[Federal Register Volume 85, Number 102 (Wednesday, May 27, 2020)]
[Notices]
[Pages 31828-31832]
[FR Doc No: 2020-11285]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88911; File Nos. SR-DTC-2020-008; SR-FICC-2020-004; SR-
NSCC-2020-008]

Self-Regulatory Organizations; The Depository Trust Company;
Fixed Income Clearing Corporation; National Securities Clearing
Corporation; Order Approving a Proposed Rule Change To Modify the
Clearing Agency Model Risk Management Framework

May 20, 2020.
    On April 10, 2020, The Depository Trust Company (``DTC''), Fixed
Income Clearing Corporation (``FICC''), and National Securities
Clearing Corporation (``NSCC,'' each a ``Clearing Agency,'' and
collectively, the ``Clearing

Agencies''), filed with the Securities and Exchange Commission
(``Commission'') proposed rule changes SR-DTC-2020-008; SR-FICC-2020-
004; SR-NSCC-2020-008, respectively, pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder.\2\ The proposed rule changes were published for comment in
the Federal Register on April 21, 2020,\3\ and the Commission received
no comment letters regarding the changes proposed in the proposed rule
changes. For the reasons discussed below, the Commission is approving
the proposed rule changes.\4\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 88640 (April 15, 2020),
85 FR 22191 (April 21, 2020) (``DTC Notice of Filing''); Securities
Exchange Act Release No. 88636 (April 15, 2020), 85 FR 22228 (April
21, 2020) (``FICC Notice of Filing''); Securities Exchange Act
Release No. 88637 (April 15, 2020), 85 FR 22222 (April 21, 2020)
(``NSCC Notice of Filing'').
    \4\ Capitalized terms not defined herein are defined in the DTC
Rules, GSD Rules, MBSD Rules, or NSCC Rules, as applicable,
available at http://dtcc.com/legal/rules-and-procedures.
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I. Description of the Proposed Rule Change

A. Background

    Each Clearing Agency has established a Model Risk Management
Framework (``Framework'') \5\ to help it identify, measure, monitor,
and manage the risks associated with the design, development,
implementation, use, and validation of quantitative models.\6\ Pursuant
to the Framework, a model developed for use by any of the Clearing
Agencies and meeting the above definition for the term ``model'' is
included and tracked within a model inventory (``Model Inventory'')
maintained by DTCC's Model Validation and Control Unit (``MVC''), which
is part of the Group Chief Risk Office. The parent company of the
Clearing Agencies is The Depository Trust & Clearing Corporation
(``DTCC''). DTCC operates on a shared services model with respect to
the Clearing Agencies. Most corporate functions are established and
managed on an enterprise-wide basis pursuant to intercompany agreements
under which it is generally DTCC that provides a relevant service to a
Clearing Agency.
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    \5\ See Securities Exchange Act Release No. 81485 (August 25,
2017), 82 FR 41433 (August 31, 2017) (File Nos. SR-DTC-2017-008; SR-
FICC-2017-014; SR-NSCC-2017-008) (``2017 Framework Order''). The
proposed rule changes do not require any changes to (1) the Rules,
By-Laws and Organization Certificate of DTC (``DTC Rules''), (2) the
Rulebook of the Government Securities Division of FICC (``GSD
Rules''), (3) the Clearing Rules of the Mortgage-Backed Securities
Division of FICC (``MBSD Rules''), or (4) the Rules & Procedures of
NSCC (``NSCC Rules''), as the Framework is a standalone document.
    \6\ See 2017 Framework Order, 82 FR at 41433. ``[M]odel'' refers
to a quantitative method, system, or approach that applies
statistical, economic, financial, or mathematical theories,
techniques, and assumptions to process input data into quantitative
estimates. A ``model'' consists of three components: An information
input component, which delivers assumptions and data to the model; a
processing component, which transforms inputs into estimates; and a
reporting component, which translates the estimates into useful
business information. The definition of ``model'' also covers
quantitative approaches whose inputs are partially or wholly
qualitative or based on expert judgment, provided that the output is
quantitative in nature. See DTC Notice of Filing, 82 FR at 22192;
FICC Notice of Filing, 82 FR at 22228; NSCC Notice of Filing, 82 FR
at 22222.
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    The proposed rule changes would amend the Framework to (i) modify
certain roles and governance arrangements set forth within the
Framework, (ii) incorporate a description of and references to the
``Model Risk Tolerance Statement,'' and (iii) make other technical and
clarifying changes to the text of the Framework, as described below.

B. Modification of Roles and Governance Arrangements

1. Role and Reporting Lines of the Model Owner, MVC, and MRC
    Section 3.1 of the Framework describes how models are developed for
use by any of the Clearing Agencies and tracked within the Model
Inventory.\7\ In particular, the Framework currently describes a
``Model Owner'' \8\ as the person responsible for the development or
operation of a model being validated by MVC. The proposal would define
a Model Owner as the person who is designated by the applicable
business area or support function to be responsible for a particular
model and who is recorded as the Model Owner for such model by MVC in
the Model Inventory.
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    \7\ See DTC Notice of Filing, 82 FR at 22192; FICC Notice of
Filing, 82 FR at 22228; NSCC Notice of Filing, 82 FR at 22223.
    \8\ See 2017 Framework Order, 82 FR at 41434.
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    Currently, the Framework states that the Executive Director of MVC
reports to the Group Chief Risk Officer rather than to any Model Owner.
The proposal would change the title of the head of MVC from an
Executive Director to Managing Director at each Clearing Agency to
reflect that a more senior officer of the Clearing Agencies would be
responsible for supervising MVC.\9\ The proposal would also clarify
that the head of MVC reports to the Group Chief Risk Officer rather
than to anyone that could be a Model Owner (i.e., anyone who develops
and operates a model and not only personnel who are currently Model
Owners). The Clearing Agencies represent that this change is to make
clear that MVC has an independent reporting line to the Group Chief
Risk Officer, without potential conflict of reporting to any person
that could be a Model Owner.\10\ Under the proposal, the Framework
would further state that the head of MVC is a member of the Management
Risk Committee (``MRC'').\11\
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    \9\ See DTC Notice of Filing, 82 FR at 22193; FICC Notice of
Filing, 82 FR at 22229; NSCC Notice of Filing, 82 FR at 22223.
    \10\ See DTC Notice of Filing, 82 FR at 22193; FICC Notice of
Filing, 82 FR at 22229; NSCC Notice of Filing, 82 FR at 22224.
    \11\ The MRC is the Clearing Agencies' management level
committee responsible for, among other things, model risk management
matters. See 2017 Framework Order, 82 FR at 41435.
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2. Processes for Determining Model Materiality and Complexity
    Section 3.2 of the Framework outlines that MVC assigns a
materiality rating and complexity rating to each model after it is
added to the Model Inventory.\12\ Currently, all model materiality
rating and complexity rating assignments are reviewed by at least
annually by MVC, as well as by the Model Risk Governance Committee
(``MRGC'').\13\
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    \12\ A model's rating impacts both the prioritization and
approval authority for that model's validation. See DTC Notice of
Filing, 82 FR at 22193; FICC Notice of Filing, 82 FR at 22230; NSCC
Notice of Filing, 82 FR at 22224.
    \13\ See 2017 Framework Order, 82 FR at 41434.
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    The proposal would revise the role of the MRGC, including by
removing its oversight authority in the Model Validation process and
leaving MVC as the sole entity responsible for reviewing the model
materiality and complexity ratings. Moreover, under the proposal, the
MRGC would serve as a forum for review of model risk matters rather
than a decision-making body charged with the oversight of such matters.
The proposal would also revise the MRGC's name by replacing
``Committee'' with ``Council'' to reflect the MRGC's role as an
advisory body.\14\
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    \14\ See DTC Notice of Filing, 82 FR at 22193; FICC Notice of
Filing, 82 FR at 22230; NSCC Notice of Filing, 82 FR at 22224. As
proposed, the MRGC could provide advice or recommendations regarding
model risk matters to the interested party of a pertinent model.
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3. Processes for Model Approval and Control
    Section 3.6 of the Framework currently provides that the Financial
Engineering Unit (``FEU'') within Quantitative Risk Management
(``QRM'') is responsible for developing, testing, and signing-off on
new models and enhancements to existing models before

submitting any new model to MVC for Model Validation and approval. The
Clearing Agencies state that QRM is a risk management function within
the Group Chief Risk Office, and that a representative of QRM is the
Model Owner for all margin models used by the Clearing Agencies.\15\
The section further explains that all new models and all material
changes to existing models undergo Model Validation by MVC and must be
approved prior to business use. In addition, the section states that
models that have a materiality rating of `Medium' or `High' must be
approved by the MRC, after the MRGC has reviewed the model and
recommended it to the MRC for approval.
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    \15\ See DTC Notice of Filing, 82 FR at 22194; FICC Notice of
Filing, 82 FR at 22230; NSCC Notice of Filing, 82 FR at 22224.
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    The proposal would transfer FEU's responsibilities to the Model
Owners to reflect the elimination of the FEU within QRM.\16\ Also, the
proposal would remove the requirement that Model Validations with a
materiality rating of `Medium' or `High' be approved by the MRC, after
the MRGC has reviewed and recommended the model to the MRC for
approval. As a result of these changes, MVC would have the sole and
exclusive authority to approve a model.
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    \16\ See id.
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    The Clearing Agencies represent that MVC is best suited to address
Model Validation issues based on its quantitative and technical
expertise and knowledge.\17\ Accordingly, the proposal would remove any
text that indicates that MRC approval is required for any Model
Validation to be complete and/or for a model to remain in production.
In addition, consistent with the proposed changes to Section 3.2, the
proposal would make changes to reflect that the MRGC does not have any
oversight role for model approval and control.
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    \17\ See id.
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4. Model Performance Monitoring Responsibilities
    Section 3.8 of the Framework currently states that MVC is
responsible for model performance monitoring, including review of risk-
based models used to calculate margin requirements and relevant
parameters/threshold indicators, sensitivity analysis, and model
backtesting results, and preparation of related reports. It also states
that review of these model performance measures is subject to review by
the MRGC.
    Under the proposal, the Framework would identify Model Owners as
responsible for the design and execution of model performance
monitoring and preparation of model performance monitoring reports.
Similarly, the proposal would revise the Framework to clarify that QRM,
which encompasses Model Owners, would be responsible for model
performance monitoring of the Clearing Agencies' margin models. The
proposal would also revise the role of MVC with respect to model
performance monitoring to providing oversight of model performance
monitoring activities (as opposed to conducting the monitoring) by
setting organizational standards and providing critical analysis for
identifying model issues and/or limitations. In addition, the proposal
would remove the statement that review of model performance measure is
subject to review by the MRGC.
5. Backtesting Responsibilities
    Section 3.9 of the Framework currently states that MVC is
responsible for each Clearing Agency's Value-at-Risk (``VaR'')
backtesting and Clearing Fund Requirement (``CFR'') backtesting.
Consistent with the changes described above, this section would be
revised to state that QRM would perform VaR and CFR backtesting, as QRM
is responsible for performance monitoring functions with respect to
margin models.
6. Board of Directors and Senior Management Reporting
    Section 4.1 of the Framework currently describes the MRGC as the
primary forum for MVC's regular reporting of Model Validation
activities and material model risks identified through regular model
performance monitoring. The proposal would delete this reference to the
MRGC's role, as it would no longer have oversight of Model Validation
and model performance monitoring. In addition, it would add the MRC as
a recipient of periodic reporting.
7. Escalation
    Section 4.2 describes the processes applicable for further review
of the key metrics identified in Section 3.9 (Backtesting). Currently,
such metrics are reviewed by the Market and Liquidity Risk Management
unit within the Group Chief Risk Office and MVC, and also reported to
the MRC, on at least a monthly basis. The section further states that
the MRGC reviews and approves changes to backtesting methodology.
    The proposal would eliminate the provision that MVC would review
the metrics and clarify that the key metrics are reported to MRC by the
group within the Group Chief Risk Office responsible for risk
reporting. The proposal would remove the MRGC's role in review and
approval of changes to backtesting methodology and instead vest that
responsibility with MVC to reflect the change in oversight of Model
Validation from the MRGC to MVC.

C. Incorporation of the Model Risk Tolerance Statement

    The Framework currently includes a description of internal DTCC
policies and procedures that support the Framework, including the (1)
DTCC Model Risk Management Policy, (2) DTCC Model Validation
Procedures, (3) DTCC Model Risk Performance Monitoring Procedures, (4)
the DTCC Backtesting Procedures, and (5) Market Risk Tolerance
Statement (``Related Procedures''). The Framework also notes that the
Related Procedures may be updated or amended.
    The proposal would add the Model Risk Tolerance Statement as one of
DTCC's internal policies and procedures to support the Framework. The
proposal would explain that the Model Risk Tolerance Statement sets
forth, among other things, risk tolerance levels covering model design
and implementation, including consideration of a model's intended
purpose and/or its adequacy of performance.
    The proposal would also add an explanation of the existing Market
Risk Tolerance Statement, stating that it articulates, among other
things, risk tolerance levels for (i) margin backtests addressing
backtest coverage and (ii) stress tests covering exposure to extreme
market moves.
    Further, the proposal would add language to the Framework stating
that the Model Risk Tolerance Statement and the Market Risk Tolerance
Statement (each a ``Risk Tolerance Statement'') record the overall risk
reduction or mitigation objectives as they relate to model risk and
market risk activities. Under the proposal, the Framework would also
state that the Risk Tolerance Statements document the risk controls and
other measures used to manage such activities, including escalation
requirements in the event of risk metric breaches. Similarly, the
proposal would also revise the Framework to provide that the Risk
Tolerance Statements would be reviewed, revised, retired, replaced, or
approved by the BRC annually, based upon the existing circumstances and
the reasonable best judgement of management relating to model risk
management matters.

D. Other Technical Changes

    The proposal would also make a number of technical changes to the
Framework. First, Section 3.8 of the Framework currently states that
model performance monitoring is the process of (i) evaluating an active
model's ongoing performance based on theoretical tests, (ii) monitoring
the model's parameters through the use of threshold indicators, and/or
(iii) backtesting using actual historical data/realizations to test a
VaR model's predictive power. The Clearing Agencies state that the
process of model performance monitoring does not always take into
account theoretical tests, threshold indicators, and/or historical
data/realizations, but could take some or all of these into account as
appropriate under the circumstances.\18\ Accordingly, the proposal
would eliminate references to ``theoretical tests,'' ``threshold
indicators,'' and ``historical data/realizations'' to provide a more
accurate description of the Clearing Agencies' model performance
monitoring process.\19\
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    \18\ See DTC Notice of Filing, 82 FR at 22194; FICC Notice of
Filing, 82 FR at 22231; NSCC Notice of Filing, 82 FR at 22225.
    \19\ See id.
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    Second, to improve the readability and clarity of the Framework's
text, the proposal would (1) remove the use of the modifier ``Clearing
Agency'' with respect to references to models and other parts of the
Framework, (2) replace ``vendor'' with ``externally purchased'' in
describing models developed externally, (3) relocate certain sentences,
and (4) consistently use ``model'' without capitalization.

II. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \20\ 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 rules and regulations thereunder applicable
to such organization. After carefully considering the proposed rule
change, the Commission finds that the proposed rule change is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to the Clearing Agencies. In
particular, the Commission finds that the proposed rule change is
consistent with Section 17A(b)(3)(F) \21\ of the Act and Rules 17Ad-
22(e)(2)(v), (e)(4)(vii), and (e)(7)(vii) thereunder.\22\
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    \20\ 15 U.S.C. 78s(b)(2)(C).
    \21\ 15 U.S.C. 78q-1(b)(3)(F).
    \22\ 17 CFR 240.17Ad-22(e)(2)(v), (e)(4)(vii), and (e)(7)(vii).
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A. Consistency With Section 17A(b)(3)(F)

    Section 17A(b)(3)(F) of the Act requires, in part, that the rules
of a clearing agency be designed to assure the safeguarding of
securities and funds which are in the custody or control of the
clearing agency or for which it is responsible.\23\
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    \23\ 15 U.S.C. 78q-1(b)(3)(F).
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    As described above, the Framework is designed to identify, measure,
monitor, and manage the risks related to the design, development,
implementation, use, and validation of quantitative models. The
proposal is designed to enhance the Framework by improving the
governance arrangements relating to the management of the Clearing
Agencies' quantitative models, expanding internal policies and
procedures to manage the models, and removing inconsistent and
inaccurate terminology.
    First, the proposal is designed to clarify and enhance the
governance structures set forth in the Framework in a number of ways.
The proposal would clarify and revise the roles of Model Owner and QRM.
The proposal would revise MRGC's role as advisory and no-decision
making one, and transfer MRGC's responsibilities to MVC. The proposal
would transfer the responsibility for approval of Model Validations
from MRC to MVC. The Clearing Agencies represent that MVC is composed
of individuals with a high level of expertise relating to Model
Validation, and that MVC has an independent reporting line to the Group
Chief Risk Officer, without any potential conflict of reporting to any
person that could be a Model Owner.\24\ Thus, taken together, under the
proposal, the governance arrangements set forth in the Framework would
specify these particular lines of responsibility that ensure
independence and competency of the group that manages model risk.
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    \24\ See DTC Notice of Filing, 82 FR at 22194; FICC Notice of
Filing, 82 FR at 22230; NSCC Notice of Filing, 82 FR at 22224. MVC
is functionally separate from all Clearing Agency areas that develop
or operate models. See 2017 Framework Order, 82 FR at 41434.
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    Second, the proposal incorporates the Model Risk Tolerance
Statement in the Framework as one of the Clearing Agencies' internal
policies and procedures to support the Framework. The Model Risk
Tolerance Statement should provide additional specificity and clarity
to the risk tolerance levels and help the Clearing Agencies to manage
their models within more clearly defined risk tolerance levels. Third,
the proposal makes other technical and clarifying changes to the text
that should help facilitate the effective execution of the Framework by
removing inconsistent use of terminology and adopting more accurate
terminology.
    With the proposed rule changes designed to enhance the Framework,
the Clearing Agencies should be able to more effectively manage its
quantitative models, and in turn, better evaluate and address risk
presented by Clearing Agencies' members. By effectively evaluating and
addressing risk presented by members, the Clearing Agencies should be
able to better address their exposure to members and assure the
safeguarding of securities and funds which are in Clearing Agencies'
custody or control. Therefore, for the reasons stated above, the
Commission believes that the proposed rule changes are consistent with
the requirements of 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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B. Consistency With Rules 17Ad-22(e)(2)(v)

    Rule 17Ad-22(e)(2)(v) under the Act requires that each covered
clearing agency establish, implement, maintain and enforce written
policies and procedures reasonably designed to provide for governance
arrangements that specify clear and direct lines of responsibility.\26\
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    \26\ 17 CFR 240.17Ad-22(e)(2)(v).
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    As stated above, the proposal clarifies and specifies the
governance arrangements relating to the management of the Clearing
Agencies model risk management, including: (1) The officer responsible
for supervising MVC would be elevated from Executive Director to
Managing Director; (2) the officer responsible for supervising would
report directly to the Group Chief Risk Officer rather than any person
that is part of the development or operation of a model; (3) the MRGC
would relinquish any decision making authority with regard to model
risk management issues; (4) MVC would have the sole and exclusive
authority to approve a model, and would oversee model performance
monitoring activities; and (5) QRM would perform VaR and CFR
backtesting. Such changes would clearly specify particular lines of
responsibilities and a decision making process at each stage of the
model risk management process. Because the proposal would specify clear
and direct lines of responsibility, the Commission believes that the
proposed changes to

the Framework are consistent with Rule 17Ad-22(e)(2)(v) \27\ under the
Act.
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    \27\ 17 CFR 240.17Ad-22(e)(2)(v).
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C. Consistency With Rules 17Ad-22(e)(4)(vii) and (e)(7)(vii)

    Rule 17Ad-22(e)(4)(vii) under the Act requires that each covered
clearing agency establish, implement, maintain and enforce written
policies and procedures reasonably designed to effectively identify,
measure, monitor, and manage its credit exposures to participants and
those arising from its payment, clearing, and settlement processes,
including by performing a model validation for its credit risk models
not less than annually or more frequently as may be contemplated by the
covered clearing agency's risk management framework.\28\
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    \28\ 17 CFR 240.17Ad-22(e)(4)(vii).
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    Rule 17Ad-22(e)(7)(vii) under the Act requires, in part, that each
covered clearing agency establish, implement, maintain and enforce
written policies and procedures reasonably designed to effectively
identify, measure, monitor, and manage the liquidity risk that arises
in or is borne by the covered clearing agency, including measuring,
monitoring, and managing its settlement and funding flows on an ongoing
basis, and its use of intraday liquidity by, at a minimum, performing a
model validation for its liquidity risk models not less than annually
or more frequently as may be contemplated by the covered clearing
agency's risk management framework.\29\
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    \29\ 17 CFR 240.17Ad-22(e)(7)(vii).
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    Rule 17Ad-22(a)(9) under the Act defines a model validation as an
evaluation of the performance of each material risk management model
used by a covered clearing agency (and the related parameters and
assumptions associated with such models), including initial margin
models, liquidity risk models, and models used to generate clearing or
guaranty fund requirements, performed by a qualified person who is free
from influence from the persons responsible for the development or
operation of the models or policies being validated.\30\
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    \30\ 17 CFR 240.17Ad-22(a)(9).
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    The Framework provides a process for validation of the Clearing
Agencies' credit and liquidity risk models. The proposal would enhance
the Framework by clarifying and amending the governance relating to the
model risk management of these models, including Model Validation,
expanding internal policies and procedures to manage the models, and
removing inconsistent and inaccurate terminology.
    In particular, the proposal would state that MVC would have the
sole and exclusive authority to approve a model and that it has an
independent reporting line to the Group Chief Risk Officer. The
Clearing Agencies represent that this change is to make clear that MVC
would not have potential conflicts of interest by reporting to any
person that could have been a part of the development or operation of a
model. Also, the proposal would remove the MRGC's oversight authority
regarding Model Validation and move that authority to MVC. The Clearing
Agencies represent that MVC is composed of individuals with a high
level of quantitative and technical expertise and knowledge.
    The changes set forth in the proposal would clearly define the
governance applicable to the Model Validation process and assign
responsibilities to a group that is qualified and free from influence
from the persons responsible for the development and operation of the
Clearing Agencies' models. The Framework would continue to provide that
Model Validations are performed annually. The Commission therefore
believes that the proposed changes to the Framework are consistent with
Rule 17Ad-22(e)(4)(vii) \31\ and (e)(7)(vii) \32\ under the Act.
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    \31\ 17 CFR 240.17Ad-22(e)(4)(vii).
    \32\ 17 CFR 240.17Ad-22(e)(7)(vii).
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III. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposed rule changes are consistent with the requirements of the Act
and in particular with the requirements of Section 17A of the Act \33\
and the rules and regulations promulgated thereunder.
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    \33\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\34\ that proposed rule changes SR-DTC-2020-008, SR-FICC-2020-004, SR-
NSCC-2020-008, be, and hereby are, APPROVED.\35\
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    \34\ 15 U.S.C. 78s(b)(2).
    \35\ In approving the proposed rule changes, the Commission
considered the proposals' impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
    \36\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-11285 Filed 5-26-20; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 146 (Wednesday, July 30, 2014)]
[Notices]
[Pages 44221-44224]
[FR Doc No: 2014-17883]

=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31186; File No. 812-14314]

Steben Alternative Investment Funds and Steben & Company, Inc.;
Notice of Application

July 24, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from section 15(a) of
the Act and rule 18f-2 under the Act, as well as from certain
disclosure requirements.

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Summary of Application:  Applicants request an order that would permit
them to enter into and materially amend subadvisory agreements with
Wholly-Owned Subadvisers (as defined below) and non-affiliated
subadvisers without shareholder approval and would grant relief from
certain disclosure requirements.

Applicants:  Steben Alternative Investment Funds (``Trust'') and Steben
& Company, Inc. (``Adviser'').

Filing Dates:  The application was filed on May 22, 2014.

Hearing or Notification of Hearing:  An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary
and serving applicants with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on August 18, 2014, and should be accompanied by proof of service
on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090. Applicants, 9711 Washingtonian
Boulevard, Suite 400, Gaithersburg, MD 20878.

FOR FURTHER INFORMATION CONTACT: Kay-Mario Vobis, Senior Counsel, at
(202) 551-6728, or Mary Kay Frech, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Chief Counsel's Office).

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

Applicants' Representations

    1. The Trust is organized as a Delaware statutory trust and is
registered under the Act as an open-end management investment company.
The Trust currently offers one series of shares (the ``Series''),
Steben Managed Futures Strategy Fund. The Series commenced operations
on April 1, 2014. The Adviser, a corporation organized under the laws
of the state of Maryland, is registered as an investment adviser under
the Investment Advisers Act of 1940 (``Advisers Act'').
    2. Applicants request an order to permit the Adviser, subject to
the approval of the board of trustees of the Trust (``Board''),
including a majority of the members of the Board who are not
``interested persons,'' as defined in section 2(a)(19) of the Act, of
the Series or the Adviser (``Independent Board Members''), to, without
obtaining shareholder approval: (i) Select Subadvisers to manage all or
a portion of the assets of a Series and enter into Sub-Advisory
Agreements (as defined below) with the Subadvisers,\1\ and (ii)
materially amend Sub-Advisory Agreements with the Subadvisers.\2\
Applicants request that the relief apply to the named applicants, as
well as to any future Series and any other existing or future
registered open-end management investment company or series thereof
that is advised by the

Adviser or its successors, uses the multi-manager structure described
in the application, and complies with the terms and conditions of the
application (``Subadvised Series'').\3\
---------------------------------------------------------------------------

    \1\ A ``Subadviser'' is (1) an indirect or direct ``wholly-owned
subsidiary'' (as such term is defined in the Act) of the Adviser for
the Series, or (2) a sister company of the Adviser for the Series
that is an indirect or direct ``wholly-owned subsidiary'' (as such
term is defined in the Act) of the same company that, indirectly or
directly, wholly owns the Adviser (each of (1) and (2) a ``Wholly-
Owned Subadviser'' and collectively, the ``Wholly-Owned
Subadvisers''), or (3) an investment subadviser for the Series that
is not an ``affiliated person'' (as such term is defined in section
2(a)(3) of the Act) of the Series or the Adviser, except to the
extent that an affiliation arises solely because the subadviser
serves as a subadviser to the Series (each a ``Non-Affiliated
Subadviser'' and collectively, the ``Non-Affiliated Subadvisers'').
The Subadvisers will be registered with the Commission under the
Advisers Act or exempt from such registration.
    \2\ Shareholder approval will continue to be required for any
other subadviser changes and material amendments to an existing Sub-
Advisory Agreement with any subadviser other than a Non-Affiliated
Subadviser or a Wholly-Owned Subadviser, in each case (all such
changes requiring shareholder approval referred to herein as
``Ineligible Subadviser Changes'') except as otherwise permitted by
applicable law or by rule.
    \3\ For the purposes of the requested order, ``successor'' is
limited to an entity resulting from a reorganization into another
jurisdiction or a change in the type of business organization. All
registered open-end investment companies that currently intend to
rely on the requested order are named as applicants. Any entity that
relies on the requested order will do so only in accordance with the
terms and conditions contained in the application. If the name of
any Subadvised Series contains the name of a Subadviser, the name of
the Adviser to the Subadvised Series, or a trademark or trade name
that is owned by or publicly used to identify the Adviser, will
precede the name of that Subadviser.
---------------------------------------------------------------------------

    3. The requested relief will not extend to any subadviser, other
than a Wholly-Owned Subadviser, who is an affiliated person, as defined
in section 2(a)(3) of the Act, of the Subadvised Series or of the
Adviser, other than by reason of serving as a subadviser to one or more
of the Subadvised Series (``Affiliated Subadviser'').
    4. The Adviser serves as the investment adviser to the Series
pursuant to an investment advisory agreement with the Trust
(``Investment Advisory Agreement'). The Investment Advisory Agreement
for the Series has been approved by the board of trustees of the Trust
(``Board''),\4\ including a majority of the Independent Board Members,
and by the shareholders of the Series in the manner required by
sections 15(a) and 15(c) of the Act and rule 18f-2 thereunder. The
terms of the Investment Advisory Agreement comply with section 15(a) of
the Act.
---------------------------------------------------------------------------

    \4\ The term ``Board'' also includes the board of trustees or
directors of a future Subadvised Series.
---------------------------------------------------------------------------

    5. Pursuant to the terms of the Investment Advisory Agreement, the
Adviser, subject to the supervision of the Board, provides continuous
investment advisory services to the Series. The Adviser will
periodically review the Series' investment policies and strategies, and
based on its need may recommend changes to the investment policies and
strategies of the Series for consideration by the Board. For its
services to the Series under the Investment Advisory Agreement, the
Adviser receives an investment management fee from the Series. The
Investment Advisory Agreement provides that the Adviser may, subject to
the approval of the Board, including a majority of the Independent
Board Members and the initial shareholder of the Subadvised Series,
delegate portfolio management responsibilities of all or a portion of
the assets of a Subadvised Series to one or more Subadvisers.
    6. Pursuant to the Investment Advisory Agreement, the Adviser has
overall responsibility for the management and investment of the assets
of each Subadvised Series. These responsibilities include, for example,
recommending the removal or replacement of Subadvisers, and determining
the portion of that Subadvised Series' assets to be managed by any
given Subadviser and reallocating those assets as necessary from time
to time.
    7. The Adviser may enter into investment sub-advisory agreements
with various Subadvisers on behalf of the Subadvised Series (``Sub-
Advisory Agreements'') to provide investment management services to the
Subadvised Series. The terms of each Sub-Advisory Agreement comply
fully with the requirements of section 15(a) of the Act and have been
approved by the Board, including a majority of the Independent Board
Members and the initial shareholder of the Subadvised Series, in
accordance with sections 15(a) and 15(c) of the Act and rule 18f-2
thereunder. The Subadvisers, subject to the supervision of the Adviser
and oversight of the Board, will determine the securities and other
investments to be purchased, sold or entered into by a Subadvised
Series and will place orders with brokers or dealers that they select.
The Adviser will compensate each Subadviser out of the fee paid to the
Adviser under the Investment Advisory Agreement.
    8. If the requested order is granted and if new Subadvisers are
hired, the Subadvised Series will inform shareholders of the hiring of
a new Subadviser pursuant to the following procedures (``Modified
Notice and Access Procedures''): (a) Within 90 days after a new
Subadviser is hired for any Subadvised Series, that Subadvised Series
will send its shareholders either a Multi-manager Notice or a Multi-
manager Notice and Multi-manager Information Statement; \5\ and (b) the
Subadvised Series will make the Multi-manager Information Statement
available on the Web site identified in the Multi-manager Notice no
later than when the Multi-manager Notice (or Multi-manager Notice and
Multi-manager Information Statement) is first sent to shareholders, and
will maintain it on that Web site for at least 90 days. In the
circumstances described in the application, a proxy solicitation to
approve the appointment of new Subadvisers provides no more meaningful
information to shareholders than the proposed Multi-manager Information
Statement. Applicants state that each Board would comply with the
requirements of sections 15(a) and 15(c) of the Act before entering
into or amending Sub-Advisory Agreements.
---------------------------------------------------------------------------

    \5\ A ``Multi-manager Notice'' will be modeled on a Notice of
Internet Availability as defined in rule 14a-16 under the Securities
Exchange Act of 1934 (``Exchange Act''), and specifically will,
among other things: (a) Summarize the relevant information regarding
the new Subadviser (except as modified to permit Aggregate Fee
Disclosure (as defined below); (b) inform shareholders that the
Multi-manager Information Statement is available on a Web Site; (c)
provide the website address; (d) state the time period during which
the Multi-manager Information Statement will remain available on
that website; (e) provide instructions for accessing and printing
the Multi-manager Information Statement; and (f) instruct the
shareholder that a paper or email copy of the Multi-manager
Information Statement may be obtained, without charge, by contacting
the Subadvised Series. A ``Multi-manager Information Statement''
will meet the requirements of Regulation 14C, Schedule 14C and Item
22 of Schedule 14A under the Exchange Act for an information
statement, except as modified by the order to permit Aggregate Fee
Disclosure. Multi-manager Information Statements will be filed with
the Commission via the EDGAR system.
---------------------------------------------------------------------------

    9. Applicants also request an order exempting the Subadvised Series
from certain disclosure obligations that may require each Subadvised
Series to disclose fees paid by the Adviser to each Subadviser.
Applicants seek relief to permit each Subadvised Series to disclose (as
a dollar amount and a percentage of the Subadvised Series' net assets):
(a) The aggregate fees paid to the Adviser and any Wholly-Owned
Subadvisers; (b) the aggregate fees paid to Non-Affiliated Subadvisers;
and (c) the fee paid to each Affiliated Subadviser (collectively, the
``Aggregate Fee Disclosure''). An exemption is requested to permit the
Series to include only the Aggregate Fee Disclosure. All other items
required by Sections 6-07(2)(a), (b), and (c) of Regulation S-X will be
disclosed.

Applicants' Legal Analysis

    1. Section 15(a) of the Act states, in part, that it is unlawful
for any person to act as an investment adviser to a registered
investment company ``except pursuant to a written contract, which
contract, whether with such registered company or with an investment
adviser of such registered company, has been approved by the vote of a
majority of the outstanding voting securities of such registered
company.'' Rule 18f-2 under the Act provides that each series or class
of stock in a series investment company affected by a matter must
approve that matter if the Act requires shareholder approval.
    2. Form N-1A is the registration statement used by open-end
investment companies. Item 19(a)(3) of Form N-1A

requires a registered investment company to disclose in its statement
of additional information the method of computing the ``advisory fee
payable'' by the investment company, including the total dollar amounts
that the investment company ``paid to the adviser (aggregated with
amounts paid to affiliated advisers, if any), and any advisers who are
not affiliated persons of the adviser, under the investment advisory
contract for the last three fiscal years.''
    3. Rule 20a-1 under the Act requires proxies solicited with respect
to a registered investment company to comply with Schedule 14A under
the Exchange Act. Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and
22(c)(9) of Schedule 14A, taken together, require a proxy statement for
a shareholder meeting at which the advisory contract will be voted upon
to include the ``rate of compensation of the investment adviser,'' the
``aggregate amount of the investment adviser's fee,'' a description of
the ``terms of the contract to be acted upon,'' and, if a change in the
advisory fee is proposed, the existing and proposed fees and the
difference between the two fees.
    4. Regulation S-X sets forth the requirements for financial
statements required to be included as part of a registered investment
company's registration statement and shareholder reports filed with the
Commission. Sections 6-07(2)(a), (b), and (c) of Regulation S-X require
a registered investment company to include in its financial statement
information about the investment advisory fees.
    5. Section 6(c) of the Act provides that the Commission by order
upon application may conditionally or unconditionally exempt any
person, security, or transaction or any class or classes of persons,
securities, or transactions from any provisions of the Act, or from any
rule thereunder, if such exemption is necessary or appropriate in the
public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
Applicants state that their requested relief meets this standard for
the reasons discussed below.
    6. Applicants assert that the shareholders expect the Adviser,
subject to the review and approval of the Board, to select the
Subadvisers who are in the best position to achieve the Subadvised
Series' investment objective. Applicants assert that, from the
perspective of the shareholder, the role of the Subadvisers is
substantially equivalent to the role of the individual portfolio
managers employed by an investment adviser to a traditional investment
company. Applicants believe that permitting the Adviser to perform the
duties for which the shareholders of the Subadvised Series are paying
the Adviser--the selection, supervision and evaluation of the
Subadvisers--without incurring unnecessary delays or expenses is
appropriate in the interest of the Subadvised Series' shareholders and
will allow such Subadvised Series to operate more efficiently.
Applicants state that the Investment Advisory Agreement will continue
to be fully subject to section 15(a) of, and rule 18f-2 under, the Act
and approved by the Board, including a majority of the Independent
Board Members, in the manner required by sections 15(a) and 15(c) of
the Act. Applicants are not seeking an exemption with respect to the
Investment Advisory Agreement.
    7. Applicants assert that disclosure of the individual fees that
the Adviser would pay to the Subadvisers of Subadvised Series that
operate under the multi-manager structure described in the application
would not serve any meaningful purpose. Applicants contend that the
primary reasons for requiring disclosure of individual fees paid to
Subadvisers are to inform shareholders of expenses to be charged by a
particular Subadvised Series and to enable shareholders to compare the
fees to those of other comparable investment companies. Applicants
believe that the requested relief satisfies these objectives because
the advisory fee paid to the Adviser will be fully disclosed and
therefore, shareholders will know what the Subadvised Series' fees and
expenses are and will be able to compare the advisory fees a Subadvised
Series is charged to those of other investment companies. Applicants
assert that the requested disclosure relief would benefit shareholders
of the Subadvised Series because it would improve the Adviser's ability
to negotiate the fees paid to Subadvisers. Applicants state that the
Adviser may be able to negotiate rates that are below a Subadviser's
``posted'' amounts if the Adviser is not required to disclose the
Subadvisers' fees to the public. Applicants submit that the relief
requested to use Aggregate Fee Disclosure will also encourage
Subadvisers to negotiate lower sub-advisory fees with the Adviser if
the lower fees are not required to be made public.
    8. For the reasons discussed above, applicants submit that the
requested relief meets the standards for relief under section 6(c) of
the Act. Applicants state that the operation of the Subadvised Series
in the manner described in the application must be approved by
shareholders of a Subadvised Series before that Subadvised Series may
rely on the requested relief. In addition, applicants state that the
proposed conditions to the requested relief are designed to address any
potential conflicts of interest, including any posed by the use of
Wholly-Owned Subadvisers, and provide that shareholders are informed
when new Subadvisers are hired. Applicants assert that conditions 6, 7,
10 and 11 are designed to provide the Board with sufficient
independence and the resources and information it needs to monitor and
address any conflicts of interest with affiliated persons of the
Adviser, including Wholly-Owned Subadvisers. Applicants state that,
accordingly, they believe the requested relief is necessary or
appropriate in the public interest and consistent with the protection
of investors and the purposes fairly intended by the policy and
provisions of the Act.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will
be subject to the following conditions:
    1. Before a Subadvised Series may rely on the order requested in
the application, the operation of the Subadvised Series in the manner
described in the application, including the hiring of Wholly-Owned
Subadvisers, will be, or has been, approved by a majority of the
Subadvised Series' outstanding voting securities as defined in the Act,
or, in the case of a new Subadvised Series whose public shareholders
purchase shares on the basis of a prospectus containing the disclosure
contemplated by condition 2 below, by the sole initial shareholder
before offering the Subadvised Series' shares to the public.
    2. The prospectus for each Subadvised Series will disclose the
existence, substance, and effect of any order granted pursuant to the
application. Each Subadvised Series will hold itself out to the public
as employing the multi-manager structure described in the application.
Each prospectus will prominently disclose that the Adviser has the
ultimate responsibility, subject to oversight by the Board, to oversee
the Subadvisers and recommend their hiring, termination and
replacement.
    3. The Adviser will provide general management services to a
Subadvised Series, including overall supervisory responsibility for the
general management and investment of the Subadvised Series' assets.
Subject to review and approval of the Board, the

Adviser will (a) set a Subadvised Series' overall investment
strategies, (b) evaluate, select, and recommend Subadvisers to manage
all or a portion of a Subadvised Series' assets, and (c) implement
procedures reasonably designed to ensure that Subadvisers comply with a
Subadvised Series' investment objective, policies and restrictions.
Subject to review by the Board, the Adviser will (a) when appropriate,
allocate and reallocate a Subadvised Series' assets among multiple
Subadvisers; and (b) monitor and evaluate the performance of
Subadvisers.
    4. A Subadvised Series will not make any Ineligible Subadviser
Changes without such agreement, including the compensation to be paid
thereunder, being approved by the shareholders of the applicable
Subadvised Series.
    5. Subadvised Series will inform shareholders of the hiring of a
new Subadviser within 90 days after the hiring of the new Subadviser
pursuant to the Modified Notice and Access Procedures.
    6. At all times, at least a majority of the Board will be
Independent Board Members, and the selection and nomination of new or
additional Independent Board Members will be placed within the
discretion of the then-existing Independent Board Members.
    7. Independent Legal Counsel, as defined in rule 0-1(a)(6) under
the Act, will be engaged to represent the Independent Board Members.
The selection of such counsel will be within the discretion of the
then-existing Independent Board Members.
    8. The Adviser will provide the Board, no less frequently than
quarterly, with information about the profitability of the Adviser on a
per Subadvised Series basis. The information will reflect the impact on
profitability of the hiring or termination of any Subadviser during the
applicable quarter.
    9. Whenever a Subadviser is hired or terminated, the Adviser will
provide the Board with information showing the expected impact on the
profitability of the Adviser.
    10. Whenever a Subadviser change is proposed for a Subadvised
Series with an Affiliated Subadviser or a Wholly-Owned Subadviser, the
Board, including a majority of the Independent Board Members, will make
a separate finding, reflected in the Board minutes, that such change is
in the best interests of the Subadvised Series and its shareholders,
and does not involve a conflict of interest from which the Adviser or
the Affiliated Subadviser or Wholly-Owned Subadviser derives an
inappropriate advantage.
    11. No Board member or officer of a Subadvised Series, or partner,
director, manager, or officer of the Adviser, will own directly or
indirectly (other than through a pooled investment vehicle that is not
controlled by such person), any interest in a Subadviser, except for
(i) ownership of interests in the Adviser or any entity, other than a
Wholly-Owned Subadviser, that controls, is controlled by, or is under
common control with the Adviser, or (ii) ownership of less than 1% of
the outstanding securities of any class of equity or debt of a publicly
traded company that is either a Subadviser or an entity that controls,
is controlled by, or is under common control with a Subadviser.
    12. Each Subadvised Series will disclose the Aggregate Fee
Disclosure in its registration statement.
    13. In the event the Commission adopts a rule under the Act
providing substantially similar relief to that requested in the
application, the requested order will expire on the effective date of
that rule.
    14. Any new Sub-Advisory Agreement or any amendment to a Subadvised
Series' existing Investment Advisory Agreement or Sub-Advisory
Agreement that directly or indirectly results in an increase in the
aggregate advisory fee rate payable by the Subadvised Series will be
submitted to the Subadvised Series' shareholders for approval.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-17883 Filed 7-29-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 86, Number 91 (Thursday, May 13, 2021)]
[Rules and Regulations]
[Pages 26149-26150]
[FR Doc No: 2021-10068]

========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents.

========================================================================

Federal Register / Vol. 86, No. 91 / Thursday, May 13, 2021 / Rules
and Regulations

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2021-0138; Project Identifier MCAI-2020-01466-T;
Amendment 39-21560; AD 2021-10-27]
RIN 2120-AA64

Airworthiness Directives; BAE Systems (Operations) Limited
Airplanes

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

ACTION: Final rule.

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

SUMMARY: The FAA is adopting a new airworthiness directive (AD) for all
BAE Systems (Operations) Limited Model BAe 146 and Model Avro 146-RJ
series airplanes. This AD was prompted by a report indicating that
during a routine battery capacity check on the emergency light power
units, the printed circuit boards (PCBs) for certain power units were
found to show signs of burning. This AD requires replacing each
Honeywell emergency light power unit having a certain part number with
a serviceable emergency light power unit. The FAA is issuing this AD to
address the unsafe condition on these products.

DATES: This AD is effective June 17, 2021.

ADDRESSES:

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-2021-
0138; or in person at Docket Operations between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays. The AD docket contains
this final rule, any comments received, and other information. The
address for Docket Operations is U.S. Department of Transportation,
Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200
New Jersey Avenue SE, Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Todd Thompson, Aerospace Engineer,
Large Aircraft Section, International Validation Branch, FAA, 2200
South 216th St., Des Moines, WA 98198; telephone and fax:<PHONE_NUMBER>;
email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Background

    The European Union Aviation Safety Agency (EASA), which is the
Technical Agent for the Member States of the European Union, has issued
EASA AD 2020-0237, dated October 28, 2020 (EASA AD 2020-0237) (also
referred to as the Mandatory Continuing Airworthiness Information, or
the MCAI), to correct an unsafe condition for all BAE Systems
(Operations) Limited Model BAe 146 and Model Avro 146-RJ series
airplanes. You may examine the MCAI in the AD docket at https://www.regulations.gov by searching for and locating Docket No. FAA-2021-
0138.
    The FAA issued a notice of proposed rulemaking (NPRM) to amend 14
CFR part 39 by adding an AD that would apply to all BAE Systems
(Operations) Limited Model BAe 146 and Model Avro 146-RJ series
airplanes. The NPRM published in the Federal Register on March 15, 2021
(86 FR 14283). The NPRM was prompted by a report indicating that during
a routine battery capacity check on the emergency light power units,
the PCBs for certain power units were found to show signs of burning.
The NPRM proposed to require replacing each Honeywell emergency light
power unit having a certain part number with a serviceable emergency
light power unit. The FAA is issuing this AD to address heat damage of
the PCBs, which could lead to battery discharge and possibly result in
lack of power supply to the emergency light units when needed. See the
MCAI for additional background information.

Comments

    The FAA gave the public the opportunity to participate in
developing this final rule. The FAA received no comments on the NPRM or
on the determination of the cost to the public.

Conclusion

    The FAA reviewed the relevant data and determined that air safety
and the public interest require adopting this final rule as proposed,
except for minor editorial changes. The FAA has determined that these
minor changes:
     Are consistent with the intent that was proposed in the
NPRM for addressing the unsafe condition; and
     Do not add any additional burden upon the public than was
already proposed in the NPRM.

Costs of Compliance

    The FAA estimates that this AD affects 30 airplanes of U.S.
registry. The FAA estimates the following costs to comply with this AD:

                                      Estimated Costs for Required Actions
----------------------------------------------------------------------------------------------------------------
                                                                                Cost per       Cost on U.S.
                          Labor cost                              Parts cost        product         operators
----------------------------------------------------------------------------------------------------------------
2 work-hours x $85 per hour = $170...........................          $1,800           $1,970          $59,100
----------------------------------------------------------------------------------------------------------------

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, section 106, describes the
authority of the FAA Administrator. Subtitle VII: Aviation Programs,
describes in more detail the scope of the Agency's authority.
    The FAA is issuing this rulemaking under the authority described in
Subtitle VII, Part A, Subpart III, Section 44701: General requirements.
Under that section, Congress charges the FAA with promoting safe flight
of civil aircraft in air commerce by prescribing regulations for
practices, methods, and

procedures the Administrator finds necessary for safety in air
commerce. This regulation is within the scope of that authority because
it addresses an unsafe condition that is likely to exist or develop on
products identified in this rulemaking action.

Regulatory Findings

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

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

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

2021-10-27 BAE Systems (Operations) Limited: Amendment 39-21560;
Docket No. FAA-2021-0138; Project Identifier MCAI-2020-01466-T.

(a) Effective Date

    This airworthiness directive (AD) is effective June 17, 2021.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to all BAE Systems (Operations) Limited
airplanes specified in paragraphs (c)(1) and (2) of this AD,
certificated in any category.
    (1) Model BAe 146-100A, -200A, and -300A airplanes.
    (2) Model Avro 146-RJ70A, 146-RJ85A, and 146-RJ100A airplanes.

(d) Subject

    Air Transport Association (ATA) of America Code 33, Lights.

(e) Unsafe Condition

    This AD was prompted by a report indicating that during a
routine battery capacity check on the emergency light power units,
the printed circuit boards (PCBs) for power units LE 10 and LE 22
(Illustrated Parts Catalog (IPC) 33-50-00) were found to show signs
of burning. The FAA is issuing this AD to address heat damage of the
PCBs, which could lead to battery discharge and possibly result in
lack of power supply to the emergency light units when needed.

(f) Compliance

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

(g) Definitions

    (1) An affected part is defined as a Honeywell emergency light
power unit, having part number 60-3550-1, except for those modified
and marked using the instructions specified in Honeywell Service
Bulletin 60-3550-33-0001, Revision 1, dated September 3, 2013.
    (2) A serviceable part is defined as an emergency light power
unit that is not an affected part.
    (3) Group 1 airplanes are those that have an affected part
installed.
    (4) Group 2 airplanes are those that do not have an affected
part installed.

(h) Replacement

    Within two months after the effective date of this AD: Replace
each affected part with a serviceable part.

    Note 1 to paragraph (h): BAE Systems (Operations) Limited
Service Bulletin ISB.33-081, dated November 4, 2019, contains
information related to the replacement specified in paragraph (h) of
this AD.

(i) Parts Installation Prohibition

    As of the applicable compliance times specified in paragraphs
(i)(1) or (2) of this AD, do not install an affected part on any
airplane.
    (1) For Group 1 airplanes: After replacement of each affected
part on an airplane as specified in paragraph (h) of this AD.
    (2) For Group 2 airplanes: As of the effective date of this AD.

(j) Other FAA AD Provisions

    The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager,
Large Aircraft Section, International Validation 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 responsible Flight
Standards Office, as appropriate. If sending information directly to
the Large Aircraft Section, International Validation Branch, send it
to the attention of the person identified in paragraph (k)(2) of
this AD. Information may be emailed to<EMAIL_ADDRESS>
Before using any approved AMOC, notify your appropriate principal
inspector, or lacking a principal inspector, the manager of the
responsible Flight Standards Office.
    (2) Contacting the Manufacturer: For any requirement in this AD
to obtain instructions from a manufacturer, the instructions must be
accomplished using a method approved by the Manager, Large Aircraft
Section, International Validation Branch, FAA; or the European Union
Aviation Safety Agency (EASA); or BAE Systems (Operations) Limited's
EASA Design Organization Approval (DOA). If approved by the DOA, the
approval must include the DOA-authorized signature.

(k) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information
(MCAI) EASA AD 2020-0237, dated October 28, 2020, for related
information. This MCAI may be found in the AD docket on the internet
at https://www.regulations.gov by searching for and locating Docket
No. FAA-2021-0138.
    (2) For more information about this AD, contact Todd Thompson,
Aerospace Engineer, Large Aircraft Section, International Validation
Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone
and fax:<PHONE_NUMBER>; email<EMAIL_ADDRESS>    (3) For service information identified in this AD that is not
incorporated by reference, contact BAE Systems (Operations) Limited,
Customer Information Department, Prestwick International Airport,
Ayrshire, KA9 2RW, Scotland, United Kingdom; telephone +44 1292
675207; fax +44 1292 675704; email<EMAIL_ADDRESS>
internet http://www.baesystems.com.

(l) Material Incorporated by Reference

    None.

    Issued on May 7, 2021.
Gaetano A. Sciortino,
Deputy Director for Strategic Initiatives, Compliance & Airworthiness
Division, Aircraft Certification Service.
[FR Doc. 2021-10068 Filed 5-12-21; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register: March 19, 2009 (Volume 74, Number 52)]
[Notices]
[Page 11808]
[DOCID:fr19mr09-131]

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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

Notice of Informational Filing

    For informational purposes only, the Federal Railroad
Administration (FRA) is providing notice that it has received an
informational filing from BNSF Railway Company (BNSF) to continue
testing Version II of the railroad's Electronic Train Management System
(ETMS) submitted pursuant to Title 49 Code of Federal Regulations Sec.
236.913. The informational filing is described below, including the
submitting party and the requisite docket number where the
informational filing and any related information may be found. The
document is available for public inspection; however, FRA is not
accepting public comment on the document.

BNSF Railway Company (Docket Number FRA-2006-23687)

    The BNSF Railway Company (BNSF) has submitted an informational
filing to FRA to extend operational testing of ETMS Version II on to
its Wichita Falls Subdivision. This continued testing will allow BNSF
to obtain the necessary information required to amend its currently
approved Product Safety Plan for ETMS Version I for a future submittal
to FRA. The informational filing has been placed under Docket Number
FRA-2006-23687 and is available for public inspection.
    Interested parties are invited to review the informational filing
and associated documents at the DOT Docket Management facility during
regular business hours (9 a.m.-5 p.m.) at 1200 New Jersey Avenue, SE.,
Room W12-140, Washington, DC 20590. All documents in the public docket
are also available for inspection and copying on the internet at http:/
/www.regulations.gov.
    Anyone is able to search the electronic form of any written
communications received into any of our dockets by name of the
individual submitting the document (or signing the document, if
submitted on behalf of an association, business, labor union, etc.).
You may review the DOT's complete Privacy Act Statement in the Federal
Register published on April 11, 2000 (Volume 65, Number 70; Pages
19477-78).

    Issued in Washington, DC on March 12, 2009.
Grady C. Cothen, Jr.,
Deputy Associate Administrator for Safety Standards and Program
Development.
 [FR Doc. E9-5842 Filed 3-18-09; 8:45 am]

BILLING CODE 4910-06-P


[Federal Register Volume 84, Number 117 (Tuesday, June 18, 2019)]
[Notices]
[Page 28315]
[FR Doc No: 2019-12831]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[Internal Agency Docket No. FEMA-4421-DR; Docket ID FEMA-2019-0001]

Iowa; Amendment No. 6 to Notice of a Major Disaster Declaration

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notice.

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

SUMMARY: This notice amends the notice of a major disaster declaration
for the State of Iowa (FEMA-4421-DR), dated March 23, 2019, and related
determinations.

DATES: This amendment was issued May 8, 2019.

FOR FURTHER INFORMATION CONTACT: Dean Webster, Office of Response and
Recovery, Federal Emergency Management Agency, 500 C Street SW,
Washington, DC 20472,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The notice of a major disaster declaration
for the State of Iowa is hereby amended to include the following areas
among those areas determined to have been adversely affected by the
event declared a major disaster by the President in his declaration of
March 23, 2019.

    Carroll, Dickinson, Madison, Mahaska, and Page Counties for
Public Assistance [Categories C-G] (already designated for debris
removal and emergency protective measures [Categories A and B],
including direct federal assistance, under the Public Assistance
program).

The following Catalog of Federal Domestic Assistance Numbers (CFDA)
are to be used for reporting and drawing funds: 97.030, Community
Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling;
97.033, Disaster Legal Services; 97.034, Disaster Unemployment
Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048,
Disaster Housing Assistance to Individuals and Households In
Presidentially Declared Disaster Areas; 97.049, Presidentially
Declared Disaster Assistance--Disaster Housing Operations for
Individuals and Households; 97.050, Presidentially Declared Disaster
Assistance to Individuals and Households--Other Needs; 97.036,
Disaster Grants--Public Assistance (Presidentially Declared
Disasters); 97.039, Hazard Mitigation Grant.

Pete Gaynor,
Acting Administrator, Federal Emergency Management Agency.
[FR Doc. 2019-12831 Filed 6-17-19; 8:45 am]
 BILLING CODE 9111-23-P


[Federal Register: March 26, 2009 (Volume 74, Number 57)]
[Proposed Rules]
[Page 13170]
[DOCID:fr26mr09-35]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2007-0359-200823(b); FRL-8781-6]

Approval and Promulgation of Implementation Plans; Revisions to
the Alabama State Implementation Plan; Birmingham and Jackson Counties

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to approve a revision to the Alabama State
Implementation Plan (SIP) for two separate areas: Birmingham
nonattainment area and Jackson County nonattainment area for both the
8-hour ozone and the PM2.5 National Ambient Air Quality
Standard. On March 7, 2007, and on January 8, 2009, revisions of the
transportation conformity criteria and procedures related to
interagency consultation and enforceability of certain transportation-
related control measures and mitigation measures were submitted to EPA
for approval by the State of Alabama. The intended effect is to update
the transportation conformity criteria and procedures in the Alabama
SIP.
    In the Final Rules Section of this Federal Register, EPA is
approving the State's SIP revision as a direct final rule without prior
proposal because the Agency views this as a noncontroversial submittal
and anticipates no adverse comments. A detailed rationale for the
approval is set forth in the direct final rule. If no adverse comments
are received in response to this rule, no further activity is
contemplated. If EPA receives adverse comments, the direct final rule
will be withdrawn and all public comments received will be addressed in
a subsequent final rule based on this proposed rule. EPA will not
institute a second comment period on this document. Any parties
interested in commenting on this document should do so at this time.

DATES: Written comments must be received on or before April 27, 2009.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-
OAR-2007-0359, by one of the following methods:
    (a) http://www.regulations.gov: Follow the on-line instructions for
submitting comments.
    (b) E-mail<EMAIL_ADDRESS>    (c) Fax:<PHONE_NUMBER>.
    (d) Mail: ``EPA-R04-OAR-2007-0359,'' Air Quality Modeling and
Transportation Section, Air Planning Branch, Air, Pesticides and Toxics
Management Division, U.S. Environmental Protection Agency, Region 4, 61
Forsyth Street, SW., Atlanta, Georgia 30303-8960.
    (e) Hand Delivery or Courier: Amanetta Wood, Air Quality Modeling
and Transportation Section, Air Planning Branch, Air, Pesticides and
Toxics Management Division, U.S. Environmental Protection Agency,
Region 4, 61 Forsyth Street, SW., Atlanta, Georgia 30303-8960. Such
deliveries are only accepted during the Regional Office's normal hours
of operation. The Regional Office's official hours of business are
Monday through Friday, 8:30 to 4:30, excluding Federal holidays.
    Please see the direct final rule which is located in the Rules
section of this Federal Register for detailed instructions on how to
submit comments.

FOR FURTHER INFORMATION CONTACT: Amanetta Wood of the Air Quality
Modeling and Transportation Section at the Air Planning Branch, Air,
Pesticides and Toxics Management Division, U.S. Environmental
Protection Agency, Region 4, 61 Forsyth Street, SW., Atlanta, Georgia
30303-8960. Ms. Wood's telephone number is<PHONE_NUMBER>. She can also
be reached via electronic mail at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: For additional information see the direct
final rule which is published in the Rules Section of this Federal
Register.

    Dated: February 25, 2009.
Beverly H. Banister,
Acting Regional Administrator, Region 4.
[FR Doc. E9-6644 Filed 3-25-09; 8:45 am]

BILLING CODE 6560-50-P


[Federal Register Volume 79, Number 124 (Friday, June 27, 2014)]
[Notices]
[Pages 36498-36500]
[FR Doc No: 2014-15091]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RD14-4-000]

Proposed Agency Information Collection

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice and Request for Comments.

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

SUMMARY: The Federal Energy Regulatory Commission (Commission) invites
public comment in Docket No. RD14-4-000 on a proposed collection of
information that the Commission is developing for submission to the
Office of Management and Budget (OMB) pursuant to the Paperwork
Reduction Act of 1995. Comments are invited on: (a) Whether the
proposed collection of information is necessary for the proper
performance of the functions of the agency, including whether the
information shall have practical utility; (b) the accuracy of the
agency's estimate of the burden of the proposed collection of
information, including the validity of the methodology and assumptions
used; (c) ways to enhance the quality, utility, and clarity of the
information to be collected; and (d) ways to minimize the burden of the
collection of information on respondents, including through the use of
automated collection techniques or other forms of information
technology.

DATES: Comments regarding this proposed information collection must be
received on or before August 26, 2014.

ADDRESSES: Comments, identified by docket number, may be filed in the
following ways:
     Electronic Filing through http://www.ferc.gov. Documents
created electronically using word processing software should be filed
in native applications or print-to-PDF format and not in a scanned
format.
     Mail/Hand Delivery: Those unable to file electronically
may mail or hand-deliver an original of their comments to: Federal
Energy Regulatory Commission, Secretary of the Commission, 888 First
Street NE., Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT: Ellen Brown may be reached by email at
<EMAIL_ADDRESS>telephone at<PHONE_NUMBER>, and fax at (202)
273-0873.

SUPPLEMENTARY INFORMATION: The proposed information collection in
Docket No. RD14-4-000 relates to a proposed revision to the Interchange
Scheduling and Coordination (INT) group of Reliability Standards,
developed by the North American Electric Reliability Corporation
(NERC), and submitted to the Commission for approval. The proposed
revision modifies the Interchange Scheduling and Coordination
Reliability Standards in response to Commission directives in Order No.
693,\1\ as well as some other clarifying revisions relating to the ten
revised definitions and four new definitions to be added to the NERC
Glossary of Terms Used in NERC Reliability Standards (NERC Glossary).
The information collection requirements contained in the Interchange
Scheduling and Coordination group of Reliability Standards are
contained in FERC-725A (OMB Control Number 1902-0244).
---------------------------------------------------------------------------

    \1\ Mandatory Reliability Standards for the Bulk-Power System,
Order No. 693, 72 FR 16416 (Apr. 4, 2007), FERC Stats. & Regs. ]
31,242, at PP 819, 821, 843, 848, 872, 875 & 887, order on reh'g,
Order No. 693-A, 120 FERC ] 61,053 (2007).
---------------------------------------------------------------------------

    On March 16, 2007, the Commission issued Order No. 693, approving
83 of the 107 Reliability Standards and

associated definitions filed by NERC, including the Interchange
Scheduling and Coordination group of Reliability Standards INT-001,
INT-003, INT-004, INT-005, INT-006, INT-007, INT-008, INT-009, and INT-
010.\2\ In Order No. 693, the Commission directed NERC to make changes
through the Reliability Standards development process to address
certain directives. Specifically, the Commission directed NERC to: (1)
Develop a modification to INT-001-2 that includes a requirement that
interchange information must be submitted for all point-to-point
transfers entirely within a balancing authority area, including all
grandfathered and ``non-Order No. 888'' transfers; and (2) to develop a
modification to INT-006-1 through the Reliability Standards development
process to make the standard applicable to reliability coordinators and
transmission operators, and require reliability coordinators and
transmission operators to review energy interchange transactions from
the wide-area and local area reliability viewpoints respectively and,
where their review indicates a potential detrimental reliability
impact, communicate to the sink balancing authorities necessary
transaction modifications.
---------------------------------------------------------------------------

    \2\ Order No. 693, FERC Stats. & Regs. ] 31,242 at PP 814-887.
---------------------------------------------------------------------------

    In its February 27, 2014 petition, NERC seeks Commission approval
of proposed revisions to the currently effective Reliability Standards,
as well as one new Reliability Standard to address the Commission's
directives. NERC asserts that, collectively, the five proposed
Reliability Standards, consisting of fourteen requirements, consolidate
the body of Interchange Scheduling and Coordination Reliability
Standards. In its petition, NERC also seeks approval for the retirement
of the currently effective Reliability Standards.\3\ NERC also seeks
approval of ten revised definitions and four new definitions to be
added to the NERC Glossary. NERC proposes to add the term
``Interchange'' to the existing definition for ``Operational Planning
Analysis.'' \4\ NERC States that ``by explicitly including
`Interchange' in the definition of `Operational Planning Analysis,' the
Reliability Coordinator must consider Interchange when performing the
analysis required in Reliability Standard IRO-008-1.'' \5\ Therefore,
the estimates for this information collection are based on the proposed
modifications.
---------------------------------------------------------------------------

    \3\ NERC Petition at 4.
    \4\ ``Interchange'' is defined in the NERC Glossary as ``Energy
transfers that cross Balancing Authority Boundaries.
    \5\ NERC Petition at 32.
---------------------------------------------------------------------------

    The Commission estimates a modest increase in information
collection and reporting that would result from implementing NERC's
proposed revision to the NERC Glossary definition of ``Operational
Planning Analysis'' and new proposed Reliability Standard INT-011-1.
The estimate reflects NERC's proposal to include a requirement that
interchange information must be submitted for all point-to-point
transfers entirely within a balancing authority area, including all
grandfathered and ``non-Order No. 888'' transfers; and NERC's
alternative proposal to address the Commission's concern regarding INT-
006-1, as described above.
    NERC explains that ``by explicitly including `Interchange' in the
definition of `Operational Planning Analysis,' the Reliability
Coordinator must consider Interchange when performing the analysis
required in Reliability Standard IRO-008-1.'' \6\ These administrative
burdens fall into three categories of ``Submit Interchange
Information,'' ``Communicate Transaction Modification'' and ``Submit a
Request for Interchange'' as described in NERC's petition.\7\ NERC's
technical justification has shown that when the results of reliability
coordinator studies indicate the need for action, the reliability
coordinator is required to share the results per Requirement R3 of
Reliability Standard IRO-008-1. NERC explains that because energy
transfers within a balancing authority area that use point-to-point
transmission service can impact transmission congestion, proposed
Reliability Standard INT-011-1 ensures that these transfers are
communicated and accounted for in congestion management procedures. If
a transfer within a balancing authority area is submitted as a request
for interchange or otherwise accounted for in congestion management
procedures, it can be evaluated and processed comparable to a request
for interchange that crosses balancing authority areas.\8\
---------------------------------------------------------------------------

    \6\ NERC Petition at 32.
    \7\ NERC Petition, Exhibit E at 1-2.
    \8\ NERC Petition at 22.
---------------------------------------------------------------------------

    Accordingly, we estimate an increase of one hour needed for
``Submit Interchange Information'' for balancing authorities,
``Communicate Transaction Modification'' for the reliability
coordinators, and ``Submit a Request for Interchange'' for the load-
serving entities, respectively. With respect to the proposed revisions
and retirement of the currently-effective Reliability Standards, the
Commission estimates no material change in information collection
because the consolidation of the standards does not impact the
paperwork burden.
    Burden Statement: Public reporting burden for this proposed
collection is estimated as:

                                                                        FERC-725A
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average      Total annual
                                                 Number and type of       Annual  number   Total number    burden & cost  burden hours &     Cost per
                                                     respondents           of  responses   of responses    per response    total annual   respondent ($)
                                                                          per respondent                        \9\            cost
                                            (1).........................             (2)   (1)*(2) = (3)             (4)   (3)*(4) = (5)       (5) / (1)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Submit Interchange Information............  114, Balancing authority                  52           5,928          1, $60          5,928,          $3,120
                                             (BA).                                                                              $355,680
Communicate Transaction Modification......  21, Reliability coordinator               12             252          1, $60    252, $15,120             720
                                             (RC).
Submit Request for Interchange (INT-011-1)  502, Load-serving entity                  12           6,024          1, $60          6,024,             720
                                             (LSE).                                                                             $361,440
Evidence Retention........................  637, BA/RC/LSE..............               1             637          1, $32    637, $20,384              32
                                                                         -------------------------------------------------------------------------------
    Total.................................  ............................  ..............          12,841  ..............         12,841,  ..............
                                                                                $752,624
--------------------------------------------------------------------------------------------------------------------------------------------------------

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

    \9\ The estimates for cost per response are derived using the
following formula: Average Burden Hours per Response * XX per Hour =
Average Cost per Response. The estimates for cost per hour (rounded
to the nearest dollar) are derived as follows:
     $60/hour, the average salary plus benefits per engineer
(from Bureau of Labor Statistics at http://bls.gov/oes/current/naics3_221000.htm).
     $82/hour, the salary plus benefits per manager (from
Bureau of Labor Statistics at http://bls.gov/oes/current/naics3_221000.htm).
     $32/hour, the salary plus benefits per information and
record clerks (from Bureau of Labor Statistics at http://bls.gov/oes/current/naics3_221000.htm).

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    Dated: June 18, 2014.
Kimberly D. Bose,
Secretary.
[FR Doc. 2014-15091 Filed 6-26-14; 8:45 am]
BILLING CODE 6717-01-P