under Section 15 of the
Exchange Act \33\ and continues to operate as an ECN;
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78o.
---------------------------------------------------------------------------

    (2) DECN operates in compliance with the obligations set forth
under Regulation ATS;
    (3) DECN and ISE continue to operate as separate legal entities;
    (4) ISE files a proposed rule change under Section 19 of the
Exchange Act \34\ if any material changes are sought to be made to
DECN's operations. A material change would include any changes to a
stated policy, practice, or interpretation regarding the operation of
DECN or any other event or action relating to DECN that would require
the filing of a

proposed rule change by an SRO or an SRO facility; \35\
---------------------------------------------------------------------------

    \34\ 15 U.S.C. 78s.
    \35\ See Section 19(b) of the Exchange Act and Rule 19b-4
thereunder. The Commission notes that a material change would
include, among other things, changes to DECN's operating platform;
the types of securities traded on DECN; DECN's types of subscribers;
or the reporting venue for trading that takes place on DECN. The
Commission also notes that any rule filings must set forth the
operation of the DECN facility sufficiently so that the Commission
and the public are able to evaluate the proposed changes.
---------------------------------------------------------------------------

    (5) ISE files a proposed rule change under Section 19 of the
Exchange Act if DECN's fee schedule is sought to be modified; and
    (6) ISE treats DECN the same as other ECNs that participate in the
Facility, and, in particular, ISE does not accord DECN preferential
treatment in how DECN submits orders to the Facility or in the way its
orders are displayed or executed.\36\
---------------------------------------------------------------------------

    \36\ See Exemption Request at 3.
---------------------------------------------------------------------------

    In addition, the Commission notes that the Financial Industry
Regulatory Authority is currently the Designated Examining Authority
for DECN.
    For the reasons discussed above, the Commission finds that the
temporary conditional exemptive relief requested by ISE is appropriate
in the public interest and is consistent with the protection of
investors.
    It is ordered, pursuant to Section 36 of the Exchange Act,\37\ that
the application for a temporary conditional exemption is granted for a
period of 180 days following the Closing, as defined above.
---------------------------------------------------------------------------

    \37\ 15 U.S.C. 78mm.

    By the Commission.
Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-30860 Filed 12-29-08; 8:45 am]

BILLING CODE 8011-01-P