[Federal Register Volume 85, Number 48 (Wednesday, March 11, 2020)]
[Notices]
[Pages 14284-14286]
[FR Doc No: 2020-04920]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88337; File No. SR-ICC-2020-001]

Self-Regulatory Organizations; ICE Clear Credit LLC; Order
Approving Proposed Rule Change Relating To Revising the ICC Clearing
Rules To Consider the Possibility of ICC Receiving Proceeds From
Default Insurance

March 5, 2020.

I. Introduction

    On January 9, 2020, ICE Clear Credit LLC (``ICC'') 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 thereunder,\2\ a proposed rule change to
revise its Clearing Rules (the ``Rules'') \3\ to consider the
possibility of ICC receiving proceeds from default insurance. The
proposed rule change was published for comment in the Federal Register
on January 21, 2020.\4\ 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\ Capitalized terms used but not defined herein have the
meanings specified in the Rules.
    \4\ Self-Regulatory Organizations; ICE Clear Credit LLC; Notice
of Filing of Proposed Rule Change, Security-Based Swap Submission,
or Advance Notice Relating to the ICC Clearing Rules; Exchange Act
Release No. 87958 (Jan. 14, 2020); 85 FR 3446 (Jan. 21, 2020)
(``Notice'').
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II. Description of the Proposed Rule Change

    The proposed rule change would amend Chapters 1 and 8 of the ICC
Rules to allow ICC to receive proceeds from an insurance policy in the
event of the default of a Clearing Participant (``CP''). The proposed
rule change would incorporate these proceeds from insurance into ICC's
default waterfall and therefore treat them similar to other resources
that ICC uses to cover losses from CP defaults, like the guaranty fund.
In terms of incorporating insurance proceeds into ICC's default
waterfall, under the proposed rule change, generally ICC would use
proceeds from insurance before using guaranty fund resources from non-
defaulting CPs. Although the proposed rule change would establish the
legal framework for ICC to maintain insurance and use insurance
proceeds in the event of a CP's default, the proposed rule change would
not require that ICC maintain such insurance.
    With respect to Chapter 1 of the ICC Rules, which sets out the
defined terms used in the Rules, the proposed rule change would add to
ICC Rule 102 (``Definitions'') the term ``Insurance Proceeds'' and
would refer to proposed Rule 802(b)(i)(A)(4), where the term would be
defined. Proposed Rule 802(b)(i)(A)(4) would define the term
``Insurance Proceeds'' to mean insurance proceeds, if any, received by
ICC in connection with a CP's default. Additionally, proposed Rule
802(b)(i)(A)(4) would state that ICC shall not be obligated to obtain
or maintain any insurance policy with respect to the default of a CP,
thus making explicit the point described above that the proposed rule
change would not require that ICC maintain insurance against defaults.
    With respect to Chapter 8 of the ICC Rules, the proposed rule
change would first amend ICC Rule 802(a). ICC Rule 802(a) provides that
ICC may charge against a defaulting CP's contributions to the guaranty
fund losses suffered from the CP's default. Rule 802(a) lists the types
of losses and expenses that ICC may charge against the defaulting CP's
contributions to the guaranty fund, ordered by priority. Rule 802(a)
also explains how ICC would pay out any surplus remaining after paying
all of the other listed items. As explained in Rule 802(a), ICC may pay
the surplus to ICC or to whomever may be lawfully entitled to receive
the surplus, including any insurer, surety, or guarantor of the
obligations of ICC. The proposed rule change would add to this any
insurer, surety, or guarantor with respect to the obligations of the

defaulting CP. This aspect of the proposed change would thus allow ICC
to pay to an insurance provider surplus guaranty fund contributions of
the defaulting CP, which ICC may be required to do under the terms of a
policy insuring against losses resulting from the default of a CP.
    The proposed rule change would next amend Rule 802(b) to integrate
default insurance into ICC's default waterfall. Rule 802(b) gives ICC
the right to charge against certain financial resources losses
resulting from the default of a CP. Rule 802(b) lists the financial
resources to which ICC may charge such losses, in the order by which
ICC may use them. The proposed rule change would add to this list the
insurance proceeds, if any, that ICC receives in connection with the
CP's default. ICC would be able to use the insurance proceeds only
after charging losses to ICC's contributions to the guaranty fund but
before using the guaranty fund contributions of non-defaulting CPs.
    Under ICC Rule 802(c), the defaulting CP remains liable for any
losses charged in the manner permitted under Rule 802(b). As such, Rule
802(c) permits ICC to recover the liability from the defaulting CP's
margin, collateral, or other assets, or by legal process. Rule 802(c)
also requires that, should ICC make any such recovery, ICC must use the
money recovered to pay back certain expenses and persons, according to
the order listed in Rule 802(c). The proposed rule change would add to
this list in Rule 802(c) an insurance provider, to the extent the
provider is entitled to such recovery. Thus, this aspect of the
proposed rule change would amend Rule 802(c) to reflect that ICC may
owe money recovered from or in respect of a defaulting CP to the
insurance provider and would allow ICC to pay back such insurance
provider as necessary.
    The proposed rule change would also make two specific changes to
provide ICC flexibility to cover losses while waiting for payment under
an insurance policy. First, the proposed rule change would amend Rule
802(b) to provide that ICC could use the guaranty fund contributions of
non-defaulting CPs prior to receipt of any insurance proceeds. In that
event, ICC would be required to reimburse the non-defaulting CPs from
the insurance proceeds when received. Similarly, the proposed rule
change would amend Rule 808 to allow ICC to conduct reduced gains
distribution where ICC has made a claim under an insurance policy but
has not yet received any proceeds from the claim. In that event, the
proposed rule change would make any proceeds ultimately received under
the insurance policy available as a potential resource to pay back CPs
that have been subject to reduced gains distribution under Rule 808.

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.\5\ For the reasons given below, the Commission finds that
the proposed rule change is consistent with Section 17A(b)(3)(F) of the
Act \6\ and Rule 17Ad-22(d)(11) thereunder.\7\
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    \5\ 15 U.S.C. 78s(b)(2)(C).
    \6\ 15 U.S.C. 78q-1(b)(3)(F).
    \7\ 17 CFR 240.17Ad-22(d)(11).
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A. 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 ICC be designed to promote the prompt and accurate
clearance and settlement of securities transactions and, to the extent
applicable, derivative agreements, contracts, and transactions, as well
as to assure the safeguarding of securities and funds which are in the
custody or control of ICC or for which it is responsible, and, in
general, to protect investors and the public interest.\8\ As discussed
above, the proposed rule change would establish the legal framework for
the use of default insurance by amending ICC's default waterfall to
provide for the use of such insurance and by allowing ICC to pay to the
insurance provider, as necessary, surplus guaranty fund contributions
of the defaulting CP and money recovered from the defaulting CP. The
proposed rule change would also provide ICC with the ability to use
other financial resources and to engage in reduced gains distribution
while awaiting payment under a default insurance policy. Although the
proposed rule change explicitly would not require that ICC obtain or
maintain a default insurance policy, the Commission believes that in
establishing the legal framework and operational flexibility for using
such a default insurance policy, the proposed rule change would provide
ICC a means of obtaining an additional financial resource (i.e.,
insurance) for offsetting losses resulting from a CP's default.
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    \8\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    In doing so, the Commission believes that proposed rule change
would enhance ICC's ability potentially to avoid the losses that could
result from the default of a Clearing Participant. Because losses
resulting from a CP's default could cause losses for ICC, disrupting
ICC's ability to clear and settle securities transactions, the
Commission believes that the proposed rule change would promote the
prompt and accurate clearance and settlement of securities
transactions. Moreover, because losses resulting from a CP's default
could cause losses for ICC, disrupting ICC's access to securities and
funds, the Commission believes the proposed rule change would help to
assure the safeguarding of securities and funds in ICC's custody and
control. Finally, for these reasons, the Commission believes that the
proposed rule change would, in general, protect investors and the
public interest.
    Therefore, the Commission finds that the proposed rule change would
promote the prompt and accurate clearance and settlement of securities
transactions, assure the safeguarding of securities and funds in ICC's
custody and control, and, in general, protect investors and the public
interest, consistent with the Section 17A(b)(3)(F) of the Act.\9\
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    \9\ 15 U.S.C. 78q-1(b)(3)(F).
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B. Consistency With Rule 17Ad-22(d)(11)

    Rule 17Ad-22(d)(11) requires that ICC establish, implement,
maintain and enforce written policies and procedures reasonably
designed to make key aspects of its default procedures publicly
available and establish default procedures that ensure that ICC can
take timely action to contain losses and liquidity pressures and to
continue meeting its obligations in the event of a participant
default.\10\ As discussed above, the Commission believes the proposed
rule change, in establishing the legal framework and operational
flexibility for using a default insurance policy, would provide ICC a
means of obtaining an additional financial resource (i.e., insurance)
for offsetting losses resulting from a CP's default. The Commission
believes the proposed rule change would therefore help to ensure that
ICC is able to take timely action to contain losses and liquidity
pressures and to continue meeting its obligations in the event of a
CP's default by giving ICC the ability to obtain additional resources
to offset losses resulting from a CP's default. Therefore the
Commission finds that the proposed

rule change is consistent with Rule 17Ad-22(d)(11).\11\
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    \10\ 15 U.S.C. 17Ad-22(d)(11).
    \11\ 15 U.S.C. 17Ad-22(d)(11).
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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 \12\ and Rule 17Ad-22(d)(11) thereunder.\13\
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    \12\ 15 U.S.C. 78q-1(b)(3)(F).
    \13\ 17 CFR 240.17Ad-22(d)(11).
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    It is therefore ordered pursuant to Section 19(b)(2) of the Act
\14\ that the proposed rule change (SR-ICC-2020-001), be, and hereby
is, approved.\15\
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    \14\ 15 U.S.C. 78s(b)(2).
    \15\ 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.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-04920 Filed 3-10-20; 8:45 am]
BILLING CODE 8011-01-P


Memo to File

From:  Kathryn Kelley
Date:  9/20/12

On September 20, 2012 EPA attended a listening session with a representative from the Canadian Ship Owners Association (CSA).

Attendees are the following:

Name				Affiliation
Robert Lewis-Manning	CSA
Debbie Murray		CSA
Ryan Albert			EPA
Kathryn Kelley		EPA

The representatives from CSA raised concerns about the availability of technology and type approval process for ballast water treatment and coordination between EPA and the U.S. Coast Guard on dates for implementation.


[Federal Register Volume 85, Number 29 (Wednesday, February 12, 2020)]
[Rules and Regulations]
[Pages 7868-7871]
[FR Doc No: 2020-02667]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2016-9073; Product Identifier 2015-NM-062-AD; Amendment
39-19836; AD 2020-03-11]
RIN 2120-AA64

Airworthiness Directives; The Boeing Company Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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SUMMARY: The FAA is adopting a new airworthiness directive (AD) for
certain Boeing Model 707 airplanes and Model 720 and 720B series
airplanes. This AD was prompted by the FAA's analysis of the Model 707
and 720 fuel system reviews conducted by the manufacturer. This AD
requires modifying the fuel quantity indicating system (FQIS) to
prevent development of an ignition source inside the center fuel tank
due to electrical fault conditions. The FAA is issuing this AD to
address the unsafe condition on these products.

DATES: This AD is effective March 18, 2020.

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-2016-
9073; 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 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: Jon Regimbal, Aerospace Engineer,
Propulsion Section, FAA, Seattle ACO Branch, 2200 South 216th St., Des
Moines, WA 98198; phone and fax:<PHONE_NUMBER>; email:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Discussion

    The FAA issued a notice of proposed rulemaking (NPRM) to amend 14
CFR part 39 by adding an AD that would apply to certain Boeing Model
707 airplanes and Model 720 and 720B series airplanes. The NPRM
published in the Federal Register on September 23, 2016 (81 FR 65577).
The NPRM was prompted by the FAA's analysis of the Model 707 and 720
fuel system reviews conducted by the manufacturer. The NPRM proposed to
require modifying the FQIS to prevent development of an ignition source
inside the center fuel tank due to electrical fault conditions.
    The FAA is issuing this AD to address ignition sources inside the
center fuel tank, which, in combination with flammable fuel vapors,
could result in a fuel tank explosion and consequent loss of the
airplane.

Comments

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

Request To Withdraw NPRM: No Unsafe Condition

    Boeing requested that the FAA withdraw the NPRM. Boeing reported
that its safety analysis indicated that the FQIS on the Model 707/720
airplane does not have an unsafe condition. Boeing noted that three
fuel-tank safety-related actions, including changes to the lightning
shielding of the FQIS wires in the wing leading edge area, are required
by AD 2007-23-12, Amendment 39-15258 (72 FR 63800, November 13, 2007;
corrected January 10, 2008 (73 FR 1816)) (``AD 2007-23-12''). Boeing
pointed out that AD 2007-23-12 requires operators to perform a survey
of the fuel system wiring configurations on its airplanes. (That AD
also requires operators to report the results of the surveys and
discrepancies found.) Boeing stated that no operator has reported any
discrepancy, and no operator has requested service information to
support any changes related to fuel tank safety.
    The FAA disagrees with the commenter's request. Boeing did not
provide specific details about the type of assessment that was
performed (total fleet risk, average risk per flight hour, peak
individual flight risk, etc.). Based on Boeing's fuel system safety
assessment submitted in response to Special Federal Aviation Regulation
No. 88 (``SFAR 88'') of 14 CFR part 21, the FAA has determined that
there is an unsafe condition due to the potential for a fuel tank
ignition source to occur from the FQIS due to its design architecture,
component design details, and installation design details. The FAA's
determination was made in accordance with the guidance contained in FAA
Policy Memorandum ANM100-2003-112-15, ``SFAR 88-Mandatory Action
Decision Criteria,'' dated February 25, 2003.\1\ Under that policy, an
ignition source that can occur in a high-flammability fuel tank, due to
a combination of a preexisting failure that can exist undetected for
multiple flights and one additional failure, is an unsafe condition
requiring corrective action. High-flammability fuel tanks are defined
in the policy as fuel tanks with a fleet average flammability greater
than 7 percent as calculated in accordance with 14 CFR Appendix N to
part 25. At the time of the unsafe condition determination in April
2003, Boeing acknowledged that the Model 707/720 center fuel tank was a
high-flammability fuel tank. The Boeing SFAR 88 report for the Model
707/720 showed that a combination of an in-tank wire fault or
contamination condition (which can remain latent for multiple flights)
and a hot short outside of the tank between the affected FQIS tank
circuit and other aircraft power wiring cobundled with FQIS tank
circuit wiring could result in an ignition source in the fuel tank.
That combination of failures was classified by the FAA as a ``known
combination of failures'' under the criteria in the policy memorandum
due to the similarity of the Model 707/720 FQIS system architecture and
design details to those of the Boeing Model 747 airplane involved in
the TWA Flight 800 catastrophic fuel tank explosion accident in 1996.
The National Transportation Safety Board (NTSB) concluded that an FQIS
failure combination as described above was the most likely cause of
that accident.\2\ The addition of lightning shields required by AD
2007-23-12 is unrelated to the unsafe condition that prompted this AD,
and was instead driven by a concern that a critical lightning strike
could cause an ignition source in the tank via FQIS wiring. The FAA has
therefore determined that it is necessary to issue this final rule as
proposed.
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    \1\ http://rgl.faa.gov/Regulatory_and_Guidance_Library/
rgPolicy.nsf/0/dc94c3a46396950386256d5e006aed11/$FILE/Feb2503.pdf.
    \2\ NTSB Aviation Accident Report AAR-00-03 https://www.ntsb.gov/investigations/AccidentReports/Reports/AAR0003.pdf.
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Request To Withdraw NPRM: No Passenger Airplanes Affected

    Boeing requested that the FAA withdraw the NPRM because none of the
four affected U.S.-registered airplanes are passenger airplanes, and
the world fleet size and fleet operational exposure for these airplanes
continue to decline with time. Boeing stated that its safety
assessment, using methodologies ``recognized by the FAA,'' shows that
the vulnerability of the Model 707/720 FQIS to a latent failure plus a
single failure does not present an unsafe condition. Boeing concluded
that requiring the proposed actions will not promote air safety and
instead will add unnecessary cost to operators.
    The FAA disagrees with the commenter's request. The FAA has not
limited its actions related to fuel tank safety to passenger airplanes.
The FAA has determined that an unsafe condition exists using the
decision criteria in FAA Policy Memorandum PS-ANMl00-2003-112-15. The
FAA assumes that in citing assessment methodologies recognized by the
FAA, Boeing is referring to having performed an assessment of the total
fleet risk for the Model 707/720 fleet that showed a very low
likelihood of a fuel tank ignition event in the remaining life of that
fleet. However the FAA's unsafe condition determination was calculated
using the decision criteria in FAA Policy Memorandum ANMl00-2003-112-
15. This determination was not driven by a fleet risk assessment. A
latent in-tank failure that provides a conductive path or reduces
dielectric strength of the tank wiring or components, combined with an
external wiring system failure that conducts power onto the tank
wiring, could create an ignition source in the fuel tank. That
combination of failures was classified as a ``known combination of
failures'' under the criteria in the policy memo due to the similarity
of the Model 707/720 FQIS system architecture and design details to
those of the Model 747 airplane involved in the catastrophic fuel tank
explosion. The NTSB concluded that an FQIS failure combination as
described above was the most likely cause of that accident. The FAA
therefore considers it necessary to address this unsafe condition. The
per-airplane cost is expected to be similar to the cost of the actions
required for Model 737 and 747 airplanes in AD 99-03-04, Amendment

39-11018 (64 FR 4959, February 2, 1999) (``AD 99-03-04''); and AD 98-
20-40, Amendment 39-10808 (63 FR 52147, September 30, 1998) (``AD 98-
20-40''). Therefore, the FAA has made no changes to this final rule as
a result of this comment.

Request To Withdraw NPRM: Extremely Remote Likelihood of Unsafe
Condition

    Boeing requested that the FAA withdraw the NPRM. Boeing considered
the likelihood of an undetected latent electrical fault condition of
the FQIS to be extremely remote, due to the FQIS architecture. Boeing
added that the existing Model 707/720 FQIS design uses a three-wire
system that goes directly from the fuel tank to the flight deck
indication. Boeing stated that an electrical fault of an in-tank
component causes the FQIS to provide a fault indication to the flight
crew, so the failure is not latent.
    The FAA disagrees with the commenter's request. The agency
contacted Boeing to resolve the apparent conflict between this comment
and the company's previously submitted SFAR 88 reports. In the SFAR 88
reports for Model 707/720 airplanes, Boeing stated that a latent in-
tank failure condition could not be claimed to be extremely remote, and
acknowledged that the system does not comply with the requirements of
14 CFR 25.981(a)(3) related to a latent failure plus a single failure.
(Extremely remote qualitatively means that the condition would occur no
more than a few times in the total fleet life. In numerical probability
analysis, a condition that has a probability on the order of 1 in 10
million flight hours or less is considered extremely remote.) However,
the comment that Boeing submitted to the NPRM stated that a latent in-
tank failure was extremely remote.
    A meeting with representatives from the FAA and Boeing was held
February 15, 2019, to clarify Boeing's position. (A record of that
meeting has been posted to the AD docket.) Boeing explained that it had
intended to convey in its comment that the estimated probability for
the initial failure that creates a latent in-tank loss of dielectric
strength, resistive current path, or short condition is extremely
remote. Boeing acknowledged that when the estimated probability of that
failure initiation is multiplied by the average latency period, the
probability of a latent in-tank failure existing in any given flight
hour is not extremely remote.
    Given this clarification, Boeing's comment was consistent with the
conclusions of its SFAR 88 reviews. The FQIS does not provide a fault
indication to the flight crew other than unusual readings or a zero
reading provided by a tank gage if a hard short to ground or power
occurs. In addition, even if such a fault is noted by the flight crew,
the approved Master Minimum Equipment List for the Model 707/720
airplane allows operators to fly for up to ten days in that condition,
without disconnecting the FQIS for the affected tank, with provisions
for extending beyond the ten days. The FAA therefore does not agree
that a latent failure of in-tank wiring or components, such that an
ignition source could occur if an external hot short occurs, is
extremely remote. Therefore, the FAA has made no changes to this final
rule as a result of this comment.

Request To Revise Cost Estimate

    Boeing requested that if the NPRM is not withdrawn, the FAA revise
the cost estimate to reflect the cost of developing a design solution
for the center wing tank FQIS. Boeing expected that a small number of
airplanes would actually be modified, so the cost of developing a
design solution would be spread over a small number of airplanes,
resulting in a significant per-airplane cost. Boeing did not provide
any specific cost information or describe the actual modifications for
which they provided cost comments.
    The FAA disagrees with the commenter's request to revise the cost
estimate. The FAA based the cost estimate for Model 707/720 passenger
airplanes on the inflation-adjusted estimated costs for installation of
transient suppression devices on the Model 747 airplane as required by
AD 98-20-40. The FAA considers that the transient suppression design
solutions, if not the actual parts, developed for Model 737 and 747
airplanes in response to AD 99-03-04 and AD 98-20-40 will be applicable
to the Model 707/720 airplane due to the similarity of those models'
FQIS designs. The FAA agrees that the nonrecurring design development
costs associated with any necessary model-specific design activity will
be spread over fewer airplanes, resulting in higher per-airplane costs.
However, the FAA increased the cost estimate in the NPRM to reflect
that increased cost to the existing fleet. Boeing did not propose any
specific alternative cost figures to be substituted for the FAA
estimate. The one affected U.S. passenger airplane in operation at the
time the NPRM was published has been removed from service. The
remaining U.S. airplanes are an experimental research airplane and
privately owned military contract aerial refuelers. For those
airplanes, the operators have the potential to use the Alternative
Methods of Compliance (AMOC) approval process to propose alternative
approaches to address the unsafe condition using operational or
utilization restrictions. The FAA has made no changes to this final
rule as a result of this comment.

Conclusion

    The FAA reviewed the relevant data, considered the comments
received, and determined that air safety and the public interest
require adopting this final rule as proposed, except for 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 three airplanes of U.S.
registry: two cargo/tanker airplanes and one experimental airplane. The
FAA estimates 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
----------------------------------------------------------------------------------------------------------------
Modification..........................  600 work-hours x $85 per        $150,000        $201,000        $603,000
                                         hour = $51,000.
----------------------------------------------------------------------------------------------------------------

Authority for This Rulemaking

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

Regulatory Findings

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

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

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

2020-03-11 The Boeing Company: Amendment 39-19836; Docket No. FAA-
2016-9073; Product Identifier 2015-NM-062-AD.

(a) Effective Date

    This AD is effective March 18, 2020.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to The Boeing Company Model 707-100 long body, -
200, -100B long body, -100B short body, -300, -300B, -300C, and -400
series airplanes; and Model 720 and 720B series airplanes;
certificated in any category; excluding airplanes equipped with a
flammability reduction means (FRM) approved by the FAA as compliant
with the Fuel Tank Flammability Reduction (FTFR) requirements of 14
CFR 25.981(b) or 14 CFR 26.33(c)(1).

(d) Subject

    Air Transport Association (ATA) of America Code 28, Fuel.

(e) Unsafe Condition

    This AD was prompted by the FAA's analysis of the Model 707/720
fuel system reviews conducted by the manufacturer. The FAA is
issuing this AD to address ignition sources inside the center fuel
tank, which, in combination with flammable fuel vapors, could result
in a fuel tank explosion and consequent loss of the airplane.

(f) Compliance

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

(g) Modification

    Within 60 months after the effective date of this AD, modify the
fuel quantity indicating system (FQIS) to prevent development of an
ignition source inside the center fuel tank due to electrical fault
conditions, using a method approved in accordance with the
procedures specified in paragraph (h) of this AD.

(h) 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 (i) of this AD. Information may be
emailed to<EMAIL_ADDRESS>    (2) Before using any approved AMOC, notify your appropriate
principal inspector, or lacking a principal inspector, the manager
of the local flight standards district office/certificate holding
district office.
    (3) An AMOC that provides an acceptable level of safety may be
used for any repair, modification, or alteration required by this AD
if it is approved by the Boeing Company Organization Designation
Authorization (ODA) that has been authorized by the Manager, Seattle
ACO Branch, FAA, to make those findings. To be approved, the repair
method, modification deviation, or alteration deviation must meet
the certification basis of the airplane, and the approval must
specifically refer to this AD.

(i) Related Information

    For more information about this AD, contact Jon Regimbal,
Aerospace Engineer, Propulsion Section, FAA, Seattle ACO Branch,
2200 South 216th St., Des Moines, WA 98198; phone and fax: 206-231-
3557; email<EMAIL_ADDRESS>
(j) Material Incorporated by Reference

    None.

    Issued on February 3, 2020.
Lance T. Gant,
Director, Compliance & Airworthiness Division, Aircraft Certification
Service.
[FR Doc. 2020-02667 Filed 2-11-20; 8:45 am]
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