[Federal Register: October 1, 2010 (Volume 75, Number 190)]
[Rules and Regulations]
[Page 60604-60608]
[DOCID:fr01oc10-5]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2010-0550; Directorate Identifier 2009-NM-124-AD;
Amendment 39-16454; AD 2010-20-19]
RIN 2120-AA64

Airworthiness Directives; Bombardier, Inc. Model CL-600-2B19
(Regional Jet Series 100 & 440) Airplanes; Model CL-600-2C10 (Regional
Jet Series 700, 701, & 702) Airplanes; Model CL-600-2D15 (Regional Jet
Series 705) Airplanes; and Model CL-600-2D24 (Regional Jet Series 900)
Airplanes

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

ACTION: Final rule.

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SUMMARY: We are adopting a new airworthiness directive (AD) for the
products listed above. This AD results from mandatory continuing
airworthiness information (MCAI) originated by an aviation authority of
another country to identify and correct an unsafe condition on an
aviation product. The MCAI describes the unsafe condition as:

    Two cases of a crack on a ``dry'' ADG [air driven generator]
(Hamilton Sundstrand part number in the 761339 series), in the aft
area of the strut and generator housing assembly, have been reported
on CL-600-2B19 aircraft. The same part is also installed on CL-600-
2C10, -2D15 and -2D24 aircraft. Investigation determined that the
crack was in an area of the strut where the wall thickness of the
casting was below specification, due to a manufacturing anomaly in a
specific batch of ADGs. Structural failure and departure of the ADG
during deployment could possibly result in damage to the aircraft
structure. If deployment was activated by a dual engine shutdown,
ADG structural failure would also result in loss of hydraulics for
the flight controls.
* * * * *

We are issuing this AD to require actions to correct the unsafe
condition on these products.

DATES: This AD becomes effective November 5, 2010.
    The Director of the Federal Register approved the incorporation by
reference of certain publications listed in this AD as of November 5,
2010.

ADDRESSES: You may examine the AD docket on the Internet at http://
www.regulations.gov or in person at the U.S. Department of
Transportation, Docket Operations, M-30, West Building Ground Floor,
Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Craig Yates, Aerospace Engineer,
Airframe and Mechanical Systems Branch, ANE-171, FAA, New York Aircraft
Certification Office, 1600 Stewart Avenue, Suite 410, Westbury, New
York 11590; telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR
part 39 to include an AD that would apply to the specified products.
That NPRM was published in the Federal Register on June 18, 2010 (75 FR
34657). That NPRM proposed to correct an unsafe condition for the
specified products. The MCAI states:

    Two cases of a crack on a ``dry'' ADG [air driven generator]
(Hamilton Sundstrand part number in the 761339 series), in the aft
area of the strut and generator housing assembly, have been reported
on CL-600-2B19 aircraft. The same part is also installed on CL-600-
2C10, -2D15 and -2D24 aircraft. Investigation determined that the
crack was in an area of the strut where the wall thickness of the
casting was below specification, due to a manufacturing anomaly in a
specific batch of ADGs. Structural failure and departure of the ADG
during deployment could possibly result in damage to the aircraft
structure. If deployment was activated by a dual engine shutdown,
ADG structural failure would also result in loss of hydraulics for
the flight controls.
    This [Transport Canada Civil Aviation (TCCA)] directive gives
instructions to check the part number of the installed ADG and, for
ADGs with a part number in the 761339 series, the serial numbers of
the ADG and strut and generator housing assembly are also to be
checked. If these serial numbers are within specified ranges * * *,
a one-time fluorescent penetrant inspection of the ADG strut is
required [and replacement of the ADG if necessary].
    Note: For ADGs with serial numbers in the * * * specified
ranges, subsequent fluorescent penetrant inspections are required
after each scheduled in-flight or on-ground functional check of the
ADG and also after each unscheduled in-flight ADG deployment. These
inspection requirements are not mandated in this [TCCA] directive
but are specified in the approved maintenance program.

You may obtain further information by examining the MCAI in the AD
docket.

Comments

    We gave the public the opportunity to participate in developing
this AD. We considered the comment received. Air Line Pilots
Association, International supports the NPRM.

Conclusion

    We reviewed the available data, including the comment received, and
determined that air safety and the public interest require adopting the
AD as proposed.

Differences Between This AD and the MCAI or Service Information

    We have reviewed the MCAI and related service information and, in
general, agree with their substance. But we might have found it
necessary to use different words from those in the MCAI to ensure the
AD is clear for U.S. operators and is enforceable. In making these
changes, we do not intend to differ substantively from the information
provided in the MCAI and related service information.
    We might also have required different actions in this AD from those
in the MCAI in order to follow our FAA policies. Any such differences
are highlighted in a NOTE within the AD.

Costs of Compliance

    We estimate that this AD will affect 1,073 products of U.S.
registry. We also estimate that it will take about 1 work-hour per
product to comply with the basic requirements of this AD. The average
labor rate is $85 per work-hour. Based on these figures, we estimate
the cost of this AD to the U.S. operators to be $91,205, or $85 per
product.

Authority for This Rulemaking

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

Regulatory Findings

    We determined that this 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 this AD:
    1. Is not a ``significant regulatory action'' under Executive Order
12866;
    2. Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979); 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.
    We prepared a regulatory evaluation of the estimated costs to
comply with this AD and placed it in the AD docket.

Examining the AD Docket

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

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

0
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 AD:

2010-20-19 Bombardier, Inc.: Amendment 39-16454. Docket No. FAA-
2010-0550; Directorate Identifier 2009-NM-124-AD.

Effective Date

    (a) This airworthiness directive (AD) becomes effective November
5, 2010.

Affected ADs

    (b) None.

Applicability

    (c) This AD applies to Bombardier, Inc. Model CL-600-2B19
(Regional Jet Series 100 & 440) airplanes, serial numbers 7305
through 8051 inclusive; Model CL-600-2C10 (Regional Jet Series 700,
701, & 702) airplanes, serial numbers 10003 through 10260 inclusive;
and Model CL-600-2D15 (Regional Jet Series 705) airplanes and Model
CL-600-2D24 (Regional Jet Series 900) airplanes, serial numbers
15001 through 15106 inclusive; certificated in any category.

Subject

    (d) Air Transport Association (ATA) of America Code 24:
Electrical Power.

Reason

    (e) The mandatory continuing airworthiness information (MCAI)
states:

    Two cases of a crack on a ``dry'' ADG [air driven generator]
(Hamilton Sundstrand part number in the 761339 series), in the aft
area of the strut and generator housing assembly, have been reported
on CL-600-2B19 aircraft. The same part is also installed on CL-600-
2C10, -2D15 and-2D24 aircraft. Investigation determined that the
crack was in an area of the strut where the wall thickness of the
casting was below specification, due to a manufacturing anomaly in a
specific batch of ADGs. Structural failure and departure of the ADG
during deployment could possibly result in damage to the aircraft
structure. If deployment was activated by a dual engine shutdown,
ADG structural failure would also result in loss of hydraulics for
the flight controls.
    This [Transport Canada Civil Aviation (TCCA)] directive gives
instructions to check the part number of the installed ADG and, for
ADGs with a part number in the 761339 series, the serial numbers of
the ADG and strut and generator housing assembly are also to be
checked. If these serial numbers are within specified ranges * * *,
a one-time fluorescent penetrant inspection of the ADG strut is
required [and replacement of the ADG if necessary].
    Note: For ADGs with serial numbers in the * * * specified
ranges, subsequent fluorescent penetrant inspections are required
after each scheduled in-flight or on-ground functional check of the
ADG and also after each unscheduled in-flight ADG deployment. These
inspection requirements are not mandated in this [TCCA] directive
but are specified in the approved maintenance program.

Compliance

    (f) You are responsible for having the actions required by this
AD performed within the compliance times specified, unless the
actions have already been done.

Actions

    (g) Do the following actions.
    (1) Within 1,000 flight hours after the effective date of this
AD or before the first scheduled ADG functional test after the
effective date of this AD, whichever occurs first, inspect to
determine the part number of the installed ADG. A review of the
airplane maintenance records is acceptable in lieu of this
inspection if the part number can be conclusively determined from
that review.
    (i) If a Hamilton Sundstrand ADG having part number 1711405 is
installed, the strut thickness is within specification and no
further action is required by this AD.
    (ii) If a Hamilton Sundstrand ADG having a part number in the
761339 series is installed, within 1,000 flight hours after the
effective date of this AD or before the first scheduled ADG
functional test after the effective date of this AD, whichever
occurs first, inspect to determine the serial number of the ADG. A
review of the airplane maintenance records is acceptable in lieu of
this inspection if the serial number can be conclusively determined
from that review.
    (A) If the serial number of the ADG is 2000 or higher, the strut
wall thickness is within specification and no further action is
required by this AD.
    (B) If the serial number of the ADG is in the range 0101 through
1999 and symbol ``24-3'' is marked in the serial number block of the
identification plate, the strut wall thickness is within
specification, no further action is required by this AD.
    (C) If the serial number of the ADG is in the range 0101 through
1999 and the symbol ``24-3'' is not marked in the serial block of
the identification plate, within 1,000 flight hours after the
effective date of this AD or before the first scheduled ADG
functional test after the effective date of this AD, whichever
occurs first, inspect to determine the serial number of the strut
and generator housing assembly. A review of the airplane maintenance
records is acceptable in lieu of this inspection if the serial
number can be conclusively determined from that review.
    (1) If the serial number of the strut and generator housing
assembly is in the range 0001 through 2503, do a fluorescent
penetrant inspection in accordance with paragraph (g)(2) of this AD
at the times specified in paragraph (g)(2) of this AD.
    (2) If the serial number of the strut and generator housing
assembly is 2504 or higher, the strut wall thickness is within
specification and no further action is required by this AD.
    (3) If the serial number of the strut and generator housing
assembly is not inspected or it is not possible to determine the
serial number, do a fluorescent penetrant inspection in accordance
with paragraph (g)(2) of this AD at the times specified in paragraph
(g)(2) of this AD.
    (2) For ADGs having a strut and generator assembly identified in
paragraph (g)(1)(ii)(C)(1) or (g)(1)(ii)(C)(3) of this AD: Within
1,000 flight hours after the effective date of this AD or before the
first scheduled ADG functional test after the effective date of this
AD, whichever occurs first, do a fluorescent penetrant inspection
for cracking of the ADG strut, and if any crack is found, before
further flight, replace the ADG with a serviceable ADG, in
accordance with the Accomplishment Instructions of Bombardier Alert
Service Bulletin A601R-24-120, Revision C, dated April 20, 2009 (for
Model CL-600-2B19 airplanes); or Bombardier Alert Service Bulletin
A670BA-24-020, Revision C, dated April 20, 2009 (for Model CL-600-
2C10, CL-600-2D15, and CL-600-2D24 airplanes).
    (3) Fluorescent penetrant inspections accomplished before the
effective date of this AD in accordance with any applicable service
bulletin specified in Table 1 of this AD are considered acceptable
for compliance with the corresponding fluorescent penetrant
inspection specified in this AD.

                                        Table 1--Credit Service Bulletins
----------------------------------------------------------------------------------------------------------------
     Bombardier, Inc. model--         Service Bulletin--          Revision--                  Date--
----------------------------------------------------------------------------------------------------------------
CL-600-2B19 airplanes............  Bombardier Alert Service  Original...........  April 20, 2005.
                                    Bulletin A601R-24-120.
CL-600-2B19 airplanes............  Bombardier Alert Service  A..................  December 1, 2005.
                                    Bulletin A601R-24-120.
CL-600-2B19 airplanes............  Bombardier Alert Service  B..................  December 7, 2006.
                                    Bulletin A601R-24-120.
CL-600-2C10 airplanes and CL-600-  Bombardier Alert Service  Original...........  April 20, 2005.
 2D24 airplanes.                    Bulletin A670BA-24-020.
CL-600-2C10 airplanes; and CL-600- Bombardier Alert Service  A..................  May 17, 2005.
 2D15 and CL-600-2D24 airplanes.    Bulletin A670BA-24-020.
CL-600-2C10 airplanes; and CL-600- Bombardier Alert Service  B..................  December 7, 2006.
 2D15 and CL-600-2D24 airplanes.    Bulletin A670BA-24-020.

CL-600-2B19 airplanes; CL-600-     Hamilton Sundstrand       Original...........  April 14, 2005.
 2C10 airplanes; and CL-600-2D15    Service Bulletin
 and CL-600-2D24 airplanes.         ERPS10AG-24-3.
CL-600-2B19 airplanes; CL-600-     Hamilton Sundstrand       1..................  April 19, 2005.
 2C10 airplanes; and CL-600-2D15    Service Bulletin
 and CL-600-2D24 airplanes.         ERPS10AG-24-3.
CL-600-2B19 airplanes; CL-600-     Hamilton Sundstrand       2..................  November 14, 2006.
 2C10 airplanes; and CL-600-2D15    Service Bulletin
 and CL-600-2D24 airplanes.         ERPS10AG-24-3.
Bombardier, Inc. CL-600-2B19       Hamilton Sundstrand       3..................  March 12, 2009.
 airplanes; CL-600-2C10             Service Bulletin
 airplanes; and CL-600-2D15 and     ERPS10AG-24-3.
 CL-600-2D24 airplanes.
----------------------------------------------------------------------------------------------------------------

    Note 1: Additional guidance on the ADGs specified in paragraphs
(g)(1)(ii)(C)(1)and (g)(1)(ii)(C)(3) of this AD and the repetitive
fluorescent penetrant inspections specified as part of the periodic
ADG functional check procedure may be found in the applicable tasks
identified in Table 2 of this AD. These tasks can be found in Part
2--Airworthiness Limitations, Appendix A--Certification Maintenance
Requirements (CMR), of the Bombardier CL-600-2C10, CL-600-2D15, and
CL-600-2D24 Maintenance Requirements Manual; and the Canadair CRJ
Series Regional Jet Aircraft Maintenance Manual (AMM); as
applicable.

    Table 2--Guidance for the Periodic ADG Functional Check Procedure
------------------------------------------------------------------------
        Bombardier, Inc. Model--                  Task number--
------------------------------------------------------------------------
CL-600-2B19 airplanes..................  CMR Task C24-20-129-01 and AMM
                                          Task 24-23-01-720-803
CL-600-2C10 airplanes..................  CMR Task 24-23-00-102 and AMM
                                          Task 24-23-01-720-802
CL-600-2D15 and CL-600-2D24 airplanes..  CMR Task 24-23-00-102 and AMM
                                          Task 24-23-01-720-802
------------------------------------------------------------------------

    Note 2:  Additional guidance on the ADGs specified in paragraph
(g)(1)(ii)(C)(1), and the fluorescent penetrant inspection necessary
following each future unscheduled in-flight ADG deployment can be
found in the tasks specified in Table 3 of this AD.

  Table 3--Guidance for Inspection Following Unscheduled In-Flight ADG
                               Deployment
------------------------------------------------------------------------
          Bombardier, Inc. Model--                    AMM task--
------------------------------------------------------------------------
CL[dash]600-2B19 airplanes, serial numbers   05-51-19-210-801
 7305 through 8051 inclusive.
CL-600-2C10 airplanes, serial numbers 10003  05-51-19-210-801
 through 10260 inclusive.
CL[dash]600[dash]2D15 and CL-600-2D24        05-51-19-210-801
 airplanes, serial numbers 15001 through
 15106 inclusive.
------------------------------------------------------------------------

    Note 3:  In Hamilton Sundstrand Service Bulletin ERPS10AG-24-3,
the fluorescent penetrant inspection is referred to as a ``Penetrant
Check.''.

FAA AD Differences

    Note 4: This AD differs from the MCAI and/or service information
as follows: No differences.

Other FAA AD Provisions

    (h) The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager, New
York Aircraft Certification Office (ACO), ANE-170, FAA, has the
authority to approve AMOCs for this AD, if requested using the
procedures found in 14 CFR 39.19. Send information to ATTN: Program
Manager, Continuing Operational Safety, FAA, New York ACO, 1600
Stewart Avenue, Suite 410, Westbury, New York 11590; telephone 516-
228-7300; fax<PHONE_NUMBER>. Before using any approved AMOC on any
airplane to which the AMOC applies, notify your principal
maintenance inspector (PMI) or principal avionics inspector (PAI),
as appropriate, or lacking a principal inspector, your local Flight
Standards District Office. The AMOC approval letter must
specifically reference this AD.
    (2) Airworthy Product: For any requirement in this AD to obtain
corrective actions from a manufacturer or other source, use these
actions if they are FAA-approved. Corrective actions are considered
FAA-approved if they are approved by the State of Design Authority
(or their delegated agent). You are required to assure the product
is airworthy before it is returned to service.
    (3) Reporting Requirements: For any reporting requirement in
this AD, under the provisions of the Paperwork Reduction Act (44
U.S.C. 3501 et seq.), the Office of Management and Budget (OMB) has
approved the information collection requirements and has assigned
OMB Control Number 2120-0056.
    (4) Special Flight Permits: Special flight permits, as described
in section 21.197 and section 21.199 of the Federal Aviation
Regulations (14 CFR 21.197 and 21.199), are not allowed.

Related Information

    (i) Refer to MCAI Canadian Airworthiness Directive CF-2009-27,
dated June 8, 2009; Bombardier Alert Service Bulletin A601R-24-120,
Revision C, dated April 20, 2009; and Bombardier Alert Service
Bulletin A670BA-24-020, Revision C, dated April 20, 2009; for
related information.

Material Incorporated by Reference

    (j) You must use Bombardier Alert Service Bulletin A601R-24-120,
Revision C, dated April 20, 2009; or Bombardier Alert Service
Bulletin A670BA-24-020, Revision C, dated April 20, 2009; as
applicable; to do the actions required by this AD, unless the AD
specifies otherwise.
    (1) The Director of the Federal Register approved the
incorporation by reference of this service information under 5
U.S.C. 552(a) and 1 CFR part 51.
    (2) For service information identified in this AD, contact
Bombardier, Inc., 400 C[ocirc]te Vertu Road West, Dorval,
Qu[eacute]bec H4S 1Y9, Canada; telephone<PHONE_NUMBER>; fax 514-855-
7401; e-mail<EMAIL_ADDRESS>Internet http://
www.bombardier.com.
    (3) You may review copies of the service information at the FAA,
Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton,
Washington. For information on the

availability of this material at the FAA, call<PHONE_NUMBER>.
    (4) You may also review copies of the service information that
is incorporated by reference at the National Archives and Records
Administration (NARA). For information on the availability of this
material at NARA, call<PHONE_NUMBER>, or go to: http://
www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.

    Issued in Renton, Washington, on September 21, 2010.
Ali Bahrami,
Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 2010-24482 Filed 9-30-10; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register: February 1, 2007 (Volume 72, Number 21)]
[Notices]
[Page 4754-4756]
[DOCID:fr01fe07-101]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55161; File No. SR-ISE-2006-62]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Order Granting Approval to Proposed Rule Change as Modified by
Amendment Nos. 1 and 2 Thereto, To Implement a Penny Pilot Program To
Quote Certain Options in Pennies

January 24, 2007.

I. Introduction

    On October 11, 2006, the International Securities Exchange, LLC
(``ISE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to permit certain option classes
to be quoted in pennies on a pilot basis and to adopt certain quote
mitigation strategies. The proposed rule change was published for
comment in the Federal Register on October 20, 2006.\3\ The Commission
received three comment letters on the proposed rule change.\4\ On
November 6, 2006, the Exchange filed Amendment No. 1 to the proposed
rule change.\5\ The Exchange filed Amendment No. 2 to the proposal on
January 5, 2007.\6\ The Exchange

responded to the comment letters on January 11, 2007.\7\ This order
approves the proposed rule change as modified by Amendment Nos. 1 and
2.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 54603 (October 16,
2006), 71 FR 62024.
    \4\ See letters to Nancy M. Morris, Secretary, Commission, from
Christopher Nagy, Chair, Securities Industry and Financial Markets
Association (``SIFMA'') Options Committee, dated December 20, 2006
(``SIFMA Letter''); from Patrick Sexton, Associate General Counsel,
CBOE, dated November 13, 2006 (``CBOE Letter''); and from Peter J.
Bottini, Executive Vice President, optionsXpress, Inc., dated
October 31, 2006 (``optionsXpress Letter'').
    \5\ Amendment No. 1 made a clarifying change to proposed rule
text in ISE Rule 804(h). Amendment No. 1 is technical in nature, and
the Commission is not publishing Amendment No. 1 for public comment.
    \6\ Amendment No. 2 revised the Regulatory Information Circular
ISE will distribute to its members to reflect the replacement of
Glamis Gold, which was delisted, with Agilent Tech, Inc. in the list
of options classes permitted to be quoted in pennies. Amendment No.
2 is technical in nature, and the Commission is not publishing
Amendment No. 2 for public comment.
    \7\ See letter to Nancy M. Morris, Secretary, Commission, from
Michael J. Simon, Secretary, ISE, submitted January 11, 2007. On
January 23, 2007, ISE supplemented its initial response by providing
additional information about its Holdback Timer. See letter to Nancy
Morris, Secretary, Commission, from Michael J. Simon, Secretary,
ISE, dated January 23, 2007 (collectively ``Exchange Response'').
---------------------------------------------------------------------------

II. Description of the Proposal

A. Scope of the Penny Pilot Program

    ISE proposes to amend its rules to permit certain options classes
to be quoted in pennies during a six-month pilot (``Penny Pilot
Program''), which would commence on January 26, 2007. Specifically, the
Exchange proposes to amend ISE Rule 710 to specify that the Exchange
will: (1) Participate in the Penny Pilot Program, and (2) state that
the parameters of the Penny Pilot Program will be communicated to its
members via Regulatory Information Circular.
    Currently, all six options exchanges, including ISE, quote options
in nickel and dime increments. The minimum price variation for
quotations in options series that are quoted at less than $3 per
contract is $0.05 and the minimum price variation for quotations in
options series that are quoted at $3 per contract or greater is $0.10.
Under the Penny Pilot Program, beginning on January 26, 2007, market
participants would be able to begin quoting in penny increments in
certain series of option classes.
    The Penny Pilot Program would include the following thirteen
options: Ishares Russell 2000 (IWM); NASDAQ-100 Index Tracking Stock
(QQQQ); SemiConductor Holders Trust (SMH); General Electric Company
(GE); Advanced Micro Devices, Inc. (AMD), Microsoft Corporation (MSFT);
Intel Corporation (INTC); Caterpillar, Inc. (CAT); Whole Foods Market,
Inc. (WFMI); Texas Instruments, Inc. (TXN); Flextronics International
Ltd. (FLEX); Sun Microsystems, Inc. (SUNW); and Agilent Technologies,
Inc. (A). The Exchange will communicate the list of options to be
included in the Penny Pilot Program to its membership via Regulatory
Information Circular.
    The minimum price variation increment for all classes included in
the Penny Pilot Program, except for the QQQQs, would be $0.01 for all
quotations in option series that are quoted at less than $3 per
contract and $0.05 for all quotations in option series that are quoted
at $3 per contract or greater. The QQQQs would be quoted in $0.01
increments for all options series.
    ISE commits to deliver a report to the Commission during the fourth
month of the pilot, which would be composed of data from the first
three months of trading. The report would analyze the impact of penny
pricing on market quality and options system capacity.
    In addition, the Exchange will amend ISE Rule 716, which currently
permits trades in the Exchange's Block, Facilitation and Solicitation
Mechanisms to be effected at ``split prices,'' which are the mid-points
of the current standard trading increments, to clarify that options
trading in penny increments will not be eligible for split pricing.

B. Quote Mitigation Strategies

    To mitigate quote message traffic, ISE has represented to the
Commission that it intends to codify certain quote mitigation
strategies, which are currently in place on the Exchange.\8\
---------------------------------------------------------------------------

    \8\ In addition to the quote mitigation strategies discussed
herein, the ISE also proposed a fee program that requires market
makers to purchase more APIs as the market maker generates more
quotes, thus imposing economic incentives on market makers to limit
the number of quotations they disseminate. See Securities Exchange
Act Release No. 53522 (March 20, 2006), 71 FR 14975 (March 24, 2006)
(SR-ISE-2006-09).
---------------------------------------------------------------------------

    [cir] Monitoring. The ISE submits that it actively monitors the
quotation activity of its market makers. When the Exchange detects that
a market maker is disseminating significantly more quotes than an
average market maker, the Exchange contacts that market maker and
alerts it to such activity. Such monitoring frequently reveals that the
market maker may have internal system issues or has incorrectly-set
system parameters that were not immediately apparent. The Exchange
believes that, even without uncovering problems, alerting a market
maker to possible excessive quoting usually leads the market maker to
take steps to reduce the number of its quotes.
    [cir] Holdback Timer. The ISE has the systemic ability to limit the
dissemination of quotations and other changes to the ISE best bid and
offer according to prescribed time criteria (a ``Holdback Timer''). For
example, if there is a change in the price of a security underlying an
option, multiple market makers likely will adjust the price or size of
their quotes. Rather than disseminating each individual change, the
Holdback Timer permits the Exchange to wait until all market makers
have adjusted their quotes and then to disseminate a new quotation.
This helps prevent the ``flickering'' of quotations. The ISE proposes
to codify the Holdback Timer. As proposed in ISE Rule 804, the ISE will
utilize a Holdback Timer that delays quotation updates for up to, but
not longer than, one second.
    [cir] Delisting. The ISE has committed to the Commission that it
will delist options with average daily volume (``ADV'') of less than 20
contracts.\9\ However, it has been the ISE's policy to be more
aggressive in delisting relatively inactive options, thereby
eliminating the quotation traffic attendant to such listings.
Currently, it is the ISE's policy to delist options with ADV of less
than 50, even with the advent of the Exchange's new ``Second Market,''
\10\ which provides liquidity for less-active options.
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 47483 (March 11,
2003), 68 FR 13352 (March 19, 2003) (SR-ISE-2003-04).
    \10\ See Securities Exchange Act Release No. 54340 (August 21,
2006), 71 FR 51240 (August 29, 2006) (SR-ISE-2006-40).
---------------------------------------------------------------------------

III. Discussion

    After careful review of the proposal, the comment letters and the
Exchange's response thereto, the Commission finds that the proposed
rule change, as modified by Amendment Nos. 1 and 2, is consistent with
the requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange.\11\ In particular, the
Commission finds that the proposal is consistent with Section 6(b)(5)
of the Act,\12\ which requires, among other things, that the rules of
an exchange be designed to promote just and equitable principles of
trade, to remove impediments to and perfect the mechanism of a free and
open market and a national market system, and, in general, to protect
investors and the public interest.
---------------------------------------------------------------------------

    \11\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the implementation of a limited six-
month Penny Pilot Program by the ISE and the five other options
exchanges will provide valuable information to the exchanges, the
Commission and others about the impact of penny quoting in the options
market. In particular, the Penny Pilot Program will allow analysis of
the impact of penny quoting on: (1) Spreads; (2) transaction costs; (3)
payment for order flow; and (4) quote message traffic.

    The Commission believes that the thirteen options classes to be
included in the penny pilot program represent a diverse group of
options classes with varied trading characteristics. This diversity
should facilitate analyses by the Commission, the options exchanges and
others. The Commission also believes that the Penny Pilot Program is
sufficiently limited that it is unlikely to increase quote message
traffic beyond the capacity of market participants' systems and disrupt
the timely receipt of quote information.\13\ Nevertheless, because the
Commission expects that the Penny Pilot Program will increase quote
message traffic, the Commission is also approving the Exchange's
proposals to reduce the number of quotations it disseminates.
---------------------------------------------------------------------------

    \13\ In addition, the Commission believes that it is appropriate
for ISE to amend ISE Rule 716 to clarify that options trading in
penny increments is not eligible for split pricing.
---------------------------------------------------------------------------

    In this regard, the commenters expressed concern about ISE's
proposed quote mitigation strategy. In particular, although
optionsXpress generally supported ISE's Holdback Timer, it expressed
concern that a longer holdback timer period could negatively impact
market quality and undermine transparency in the options market.\14\
---------------------------------------------------------------------------

    \14\ See optionsXpress Letter, supra note 4. OptionsXpress also
stated its view that current problems with the intermarket linkage
will be exacerbated in the option classes participating in the Penny
Pilot Program. Id.
---------------------------------------------------------------------------

    In addition, SIFMA recommends that all six of the option exchanges
adopt a comprehensive and uniform quote mitigation strategy.\15\ In
particular, SIFMA strongly supports the adoption of the Holdback Timer
mitigation proposal as the most efficient means of reducing quotation
traffic. SIFMA, however, expressed concern that the lack of uniformity
among the quote mitigation proposals adopted by the exchanges will
impose a burden on member firms and cause confusion for market
participants, especially retail investors.
---------------------------------------------------------------------------

    \15\ See SIFMA Letter, supra note 4.
---------------------------------------------------------------------------

    Although SIFMA urges the adoption of a uniform and comprehensive
approach to quote mitigation, it does not oppose ISE's quote mitigation
proposals. In fact, SIFMA acknowledges that certain of ISE's proposals,
such as notifying members whose quote activity suggests systems
malfunctions or wrong settings and delisting inactive series can
contribute to quote mitigation. SIFMA, however, expressed its belief
that these proposals do not go far enough to resolve the industry's
concerns regarding systems capacity.
    The Commission supports efforts to implement a uniform, industry-
wide quote mitigation plan. It does not, however, believe such efforts
preclude individual exchanges from initiating their own quote
mitigation strategies. The Commission does not believe that ISE's
proposed quote mitigation strategies will lead to confusion among
market participants.
    Finally, CBOE commented that it did not have a fundamental
objection to ISE's use of the Holdback Timer, but instead sought
additional information concerning how the Holdback Timer functions and
how orders sent to ISE by CBOE members or by CBOE though linkage might
be impacted by the Holdback Timer.\16\ Specifically, CBOE requested
additional information about the extent to which the Holdback Timer is
utilized throughout the day and whether it is used uniformly in all
option classes traded on ISE. In response, ISE indicated that it
intends to use the Holdback Timer uniformly in all option classes.\17\
In addition, the ISE committed to apply the Holdback Timer mechanism
throughout the trading day for a period of up to, but no more than, one
second.\18\ In further response to inquiry from CBOE, the ISE
represented that it does not intend to disclose the precise length of
the timer to its members, to non-members or to the other exchanges.\19\
---------------------------------------------------------------------------

    \16\ See CBOE Letter, supra note 4.
    \17\ Telephone conversation between Katherine Simmons, Deputy
General Counsel, ISE, and Jennifer L. Colihan, Special Counsel and
Cyndi N. Rodriguez, Special Counsel, Division of Market Regulation,
Commission, on January 23, 2007. See also Exchange Response, supra
note 6.
    \18\ Telephone conversation between Katherine Simmons, Deputy
General Counsel, ISE and Jennifer L. Colihan, Special Counsel, and
Cyndi N. Rodriguez, Division of Market Regulation, Commission, on
January 23, 2007.
    \19\ Id.
---------------------------------------------------------------------------

    In addition, CBOE inquired whether the Holdback Timer will apply
only to market maker quotations and asked the Exchange to clarify what
information will be delayed by the Holdback Timer. ISE clarified that
the Holdback Timer will be applied when there is a change in the price
and/or size of the security underlying an option. The Exchange will
wait (for a period up to one second) until multiple market participants
have adjusted their quotes and then will disseminate a new quotation.
The Exchange will apply the Holdback Timer to all data that it sends to
OPRA.\20\ Finally, in response to CBOE's inquiry regarding the
treatment of incoming marketable orders, ISE indicated that Holdback
Timer ``does not affect the receipt or processing of quotes, orders or
trades within the Exchange's system in any way.'' \21\ Therefore,
incoming marketable orders sent to the Exchange will be executed
against the prices and sizes available in ISE's system without regard
to the application of the Holdback Timer.\22\
---------------------------------------------------------------------------

    \20\ See Exchange Response, supra note 7.
    \21\ Id.
    \22\ Id.
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\23\ that the proposed rule change (SR-ISE-2006-62), as modified by
Amendment Nos. 1 and 2, be, and hereby is, approved on a six-month
pilot basis, which will commence on January 26, 2007.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\24\
---------------------------------------------------------------------------

    \24\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-1590 Filed 1-31-07; 8:45 am]

BILLING CODE 8011-01-P


That Become Major.      major source standards by
                                                          date indicated in this
                                                          subpart or by equivalent
                                                          time period (e.g., 3
                                                          years).
Sec.   63.6(d).................  [Reserved]............
Sec.   63.6(e)(1)(i)...........  Operation and           Operate to minimize          Yes, before July 7, 2023.
                                  Maintenance.            emissions at all times.     No, beginning on and after
                                                                                July 7, 2023. See Sec.
                                                                                63.2350(d) for general
                                                                                duty requirement.
Sec.   63.6(e)(1)(ii)..........  Operation and           Correct malfunctions as      Yes, before July 7, 2023.
                                  Maintenance.            soon as practicable.        No, beginning on and after
                                                                                July 7, 2023.
Sec.   63.6(e)(1)(iii).........  Operation and           Operation and maintenance    Yes.
                                  Maintenance.            requirements independently
                                                          enforceable; information
                                                          Administrator will use to
                                                          determine if operation and
                                                          maintenance requirements
                                                          were met.
Sec.   63.6(e)(2)..............  [Reserved]............
Sec.   63.6(e)(3)..............  SSM Plan..............  Requirement for SSM plan;    Yes, before July 7, 2023;
                                                          content of SSM plan;         however, (1) the 2-day
                                                          actions during SSM.          reporting requirement in
                                                                                paragraph Sec.
                                                                                63.6(e)(3)(iv) does not
                                                                                apply and (2) Sec.
                                                                                63.6(e)(3) does not apply
                                                                                to emissions sources not
                                                                                requiring control.
                                                                                No, beginning on and after
                                                                                July 7, 2023.
Sec.   63.6(f)(1)..............  Compliance Except       You must comply with         Yes, before July 7, 2023.
                                  During SSM.             emission standards at all   No, beginning on and after
                                                          times except during SSM.     July 7, 2023.
Sec.   63.6(f)(2)-(3)..........  Methods for             Compliance based on          Yes.
                                  Determining             performance test,
                                  Compliance.             operation and maintenance
                                                          plans, records, inspection.
Sec.   63.6(g)(1)-(3)..........  Alternative Standard..  Procedures for getting an    Yes.
                                                          alternative standard.
Sec.   63.6(h)(1)..............  Opacity/Visible         You must comply with         Yes, before July 7, 2023.
                                  Emission Standards.     opacity and visible         No, beginning on and after
                                                          emission standards at all    July 7, 2023.
                                                          times except during SSM.
Sec.   63.6(h)(2)-(9)..........  Opacity/Visible         Requirements for compliance  No; except as it applies
                                  Emission Standards.     with opacity and visible     to flares for which
                                                          emission standards.          Method 22 observations
                                                                                are required as part of a
                                                                                flare compliance
                                                                                assessment.
Sec.   63.6(i)(1)-(14).........  Compliance Extension..  Procedures and criteria for  Yes.
                                                          Administrator to grant
                                                          compliance extension.
Sec.   63.6(j).................  Presidential            President may exempt any     Yes.
                                  Compliance Exemption.   source from requirement to
                                                          comply with this subpart.
Sec.   63.7(a)(2)..............  Performance Test Dates  Dates for conducting         Yes.
                                                          initial performance
                                                          testing; must conduct 180
                                                          days after compliance date.
Sec.   63.7(a)(3)..............  Section 114 Authority.  Administrator may require a  Yes.
                                                          performance test under CAA
                                                          section 114 at any time.
Sec.   63.7(b)(1)..............  Notification of         Must notify Administrator    Yes.
                                  Performance Test.       60 days before the test.

Sec.   63.7(b)(2)..............  Notification of         If you have to reschedule    Yes.
                                  Rescheduling.           performance test, must
                                                          notify Administrator of
                                                          rescheduled date as soon
                                                          as practicable and without
                                                          delay.
Sec.   63.7(c).................  Quality Assurance (QA)/ Requirement to submit site-  Yes.
                                  Test Plan.              specific test plan 60 days
                                                          before the test or on date
                                                          Administrator agrees with;
                                                          test plan approval
                                                          procedures; performance
                                                          audit requirements;
                                                          internal and external QA
                                                          procedures for testing.
Sec.   63.7(d).................  Testing Facilities....  Requirements for testing     Yes.
                                                          facilities.
Sec.   63.7(e)(1)..............  Conditions for          Performance tests must be    Yes, before July 7, 2023.
                                  Conducting              conducted under             No, beginning on and after
                                  Performance Tests.      representative conditions;   July 7, 2023. See Sec.
                                                          cannot conduct performance   63.2354(b)(6).
                                                          tests during SSM.
Sec.   63.7(e)(2)..............  Conditions for          Must conduct according to    Yes.
                                  Conducting              this subpart and EPA test
                                  Performance Tests.      methods unless
                                                          Administrator approves
                                                          alternative.
Sec.   63.7(e)(3)..............  Test Run Duration.....  Must have three test runs    Yes; however, for transfer
                                                          of at least 1 hour each;     racks per Sec.  Sec.
                                                          compliance is based on       63.987(b)(3)(i)(A)-(B)
                                                          arithmetic mean of three     and 63.997(e)(1)(v)(A)-
                                                          runs; conditions when data   (B) provide exceptions to
                                                          from an additional test      the requirement for test
                                                          run can be used.             runs to be at least 1
                                                                                hour each.
Sec.   63.7(e)(4)..............  Authority to Require    Administrator has authority  Yes.
                                  Testing.                to require testing under
                                                          CAA section 114 regardless
                                                          of Sec.   63.7 (e)(1)-(3).
Sec.   63.7(f).................  Alternative Test        Procedures by which          Yes.
                                  Method.                 Administrator can grant
                                                          approval to use an
                                                          intermediate or major
                                                          change, or alternative to
                                                          a test method.
Sec.   63.7(g).................  Performance Test Data   Must include raw data in     Yes, except this subpart
                                  Analysis.               performance test report;     specifies how and when
                                                          must submit performance      the performance test and
                                                          test data 60 days after      performance evaluation
                                                          end of test with the         results are reported.
                                                          Notification of Compliance
                                                          Status; keep data for 5
                                                          years.
Sec.   63.7(h).................  Waiver of Tests.......  Procedures for               Yes.
                                                          Administrator to waive
                                                          performance test.
Sec.   63.8(a)(1)..............  Applicability of        Subject to all monitoring    Yes.
                                  Monitoring              requirements in standard.
                                  Requirements.
Sec.   63.8(a)(2)..............  Performance             Performance Specifications   Yes.
                                  Specifications.         in appendix B of 40 CFR
                                                          part 60 apply.
Sec.   63.8(a)(3)..............  [Reserved]............
Sec.   63.8(a)(4)..............  Monitoring of Flares..  Monitoring requirements for  Yes, before July 7, 2023;
                                                          flares in Sec.   63.11.      however, flare monitoring
                                                                                requirements in Sec.
                                                                                63.987(c) also apply
                                                                                before July 7, 2023.
                                                                                No, beginning on and after
                                                                                July 7, 2023. See Sec.
                                                                                63.2380.
Sec.   63.8(b)(1)..............  Monitoring............  Must conduct monitoring      Yes.
                                                          according to standard
                                                          unless Administrator
                                                          approves alternative.
Sec.   63.8(b)(2)-(3)..........  Multiple Effluents and  Specific requirements for    Yes.
                                  Multiple Monitoring     installing monitoring
                                  Systems.                systems; must install on
                                                          each affected source or
                                                          after combined with
                                                          another affected source
                                                          before it is released to
                                                          the atmosphere provided
                                                          the monitoring is
                                                          sufficient to demonstrate
                                                          compliance with the
                                                          standard; if more than one
                                                          monitoring system on an
                                                          emission point, must
                                                          report all monitoring
                                                          system results, unless one
                                                          monitoring system is a
                                                          backup.
Sec.   63.8(c)(1)..............  Monitoring System       Maintain monitoring system   Yes.
                                  Operation and           in a manner consistent
                                  Maintenance.            with good air pollution
                                                          control practices.
Sec.   63.8(c)(1)(i)...........  Routine and             Keep parts for routine       Yes, before July 7, 2023.
                                  Predictable SSM.        repairs readily available;  No, beginning on and after
                                                          reporting requirements for   July 7, 2023.
                                                          SSM when action is
                                                          described in SSM plan.
Sec.   63.8(c)(1)(ii)..........  CMS malfunction not in  Keep the necessary parts     Yes.
                                  SSM plan.               for routine repairs if CMS
                                                          malfunctions.
Sec.   63.8(c)(1)(iii).........  Compliance with         Develop a written SSM plan   Yes, before July 7, 2023.
                                  Operation and           for CMS.                    No, beginning on and after
                                  Maintenance                                          July 7, 2023.
                                  Requirements.
Sec.   63.8(c)(2)-(3)..........  Monitoring System       Must install to get          Yes.
                                  Installation.           representative emission or
                                                          parameter measurements;
                                                          must verify operational
                                                          status before or at
                                                          performance test.

Sec.   63.8(c)(4)..............  CMS Requirements......  CMS must be operating        Yes; however, COMS are not
                                                          except during breakdown,     applicable.
                                                          out-of-control, repair,
                                                          maintenance, and high-
                                                          level calibration drifts;
                                                          COMS must have a minimum
                                                          of one cycle of sampling
                                                          and analysis for each
                                                          successive 10-second
                                                          period and one cycle of
                                                          data recording for each
                                                          successive 6-minute
                                                          period; CEMS must have a
                                                          minimum of one cycle of
                                                          operation for each
                                                          successive 15-minute
                                                          period.
Sec.   63.8(c)(5)..............  COMS Minimum            COMS minimum procedures....  No.
                                  Procedures.
Sec.   63.8(c)(6)-(8)..........  CMS Requirements......  Zero and high level          Yes, but only applies for
                                                          calibration check            CEMS. Subpart SS of this
                                                          requirements. Out-of-        part provides
                                                          control periods.             requirements for CPMS.
Sec.   63.8(d)(1)-(2)..........  CMS Quality Control...  Requirements for CMS         Yes, but only applies for
                                                          quality control.             CEMS. Subpart SS of this
                                                                                part provides
                                                                                requirements for CPMS.
Sec.   63.8(d)(3)..............  CMS Quality Control...  Must keep quality control    Yes, before July 7, 2023,
                                                          plan on record for 5         but only applies for
                                                          years; keep old versions.    CEMS. Subpart SS of this
                                                                                part provides
                                                                                requirements for CPMS.
                                                                                No, beginning on and after
                                                                                July 7, 2023. See Sec.
                                                                                63.2366(c).
Sec.   63.8(e).................  CMS Performance         Notification, performance    Yes, but only applies for
                                  Evaluation.             evaluation test plan,        CEMS, except this subpart
                                                          reports.                     specifies how and when
                                                                                the performance
                                                                                evaluation results are
                                                                                reported.
Sec.   63.8(f)(1)-(5)..........  Alternative Monitoring  Procedures for               Yes, but subpart SS of
                                  Method.                 Administrator to approve     this part also provides
                                                          alternative monitoring.      procedures for approval
                                                                                of CPMS.
Sec.   63.8(f)(6)..............  Alternative to          Procedures for               Yes.
                                  Relative Accuracy       Administrator to approve
                                  Test.                   alternative relative
                                                          accuracy tests for CEMS.
Sec.   63.8(g).................  Data Reduction........  COMS 6-minute averages       Yes; however, COMS are not
                                                          calculated over at least     applicable.
                                                          36 evenly spaced data
                                                          points; CEMS 1 hour
                                                          averages computed over at
                                                          least four equally spaced
                                                          data points; data that
                                                          cannot be used in average.
Sec.   63.9(a).................  Notification            Applicability and State      Yes.
                                  Requirements.           delegation.
Sec.   63.9(b)(1)-(2), (4)-(5).  Initial Notifications.  Submit notification within   Yes.
                                                          120 days after effective
                                                          date; notification of
                                                          intent to construct/
                                                          reconstruct, notification
                                                          of commencement of
                                                          construction/
                                                          reconstruction,
                                                          notification of startup;
                                                          contents of each.
Sec.   63.9(c).................  Request for Compliance  Can request if cannot        Yes.
                                  Extension.              comply by date or if
                                                          installed best available
                                                          control technology or
                                                          lowest achievable emission
                                                          rate (BACT/LAER).
Sec.   63.9(d).................  Notification of         For sources that commence    Yes.
                                  Special Compliance      construction between
                                  Requirements for New    proposal and promulgation
                                  Sources.                and want to comply 3 years
                                                          after effective date.
Sec.   63.9(e).................  Notification of         Notify Administrator 60      Yes.
                                  Performance Test.       days prior.
Sec.   63.9(f).................  Notification of VE/     Notify Administrator 30      No.
                                  Opacity Test.           days prior.
Sec.   63.9(g).................  Additional              Notification of performance  Yes; however, there are no
                                  Notifications When      evaluation; notification     opacity standards.
                                  Using CMS.              about use of COMS data;
                                                          notification that exceeded
                                                          criterion for relative
                                                          accuracy alternative.
Sec.   63.9(h)(1)-(6)..........  Notification of         Contents due 60 days after   Yes; however, (1) there
                                  Compliance Status.      end of performance test or   are no opacity standards
                                                          other compliance             and (2) all initial
                                                          demonstration, except for    Notification of
                                                          opacity/visible emissions,   Compliance Status,
                                                          which are due 30 days        including all performance
                                                          after; when to submit to     test data, are to be
                                                          federal vs. state            submitted at the same
                                                          authority.                   time, either within 240
                                                                                days after the compliance
                                                                                date or within 60 days
                                                                                after the last
                                                                                performance test
                                                                                demonstrating compliance
                                                                                has been completed,
                                                                                whichever occurs first.
Sec.   63.9(i).................  Adjustment of           Procedures for               Yes.
                                  Submittal Deadlines.    Administrator to approve
                                                          change in when
                                                          notifications must be
                                                          submitted.
Sec.   63.9(j).................  Change in Previous      Must submit within 15 days   No. These changes will be
                                  Information.            after the change.            reported in the first and
                                                                                subsequent compliance
                                                                                reports.
Sec.   63.10(a)................  Recordkeeping/          Applies to all, unless       Yes.
                                  Reporting.              compliance extension; when
                                                          to submit to federal vs.
                                                          state authority;
                                                          procedures for owners of
                                                          more than one source.

Sec.   63.10(b)(1).............  Recordkeeping/          General requirements; keep   Yes.
                                  Reporting.              all records readily
                                                          available; keep for 5
                                                          years.
Sec.   63.10(b)(2)(i)..........  Records Related to      Occurrence of each for       Yes, July 7, 2023.
                                  Startup and Shutdown.   operations (process         No, beginning on and after
                                                          equipment).                  July 7, 2023.
Sec.   63.10(b)(2)(ii).........  Recordkeeping Relevant  Occurrence of each           Yes, before July 7, 2023.
                                  to Malfunction          malfunction of air          No, beginning on and after
                                  Periods and CMS.        pollution equipment.         July 7, 2023. See Sec.
                                                                                63.2390(f).
Sec.   63.10(b)(2)(iii)........  Recordkeeping Relevant  Maintenance on air           Yes.
                                  to Maintenance of Air   pollution control
                                  Pollution Control and   equipment.
                                  Monitoring Equipment.
Sec.   63.10(b)(2)(iv).........  Recordkeeping Relevant  Actions during SSM.........  Yes, before July 7, 2023.
                                  to SSM Periods and                                  No, beginning on and after
                                  CMS.                                                 July 7, 2023.
Sec.   63.10(b)(2)(v)..........  Recordkeeping Relevant  Actions during SSM.........  No.
                                  to SSM Periods and
                                  CMS.
Sec.   63.10(b)(2)(vi)-(xi)....  CMS Records...........  Malfunctions, inoperative,   Yes.
                                                          out-of-control periods.
Sec.   63.10(b)(2)(xii)........  Records...............  Records when under waiver..  Yes.
Sec.   63.10(b)(2)(xiii).......  Records...............  Records when using           Yes.
                                                          alternative to relative
                                                          accuracy test.
Sec.   63.10(b)(2)(xiv)........  Records...............  All documentation            Yes.
                                                          supporting initial
                                                          notification and
                                                          notification of compliance
                                                          status.
Sec.   63.10(b)(3).............  Records...............  Applicability                Yes.
                                                          determinations.
Sec.   63.10(c)(1)-(14)........  Records...............  Additional records for CMS.  Yes.
Sec.   63.10(c)(15)............  Records...............  Additional records for CMS.  Yes, before July 7, 2023.
                                                                                No, beginning on and after
                                                                                July 7, 2023.
Sec.   63.10(d)(1).............  General Reporting       Requirement to report......  Yes.
                                  Requirements.
Sec.   63.10(d)(2).............  Report of Performance   When to submit to federal    No. This subpart specifies
                                  Test Results.           or state authority.          how and when the
                                                                                performance test results
                                                                                are reported.
Sec.   63.10(d)(3).............  Reporting Opacity or    What to report and when....  Yes.
                                  Visible Emissions
                                  Observations.
Sec.   63.10(d)(4).............  Progress Reports......  Must submit progress         Yes.
                                                          reports on schedule if
                                                          under compliance extension.
Sec.   63.10(d)(5).............  SSM Reports...........  Contents and submission....  Yes, before July 7, 2023.
                                                                                No, beginning on and after
                                                                                July 7, 2023. See Sec.
                                                                                63.2386(d)(1)(xiii).
Sec.   63.10(e)(1)-(2).........  Additional CMS Reports  Must report results for      Yes, except this subpart
                                                          each CEMS on a unit;         specifies how and when
                                                          written copy of CMS          the performance
                                                          performance evaluation;      evaluation results are
                                                          two-three copies of COMS     reported; however, COMS
                                                          performance evaluation.      are not applicable.
Sec.   63.10(e)(3)(i)-(iii)....  Reports...............  Schedule for reporting       Yes; however, note that
                                                          excess emissions and         the title of the report
                                                          parameter monitor            is the compliance report;
                                                          exceedance (now defined as   deviations include excess
                                                          deviations).                 emissions and parameter
                                                                                exceedances.
Sec.   63.10(e)(3)(iv)-(v).....  Excess Emissions        Requirement to revert to     Yes.
                                  Reports.                quarterly submission if
                                                          there is an excess
                                                          emissions or parameter
                                                          monitoring exceedance (now
                                                          defined as deviations);
                                                          provision to request
                                                          semiannual reporting after
                                                          compliance for 1 year;
                                                          submit report by 30th day
                                                          following end of quarter
                                                          or calendar half; if there
                                                          has not been an exceedance
                                                          or excess emissions (now
                                                          defined as deviations),
                                                          report contents in a
                                                          statement that there have
                                                          been no deviations; must
                                                          submit report containing
                                                          all of the information in
                                                          Sec.  Sec.   63.8(c)(7)-
                                                          (8) and 63.10(c)(5)-(13).
Sec.   63.10(e)(3)(vi)-(viii)..  Excess Emissions        Requirements for reporting   No. This subpart specifies
                                  Report and Summary      excess emissions for CMS     the reported information
                                  Report.                 (now called deviations);     for deviations within the
                                                          requires all of the          compliance reports.
                                                          information in Sec.  Sec.
                                                           63.10(c)(5)-(13) and
                                                          63.8(c)(7)-(8).
Sec.   63.10(e)(4).............  Reporting COMS Data...  Must submit COMS data with   No.
                                                          performance test data.
Sec.   63.10(f)................  Waiver for              Procedures for               Yes.
                                  Recordkeeping/          Administrator to waive.
                                  Reporting.

Sec.   63.11(b)................  Flares................  Requirements for flares....  Yes, before July 7, 2023;
                                                                                Sec.   63.987
                                                                                requirements apply, and
                                                                                the section references
                                                                                Sec.   63.11(b).
                                                                                No, beginning on and after
                                                                                July 7, 2023. See Sec.
                                                                                63.2380.
Sec.   63.11(c), (d), and (e)..  Control and work        Alternative work practice    Yes.
                                  practice requirements.  for equipment leaks.
Sec.   63.12...................  Delegation............  State authority to enforce   Yes.
                                                          standards.
Sec.   63.13...................  Addresses.............  Addresses where reports,     Yes.
                                                          notifications, and
                                                          requests are sent.
Sec.   63.14...................  Incorporation by        Test methods incorporated    Yes.
                                  Reference.              by reference.
Sec.   63.15...................  Availability of         Public and confidential      Yes.
                                  Information.            information.
----------------------------------------------------------------------------------------------------------------

[FR Doc. 2020-05900 Filed 7-6-20; 8:45 am]
BILLING CODE 6560-50-P


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the precision of the assay to include reproducibility
and proficiency of the testing lab should be performed
as our current recommendations suggest.
However, the determination of what for a
better term I've called preclinical specificity which in
other types of tests involve the testing of random,
healthy donors, and preclinical sensitivity which in
current applications involve the testing of a certain
number of known positives, need to be modified in the
context of B19 screening.
Next slide.  The reason for this is that
NAT for B19 focuses not on the donor and the donor's
clinical status, but on an effort to cap the
contamination of manufacturing pools from which plasma
derivatives are manufactured.  And therefore, whatever
objective standard is set for the performance of such a
test should focus on the manufacturing pool.  So
therefore, as a first suggestion, we have proposed that
whatever testing is done should be capable of capping
the B19 DNA contamination of the manufacturing pools to
less than 10 genome equivalence per mL and everything
4
else will key off of this.  So this is a central
proposal.
Now we feel that that is a meaningfully low

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number and there is some support from that, from the
Vitex experience which I think we'll hear more about in
a moment and the number of positives that will have to
be rejected should be manageable.  It should not
paralyze the testing and release process for plasma.
With regard to testing for specificity,
there's two components to this testing.  One focuses on
the familiar, random plasma donations and the point, of
course, is to -- the expectation is that most of these
will be negative, but when a positive is obtained that
result should be confirmed with both repeat testing in
duplicate and a confirmatory test, preferably one that
involves the use of different primers targeted to a
different region of the genome.
The second phase and finally, the confirmed
positive should be titered in order to determine what
the test actually picked up.  The second phase would be
testing of 100,000 plasma donations in the form of
minipools.  Now I'm making an assumption here, a
reasonable assumption, that most testing initially will
be done in minipools, much like it is for the other
viruses.  Any positives that are obtained should be
confirmed by, again, repeat testing in duplicate and the
use of an appropriate confirmatory test.

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The sponsor should then trace the positive
reaction back to the individual positive unit.  Now this
proposal is not being made for the implementation of an
approved test, but identifying the positive unit was
considered to be an essential part of validating the
assay.  So during the validation phase we think the
individual unit should be identified and then the titer
of the positive minipool and the individual donation
should be determined.
Next slide.  For sensitivity, there are
basically three things:  testing of 20 known positive
donations.  It's a small number, but we recognize that
the availability of known positive units may differ from
sponsor to sponsor and determining the titer of each
that is tested.
The second phase overlaps perfectly with
the proposal under specificity, testing of the 100,000
donations in minipools, confirming any positives,
tracing the positive result back to an individual
donation and determining the titers of the minipools and
the donations.  And finally, as the gold standard, all
of the manufacturing pools that result from plasma that
has been tested through the minipool process, should be
tested and determined to be, in fact, less than 10
4

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genome equivalence per mL.
We're bringing these thoughts and I want to
emphasize that they've gone no further beyond that,
these thoughts to you, in order to get feedback on the
practicality of the proposals and the effectiveness of
them as standards for judging license applications for
B19 NAT testing.
I think I'll finish there.  The first
outside speaker is Aris Lazo, Dr. Aris Lazo from VI
Technologies and this will start a series of talks that
will describe actual real world experience with
Parvovirus B19 and its testing.
Dr. Lazo?
DR. LAZO:  Well, thank you very much and
I'd like to thank the organizer for giving me the
opportunity to be here and show our data from
implementation of B19 testing in PLAS + SD.
Sorry, I went too far.  I'm going to focus
on the implementation of B19, testing for PLAS + SD by
the polymerase chain reaction.  However, I just want to
mention very briefly that we have implemented hepatitis
A testing for final product and we submitted supplement
to our PLA to the FDA and was approved.  On the label
claim it states PLAS + SD tested by hepatitis A by PCR

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contains no greater than 9.4 genomes equivalence with 95
percent confidence interval of 6.2 and 12.6. genomes
equivalent per mL.
This testing has been done by NGI.
As you know, we have an on-going Phase 4
clinical trials and so far we have transfused 77 healthy
volunteers with one unit each and there are 14 PLAS + SD
lots that have been involved.  We have no evidence of
HAV transmission.  We have 18 seroconversions for B19.
All of them are associated with three lots of PLAS + SD
that contains PCR titers greater than 10.  Lots with
7
B19 titers less than 10 have no volunteers transmitted
4
with those lots has not seroconverted.
Therefore, Vitex decided to take the action
to screen for B19.  The available methods for testing
antigen and antivirus are not appropriate, therefore, we
decided to develop, implement and validate the CR
testing for B19.
The testing is done at two levels.  It's
done at the minipool level and it's done also at the
final product.  Our manufacturing pool contains no
greater than 2500 units of plasma.  The plasma comes in
cases containing 20 units each.  Therefore, we formed
the primary pools from each case containing the 20 units

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from the pigtail from each of those units.
And
then from five cases containing 20 units each, we formed
what we call the minipool which contains 100 units.  Our
first round of testing is testing the 100 units
minipool.  If that's negative, it goes into the
manufacture.  If it is positive, then we go and test the
five primary pools.  We discard the positive primary
pool that contained the 20 units.
We have tested so far approximately 14,000
primary pools and we have found 342 of those 14,000 to
be positive.  If we assume one positive unit per primary
pool, that will be the equivalent to 1 in 800 and this
correlates with some of the previously published
prevalence studies.
Once we have formed the minipool our PCR
consists of two pair of primers.  We use an internal
control called PPV which is a porcine Parvovirus very
similar to the B19.  We spike the porcine parvo at the
very beginning so it controls for extraction,
amplification and detection, and the extraction is
manual.  We use a Kiagene kit and then we proceed to
amplification and finally detection using gel
electrophoresis.
I just want to make a point in here that

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the number one lane is a negative sample.  The number
two lane is a negative sample containing the internal
control and lane number three is a positive sample for
B19 and contains also the internal control.
We also run blanks and we run a negative control
every five samples in order to control for close
contamination.
Once we develop the PCR we proceed to
validation and I just want to validate the assay and I
just want to mention we did this before the guidelines
that we are discussing were available.  What we did was
for -- we tested -- we studied really about at least
four parameters that included limited detection,
interference, the specificity, and precision.  The for
the limited detection we used the National Institute
Biological standards working reagent that was kindly
provided by Dr. John Saldanha.  The reason we used this
reagent was because if an international standard is
developed, then it will be very easy for us to calibrate
this reagent against the international standard and
assign units and then we know what the true sensitivity
of this assay will be.
For that, we did four series of dilutions a
half log apart and each series contained ten replicates.

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Therefore, we tested 40 samples for all the -- for each
dilution.  And the window of the limited detection is
the dilution in which 95 percent of the samples are
positive.  And in this case will be the working reagent
diluted 10 .
-1
Based on the same serial dilutions, we
determined what is called the endpoint dilution or the
ED50 and that what it tells you really is the dilution
in which 50 percent of the samples are positive.  In
this case, using the same reagent will be the 10 .  If
-2
we assume a Poisson distribution, then we will be able
to -- we were able to calculate the genomes equivalence
for mL in these samples and therefore our assay has a
medium estimate of 81 copies of genomes equivalence
sensitivity with an upper and lower 95 confidence of 49
and 135.  I must say that these calculations were done
based on a paper by Dr. Alan Heath which is the
statistician from the National Institute of Biological
Standards and Controls.
Then we proceed to determine the
specificity of the assay and for that we spike our
sample with pathogens that include viruses and bacteria.
And then in one of the samples, in one of the
replicates that we did, we spiked all the pathogens

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except the B19 and then we amplified as normal.  We
didn't see any amplification.  Therefore, those primers
for B19 are very specific and they do not cross react
with any of the other pathogens.   Then we spike the
pathogens plus B19 diluted 1 to 10.  As you have seen
before, 1 to 10 is very close to the limit of detection
of the assay.  And we amplify and we detected the five
replicates 505.  Therefore, these pathogens do not
interfere with our PCR assay.  Similar results would
have been with the bacteria.
Interference was determined at the level of
indigenous substances like hemoglobin, bilirubin,
lipids, anticoagulants and nucleoside analogs.  All the
substances were spiked into the plasma and then we
proceeded to do the amplification.  As you can see,
there is no interference.
Finally, we did assay precision at two
levels, repeatability and intermediate precision.
Again, we used the NIBSC reagent, diluted 1 to 10 which
again is very close to the limit of detection.  We got
100 percent positive results.  Also, we studied the
intermediate precision which include different
operators, different days, different lots, Tax
polymerase, extraction kits and again we didn't see any

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effect.
In conclusion, I can say that we have
developed and implemented PCR for hepatitis A and B19
that is cleaning of the plasma for HIV and B19 reduces
or eliminates transmission of B19 and hepatitis A.  And
transmission of B19 by unscreened blood products are
likely, of course, more frequently than we recognize.
These are the people who have participated in this work
and that's all.  Thank you very much.
(Applause.)
DR. YU:  Thank you, Dr. Lazo.  Our next
speaker is Dr. Thomas Weimer from Centeon Pharma.
DR. WEIMER:  Thank you.  I'm going to
present pilot study results which were obtained in our
Marburg location.  Why is B19 an NAT target for plasma
manufacture?  It's a self-limiting infection with only
a few clinical consequences.  But there are certain risk
groups like pregnant women and immuno-compromised
patients who receive plasma derived products and there
have been reported B19 transmissions for coagulation
factors.  In addition, this virus can reach tremendous
virus concentrations in the acute viremic phase up to 14
logs per milliliter.  And in addition, it's pretty
resistant to physical-chemical methods for virus

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inactivation and in addition, it's highly prevalent in
plasma donations.
So in our first attempt to estimate what we
would expect if we wanted to start screening for B19, we
looked at about 53,000 donations with a very sensitive
PCO, showing that 1 in 835 donations was PCR reactive.
Most of those positives were at low or moderate B19
levels which is less than 10
7
genomes per mL.  Those
genomes refer to the NIBSC 97542 standard.
About 1 in 10,000 donations contain titers of greater
than 10 genomes per mL, up to 10 .
7
13
Due to the prevalence our B19 PCR screening
targets the removal of those high titered donations and
the detection and removal of such donations from further
manufacturing will prohibit 9 logs or more from entering
manufacturing pools.
What we do, we call high titer screening
which is a PCR of defined limited sensitivity which was
designed to detect and remove B19 positive donations,
was greater than 10 genomes per mL.  This screening is
7
integrated into the current minipool testing procedures
and the potential B19 peak load of fractionation pools
will be reduced to less than 10 genomes per mL.
6
Next slide.  We have done two pilot

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studies, one in IND and one in the quality control
department in Marburg which tested part of the plasma
fractionated at that location.  They came to pretty
similar result of frequency of around 1 per 10,000
donations with a high titer donation.
Well, this results in fractionation pools
and we compare 30 pools which were from B19 untested
plasma with over 100 fractionation pools which were made
from B19 PCR pre-screened plasma and if you look at your
proposed limit, there are a couple of pools which would
be at or slightly above your proposed limit.  What we
can see is that the peak virus loads, they disappear.
The average goes down and there are more completely
negative pools found after pre-screen.
Next
slide, please.  We looked at the product and the product
was antithrombin III due to the fact that it could be
managed from production logistics and that the product
is going to be used in a clinical trial which includes
pregnant women.  We compared 12 lots made from untested
plasma with six lots of antithrombin III which were made
exclusively from pretested plasma, from plasma pools you
just saw.
What we knew from validation
studies was that the cumulative B19 removal factor in
the manufacturing process for the ATIII is about ten

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lots.  Here are the results where eight out of those 12
lots made from untested plasma contained B19 viral DNA
up to about 2.5 lots, I think, whereas all those six
lots made from pretested plasma were PCR nonreactive.
So this indicates that the virus reduction capacity of
this manufacturing process in conjunction with the high
titer screening for B19 results in an unreactive final
product.
Now this is specific for ATIII.  This may
look like different for other products and we may only
be able to look at those products once we have
implemented our full B19 testing for all our plasma.
Final slide, please.  So we feel that B19
high titer screening is a feasible approach to screen
for B19 contaminated units.  It will remove plasma units
with high levels of B19 from manufacturing and it will
significantly decrease peak virus loads of fractionation
pools and the removal capacity is nine to 17 lots of
virals.  It compliments the current viral removal steps
and it considerably reduces the virus burden in final
products.
Thanks for your attention.
(Applause.)
DR. YU:  Thank you, Mr. Weimer.  Our next

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speaker is Dr. Gerold Zerlauth from Baxter Hyland
Immuno.
DR. ZERLAUTH:  Ladies and gentlemen, if you
have to commute to downtown Washington every day, you
may not choose a Formula 1 racing car and if you have to
screen plasma for the presence of Parvovirus, you may
not think of PCR in the first moment because that assay
has been developed to detect very few viruses in rare
incidents.
Parvovirus, as we have seen, is present in
high numbers and in many samples and you have to make
provisions that you're not overwhelmed with work if you
run a PCR on such samples.  As we have seen, there are
reasons why we should introduce screening, namely for
the transmissibility that can be detected in plasma
derivatives and mainly there is no reliable test and so
we have to take what we have and that could be PCR or
NAT.
We have seen that prevalence of very high
titer samples is fairly high, 1 to 10,000.  We know that
individual donations can go up to 10
13
per milliliter
and overall -- one more, please -- and we  know that
pooled donations and Dr. Weimer has just show they can
go up to the 10 or 10 equivalence per milliliter.
8
9

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Next, please.  So we decided to go with PCR
for screening of Parvovirus and we wanted to detect and
eliminate high viral load donations.  We wanted to show
that there is no impact on antibody distribution and we
did not want to have any donor related follow up due to
the short period of time of the viremic phase.
Next, please.  In mid-1998, we developed a
quantitative PCR assay system based on TaqMan and we
validated that, of course, and started a limited study
to evaluate a suitable cut off level to achieve this
goal.  I have shown these slides previously.  We found
this comprises about one million donations and we found
that up, almost 60 percent on nonreactive in this test.
This is a very sensitive test and has a cut off limit
of 95 percent at about 10 to 15 genome equivalence per
milliliter.
We found that another 35 percent are very
low loaded with virus and only about four percent of the
pools were higher than 10 per milliliter.
6
This is how the production pools look like
in the same assay and you see that we do have up to the
10
9
of genome equivalence in production pools if they
are made from unscreened material.
Next please.  This is just a list of

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