[Federal Register Volume 77, Number 143 (Wednesday, July 25, 2012)]
[Proposed Rules]
[Pages 43547-43550]
[FR Doc No: 2012-18147]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2012-0723; Directorate Identifier 2011-NM-137-AD]
RIN 2120-AA64

Airworthiness Directives; The Boeing Company Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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

SUMMARY: We propose to adopt a new airworthiness directive (AD) for
certain The Boeing Company Model 737-600, -700, -700C, -800, and -900
series airplanes. This proposed AD was prompted by a report of cracks
found in the skin at body station (STA) 540 just below stringer S-22L
on a Model 737-700 series airplane. This proposed AD would require
repetitive detailed and high frequency eddy current inspections for
cracking of the skin around the eight fasteners common to the ends of
the STA 540 bulkhead chords between stringers S-22 and S-23, left and
right sides; and corrective actions and preventive modification if
necessary. We are proposing this AD to detect and correct fatigue
cracking in the skin, which can result in rapid decompression of the
cabin.

DATES: We must receive comments on this proposed AD by September 10,
2012.

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 proposed 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 Avenue SW., Renton, WA. 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: Alan Pohl, Aerospace Engineer,
Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office,
1601 Lind Avenue SW., Renton, WA 98057-3356; phone:<PHONE_NUMBER>; fax:
425-917-6590; email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite 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-2012-0723;
Directorate Identifier 2011-NM-137-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

    We received a report of cracks found in the skin at body station
(STA) 540 just below stringer S-22L on a Model 737-700 series airplane.
Subsequent investigation revealed that the design at the STA 540
bulkhead chords has insufficient load path where the chords meet
between stringers S-22 and S-23 on both the left and right sides of the
airplane. This condition, if not corrected, could result in fatigue
cracking in the skin, which can result in rapid decompression of the
cabin.

Relevant Service Information

    We reviewed Boeing Special Attention Service Bulletin 737-53-1294,
dated March 31, 2011. The service information describes procedures for
repetitive detailed and high frequency eddy current (HFEC) inspections
for cracking of the skin around the eight fasteners common to the ends
of the STA 540 bulkhead chords between stringers S-22 and S-23, and
corrective actions and preventive modification if necessary. The
preventive modification includes doing an open-hole HFEC inspection for
cracking of the skin and STA 540 bulkhead chords, installing a new
chord splice plate, and repair if necessary. The corrective actions
include repairing cracking, and doing preventive modifications on any
side on which cracking is not found.

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 these same type
designs.

Proposed AD Requirements

    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.''

Differences Between the Proposed AD and the Service Information

    Boeing Special Attention Service Bulletin 737-53-1294, dated March
31, 2011, 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.

Clarification of Repetitive Inspections

    The Repeat Interval column of table 1 of paragraph 1.E.,
``Compliance,'' of Boeing Special Attention Service Bulletin 737-53-
1294, dated March 31, 2011, specifies repetitive detailed and HFEC
inspections at intervals not to exceed 4,000 flight cycles, and the
Accomplishment Instructions of Boeing Special Attention Service
Bulletin 737-53-1294, dated March 31, 2011, specify repetitive detailed
inspections only. We have determined that doing both repetitive
detailed and HFEC inspections is necessary to address the unsafe
condition of this AD.

Clarification of Post-Repair Inspections

    Paragraph (j), and Note 1 to paragraph (j), of this proposed AD
clarify that the post-repair inspections specified in Table 2 of
paragraph 1.E., ``Compliance,'' of Boeing Special Attention Service
Bulletin 737-53-1294, dated March 31, 2011, are not required by this
proposed AD.

Costs of Compliance

    We estimate that this proposed AD affects 903 airplanes of U.S.
registry.
    We estimate the following costs to comply with this proposed AD:

                                                 Estimated Costs
----------------------------------------------------------------------------------------------------------------
            Action                Labor cost      Parts cost   Cost per product       Cost on U.S. operators
----------------------------------------------------------------------------------------------------------------
Inspection (left and right     3 work-hours x             $0   $255 per          $230,265 per inspection cycle.
 sides).                        $85 per hour =                  inspection
                                $255 per                        cycle.
                                inspection
                                cycle.
----------------------------------------------------------------------------------------------------------------

    We estimate the following costs to do any necessary repairs and
inspections that would be required based on the results of the proposed
inspection. We have no way of determining the number of aircraft that
might need these repairs:

                                               On-Condition Costs
----------------------------------------------------------------------------------------------------------------
               Action                       Labor cost               Parts cost            Cost per  product
----------------------------------------------------------------------------------------------------------------
Preventive modification (each side).  6 work-hours x $85 per  $894                     $1,404.
                                       hour = $510.
Skin repair (each side).............  55 work-hours x $85     Up to $5,635             Up to $10,310.
                                       per hour = $4,675.
----------------------------------------------------------------------------------------------------------------

    According to the manufacturer, some of the costs of this proposed
AD may be covered under warranty, thereby reducing the cost impact on
affected individuals. We do not control warranty coverage for affected
individuals. As a result, we have included all costs in our 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.
    We are issuing this rulemaking under the authority described in
Subtitle VII, Part A, Subpart III, Section 44701: ``General
requirements.'' Under that section, Congress charges the FAA with
promoting safe flight of civil aircraft in air commerce by prescribing
regulations for practices, methods, and procedures the Administrator
finds necessary for safety in air commerce. This regulation is within
the scope of that authority because it addresses an unsafe condition
that is likely to exist or develop on products identified in this
rulemaking action.

Regulatory Findings

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

List of Subjects in 14 CFR Part 39

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

The Proposed Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

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

The Boeing Company: Docket No. FAA-2012-0723; Directorate Identifier
2011-NM-137-AD.

(a) Comments Due Date

    We must receive comments by September 10, 2012.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to The Boeing Company Model 737-600, -700, -
700C, -800, and -900 series airplanes; certificated in any category;
as identified in Boeing Special Attention Service Bulletin 737-53-
1294, dated March 31, 2011.

(d) Subject

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

(e) Unsafe Condition

    This AD was prompted by a report of cracks found in the skin at
body station (STA) 540 just below stringer S-22L. We are issuing
this AD to detect and correct fatigue cracking in the skin, which
can result in rapid decompression of the cabin.

(f) Compliance

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

(g) Inspection and Corrective Action

    (1) Except as required by paragraphs (g)(2), (i)(2), (i)(3), and
(i)(4) of this AD, at the applicable time specified in table 1 of
paragraph 1.E. ``Compliance,'' of Boeing Special Attention Service
Bulletin 737-53-1294, dated March 31, 2011: Do detailed and high
frequency eddy current (HFEC) inspections of the skin for cracking
in the area around the eight fasteners securing the STA 540 bulkhead
chords between stringers S-22 and S-23, and do all applicable
corrective actions, in accordance with Parts 1, 2, 3, 4, and 5 of
the Accomplishment Instructions of Boeing Special Attention Service
Bulletin 737-53-1294, dated March 31, 2011, except as required by
paragraph (i)(1) of this AD. If no cracking is found, repeat the
detailed and HFEC inspections at the intervals specified in table 1
of paragraph 1.E., ``Compliance,'' of Boeing Special Attention
Service Bulletin 737-53-1294, dated March 31, 2011, except as
required by paragraph (g)(2) of this AD, until the optional
preventive modification specified in paragraph (h) of this AD is
done. Do all applicable corrective actions before further flight.
    (2) For airplanes that have incorporated Boeing Business Jet
Lower Cabin Altitude Supplemental Type Certificate (STC) ST01697SE
(6,500 feet maximum cabin altitude in lieu of 8,000 feet), the
flight-cycle related compliance times are different from those
specified in Boeing Special Attention Service Bulletin 737-53-1294,
dated March 31, 2011. All initial compliance times specified in
total flight cycles or flight cycles must be reduced to half of
those specified in Boeing Special Attention Service Bulletin 737-53-
1294, dated March 31, 2011. All repetitive interval compliance times
specified in flight cycles must be reduced to one-quarter of those
specified in Boeing Special Attention Service Bulletin 737-53-1294,
dated March 31, 2011.

(h) Optional Preventive Modification

    Accomplishing the preventive modification, including an HFEC
inspection for cracking of the skin and STA 540 bulkhead chords, and
all applicable repairs, in accordance with paragraph 3.B, Part 2 or
Part 4 (left side), and Part 3 or Part 5 (right side), of the
Accomplishment Instructions of Boeing Special Attention Service
Bulletin 737-53-1294, dated March 31, 2011, terminates the
inspection requirements of paragraph (g) of this AD for the side on
which the modification is done, except as required by paragraph
(i)(1) of this AD.

(i) Exceptions to Service Bulletin Specifications

    (1) If any cracking is found during any inspection required by
this AD, and Boeing Special Attention Service Bulletin 737-53-1294,
dated March 31, 2011, specifies to contact Boeing for appropriate
action: Before further flight, repair using a method approved in
accordance with the procedures specified in paragraph (k) of this
AD.

    (2) Where Boeing Special Attention Service Bulletin 737-53-1294,
dated March 31, 2011, specifies to do the action after the original
issue date of that service bulletin, this AD requires the compliance
time after the effective date of this AD.
    (3) Where the Condition column of table 1 of paragraph 1.E.,
``Compliance,'' of Boeing Special Attention Service Bulletin 737-53-
1294, dated March 31, 2011, specifies a condition as of the original
issue date of that service bulletin, this AD specifies the condition
as of the effective date of this AD.
    (4) Note 1 of paragraph 3.A. of the Accomplishment Instructions
of Boeing Special Attention Service Bulletin 737-53-1294, dated
March 31, 2011, is to be disregarded when accomplishing the actions
required by this AD.

(j) Post-Repair Inspections

    The post-repair inspections, specified in Table 2 of paragraph
1.E., ``Compliance,'' of Boeing Special Attention Service Bulletin
737-53-1294, dated March 31, 2011, are not required by this AD.

    Note 1 to paragraph (j) of this AD: The damage tolerance
inspections specified in Table 2 of paragraph 1.E., ``Compliance,''
of Boeing Special Attention Service Bulletin 737-53-1294, dated
March 31, 2011, may be used in support of compliance with Section
121.1109(c)(2) or 129.109(c)(2) of the Federal Aviation Regulations
(14 CFR 121.1109(c)(2) or 14 CFR 129.109(c)(2)). The corresponding
actions specified in the Accomplishment Instructions of Boeing
Special Attention Service Bulletin 737-53-1294, dated March 31,
2011, are not required by this AD.

(k) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Seattle ACO, 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
ACO, it 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 Organization Designation Authorization
(ODA) that has been authorized by the Manager, Seattle Aircraft
Certification Office (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.

(l) Related Information

    (1) For more information about this AD, contact Alan Pohl,
Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft
Certification Office, 1601 Lind Avenue SW., Renton, WA 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, WA 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, WA. For information on the availability of
this material at the FAA, call<PHONE_NUMBER>.

    Issued in Renton, Washington, on July 17, 2012.
Michael Kaszycki,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 2012-18147 Filed 7-24-12; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 83, Number 234 (Thursday, December 6, 2018)]
[Rules and Regulations]
[Pages 62697-62700]
[FR Doc No: 2018-26365]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2018-0960; Product Identifier 2018-NM-151-AD; Amendment
39-19512; AD 2018-23-51]
RIN 2120-AA64

Airworthiness Directives; The Boeing Company Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule; request for comments.

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

SUMMARY: We are adopting a new airworthiness directive (AD) for all The
Boeing Company Model 737-8 and -9 airplanes. This emergency AD was sent
previously to all known U.S. owners and operators of these airplanes.
This AD requires revising certificate limitations and operating
procedures of the airplane flight manual (AFM) to provide the flight
crew with runaway horizontal stabilizer trim procedures to follow under
certain conditions. This AD was prompted by analysis performed by the
manufacturer showing that if an erroneously high single angle of attack
(AOA) sensor input is received by the flight control system, there is a
potential for repeated nose-down trim commands of the horizontal
stabilizer. We are issuing this AD to address the unsafe condition on
these products.

DATES: This AD is effective December 21, 2018 to all persons except
those persons to whom it was made immediately effective by Emergency AD
2018-23-51, issued on November 7, 2018, which contained the
requirements of this amendment.
    We must receive comments on this AD by January 22, 2019.

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.

Examining the AD Docket

    You may examine the AD docket on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2018-
0960; 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, the regulatory evaluation, any comments received, and
other information. The street address for Docket Operations (phone:
800-647-5527) is in the ADDRESSES section. Comments will be available
in the AD docket shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Douglas Tsuji, Senior Aerospace
Engineer, Systems and Equipment Section, FAA, Seattle ACO Branch, 2200
South 216th St., Des Moines, WA 98198; phone and fax:<PHONE_NUMBER>;
email: [email protected].

SUPPLEMENTARY INFORMATION:

Discussion

    On November 7, 2018, we issued Emergency AD 2018-23-51, which
requires revising certificate limitations and operating procedures of
the AFM to provide the flight crew with runaway horizontal stabilizer
trim procedures to follow under certain conditions. This emergency AD
was sent previously to all known U.S. owners and operators of these
airplanes. This action was prompted by analysis performed by the
manufacturer showing that if an erroneously high single AOA sensor
input is received by the flight control system, there is a potential
for repeated nose-down trim commands of the horizontal stabilizer. This
condition, if not addressed, could cause the flight crew to have
difficulty controlling the airplane, and lead to excessive nose-down
attitude, significant altitude loss, and possible impact with terrain.

FAA's Determination

    We are issuing 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.

AD Requirements

    This AD requires revising certificate limitations and operating
procedures of the AFM to provide the flight crew with runaway
horizontal stabilizer trim procedures to follow under certain
conditions.

Interim Action

    We consider this AD interim action. If final action is later
identified, we might consider further rulemaking then.

FAA's Determination of the Effective Date

    An unsafe condition exists that requires the immediate adoption of
Emergency AD 2018-23-51, issued on November 7, 2018, to all known U.S.
owners and operators of these airplanes. The FAA found that the risk to
the flying public justified waiving notice and comment prior to
adoption of this rule because an erroneously high single AOA sensor
input received by the flight control system can result in a potential
for repeated nose-down trim commands of the horizontal stabilizer,
which could cause the flight crew to have difficulty controlling the
airplane, and lead to excessive nose-down attitude, significant
altitude loss, and possible impact with terrain. These conditions still
exist and the AD is hereby published in the Federal Register as an
amendment to section 39.13 of the Federal Aviation Regulations (14 CFR
39.13) to make it effective to all persons. Therefore, we find good
cause that notice and opportunity for prior public comment are
impracticable. In addition, for the reason(s) stated above, we find
that good cause exists for making this amendment effective in less than
30 days.

Comments Invited

    This AD is a final rule that involves requirements affecting flight
safety and was not preceded by notice and an opportunity for public
comment. However, we invite you to send any written data, views, or
arguments about

this final rule. Send your comments to an address listed under the
ADDRESSES section. Include the docket number FAA-2018-0960 and Product
Identifier 2018-NM-151-AD at the beginning of your comments. We
specifically invite comments on the overall regulatory, economic,
environmental, and energy aspects of this final rule. We will consider
all comments received by the closing date and may amend this final rule
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 final rule.

Costs of Compliance

    We estimate that this AD affects 45 airplanes of U.S. registry. We
estimate the following costs to comply with this AD:

                                      Estimated Costs for Required Actions
----------------------------------------------------------------------------------------------------------------
                                                                                Cost per      Cost on U.S.
                Action                         Labor cost           Parts cost        product        operators
----------------------------------------------------------------------------------------------------------------
Revising the AFM......................  1 work-hour x $85 per                 $0             $85          $3,825
                                         hour = $85.
----------------------------------------------------------------------------------------------------------------

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.
    This AD is issued in accordance with authority delegated by the
Executive Director, Aircraft Certification Service, as authorized by
FAA Order 8000.51C. In accordance with that order, issuance of ADs is
normally a function of the Compliance and Airworthiness Division, but
during this transition period, the Executive Director has delegated the
authority to issue ADs applicable to transport category airplanes and
associated appliances to the Director of the System Oversight Division.

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) Is not a ``significant rule'' under 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.

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):

2018-23-51 The Boeing Company: Amendment 39-19512; Docket No. FAA-
2018-0960; Product Identifier 2018-NM-151-AD.

(a) Effective Date

    This AD is effective December 21, 2018 to all persons except
those persons to whom it was made immediately effective by Emergency
AD 2018-23-51, issued on November 7, 2018, which contained the
requirements of this amendment.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to all The Boeing Company Model 737-8 and -9
airplanes, certificated in any category.

(d) Subject

    Air Transport Association (ATA) of America Code 27, Flight
controls.

(e) Unsafe Condition

    This AD was prompted by analysis performed by the manufacturer
showing that if an erroneously high single angle of attack (AOA)
sensor input is received by the flight control system, there is a
potential for repeated nose-down trim commands of the horizontal
stabilizer. We are issuing this AD to address this potential
resulting nose-down trim, which could cause the flight crew to have
difficulty controlling the airplane, and lead to excessive nose-down
attitude, significant altitude loss, and possible impact with
terrain.

(f) Compliance

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

(g) Revision of Airplane Flight Manual (AFM): Certificate Limitations

    Within 3 days after the effective date of this AD, revise the
Certificate Limitations chapter of the applicable AFM to include the
information in figure 1 to paragraph (g) of this AD.

[GRAPHIC] [TIFF OMITTED] TR06DE18.000

(h) AFM Revision: Operating Procedures

    Within 3 days after the effective date of this AD, revise the
Operating Procedures chapter of the applicable AFM to include the
information in figure 2 to paragraph (h) of this AD.

[GRAPHIC] [TIFF OMITTED] TR06DE18.001

 (i) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Seattle 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 protected].
    (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 Douglas Tsuji,
Senior Aerospace Engineer, Systems and Equipment Section, FAA,
Seattle ACO Branch, 2200 South 216th St., Des Moines, WA 98198;
phone and fax:<PHONE_NUMBER>; email: [email protected].

(k) Material Incorporated by Reference

    None.

    Issued in Des Moines, Washington, on November 21, 2018.
Michael Kaszycki,
Acting Director, System Oversight Division, Aircraft Certification
Service.
[FR Doc. 2018-26365 Filed 12-4-18; 8:45 am]
 BILLING CODE 4910-13-P


[Federal Register Volume 86, Number 102 (Friday, May 28, 2021)]
[Notices]
[Pages 28829-28830]
[FR Doc No: 2021-11371]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OPP-2021-0306; FRL-10023-48]

Dinotefuran; Receipt of Applications for Emergency Exemption,
Solicitation of Public Comment

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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SUMMARY: EPA has received specific exemption requests from the
Pennsylvania Department of Agriculture and the Virginia Department of
Agriculture and Consumer Services to use the pesticide dinotefuran (CAS
No. 165252-70-0) to treat up to 25,000 and 29,000 acres, respectively,
of pome and stone fruits to control the brown marmorated stinkbug. The
applicants propose uses which are supported by the Interregional
Research Project Number 4 (IR4) program and have been requested in 5 or
more previous years, and petitions for tolerances have not yet been
submitted to the Agency. Therefore, as required, EPA is soliciting
public comment before making the decision whether or not to grant the
exemptions.

DATES: Comments must be received on or before June 14, 2021.

ADDRESSES: The docket for these actions, identified by docket
identification (ID) number EPA-HQ-OPP-2021-0306, is available at http://www.regulations.gov or at the Office of Pesticide Programs Regulatory
Public Docket (OPP Docket) in the Environmental Protection Agency
Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334,
1301 Constitution Ave. NW, Washington, DC 20460-0001. The Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is<PHONE_NUMBER>, and the telephone number for the OPP
Docket is<PHONE_NUMBER>.

    Due to the public health concerns related to COVID-19, the EPA
Docket Center (EPA/DC) and Reading Room is closed to visitors with
limited exceptions. The staff continues to provide remote customer
service via email, phone, and webform. For the latest status
information on EPA/DC services and docket access, visit https://www.epa.gov/dockets. Submit your comments, identified by docket ID
number EPA-HQ-OPP-2021-0306, by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments. Do not submit
electronically any information you consider to be Confidential Business
Information (CBI) or other information whose disclosure is restricted
by statute.
     Mail: OPP Docket, Environmental Protection Agency Docket
Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW, Washington, DC
20460-0001.
     Hand Delivery: To make special arrangements for hand
delivery or delivery of boxed information, please follow the
instructions at https://www.epa.gov/dockets/where-send-comments-epa-dockets. Additional instructions on commenting or visiting the docket,
along with more information about dockets generally, is available at
http://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT: Marietta Echeverria, Registration
Division (7505P), Office of Pesticide Programs, Environmental
Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-
0001; main telephone number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    You may be potentially affected by these actions if you are an
agricultural producer, food manufacturer, or pesticide manufacturer.
The following list of North American Industrial Classification System
(NAICS) codes is not intended to be exhaustive, but rather provides a
guide to help readers determine whether this document applies to them.
Potentially affected entities may include:
     Crop production (NAICS code 111).
     Animal production (NAICS code 112).
     Food manufacturing (NAICS code 311).
     Pesticide manufacturing (NAICS code 32532).

B. What should I consider as I prepare my comments for EPA?

    1. Submitting CBI. Do not submit this information to EPA through
www.regulations.gov or email. Clearly mark the part or all of the
information that you claim to be CBI. For CBI information in a disk or
CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as
CBI and then identify electronically within the disk or CD-ROM the
specific information that is claimed as CBI. In addition to one
complete version of the comment that includes information claimed as
CBI, a copy of the comment that does not contain the information
claimed as CBI must be submitted for inclusion in the public docket.
Information so marked will not be disclosed except in accordance with
procedures set forth in 40 CFR part 2.
    2. Tips for preparing your comments. When preparing and submitting
your comments, see the commenting tips at http://www.epa.gov/dockets/comments.html.
    3. Environmental justice. EPA seeks to achieve environmental
justice, the fair treatment and meaningful involvement of any group,
including minority and/or low income populations, in the development,
implementation, and enforcement of environmental laws, regulations, and
policies. To help address potential environmental justice issues, the
Agency seeks information on any groups or segments of the population
who, as a result of their location, cultural practices, or other
factors, may have atypical or disproportionately high and adverse human
health impacts or environmental effects from exposure to the
pesticide(s) discussed in this document, compared to the general
population.

II. What action is the Agency taking?

    Under section 18 of the Federal Insecticide, Fungicide, and
Rodenticide Act (FIFRA) (7 U.S.C. 136p), at the discretion of the EPA
Administrator, a Federal or State agency may be exempted from any
provision of FIFRA if the EPA Administrator determines that emergency
conditions exist which require the exemption. The Pennsylvania
Department of Agriculture and the Virginia Department of Agriculture
and Consumer Services have requested the EPA Administrator to issue
specific exemptions for the use of dinotefuran on pome and stone fruits
to control the brown marmorated stinkbug. Information in accordance
with 40 CFR part 166 was submitted as part of the requests.
    As part of the requests, the applicants assert that the rapid
spread of large outbreaks of the brown marmorated stinkbug (an invasive
species) has resulted in an urgent and non-routine pest control
situation that is expected to cause significant economic losses without
the requested uses.
    The Applicants propose to make no more than two applications at a
rate of 0.203 to 0.304 lb. (maximum total of 0.608 lb.) of dinotefuran
per acre on up to 54,000 acres of pome and stone fruits grown in
Pennsylvania and Virginia, from May 15 to October 15, 2021. A total of
32,832 lbs. of dinotefuran could be used (maximum acreage at highest
rate).
    This notice does not constitute a decision by EPA on the
applications themselves. The regulations governing FIFRA section 18
require publication of a notice of receipt of an application for a
specific exemption proposing a use which is supported by the IR4
program and has been requested in 5 or more previous years, and a
petition for tolerance has not yet been submitted to the Agency. The
notice provides an opportunity for public comment on the application.
    The Agency will review and consider all comments received during
the comment period in determining whether to issue the specific
exemptions requested by the Pennsylvania Department of Agriculture and
the Virginia Department of Agriculture and Consumer Services, as well
as any subsequent specific exemption applications submitted by other
state lead agencies.

(Authority: 7 U.S.C. 136 et seq.)

    Dated: May 19, 2021.
Marietta Echeverria,
Director, Registration Division, Office of Pesticide Programs.
[FR Doc. 2021-11371 Filed 5-27-21; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 88, Number 57 (Friday, March 24, 2023)]
[Notices]
[Pages 17886-17891]
[FR Doc No: 2023-06057]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97169; File No. SR-ICEEU-2023-004]

Self-Regulatory Organizations; ICE Clear Europe Limited; Order
Approving Proposed Rule Change Relating to Amendments to the ICE Clear
Europe Counterparty Credit Risk Policy and Counterparty Credit Risk
Procedures

March 20, 2023.

I. Introduction

    On January 20, 2023, ICE Clear Europe Limited (``ICE Clear
Europe'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4,\2\ a proposed
rule change to amend its Counterparty Credit Risk Policy (the ``CC Risk
Policy'') and Counterparty Credit Risk Procedures (the ``CC Risk
Procedures''). The proposed rule change was published for comment in
the Federal Register on

February 7, 2023.\3\ The Commission did not receive comments regarding
the proposed rule change. For the reasons discussed below, the
Commission is approving the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Self-Regulatory Organizations; ICE Clear Europe Limited;
Notice of Filing of Proposed Rule Change Relating to Amendments to
the ICE Clear Europe Counterparty Credit Risk Policy and
Counterparty Credit Risk Procedures, Exchange Act Release No. 96787
(Feb. 1, 2023); 88 FR 8018 (Feb. 7, 2023) (SR-ICEEU-2023-004)
(``Notice'').
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II. Description of the Proposed Rule Change

i. Background

    ICE Clear Europe is registered with the Commission as a clearing
agency for the purpose of clearing security-based swaps. In its role as
a clearing agency for clearing security-based swaps, ICE Clear Europe
provides services to its Clearing Members and receives banking,
investment, custody, and other financial services from its Financial
Service Providers (``FSPs'').\4\ In providing services to Clearing
Members and receiving services from FSPs, ICE Clear Europe is exposed
to counterparty risk. Counterparty risk is the risk that ICE Clear
Europe suffers financial losses if a Clearing Member or FSP defaults on
its obligations to ICE Clear Europe.
---------------------------------------------------------------------------

    \4\ Capitalized terms not otherwise defined herein have the
meanings assigned to them in the CC Risk Policy and CC Risk
Procedures.
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    In 2021, ICE Clear Europe adopted the CC Risk Policy and CC Risk
Procedures.\5\ The CC Risk Policy and CC Risk Procedures describe how
ICE Clear Europe identifies, monitors, and mitigates counterparty risk.
In addition to the CC Risk Policy and CC Risk Procedures, ICE Clear
Europe has also established a Counterparty Credit Risk Parameters
document (the ``CC Risk Parameters'').\6\
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    \5\ See Self-Regulatory Organizations; ICE Clear Europe Limited;
Order Approving Proposed Rule Change Relating to Adoption of the
Counterparty Credit Risk Policy and Counterparty Credit Risk
Procedures, Exchange Act Release No. 93880 (Dec. 30, 2021), 87 FR
513 (Jan. 5, 2022) (SR-ICEEU-2021-015) (``2021 Approval Order'').
    \6\ ICE Clear Europe included the CC Risk Parameters as a
confidential Exhibit 3 to this filing and the 2021 Approval Order.
The CC Risk Parameters contain details relevant to the processes set
out in the CC Risk Policy and CC Risk Procedures. For example, the
CC Risk Parameters contain the credit eligibility criteria that ICE
Clear Europe uses to assess prospective counterparties.
---------------------------------------------------------------------------

    The proposed rule change would amend the CC Risk Policy and the CC
Risk Procedures to make a number of improvements to the versions
adopted in 2021. As described more fully below, the proposed rule
change would: (i) apply both documents to the risks arising from Links;
\7\ (ii) revise credit eligibility criteria; (iii) clarify how
frequently ICE Clear Europe reviews counterparties; (iv) add a new
defined term for Systemically Important Institution; (v) consider the
risks arising from cross-exposures and off-boarding; (vi) specify
additional mitigating actions ICE Clear Europe may take in certain
circumstances; and (vii) revise description of ICE Clear Europe's
Counterparty Rating System.\8\
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    \7\ The proposed rule change would adopt the definition of
``Link'' as found in Rule 17Ad-22(a)(8). Rule 17Ad-22(a)(8) defines
a ``Link'' as ``a set of contractual and operational arrangements
between two or more clearing agencies, financial market utilities,
or trading markets that connect them directly or indirectly for the
purposes of participating in settlement, cross margining, expanding
their services to additional instruments or participants, or for any
other purposes material to their business.'' 17 CFR 240.17Ad-
22(a)(8).
    \8\ The Counterparty Rating System is the system that ICE Clear
Europe uses to model and determine a counterparty's risk. ICE Clear
Europe uses the Counterparty Rating System to calculate a credit
score, and this credit score represents a counterparty's risk, in
terms of its overall credit quality.
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ii. Links

    Currently, both the CC Risk Policy and the CC Risk Procedures
define counterparty credit risk in relation to Clearing Members and
FSPs. Specifically, both documents define counterparty credit risk as
(i) the risk that a Clearing Member misses its next payment to ICE
Clear Europe, leaving ICE Clear Europe under-collateralized and
therefore increasing the risk of using the Guaranty Fund contributions
of other Clearing Members and ICE Clear Europe to manage a potential
default of that Clearing Member and (ii) the risk that a FSP defaults
without returning cash to ICE Clear Europe, leaving ICE Clear Europe
with a loss on its investments or expected return of cash. The proposed
rule change would expand the definition of counterparty credit risk, in
both the CC Risk Policy and the CC Risk Procedures, to include the risk
that a Link defaults, leaving ICE Clear Europe to fund material
contractual or operational arrangements associated with that Link.
    In addition to taking into account the risks arising from Links,
the proposed rule change would revise the overall objective of ICE
Clear Europe's counterparty credit risk management to include
minimizing the risk arising from a Link defaulting. The current CC Risk
Policy provides that the objective of ICE Clear Europe's counterparty
credit risk management is minimizing the risk of ICE Clear Europe being
materially under-collateralized as a result of a CM defaulting, or
realizing a material loss due to an FSP defaulting. The proposed change
would add Links to this objective, such that ICE Clear Europe's
objective would include minimizing the risk of loss due to a Link
defaulting.
    While revising the objective of ICE Clear Europe's counterparty
credit risk management to include Links, the proposed rule change also
would revise how ICE Clear Europe achieves this objective to include
Links. Currently, ICE Clear Europe minimizes counterparty credit risk
through the following actions: (i) setting and monitoring credit
criteria for counterparties; (ii) establishing a credit score for each
counterparty that represents each counterparty's credit risk and
classifying each counterparty in relation to the risk it poses; (iii)
taking mitigating actions to reduce ICE Clear Europe's exposure; (iv)
performing reviews of counterparties; and (v) setting and monitoring
exposure limits for counterparties. The proposed rule change would add
to this list identifying, monitoring, and managing risks from Links.
Thus, in addition to taking the actions set forth above to minimize
counterparty risk, under the proposed rule change, ICE Clear Europe
also would identify, monitor, and mange risks from Links.
    Similarly, the proposed rule change would add to ICE Clear Europe's
mitigating actions certain actions specific to Links. The CC Risk
Policy lists certain mitigating actions that ICE Clear Europe may take
to reduce its exposure to a counterparty. These actions include, among
other things, requiring a Clearing Member to reduce its positions and
changing ICE Clear Europe's usage of a FSP. The proposed rule change
would add to this list of mitigating actions changing ICE Clear
Europe's usage of a Link, which ICE Clear Europe could undertake to
reduce its exposure to a Link.
    In addition to revising the definition of counterparty risk, the
counterparty risk management objective, and the list of mitigating
actions, the proposed rule change also would revise how ICE Clear
Europe monitors counterparties to account for Links. As mentioned
above, currently ICE Clear Europe uses its Counterparty Rating System
to calculate a credit score that represents a counterparty's risk, in
terms of the overall credit quality of the counterparty. Under the
proposed rule change, ICE Clear Europe would continue to use its
Counterparty Rating System to calculate credit scores. The proposed
rule change would add language to the CC Risk Policy and CC Risk
Parameters, however, to note that ICE Clear Europe may use its
Counterparty Rating System or related credit criteria to represent the
credit quality of counterparties. The new

reference to related credit criteria captures the fact that ICE Clear
Europe may need to consider additional credit criteria to fully
consider the risks of Links. This additional credit criteria could
include, for example, the nature of a Link's operational arrangement
with ICE Clear Europe. Similarly, the proposed rule change would add
language to the Counterparty Credit Risk Procedures to note that, in
addition to monitoring counterparties through credit scores, ICE Clear
Europe may monitor counterparties through public news sources. Public
news sources could provide insight into events affecting the financial
standing of Links.

iii. Credit Eligibility Criteria

    ICE Clear Europe assesses prospective counterparties against
certain credit eligibility criteria. The criteria that ICE Clear Europe
uses for this assessment are set out in the CC Risk Parameters.
Overall, ICE Clear Europe uses this assessment against the credit
eligibility criteria to assess the financial stability of Clearing
Members and FSPs.\9\
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    \9\ See 2021 Approval Order, 87 FR at 514.
---------------------------------------------------------------------------

    The current CC Risk Procedures note that, as part of this
assessment, FSPs must be legal entities in approved jurisdictions and
comply with the credit eligibility criteria and Unsecured Credit Limits
found in the CC Risk Parameters. The proposed rule change would revise
this language to state that in addition to complying with the credit
eligibility criteria and Unsecured Credit Limits found in CC Risk
Parameters, ICE Clear Europe screens FSPs for Know-Your-Customer
(``KYC'') and Anti-Money Laundering (``AML'') purposes to confirm they
are not registered in countries subject to monitoring by the Financial
Action Task Force \10\ and to confirm that they have appropriate KYC
processes. ICE Clear Europe is making this change to codify in the CC
Risk Procedures its current practice of screening FSPs with respect to
KYC and AML requirements.\11\
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    \10\ The Financial Action Task Force is an intergovernmental
organization founded in 1989 on the initiative of the G7. It
develops policies and international standards to prevent money
laundering and terrorist financing. See https://www.fatf-gafi.org/en/home.html.
    \11\ Notice, 88 FR at 8018.
---------------------------------------------------------------------------

    Moreover, the proposed rule change would add language to note that
agreements with FSPs are subject to review by ICE Clear Europe's legal
team, and this review includes consideration of legal risk associated
with the governing law of the relevant agreement and the jurisdiction
of the FSP. This new language would replace the statement, found in the
current CC Risk Procedures, that FSPs must be legal entities in
approved jurisdictions. Rather than only requiring FSPs be legal
entities in approved jurisdictions, in practice ICE Clear Europe's
legal team analyzes each agreement ICE Clear Europe has with its FSPs
and considers the legal risk arising from the governing law of the
agreement and the jurisdiction of the FSP. Thus, the new language would
better describe ICE Clear Europe's current practice and codify this
practice in the CC Risk Procedures.\12\
---------------------------------------------------------------------------

    \12\ Notice, 88 FR at 8018.
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    Finally, the proposed rule change would note that all of the credit
eligibility criteria, which ICE Clear Europe uses in assessing
prospective counterparties, would be reviewed periodically. This change
to the CC Risk Procedures would codify a periodic review requirement
that is currently set out the CC Risk Parameters. That document sets
out the frequency of reviews of the credit eligibility criteria as well
as the ICE Clear Europe personnel responsible for conducting and
approving such reviews. Specifically, the CC Risk Parameters contain a
list of various minimum credit ratings that counterparties should meet,
and provide that this criteria will be reviewed annually by ICE Clear
Europe's Executive Risk Committee.

iv. Frequency of Reviews

    The proposed rule change would remove certain duplicative
requirements from the CC Risk Procedures. As part of its monitoring of
counterparty risk, ICE Clear Europe reviews prospective and current
counterparties. These reviews consist of, among other actions,
calculating credit scores for each counterparty and reviewing limits on
ICE Clear Europe's financial exposure to a counterparty.\13\
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    \13\ See 2021 Approval Order, 87 FR at 514.
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    The current CC Risk Procedures contain duplicative requirements
concerning credit scores, continuous monitoring, the watch list, and
exposure limits. The current CC Risk Procedures provide, in Section
2.3.1, that ICE Clear Europe uses its Counterparty Rating System to
calculate credit scores for each counterparty on each day. The current
CC Risk Procedures provide, in Section 2.4, that continuous monitoring
is conducted daily and the Watch List and exposure limits are reviewed
weekly, monthly and quarterly.
    With respect to Section 2.3.1, the proposed rule change would
delete ``on each day'' and replace it with ``periodically.'' As
amended, Section 2.3.1 would therefore state that ICE Clear Europe uses
its Counterparty Rating System to calculate credit scores for each
Counterparty periodically as set out in the Parameters. With respect to
Section 2.4, the proposed rule change would delete ``weekly.'' As
amended, Section 2.4 would state that continuous monitoring is
conducted daily and the Watch List and exposure limits are reviewed
monthly and quarterly.
    With respect to both changes, ICE Clear Europe maintains that it is
not decreasing the frequency of its reviews.\14\ Rather, ICE Clear
Europe is amending Section 2.3.1 to rely instead on the general
statement in Section 2.4 that continuous monitoring is conducted daily.
Thus, Section 2.4 would control, and ICE Clear Europe would still
calculate credit scores on a daily basis, despite replacing ``on each
day'' with ``periodically'' in Section 2.3.1. Moreover, ICE Clear
Europe maintains that under amended Section 2.4, it would still conduct
continuous monitoring and risk reviews on a daily basis.\15\ ICE Clear
Europe is deleting ``weekly'' because it maintains that it would
conduct the risk reviews daily, rather than weekly.
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    \14\ Notice, 88 FR at 8019.
    \15\ Notice, 88 FR at 8019.
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    Finally, the CC Risk Procedures currently state that ICE Clear
Europe's findings and recommendations from its reviews of
counterparties are approved based on the CC Risk Parameters. The
proposed rule change would amend this statement in the CC Risk
Procedures to provide that the review frequency and criteria, in
addition to ICE Clear Europe's findings and recommendations from its
reviews of counterparties, are approved based on the CC Risk
Parameters. This change would better align the CC Risk Procedures with
the CC Risk Parameters. Specifically, the CC Risk Parameters make
certain ICE Clear Europe personnel responsible for reviewing and
approving findings and recommendations from risk reviews, and sets out
the frequency and criteria for the risk reviews.

v. Systemically Important Institution

    As part of mitigating its counterparty credit risk, ICE Clear
Europe sets and monitors limits on its financial exposures to its
counterparties. These exposure limits effectively cap ICE Clear
Europe's risk of loss arising from a particular counterparty and
therefore act as an overall mitigation of counterparty risk.\16\
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    \16\ See 2021 Approval Order, 87 FR at 514.
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    As explained in the current CC Risk Procedures, ICE Clear Europe
sets an exposure limit for each Clearing

Member as a percentage of that Clearing Member's capital. As further
explained in the current CC Risk Procedures, the capital that ICE Clear
Europe considers for this purpose can include the balance sheet of a
Clearing Member's parent company. ICE Clear Europe would consider the
balance sheet of a Clearing Member's parent company if: (i) it
considers the Clearing Member to be an integral part of a large
systemically important institution headquartered in a robust legal
jurisdiction; or (ii) it has a formal and enforceable recourse to the
Clearing Member's parent company via a guarantee or equivalent
undertaking. The proposed rule change would amend the first
consideration, so that ICE Clear Europe would consider the balance
sheet of a Clearing Member's parent company if it considers the
Clearing Member to be an integral part of a large group that is a
Systemically Important Institution. The proposed rule change would
define a Systemically Important Institution as an institution with
assets greater than 200 billion Euros that is treated as a Globally
Systemically Important Institution by the European Banking Authority.
These changes are aimed at objectively defining when ICE Clear Europe
should consider the balance sheet of a parent company in eligible
capital for the purposes of the exposure limit.\17\
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    \17\ Notice, 88 FR at 8019.
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vi. Cross-Exposures and Off-Boarding

    As discussed above, ICE Clear Europe monitors counterparties daily.
This monitoring includes a number of items, such as daily credit scores
and reviews of public news.\18\ The proposed rule change would expand
the CC Risk Procedures to include monitoring for cross-exposures, which
are exposures that a counterparty may have to its affiliates that are
also ICE Clear Europe counterparties, and the risks that could arise
when off-boarding counterparties.
---------------------------------------------------------------------------

    \18\ See 2021 Approval Order, 87 FR at 514.
---------------------------------------------------------------------------

    Specifically, the proposed rule change would add language to
Section 2.4 to note that ICE Clear Europe's monitoring of counterparty
credit risk includes monitoring of cross-exposures among a Clearing
Member and its affiliates. The proposed rule change also would add
language to Section 3.1.1 of the CC Risk Procedures stating that ICE
Clear Europe monitors at least monthly credit Cross-Exposures among
counterparties and their affiliates in all their capacities as
counterparties to ICE Clear Europe.
    The proposed rule change also would expand the CC Risk Procedures
to consider the potential risks to ICE Clear Europe that could arise
when it terminates its relationship with a counterparty. These risks
could include, for example, open contractual obligations or money owed
to ICE Clear Europe. The proposed rule change would add language to
Section 2.1 of the CC Risk Procedures stating that ICE Clear Europe
ensures all counterparty risks are eliminated prior to off-boarding
counterparties.

vii. Mitigating Actions

    In addition to assessing and monitoring counterparties, ICE Clear
Europe also has the authority to take actions with respect to
counterparties to mitigate risks presented by those counterparties.\19\
For example, ICE Clear Europe may subject a counterparty to additional
monitoring or reduce its usage of an FSP. ICE Clear Europe may also add
counterparties to the Watch List, which is a list of counterparties
that ICE Clear Europe subjects to enhanced monitoring and mitigating
action if necessary. The proposed rule change would amend the CC Risk
Procedures to note two additional mitigating actions that ICE Clear
Europe could take against counterparties in certain circumstances.
---------------------------------------------------------------------------

    \19\ See 2021 Approval Order, 87 FR at 514.
---------------------------------------------------------------------------

    First, the proposed rule change would add a statement to Section
2.3.2 of the CC Risk Procedures that Clearing Members are added
automatically to the Watch List if they reach the Watch List Criteria.
Specifically, Clearing Members whose credit scores meet certain
thresholds indicating financial weakness are automatically added to the
Watch List. This criteria is set out in the CC Risk Parameters.
    Second, the proposed rule change would add language to Section
2.3.1 to note that submissions of quarterly financial statements by
counterparties later than the days mandated by ICE Clear Europe's Rules
will be communicated and escalated as set out in the CC Risk
Parameters. The CC Risk Parameters require communication with
counterparties and escalation to ICE Clear Europe's Head of Regulation
and Compliance of late quarterly financial submissions.

viii. Counterparty Rating System

    Finally, the proposed rule change would clarify the description of
ICE Clear Europe's Counterparty Rating System found in the CC Risk
Procedures. As mentioned above, the Counterparty Rating System is the
system that ICE Clear Europe uses to model and determine a
counterparty's credit risk. ICE Clear Europe uses the Counterparty
Rating System to calculate a credit score, and this credit score
represents a counterparty's credit risk.
    The proposed rule change would delete a statement in the CC Risk
Procedures that ICE Clear Europe's Counterparty Rating System may
incorporate exposure information reflecting the risk of the Clearing
Member's portfolio held with ICE Clear Europe. The proposed rule change
is deleting this statement because ICE Clear Europe is revising its
relevant risk model to consider the credit quality of a Clearing
Member, rather than the risk associated with a Clearing Member's
portfolio. ICE Clear Europe is making this change to better align the
credit scores with the credit quality of Clearing Members.\20\
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    \20\ ICE Clear Europe manages the risk associated with a
Clearing Member's portfolio through its margin and guaranty fund
requirements.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act directs the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
such proposed rule change is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to such
organization.\21\ For the reasons discussed below, the Commission finds
that the proposed rule change is consistent with Section 17A(b)(3)(F)
of the Act,\22\ and Rules 17Ad-22(e)(3)(i) and (e)(20) thereunder.\23\
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    \21\ 15 U.S.C. 78s(b)(2)(C).
    \22\ 15 U.S.C. 78q-1(b)(3)(F).
    \23\ 17 CFR 240.17Ad-22(e)(3)(i) and (e)(20).
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i. Consistency With Section 17A(b)(3)(F) of the Act

    Section 17A(b)(3)(F) of the Act requires, among other things, that
the rules of ICE Clear Europe be designed to promote the prompt and
accurate clearance and settlement of securities transactions and, to
the extent applicable, derivative agreements, contracts, and
transactions.\24\ Based on its review of the record, and for the
reasons discussed below, the Commission believes the proposed changes
to the CC Risk Policy and CC Risk Procedures are consistent with the
promotion of the prompt and accurate clearance and settlement of
securities transactions.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The Commission believes the proposed rule change overall would
improve ICE Clear Europe's ability to manage counterparty risk using
the CC Risk Policy and CC Risk Procedures. One way the proposed rule
change would do that is by expanding the risks

that ICE Clear Europe considers when it is evaluating counterparties.
For example, the proposed rule change would require that ICE Clear
Europe consider the risks arising from Links and consider the risks
associated with KYC and Anti-Money Laundering requirements when
evaluating FSPs. Similarly, the proposed rule change would require that
ICE Clear Europe consider the risks arising from its agreements with
FSPs, specifically legal risk associated with the governing law of the
agreement and the jurisdiction of the FSP, rather than only requiring
FSPs be legal entities in approved jurisdictions. Finally, the proposed
rule change would require ICE Clear Europe to monitor counterparties'
cross exposures and the risks created when off-boarding a counterparty.
The Commission believes all of these changes would expand ICE Clear
Europe's counterparty risk monitoring and management to include risks
that are not currently considered by ICE Clear Europe.
    The Commission believes that the proposed rule change would improve
ICE Clear Europe's counterparty risk management by establishing actions
ICE Clear Europe would take to monitor and mitigate counterparties that
present increased risk, such as requiring that ICE Clear Europe add a
counterparty to the Watch List if it meets criteria set out in the CC
Risk Parameters. Moreover, the proposed rule change would require ICE
Clear Europe to internally escalate a counterparty's late submission of
quarterly financial statements for further review and action. The
Commission believes requiring these actions would help ensure that ICE
Clear Europe takes immediate steps to monitor counterparties that
present additional risk, either by meeting the criteria for inclusion
on the Watch List or failing to timely file the required quarterly
financial statements.
    In addition to expanding the risks that ICE Clear Europe considers
and establishing actions to take with respect to counterparties that
present increased risk, the Commission believes the proposed rule
change would improve ICE Clear Europe's counterparty risk management by
clarifying the frequency of the various reviews conducted by ICE Clear
Europe. Specifically, the proposed rule change would require that ICE
Clear Europe review all credit eligibility criteria periodically and
that review frequency and criteria be approved based on the CC Risk
Parameters. Similarly, the proposed rule change would clarify that ICE
Clear Europe calculates credit scores, looks at public news, conducts
continuous monitoring, and completes risk reviews daily. The Commission
believes these changes would help ensure ICE Clear Europe is using
correct and current criteria to evaluate counterparties and reviewing
and monitoring counterparties daily.
    Finally, the Commission believes that two other changes discussed
above would clarify important aspects of ICE Clear Europe's
counterparty risk management. First, the Commission believes that
adding a definition for Systemically Important Institution and no
longer considering whether a Systemically Important Institution is in a
robust legal jurisdiction would define objective criteria for
considering the balance sheet of a Clearing Member's parent company in
setting the exposure limit for that Clearing Member. Defining objective
criteria with regard to the setting of exposure limits, in turn, would
improve the consistency with which ICE Clear Europe applies such limits
to control the potential loss that could arise out of a Clearing Member
default. Second, the proposed rule change would clarify the description
of ICE Clear Europe's Counterparty Rating System because it considers
the credit quality of a Clearing Member, rather than the risk
associated with a Clearing Member's portfolio. The proposed change
would better align the measurement (credit ratings) with what it seeks
to measure (a member's credit quality).
    The Commission believes counterparty risk poses a risk to ICE Clear
Europe's financial resources. For example, default by a Clearing Member
could leave ICE Clear Europe under-collateralized, and default by an
FSP could cause ICE Clear Europe to lose its investments or expected
return of cash. Similarly, default by a Link could require ICE Clear
Europe to fund material contractual or operational arrangements
associated with that Link. The Commission believes that such losses
could threaten ICE Clear Europe's ability to operate and clear and
settle transactions. Thus, the Commission believes that effective
management of ICE Clear Europe's counterparty risk could help ICE Clear
Europe mitigate risks to the financial resources needed to continue
clearing and settling transactions. The Commission therefore believes
that, by improving ICE Clear Europe's ability to manage and mitigate
counterparty risk, the proposed rule change would thereby promote the
prompt and accurate clearance and settlement of securities
transactions.
    Therefore, the Commission finds that the proposed rule change is
consistent with Section 17A(b)(3)(F) of the Act.\25\
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    \25\ 15 U.S.C. 78q-1(b)(3)(F).
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ii. Consistency With Rule 17Ad-22(e)(3)(i) Under the Act

    Rule 17Ad-22(e)(3)(i) requires that ICE Clear Europe establish,
implement, maintain, and enforce written policies and procedures
reasonably designed to, among other things, maintain a sound risk
management framework for comprehensively managing legal, credit,
liquidity, operational, general business, investment, custody, and
other risks that arise in or are borne by ICE Clear Europe, which
includes risk management policies, procedures, and systems designed to
identify, measure, monitor, and manage the range of risks that arise in
or are borne by ICE Clear Europe, that are subject to review on a
specified periodic basis and approved by the board of directors
annually.\26\ As discussed above, the proposed rule change would make a
number of improvements to the CC Risk Policy and the CC Risk
Procedures. The Commission believes these improvements would enhance
ICE Clear Europe's ability to comprehensively measure and manage the
risks posed by counterparties.
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    \26\ 17 CFR 240.17Ad-22(e)(3)(i).
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    With respect to measuring counterparty risks, the Commission
believes that requiring ICE Clear Europe to consider KYC and AML
requirements when reviewing prospective and existing FSPs would enable
ICE Clear Europe to consider the risks arising from compliance with
these requirements. The Commission further believes that requiring ICE
Clear Europe to consider legal risk associated with the governing law
of the agreement and the jurisdiction of the FSP would help ensure that
ICE Clear Europe considers this associated risk. Similarly, the
Commission believes that taking into consideration counterparties'
cross-exposures, and the risks that arise when terminating a
relationship with a counterparty, would enable ICE Clear Europe to
identify and manage the risks posed by counterparties' affiliates and
the risks that could arise when ICE Clear Europe terminates a
counterparty.
    With respect to managing counterparty risks, the Commission
believes that requiring ICE Clear Europe to add counterparties to the
Watch List when meeting certain criteria and to escalate late
submission of quarterly financial statements for further review and
action would help ICE Clear Europe to identify at-risk counterparties
for

further monitoring and mitigating action.
    Therefore, the Commission finds that the proposed rule change is
consistent with Rule 17Ad-22(e)(3)(i).\27\
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    \27\ 17 CFR 240.17Ad-22(e)(3)(i).
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iii. Consistency With Rule 17Ad-22(e)(20) Under the Act

    Rule 17Ad-22(e)(20) requires that ICE Clear Europe establish,
implement, maintain, and enforce written policies and procedures
reasonably designed to identify, monitor, and manage risks related to
any link ICE Clear Europe establishes with one or more other clearing
agencies, financial market utilities, or trading markets.\28\ As
discussed above, the proposed rule change would amend the CC Risk
Policy and the CC Risk Procedures to account for the risks arising from
Links. Among other things, ICE Clear Europe would consider as a
counterparty credit risk the risk that a Link defaults; take steps to
minimize the risk of loss due to a Link defaulting; and identify,
monitor, and mange risks arising from Links. The Commission believes
these actions are reasonably designed to identify, monitor, and manage
risks related to any Link that ICE Clear Europe may establish.
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    \28\ 17 CFR 240.17Ad-22(e)(20).
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    Therefore, the Commission finds that the proposed rule change is
consistent with Rule 17Ad-22(e)(20).\29\
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    \29\ 17 CFR 240.17Ad-22(e)(20).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act,
and in particular, with the requirements of Section 17A(b)(3)(F) of the
Act,\30\ and Rules 17Ad-22(e)(3)(i) and (e)(20) thereunder.\31\
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    \30\ 15 U.S.C. 78q-1(b)(3)(F).
    \31\ 17 CFR 240.17Ad-22(e)(3)(i) and (e)(20).
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    It is therefore ordered pursuant to Section 19(b)(2) of the Act
\32\ that the proposed rule change (SR-ICEEU-2023-004), be, and hereby
is, approved.\33\
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    \32\ 15 U.S.C. 78s(b)(2).
    \33\ In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
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    \34\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-06057 Filed 3-23-23; 8:45 am]
BILLING CODE 8011-01-P