[Federal Register Volume 86, Number 248 (Thursday, December 30, 2021)]
[Rules and Regulations]
[Pages 74353-74356]
[FR Doc No: 2021-28340]

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Rules and Regulations
                                                Federal Register
________________________________________________________________________

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

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

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Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 /
Rules and Regulations

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2021-1165; Project Identifier MCAI-2021-01414-R;
Amendment 39-21893; AD 2022-01-05]
RIN 2120-AA64

Airworthiness Directives; Airbus Helicopters

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule; request for comments.

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SUMMARY: The FAA is superseding airworthiness directive (AD) 2021-24-
06, which applied to certain Airbus Helicopters Model EC130T2
helicopters. AD 2021-24-06 required repetitive visual inspections of
the rivets on the rear transmission shaft bearing support and of the
local structure for cracking and missing, loose, or sheared rivets and
accomplishment of applicable corrective actions. This AD retains those
requirements and adds repetitive visual inspections of the rivet heads
on the left-hand and right-hand sides of the rear transmission shaft
bearing support, revises a corrective action, and adds a reporting
requirement, as specified in a European Union Aviation Safety Agency
(EASA) AD, which is incorporated by reference. This AD also revises the
special flight permit limitation from AD 2021-24-06. This AD was
prompted by an additional report of loose rivet heads on the outside
face of the tail boom corner support. The FAA is issuing this AD to
address the unsafe condition on these products.

DATES: This AD becomes effective January 14, 2022.
    The Director of the Federal Register approved the incorporation by
reference of a certain publication listed in this AD as of January 14,
2022.
    The FAA must receive comments on this AD by February 14, 2022.

ADDRESSES: You may send comments, using the procedures found in 14 CFR
11.43 and 11.45, by any of the following methods:
     Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE, Washington, DC 20590.
     Hand Delivery: Deliver to Mail address above between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
    For EASA material incorporated by reference (IBR) in this final
rule, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany;
telephone +49 221 8999 000; email [email protected]; Internet
www.easa.europa.eu. You may find this IBR material on the EASA website
at https://ad.easa.europa.eu. For Airbus Helicopters service
information identified in this final rule, contact Airbus Helicopters,
2701 North Forum Drive, Grand Prairie, TX 75052; telephone (972) 641-
0000 or<PHONE_NUMBER>; fax<PHONE_NUMBER>; or at https://www.airbus.com/helicopters/services/technical-support.html. You may
view this material at the FAA, Office of the Regional Counsel,
Southwest Region, 10101 Hillwood Pkwy., Room 6N-321, Fort Worth, TX
76177. For information on the availability of this material at the FAA,
call<PHONE_NUMBER>. Service information that is IBRed is also
available in the AD docket at https://www.regulations.gov by searching
for and locating Docket No. FAA-2021-1165.

Examining the AD Docket

    You may examine the AD docket at https://www.regulations.gov by
searching for and locating Docket No. FAA-2021-1165; or in person at
Docket Operations between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays. The AD docket contains this final rule, the
EASA AD, any comments received, and other information. The street
address for Docket Operations is listed above.

FOR FURTHER INFORMATION CONTACT: Andrea Jimenez, Aerospace Engineer,
COS Program Management Section, Operational Safety Branch, Compliance &
Airworthiness Division, FAA, 1600 Stewart Ave., Suite 410, Westbury, NY
11590; telephone<PHONE_NUMBER>; email [email protected].

SUPPLEMENTARY INFORMATION:

Background

    The FAA issued AD 2021-24-06, Amendment 39-21827 (86 FR 66934,
November 24, 2021) (AD 2021-24-06), for certain Airbus Helicopters
Model EC130T2 helicopters. AD 2021-24-06 required repetitive visual
inspections of the rivets on the rear transmission shaft bearing
support and of the local structure for cracking and missing, loose, or
sheared rivets and accomplishment of applicable corrective actions. AD
2021-24-06 was prompted by EASA Emergency AD 2021-0235-E, dated October
28, 2021 (EASA AD 2021-0235-E), issued by EASA, which is the Technical
Agent for the Member States of the European Union, to correct an unsafe
condition for Airbus Helicopters (formerly Eurocopter) Model EC 130 T2
helicopters, all serial numbers, on which Airbus Helicopters
Modification 074581 had been embodied in production. EASA advised of a
report of degradation of the rear transmission shaft bearing support on
a Model EC 130 T2 helicopter and the determination that all of the
attachment rivets of the transmission shaft bearing support were
sheared. EASA also advised that the investigation was on-going to
identify the root cause of this degradation. This condition, if not
addressed, could lead to failure of the tail rotor drive shaft and
subsequent loss of yaw control of the helicopter.

Actions Since AD 2021-24-06 was Issued

    Since the FAA issued AD 2021-24-06, EASA has issued EASA Emergency
AD 2021-0283-E, dated December 17, 2021 (EASA AD 2021-0283-E), to
supersede EASA AD 2021-0235-E. EASA advises of an additional report of
loose rivet heads on the outside face of the tail boom corner support.
Accordingly, EASA AD 2021-0283-E retains the requirements of EASA AD
2021-0235-E and also requires repetitive visual inspections of the
rivet heads on the left-hand and right-hand sides of the rear
transmission shaft bearing support, revises a corrective action, and
adds a reporting requirement. EASA considers its AD an interim action
and states that further AD

action may follow. See EASA AD 2021-0283-E for additional background
information.
    The FAA has also determined to revise the special flight permit
limitation from AD 2021-24-06. This new AD limits special flight
permits to the inspections required before the ``each first flight of
the day'' compliance time with no passengers on board. Special flight
permits are prohibited for any other actions required by this AD.

Related Service Information Under 1 CFR Part 51

    EASA AD 2021-0283-E requires repetitive visual inspections of the
rivets on the rear transmission upper and lower bearing support, the
local structure, and the rivet heads on the left-hand and right-hand
sides of the rear transmission shaft bearing support. Depending on the
results, EASA AD 2021-0283-E requires contacting Airbus Helicopters to
obtain approved repair instructions and accomplishing those
instructions, or replacing each affected rivet. EASA AD 2021-0283-E
also requires reporting inspection findings to Airbus Helicopters.
    This material is reasonably available because the interested
parties have access to it through their normal course of business or by
the means identified in the ADDRESSES section.

Other Related Service Information

    The FAA also reviewed Airbus Helicopters Emergency Alert Service
Bulletin (EASB) No. 05A039, Revision 0, dated October 27, 2021, and
EASB No. 05A039, Revision 1, dated December 16, 2021 (EASB 05A039 Rev
1). This service information specifies procedures for repetitive visual
inspections of the rear transmission bearing support areas, including
the frame and skin in the area of the bearing supports. EASB 05A039 Rev
1 adds repetitive visual inspections of the rivets heads on the left-
hand and right-hand sides of the rear transmission shaft bearing
support located under the Teflon tape on the tail boom.

FAA's Determination

    These helicopters have been approved by EASA and are approved for
operation in the United States. Pursuant to the FAA's bilateral
agreement with the European Union, EASA has notified the FAA of the
unsafe condition described in its AD. The FAA is issuing this AD after
evaluating all pertinent information and determining that the unsafe
condition exists and is likely to exist or develop on other helicopters
of the same type design.

Requirements of This AD

    This AD requires accomplishing the actions specified in EASA AD
2021-0283-E, described previously, as IBRed, except for any differences
identified as exceptions in the regulatory text of this AD and except
as discussed under ``Differences Between this AD and the EASA AD.''

Explanation of Required Compliance Information

    In the FAA's ongoing efforts to improve the efficiency of the AD
process, the FAA developed a process to use some civil aviation
authority (CAA) ADs as the primary source of information for compliance
with requirements for corresponding FAA ADs. The FAA has been
coordinating this process with manufacturers and CAAs. As a result,
EASA AD 2021-0283-E will be IBRed in this FAA final rule. This AD
would, therefore, require compliance with EASA AD 2021-0283-E in its
entirety through that incorporation, except for any differences
identified as exceptions in the regulatory text of this AD. Using
common terms that are the same as the heading of a particular section
in EASA AD 2021-0283-E does not mean that operators need comply only
with that section. For example, where the AD requirement refers to
``all required actions and compliance times,'' compliance with this AD
requirement is not limited to the section titled ``Required Action(s)
and Compliance Time(s)'' in EASA AD 2021-0283-E. Service information
referenced in EASA AD 2021-0283-E for compliance will be available at
https://www.regulations.gov by searching for and locating Docket No.
FAA-2021-1165.

Differences Between This AD and the EASA AD

    EASA AD 2021-0283-E requires inspections after each last flight of
the day (ALF), whereas this AD requires accomplishing those inspections
before each first flight of the day. EASA AD 2021-0283-E specifies that
certain inspections can be done by a mechanical technician, a pilot
with correct training and accreditation, or a pilot-owner, whereas this
AD requires those inspections be done by a qualified mechanic.
Depending on certain inspection results, EASA AD 2021-0283-E specifies
contacting Airbus Helicopters to obtain approved repair instructions
and accomplishing those instructions, whereas this AD requires repair
done in accordance with a method approved by the Manager, General
Aviation & Rotorcraft Section, International Validation Branch, FAA; or
EASA; or Airbus Helicopters'' EASA Design Organization Approval (DOA).
EASA AD 2021-0283-E requires reporting certain information to Airbus
Helicopters within 30 days after each rivet replacement, whereas this
AD requires reporting that information within 10 days after each rivet
replacement.

Interim Action

    The FAA considers this AD interim action. If final action is later
identified, the FAA might consider further rulemaking then.

Justification for Immediate Adoption and Determination of the Effective
Date

    Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5
U.S.C. 551 et seq.) authorizes agencies to dispense with notice and
comment procedures for rules when the agency, for ``good cause,'' finds
that those procedures are ``impracticable, unnecessary, or contrary to
the public interest.'' Under this section, an agency, upon finding good
cause, may issue a final rule without providing notice and seeking
comment prior to issuance. Further, section 553(d) of the APA
authorizes agencies to make rules effective in less than thirty days,
upon a finding of good cause.
    An unsafe condition exists that requires the immediate adoption of
this AD without providing an opportunity for public comments prior to
adoption. The FAA has found that the risk to the flying public
justifies foregoing notice and comment prior to adoption of this rule
because sheared attachment rivets of the transmission shaft bearing
support could lead to failure of the tail rotor drive shaft and
subsequent loss of yaw control of the helicopter. In addition, the
compliance time for the required actions are shorter than the time
necessary for the public to comment and for publication of the final
rule. Inspections of the rivets on the rear transmission shaft bearing
support and of the local structure must be continued from AD 2021-24-06
before each first flight of the day and the initial inspection of the
rivet heads must be accomplished within 10 hours time-in-service or
seven days after the effective date of this AD, whichever occurs first.
Accordingly, notice and opportunity for prior public comment are
impracticable and contrary to the public interest pursuant to 5 U.S.C.
553(b)(3)(B).
    In addition, the FAA finds that good cause exists pursuant to 5
U.S.C. 553(d) for making this amendment effective in less than 30 days,
for the same reasons

the FAA found good cause to forego notice and comment.

Comments Invited

    The FAA invites you to send any written data, views, or arguments
about this final rule. Send your comments to an address listed under
ADDRESSES. Include ``Docket No. FAA-2021-1165; Project Identifier MCAI-
2021-01414-R'' at the beginning of your comments. The most helpful
comments reference a specific portion of the final rule, explain the
reason for any recommended change, and include supporting data. The FAA
will consider all comments received by the closing date and may amend
this final rule because of those comments.
    Except for Confidential Business Information (CBI) as described in
the following paragraph, and other information as described in 14 CFR
11.35, the FAA will post all comments received, without change, to
https://www.regulations.gov, including any personal information you
provide. The agency will also post a report summarizing each
substantive verbal contact received about this final rule.

Confidential Business Information

    CBI is commercial or financial information that is both customarily
and actually treated as private by its owner. Under the Freedom of
Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public
disclosure. If your comments responsive to this AD contain commercial
or financial information that is customarily treated as private, that
you actually treat as private, and that is relevant or responsive to
this AD, it is important that you clearly designate the submitted
comments as CBI. Please mark each page of your submission containing
CBI as ``PROPIN.'' The FAA will treat such marked submissions as
confidential under the FOIA, and they will not be placed in the public
docket of this AD. Submissions containing CBI should be sent to Andrea
Jimenez, Aerospace Engineer, COS Program Management Section,
Operational Safety Branch, Compliance & Airworthiness Division, FAA,
1600 Stewart Ave., Suite 410, Westbury, NY 11590; telephone (516) 228-
7330; email [email protected]. Any commentary that the FAA
receives that is not specifically designated as CBI will be placed in
the public docket for this rulemaking.

Regulatory Flexibility Act

    The requirements of the Regulatory Flexibility Act (RFA) do not
apply when an agency finds good cause pursuant to 5 U.S.C. 553 to adopt
a rule without prior notice and comment. Because the FAA has determined
that it has good cause to adopt this rule without prior notice and
comment, RFA analysis is not required.

Costs of Compliance

    The FAA estimates that this AD affects up to 64 helicopters of U.S.
Registry. Labor rates are estimated at $85 per work-hour. Based on
these numbers, the FAA estimates the following costs to comply with
this AD.
    Inspecting the rivets and local structure takes about 0.5 work-hour
for an estimated cost of about $43 per helicopter and up to $2,752 for
the U.S. fleet, per inspection cycle. Removing the Teflon tape and
inspecting the rivet heads takes about 0.5 work-hour for an estimated
cost of about $43 per helicopter and up to $2,752 for the U.S. fleet,
per inspection cycle.
    Replacing a rivet takes about 0.5 work-hour and parts cost up to
$20 for an estimated cost of up to $63 per rivet. The FAA has received
no definitive data on which to base the cost estimates for other on-
condition repairs specified in this AD. Reporting information takes
about 1 work-hour for an estimated cost of $85 per instance.

Paperwork Reduction Act

    A federal agency may not conduct or sponsor, and a person is not
required to respond to, nor shall a person be subject to penalty for
failure to comply with a collection of information subject to the
requirements of the Paperwork Reduction Act unless that collection of
information displays a currently valid OMB Control Number. The OMB
Control Number for this information collection is 2120-0056. Public
reporting for this collection of information is estimated to be
approximately 1 hour per response, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. All responses to this collection of
information are mandatory. Send comments regarding this burden estimate
or any other aspect of this collection of information, including
suggestions for reducing this burden, to: Information Collection
Clearance Officer, Federal Aviation Administration, 10101 Hillwood
Parkway, Fort Worth, TX 76177-1524.

Authority for This Rulemaking

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

Regulatory Findings

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

List of Subjects in 14 CFR Part 39

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

The Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by:
0
a. Removing Airworthiness Directive 2021-24-06, Amendment 39-21827 (86
FR 66934, November 24, 2021); and
0
b. Adding the following new airworthiness directive:

2022-01-05 Airbus Helicopters: Amendment 39-21893; Docket No. FAA-
2021-1165; Project Identifier MCAI-2021-01414-R.

(a) Effective Date

    This airworthiness directive (AD) is effective January 14, 2022.

(b) Affected ADs

    This AD replaces AD 2021-24-06, Amendment 39-21827 (86 FR 66934,
November 24, 2021) (AD 2021-24-06).

(c) Applicability

    This AD applies to Airbus Helicopters Model EC130T2 helicopters,
certificated in any category, as identified in European Union
Aviation Safety Agency (EASA) Emergency AD 2021-0283-E, dated
December 17, 2021 (EASA AD 2021-0283-E).

(d) Subject

    Joint Aircraft System Component (JASC) Code: 5300, Fuselage
Structure.

(e) Unsafe Condition

    This AD was prompted by a report of degradation of the rear
transmission shaft bearing support and the determination that all of
the attachment rivets of the transmission shaft bearing support were
sheared. The FAA is issuing this AD to address sheared attachment
rivets of the transmission shaft bearing support. This condition, if
not addressed, could lead to failure of the tail rotor drive shaft
and subsequent loss of yaw control of the helicopter.

(f) Compliance

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

(g) Requirements

    Except as specified in paragraph (h) of this AD: Comply with all
required actions and compliance times specified in, and in
accordance with, EASA AD 2021-0283-E.

(h) Exceptions to EASA AD 2021-0283-E

    (1) Where EASA AD 2021-0283-E refers to November 1, 2021 (the
effective date of EASA Emergency AD 2021-0235-E, dated October 28,
2021), this AD requires using December 9, 2021 (the effective date
of AD 2021-24-06).
    (2) Where EASA AD 2021-0283-E refers to its effective date, this
AD requires using the effective date of this AD.
    (3) Where EASA AD 2021-0283-E requires compliance in terms of
flight hours, this AD requires using hours time-in-service.
    (4) Where paragraphs (1) and (2) of EASA AD 2021-0283-E require
accomplishing inspections after each last flight of the day or
``ALF,'' this AD requires accomplishing those inspections before
each first flight of the day.
    (5) Where the service information referenced in EASA AD 2021-
0283-E specifies that certain inspections can be done by a
mechanical technician, a pilot with correct training and
accreditation, or a pilot-owner, this AD requires that those
inspections be done by a qualified mechanic.
    (6) Where paragraphs (3) and (4) of EASA AD 2021-0283-E specify
contacting Airbus Helicopters to obtain approved repair instructions
and accomplishing those instructions, this AD requires repair done
in accordance with a method approved by the Manager, General
Aviation & Rotorcraft Section, International Validation Branch, FAA;
or EASA; or Airbus Helicopters'' EASA Design Organization Approval
(DOA). If approved by the DOA, the approval must include the DOA-
authorized signature.
    (7) Where paragraph (6) of EASA AD 2021-0283-E requires
reporting inspection results to Airbus Helicopters within 30 days
after each rivet replacement, this AD requires reporting inspection
results at the applicable time in paragraph (h)(7)(i) or (ii) of
this AD.
    (i) If the inspection was done on or after the effective date of
this AD: Submit the report within 10 days after each rivet
replacement.
    (ii) If the inspection was done before the effective date of
this AD: Submit the report within 10 days after the effective date
of this AD.
    (8) This AD does not mandate compliance with the ``Remarks''
section of EASA AD 2021-0283-E.

(i) Special Flight Permit

    Special flight permits may be permitted to accomplish the
actions required by paragraphs (1) and (2) of EASA AD 2021-0283-E
for the before each first flight of the day compliance time only,
provided that there are no passengers on board. Special flight
permits are prohibited for any other actions required by this AD.

(j) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, International Validation Branch, FAA, has the
authority to approve AMOCs for this AD, if requested using the
procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19,
send your request to your principal inspector or local Flight
Standards District Office, as appropriate. If sending information
directly to the manager of the International Validation Branch, send
it to the attention of the person identified in paragraph (k) of
this AD. Information may be emailed to: [email protected].
    (2) Before using any approved AMOC, notify your appropriate
principal inspector, or lacking a principal inspector, the manager
of the local flight standards district office/certificate holding
district office.

(k) Related Information

    For more information about this AD, contact Andrea Jimenez,
Aerospace Engineer, COS Program Management Section, Operational
Safety Branch, Compliance & Airworthiness Division, FAA, 1600
Stewart Ave., Suite 410, Westbury, NY 11590; telephone (516) 228-
7330; email [email protected].

(l) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the
incorporation by reference of the service information listed in this
paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
    (2) You must use this service information as applicable to do
the actions required by this AD, unless this AD specifies otherwise.
    (i) European Union Aviation Safety Agency (EASA) Emergency AD
2021-0283-E, dated December 17, 2021.
    (ii) [Reserved]
    (3) For EASA AD 2021-0283-E, contact EASA, Konrad-Adenauer-Ufer
3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
[email protected]; Internet www.easa.europa.eu. You may find the
EASA material on the EASA website at https://ad.easa.europa.eu.
    (4) You may view this service information at the FAA, Office of
the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy., Room
6N-321, Fort Worth, TX 76177. For information on the availability of
this material at the FAA, call<PHONE_NUMBER>. This material may be
found in the AD docket at https://www.regulations.gov by searching
for and locating Docket No. FAA-2021-1165.
    (5) You may view this material that is incorporated by reference
at the National Archives and Records Administration (NARA). For
information on the availability of this material at NARA, email
[email protected], or go to: https://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued on December 22, 2021.
Lance T. Gant,
Director, Compliance & Airworthiness Division, Aircraft Certification
Service.
 [FR Doc. 2021-28340 Filed 12-27-21; 4:15 pm]
 BILLING CODE 4910-13-P


[Federal Register Volume 85, Number 34 (Thursday, February 20, 2020)]
[Notices]
[Pages 9843-9847]
[FR Doc No: 2020-03317]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88191; File No. SR-NSCC-2019-004]

Self-Regulatory Organizations; National Securities Clearing
Corporation; Order Approving a Proposed Rule Change To Enhance National
Securities Clearing Corporation's Haircut-Based Volatility Charge
Applicable to Municipal Bonds

February 13, 2020.
    On December 13, 2019, National Securities Clearing Corporation
(``NSCC'') 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\
proposed rule change SR-NSCC-2019-004 to revise NSCC's methodology for
calculating margin amounts applicable to municipal bonds.\3\ The
proposed rule change was published for comment in the Federal Register
on January 2, 2020,\4\ and the Commission received no comment letters
regarding the changes proposed in the proposed rule change.\5\ For the
reasons discussed below, the Commission is approving the proposed rule
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ NSCC also filed the proposals contained in the proposed rule
change as advance notice SR-NSCC-2019-801 with the Commission
pursuant to Section 806(e)(1) of the Dodd-Frank Wall Street Reform
and Consumer Protection Act entitled the Payment, Clearing, and
Settlement Supervision Act of 2010 (``Clearing Supervision Act''),
12 U.S.C. 5465(e)(1), and Rule 19b-4(n)(1)(i) of the Act, 17 CFR
240.19b-4(n)(1)(i). Notice of Filing of the Advance Notice was
published for comment in the Federal Register on January 14, 2020.
Securities Exchange Act Release No. 87911 (January 8, 2020), 85 FR
2197 (January 14, 2020) (File No. SR-NSCC-2019-801).
    \4\ Securities Exchange Act Release No. 87858 (December 26,
2019), 85 FR 149 (January 2, 2020) (``Notice of Filing'').
    \5\ As the proposals contained in the proposed rule change were
also filed as an advance notice, all public comments received on the
proposals are considered regardless of whether the comments are
submitted on the proposed rule change or the advance notice.
---------------------------------------------------------------------------

I. Description of the Proposed Rule Change

    The proposed rule change would revise NSCC's Rules and Procedures
(``Rules'') \6\ to change the methodology NSCC uses for calculating the
haircut-based margin charge applicable to municipal bonds.
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    \6\ Capitalized terms not defined herein are defined in NSCC's
Rules, available at http://dtcc.com/~/media/Files/Downloads/legal/
rules/nscc_rules.pdf.
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A. Background

    NSCC provides clearing, settlement, risk management, central
counterparty services, and a guarantee of completion for virtually all
broker-to-broker trades involving equity securities, corporate and
municipal debt securities, and certain other securities. NSCC manages
its credit exposure to its members by determining an appropriate
Required Fund Deposit (i.e., margin) for each member.\7\ NSCC collects
each member's Required Fund Deposit to mitigate potential losses to
NSCC associated with the liquidation of the member's portfolio in the
event of the member's default.\8\ The aggregate of all NSCC members'
Required Fund Deposits (together with certain other deposits required
under the Rules) constitutes NSCC's Clearing Fund, which NSCC would
access should a defaulting member's own Required Fund Deposit be
insufficient to satisfy losses to NSCC caused by the liquidation of the
defaulting member's portfolio.\9\
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    \7\ See Rule 4 (Clearing Fund) and Procedure XV (Clearing Fund
Formula and Other Matters) of the Rules (``Procedure XV''), supra
note 6.
    \8\ The Rules identify when NSCC may cease to act for a member
and the types of actions NSCC may take. For example, NSCC may
suspend a firm's membership with NSCC or prohibit or limit a
member's access to NSCC's services in the event that member defaults
on a financial or other obligation to NSCC. See Rule 46
(Restrictions on Access to Services), supra note 6.
    \9\ See id.
---------------------------------------------------------------------------

    Each member's Required Fund Deposit consists of a number of
applicable components, which are calculated to address specific risks
that the member's portfolio presents to NSCC.\10\ Generally, the
largest component of a member's Required Fund Deposit is the volatility
component.\11\ The volatility component is designed to calculate the
potential losses on a portfolio over a given period of time assumed
necessary to liquidate the portfolio, within a 99% confidence level.
---------------------------------------------------------------------------

    \10\ Procedure XV, supra note 6.
    \11\ See id.
---------------------------------------------------------------------------

    The methodology for calculating the volatility component of the
Required Fund Deposit depends on the type of security.\12\
Specifically, for certain securities, including municipal bonds, NSCC
calculates a haircut-based volatility component by multiplying the
absolute value of a member's positions in such securities by a certain
percentage designated by NSCC.\13\
---------------------------------------------------------------------------

    \12\ For most securities (e.g., equity securities), NSCC
calculates the volatility component as the greater of (1) the larger
of two separate calculations that utilize a parametric Value at Risk
(``VaR'') model, (2) a gap risk measure calculation based on the
largest non-index position in a portfolio that exceeds a
concentration threshold, which addresses concentration risk that can
be present in a member's portfolio, and (3) a portfolio margin floor
calculation based on the market values of the long and short
positions in the portfolio, which addresses risks that might not be
adequately addressed with the other volatility component
calculations. See id.; see also Securities Exchange Act Release No.
82780 (February 26, 2018), 83 FR 9035 (March 2, 2018) (File No. SR-
NSCC-2017-808); Securities Exchange Act Release No. 82781 (February
26, 2018), 83 FR 9042 (March 2, 2018) (File No. SR-NSCC-2017-020).
    \13\ Procedure XV, supra note 6.
---------------------------------------------------------------------------

    NSCC's current methodology for designating the percentages used in
calculating the haircut-based volatility component for municipal bonds
involves distinguishing between municipal bonds based on tenor (i.e.,
remaining time to maturity), municipal sector (e.g., general
obligation, transportation, healthcare, etc.), and credit rating.\14\
Pursuant to that methodology, NSCC assigns each tenor-based group a
percentage.\15\ For municipal bonds rated higher than BBB+, the tenor-
based percentage is the percentage NSCC uses to calculate the haircut-
based volatility component.\16\ However, for municipal bonds rated BBB+
or lower, NSCC multiplies the tenor-based percentage by a sector-based
risk factor, resulting in a larger percentage for the haircut.\17\ The
additional sector-based risk factors

account for the variable risks between municipal sectors associated
with the various industries in which the bonds are issued and the
sources of bond repayment.\18\
---------------------------------------------------------------------------

    \14\ Id.
    \15\ Id.
    \16\ Id. For example, a $10MM short position in a municipal bond
rated above BBB+ with 3 years to maturity is subject to the 2-5
years tenor-based group haircut of 5%, which applies to the absolute
market value of the positions, resulting in a haircut-based
volatility component of $500,000. Notice of Filing, supra note 4 at
150.
    \17\ Procedure XV, supra note 6. For example, a $10MM short
position in a healthcare sector municipal bond rated BBB+ or lower
with 3 years to maturity is subject to the 2-5 years tenor-based
group haircut (5%) multiplied by the sector-based factor of 1.2,
resulting in a 6% haircut-based volatility component of $600,000.
Notice of Filing, supra note 4 at 151.
    \18\ Notice of Filing, supra note 4 at 151.
---------------------------------------------------------------------------

    In all cases, the percentage used to calculate the municipal bond
haircut-based volatility component is not less than 2%, regardless of a
municipal bond's credit rating.\19\
---------------------------------------------------------------------------

    \19\ Procedure XV, supra note 6.
---------------------------------------------------------------------------

B. Changes to NSCC's Methodology for Calculating Municipal Bond Haircut
Percentages

    NSCC states that it regularly assesses its margining methodologies
to evaluate whether margin levels are commensurate with the particular
risk attributes of the various products, portfolios, and markets that
NSCC serves.\20\ NSCC further states that based on recent impact
studies, the margin levels generated from municipal bonds using the
current methodology exceed the levels necessary to mitigate the risk
associated with those securities.\21\ In the proposed rule change, NSCC
seeks to change the methodology for calculating the municipal bond
haircut-based volatility component so that the amount of margin NSCC
collects is more commensurate with the risk attributes of those
securities.
---------------------------------------------------------------------------

    \20\ Notice of Filing, supra note 4 at 151.
    \21\ Notice of Filing, supra note 4 at 151-52. As part of the
proposed rule change, NSCC filed Exhibit 3--NSCC Impact Studies,
comparing the current and proposed methodologies. Pursuant to 17 CFR
240.24b-2, NSCC requested confidential treatment of Exhibit 3.
---------------------------------------------------------------------------

    As proposed, NSCC would retain the current provision that in all
cases the percentage used to calculate the municipal bond haircut-based
volatility component is not less than 2%, regardless of a municipal
bond's credit rating. NSCC would also continue to distinguish between
municipal bonds based on tenor, credit rating, and municipal sector.
However, NSCC would calculate the haircut percentages for various
groups of municipal bonds based on the historical returns of one or
more benchmark indices over a look-back period not shorter than 10
years, using a minimum 99% calibration percentile.
    The proposal would change the manner in which NSCC addresses the
risk presented by lower-rated municipal bonds. Instead of the current
methodology's approach which applies a sector-based straight risk
factor to the tenor-based haircut resulting in a larger haircut
percentage, the proposed approach would allow the calculation to be
more precisely tailored to the risks presented by particular municipal
bonds. Specifically, the new approach would base the haircut percentage
on the historical returns of one or more benchmark indices, such as
tenor-based indices, municipal bond sector-based indices, and high-
yield indices, over a look-back period of at least ten years, and would
no longer use a sector-based straight risk factor for lower-rated
municipal bonds. This approach should allow NSCC to more accurately
calculate margin amounts appropriate for the risks presented by such
municipal bonds by allowing NSCC to take into account a broader range
of risk characteristics associated with municipal bonds. NSCC notes
that, based on recent impact studies comparing the current and proposed
methodologies, the proposed methodology would manage NSCC's applicable
risks well above the 99% confidence level, although it would generate
lower overall margin amounts.\22\
---------------------------------------------------------------------------

    \22\ Id.
---------------------------------------------------------------------------

    NSCC states that for municipal bonds rated higher than BBB+, NSCC
would use the percentage derived from a tenor-based index as the
haircut for the purpose of calculating the volatility component.\23\
For municipal bonds rated BBB+ or lower (or not rated), NSCC states
that it would use a percentage that is the highest of: (1) The
applicable tenor-based index, (2) municipal bond sector-based indices,
and (3) a high-yield index.\24\ For all municipal bonds, when deriving
the haircut percentage from the applicable indices, NSCC would use a
look-back period of a 10-year rolling window plus a 1-year ``worst case
scenario'' stress period.\25\ NSCC would identify the largest 3-day
price return movement (reflected as a percentage) within the 99th
percentile of all 3-day price return movements during the look-back
period. Additionally, NSCC proposes to re-calibrate the municipal bond
haircut percentages no less frequently than annually.
---------------------------------------------------------------------------

    \23\ Notice of Filing, supra note 4 at 151.
    \24\ Id.
    \25\ NSCC believes that a 10-year window plus 1-year stress
period would capture relevant data and cover sufficient market data
without diluting the ``tail'' with an abundance of data. NSCC
believes this look-back period is typically long enough to capture
at least two recent market cycles, whereas a longer look-back period
might ``flatten'' out the results because recent volatile periods
might be offset by non-volatile periods, making the more recent
volatility appear less significant. Notice of Filing, supra note 4
at 152.
---------------------------------------------------------------------------

    As proposed, NSCC would have the ability to modify certain aspects
of the application of the proposed methodology consistent with NSCC's
relevant governance procedures and based on NSCC's determination that
such modifications are necessary to manage the applicable risks above
the 99% confidence level. Specifically, based on NSCC's regular review
of its margin methodologies, NSCC would be able to modify: The
frequency of re-calibrating the municipal bond haircut percentages;
which benchmark indices to use; the applicable period for the price
return used in the calculations; and the look-back period. NSCC states
that any such modifications would be subject to the governance
procedures applicable to all of NSCC's margin methodologies, as set
forth in NSCC's Clearing Agency Model Risk Management Framework, which
the Commission has approved.\26\
---------------------------------------------------------------------------

    \26\ Notice of Filing, supra note 4 at 151-52; See also
Securities Exchange Act Release No. 81485 (August 25, 2017), 82 FR
41433 (August 31, 2017) (File No. SR-NSCC-2017-008); Securities
Exchange Act Release No. 84458 (October 19, 2018), 83 FR 53925
(October 25, 2018) (File No. SR-NSCC-2018-009).
---------------------------------------------------------------------------

    Finally, NSCC proposes a method to address extraordinary
circumstances in which a certain municipality or issuer may present
unique risks not otherwise captured by the proposed methodology's use
of a percentage derived from the maximum of the applicable tenor-based
index, municipal bond sector-based indices, and high-yield indices.\27\
In such scenarios, NSCC proposes to have the ability to use the highest
percentage generated for any municipal bond group when calculating the
haircut-based volatility component for municipal bonds issued by the
municipality or issuer presenting such unique risks.
---------------------------------------------------------------------------

    \27\ For example, the market price risk for issues of a
municipality facing technical default following a natural disaster
may not be fully captured by the proposed methodology due to the
liquidity profile of municipal securities.
---------------------------------------------------------------------------

II. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \28\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that such proposed rule change is consistent with the
requirements of the Act and rules and regulations thereunder applicable
to such organization. After carefully considering the proposed rule
change, the Commission finds that the proposed rule change is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to NSCC. In particular, the
Commission finds that the proposed rule change is consistent with
Section

17A(b)(3)(F) \29\ of the Act and Rules 17Ad-22(e)(4) and (e)(6)
thereunder.\30\
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78s(b)(2)(C).
    \29\ 15 U.S.C. 78q-1(b)(3)(F).
    \30\ 17 CFR 240.17Ad-22(e)(4) and (e)(6).
---------------------------------------------------------------------------

A. Consistency With Section 17A(b)(3)(F)

    Section 17A(b)(3)(F) of the Act requires, in part, that the rules
of a clearing agency, such as NSCC, be designed to promote the prompt
and accurate clearance and settlement of securities transactions and
assure the safeguarding of securities and funds which are in the
custody or control of the clearing agency or for which it is
responsible.\31\
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    First, as described above in Section I.A., NSCC's current
methodology calculates municipal bond haircut percentages using tenor-
based percentages and sector-based risk factors. NSCC states that the
current methodology generates margin amounts greater than necessary to
mitigate NSCC's risks associated with municipal bonds.\32\ NSCC
proposes to replace the current methodology with one that would
calculate the haircut percentages based on the historical returns of
one or more benchmark indices over a look-back period of not shorter
than 10 years, using a minimum 99% calibration percentile. These
changes would result in margin amounts that are more commensurate with
the risk attributes of municipal bonds. As noted above, while the
proposed methodology would reduce margin requirements for members
holding positions in municipal bonds, NSCC states that based on recent
impact studies, the proposed methodology would fully manage NSCC's
applicable risks well above the 99% confidence level.\33\ NSCC's
collection of margin amounts with respect to municipal bonds in a
manner that fully manages NSCC's applicable credit exposures should
help ensure that, in the event of a member default, NSCC's operations
would not be disrupted and non-defaulting members would not be exposed
to losses that they cannot anticipate or control. Accordingly, the
Commission finds that NSCC's proposed methodology for calculating
municipal bond haircut percentages would promote the prompt and
accurate clearance and settlement of securities transactions,
consistent with Section 17A(b)(3)(F) of the Act.\34\ Moreover, NSCC's
collection of margin amounts with respect to municipal bonds in a
manner that fully manages NSCC's applicable credit exposures would help
ensure that NSCC maintains adequate funds necessary to manage the risks
associated with performing its clearance and settlement functions,
which could, in turn, help reduce the amount of credit losses that
would potentially be charged to the Clearing Fund contributions of non-
defaulting members in the event of a default. Accordingly, the
Commission finds that NSCC's proposed methodology for calculating
municipal bond haircut percentages should safeguard the securities and
funds that are in NSCC's custody or control or for which NSCC is
responsible, consistent with Section 17A(b)(3)(F).\35\
---------------------------------------------------------------------------

    \32\ Notice of Filing, supra note 4 at 151-52.
    \33\ Notice of Filing, supra note 4 at 151-52, 154.
    \34\ 15 U.S.C. 78q-1(b)(3)(F).
    \35\ Id.
---------------------------------------------------------------------------

    Second, as described above in Section I.B., NSCC proposes to re-
calibrate the municipal bond haircut percentages no less frequently
than annually. Regular re-calibration of the municipal bond haircut
percentages is necessary to ensure that the relevant calculations and
resulting margin levels take into account any changes over time to the
risk attributes of municipal bonds. The proposal to re-calibrate the
municipal bond haircut percentages no less frequently than annually
would require NSCC to regularly review the municipal bond haircut
percentages, thus helping to ensure that NSCC collects margin amounts
commensurate with the particular risk attributes of municipal bonds. By
enabling NSCC to continue to collect margin amounts sufficient to
manage the risks associated with municipal bonds, NSCC's proposal to
re-calibrate the municipal bond haircut percentages no less frequently
than annually should help limit NSCC's applicable credit exposures such
that, in the event of a default of a member with positions in municipal
bonds, NSCC's operations would not be disrupted and non-defaulting
members would not be exposed to losses that they cannot anticipate or
control. Accordingly, the Commission believes that NSCC's proposal to
re-calibrate the municipal bond haircut percentages no less frequently
than annually would promote the prompt and accurate clearance and
settlement of securities transactions, consistent with Section
17A(b)(3)(F).\36\
---------------------------------------------------------------------------

    \36\ Id.
---------------------------------------------------------------------------

    Third, as described above in Section I.B., a certain municipality
or issuer may present unique risks to NSCC not otherwise captured by
the proposed methodology's use of a percentage derived from the maximum
of the applicable tenor-based index, municipal bond sector-based
indices, and high-yield indices. In such scenarios, NSCC proposes to
have the ability to use the highest percentage generated for any
municipal bond group when calculating the haircut-based volatility
component for municipal bonds issued by the municipality or issuer
presenting such unique risks. By enabling NSCC to increase margin
requirements in such scenarios, the proposed rule change should help
limit NSCC's exposure such that, in the event of a default of a member
with positions in uniquely risky municipal bonds, NSCC's operations
would not be disrupted and non-defaulting members would not be exposed
to losses that they cannot anticipate or control. Accordingly, the
Commission believes that NSCC's proposed discretion to increase margin
requirements in scenarios where municipal bonds present unique risks
should promote the prompt and accurate clearance and settlement of
securities transactions, consistent with Section 17A(b)(3)(F).\37\
Moreover, by enabling NSCC to increase margin requirements in scenarios
where municipal bonds present unique risks, the proposed rule change
would help ensure that NSCC maintains adequate funds necessary to
manage the risks associated with performing its clearance and
settlement functions, which could, in turn, help reduce the amount of
credit losses that would potentially be charged to the Clearing Fund
contributions of non-defaulting members in the event of a default.
Accordingly, the Commission finds that NSCC's proposed discretion to
increase margin requirements in scenarios where municipal bonds present
unique risks should safeguard the securities and funds that are in
NSCC's custody or control or for which NSCC is responsible, consistent
with Section 17A(b)(3)(F) of the Act.\38\
---------------------------------------------------------------------------

    \37\ Id.
    \38\ Id.
---------------------------------------------------------------------------

B. Consistency With Rule 17Ad-22(e)(4)(i)

    Rule 17Ad-22(e)(4)(i) requires that NSCC establish, implement,
maintain and enforce written policies and procedures reasonably
designed to effectively identify, measure, monitor, and manage its
credit exposures to participants and those arising from its payment,
clearing, and settlement processes, including by maintaining sufficient
financial resources to cover its credit exposure to each participant
fully with a high degree of confidence.\39\
---------------------------------------------------------------------------

    \39\ 17 CFR 240.17Ad-22(e)(4)(i).
---------------------------------------------------------------------------

    As described above in Section I.B., NSCC proposes to replace the
current

methodology for calculating municipal bond haircut percentages with a
methodology that would utilize the historical returns of one or more
benchmark indices over a look-back period of not shorter than 10 years,
using a minimum 99% calibration percentile. These changes would result
in more precisely determined margin amounts, while still managing
NSCC's applicable risks well above the 99% confidence level.\40\
Accordingly, the Commission believes that the proposed methodology is
consistent with Rule 17Ad-22(e)(4)(i) because it should enable NSCC to
effectively identify, measure, monitor, and manage its credit exposures
to members with positions in municipal bonds, including by maintaining
sufficient financial resources to cover NSCC's credit exposure to such
members fully with a high degree of confidence.\41\
---------------------------------------------------------------------------

    \40\ Notice of Filing, supra note 4 at 151-52.
    \41\ 17 CFR 240.17Ad-22(e)(4)(i).
---------------------------------------------------------------------------

    As described above in Section I.B., NSCC proposes to re-calibrate
the municipal bond haircut percentages no less frequently than
annually. The proposal would require NSCC to regularly review the
municipal bond haircut percentages, thereby helping to ensure that the
haircut percentages and resulting margin levels take into account any
changes over time to the risk attributes of municipal bonds.
Accordingly, the Commission believes that the proposal to re-calibrate
the municipal bond haircut percentages no less frequently than annually
is consistent with Rule 17Ad-22(e)(4)(i) because it should allow NSCC
to effectively identify, measure, monitor, and manage its credit
exposures to members with positions in municipal bonds, including by
maintaining sufficient financial resources to cover NSCC's credit
exposure to such members fully with a high degree of confidence.\42\
---------------------------------------------------------------------------

    \42\ Id.
---------------------------------------------------------------------------

    As described above in Section I.B., NSCC proposes to have the
ability to use the highest percentage generated for any municipal bond
group when calculating the haircut-based volatility component for
municipal bonds issued by a municipality or issuer presenting unique
risks not otherwise captured by the calculations in the proposed
methodology. Such discretion should help ensure that NSCC collects
sufficient margin amounts with respect to those securities.
Accordingly, the Commission believes that the proposed ability to apply
the highest percentage to such municipal bonds is consistent with Rule
17Ad-22(e)(4)(i) because it should better enable NSCC to effectively
identify, measure, monitor, and manage its credit exposures to members
with positions in such municipal bonds, including by maintaining
sufficient financial resources to cover NSCC's credit exposure to such
members fully with a high degree of confidence.\43\
---------------------------------------------------------------------------

    \43\ Id.
---------------------------------------------------------------------------

C. Consistency With Rules 17Ad-22(e)(6)(i) and (v)

    Rule 17Ad-22(e)(6)(i) requires that NSCC establish, implement,
maintain and enforce written policies and procedures reasonably
designed to cover its credit exposures to its participants by
establishing a risk-based margin system that, at a minimum, considers,
and produces margin levels commensurate with, the risks and particular
attributes of each relevant product, portfolio, and market.\44\ Rule
17Ad-22(e)(6)(v) requires that NSCC establish, implement, maintain and
enforce written policies and procedures reasonably designed to cover
its credit exposures to its participants by establishing a risk-based
margin system that, at a minimum, uses an appropriate method for
measuring credit exposure that accounts for relevant product risk
factors and portfolio effects across products.\45\
---------------------------------------------------------------------------

    \44\ 17 CFR 240.17Ad-22(e)(6)(i).
    \45\ 17 CFR 240.17Ad-22(e)(6)(v).
---------------------------------------------------------------------------

    As described above in Section I.B., NSCC proposes to replace the
current methodology for calculating municipal bond haircut percentages
with a methodology that would utilize the historical returns of one or
more benchmark indices over a look-back period of not shorter than 10
years, using a minimum 99% calibration percentile. NSCC designed the
proposed methodology to generate margin amounts that are more
commensurate with the risk attributes of municipal bonds than the
current methodology. Accordingly, the Commission believes that the
proposed methodology is consistent with Rules 17Ad-22(e)(6)(i) and (v)
because it is designed to establish a risk-based margin system that (1)
considers and produces relevant margin levels commensurate with the
risks and particular attributes of municipal bonds, and (2) uses an
appropriate method for measuring credit exposure that accounts for
municipal bond risk factors and portfolio effects.\46\
---------------------------------------------------------------------------

    \46\ 17 CFR 240.17Ad-22(e)(6)(i) and (v).
---------------------------------------------------------------------------

    As described above in Section I.B., NSCC proposes to re-calibrate
the municipal bond haircut percentages no less frequently than
annually. The proposal would require NSCC to regularly review the
municipal bond haircut percentages, thereby helping to ensure that the
haircut percentages and resulting margin levels take into account any
changes over time to the risk attributes of municipal bonds.
Accordingly, the Commission believes that the proposal to re-calibrate
the municipal bond haircut percentages no less frequently than annually
is consistent with Rules 17Ad-22(e)(6)(i) and (v) because it would
contribute to a risk-based margin system designed to (1) consider and
produce relevant margin levels commensurate with the risks and
particular attributes of municipal bonds, and (2) use an appropriate
method for measuring credit exposure that accounts for municipal bond
risk factors and portfolio effects.\47\
---------------------------------------------------------------------------

    \47\ Id.
---------------------------------------------------------------------------

    As described above in Section I.B., NSCC proposes to have the
ability to use the highest percentage generated for any municipal bond
group when calculating the haircut-based volatility component for
municipal bonds issued by a municipality or issuer presenting unique
risks not otherwise captured by the calculations in the proposed
methodology. This discretion should help ensure that NSCC collects
sufficient margin amounts with respect to those securities.
Accordingly, the Commission believes that the proposed discretion to
apply the highest percentage to such municipal bonds is consistent with
Rules 17Ad-22(e)(6)(i) and (v) because it would contribute to a risk-
based margin system designed to (1) consider and produce relevant
margin levels commensurate with the risks and particular attributes of
municipal bonds, and (2) use an appropriate method for measuring credit
exposure that accounts for municipal bond risk factors and portfolio
effects.\48\
---------------------------------------------------------------------------

    \48\ Id.
---------------------------------------------------------------------------

III. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular with the requirements of Section 17A of the Act \49\ and
the rules and regulations promulgated thereunder.
---------------------------------------------------------------------------

    \49\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\50\ that proposed rule change SR-NSCC-2019-004, be, and hereby is,
APPROVED.\51\
---------------------------------------------------------------------------

    \50\ 15 U.S.C. 78s(b)(2).
    \51\ In approving the proposed rule change, the Commission
considered the proposals' impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).

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

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\52\
---------------------------------------------------------------------------

    \52\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020-03317 Filed 2-19-20; 8:45 am]
BILLING CODE 8011-01-P


                           ICR SUPPORTING STATEMENT
                     ENVIRONMENTAL PROTECTION AGENCY (EPA)

1.	Identification of the Information Collection

	1(a)	Title of Information Collection

State Small Business Stationary Source Technical and Environmental Compliance Assistance Programs (SBTCP) Annual Reporting Form (Renewal), EPA ICR Number 1748.10, OMB Control Number 2060-0337

	1(b)	Short Characterization (Abstract)

	This ICR is an annual collection of State Small Business Environmental Assistance Programs (SBEAP) gathered by the EPA Asbestos Small Business Ombudsman (ASBO) team. Information is collected to measure activities and accomplishments from the preceding calendar year. The collection of data is used by the EPA ASBO to evaluate the progress of state implementation of Section 507 of the 1990 Clean Air Act Amendments. The reports the EPA ASBO generates based off of the data collection under this ICR may be used by Congress; by states, both externally and internally to manage and highlight their programs; by national small business trade associations, and by other federal agencies, primarily the Small Business Administration, in evaluating the effectiveness of this type of assistance effort.

	The information that is collected is evaluated, summarized, and developed into a report, which is made available to the Congress, as required under Section 507 of the Clean Air Act's (CAA) Amendments of 1990. The information collected will reveal trends in program advancement, budget changes, and numbers of small businesses assisted. The outcome questions provide a foundation for reporting on the effectiveness of the 507 program efforts. This information is valuable to Congress, federal stakeholders, as well as the small business community because it highlights state program accomplishments, as well as progress toward improved environmental performance.

      A total of 53 respondents will complete the survey. Specifically, information collected will include the following: program contacts; program resources (budget and staffing), programmatic structure (which can vary greatly from state to state), assistance activities, outreach efforts with the small business community, types and numbers of such activities, technical assistance that their program provides to small businesses, as well approximate figures for the number of businesses that they have assisted each year. The data collected is stored in a spreadsheet that is made available to programs upon request.

      The EPA ASBO does not mandate any requirement on file storage and retention.  Each state may set its own requirements on the length of time and the manner in which they store and retain their files. The Asbestos Small Business Ombudsman Team will evaluate, review, summarize, and compile the information for preparation of the Status of State Small Business Compliance Assistance Programs report.

2.	NEED AND USE OF THE COLLECTION

	2(a)	Need/Authority for the Collection

      This collection of information is in response to the direction for EPA's Small Business Ombudsman to monitor the program under Section 507, Small Business Stationary Source Technical and Environmental Compliance Assistance Program (SBTCP) (d) of the Clean Air Act as amended in 1990, Public Law 101-549, November 15, 1990. This Act directs EPA to monitor the 507 programs and to provide a periodic report to Congress.

	2(b)	Practical Utility/Users of the Data

      The EPA ASBO will compile the results of this collection into a report, including an objective summary of conclusions and recommendations relative to funding or other environmental legislative consideration. This information will be made available online for Congressional staff and committees interested in environmental matters and small business assistance activities at the state and local levels.  In addition, this information will be made available to small business trade associations for their use in promoting the utility and viability of assistance programs, to EPA Headquarters and Regional Offices, to other federal agencies such as the Small Business Administration, to all state small business ombudsmen and small business environmental assistance program directors, to state governors, and other interested parties.

      Both state and federal officials are able to use the information generated in the report to evaluate how well the programs are functioning, and to plan how to render more effective and less costly assistance. The constantly evolving nature of these programs means that this information provides key details to policy makers at the federal, state, and local levels.

      The Agency has shared this information within its periodic reports with all the stakeholders listed above. The State 507 programs have found this process to be a valuable tool for learning about other program's strengths and innovations. It promotes a continual process of sharing ideas across programs. The EPA ASBO is also a resource for stakeholders and provides relevant data and narratives to policy makers at the federal and state levels upon request. The ASBO relies on the information collected to support recommendations made to other offices within the EPA on how to effectively assist small business efforts to improve their environmental compliance.

3.	NON-DUPLICATION, CONSULTATIONS, AND OTHER COLLECTION CRITERIA

	3(a)	Non-duplication

      Information is being requested from and about programs mandated under Section 507 of the CAA of 1990; therefore, this information is unique to this collection.

	3(b)	Public Notice Required Prior to ICR Submission to OMB

      Public notice on the renewal of this ICR was published in the Federal Register on December 11, 2014 under 79 FR 73576. This notice indicates that the ICR is up for renewal and that public comments on the previous burden estimates and any proposed changes are being sought by the EPA Office of Small Business Program, which the ASBO is located under. There were no comments received.

	3(c)	Consultations

      In preparing this ICR and in revising the Reporting Form, the EPA ASBO worked with a group of staff that were willing to discuss the data collection forms and possible ways to improve its efficiency. The subcommittee consisted of representatives from the 507 programs. The following were contacted:

Tony Pendola, North Carolina, Small Business Ombudsman
919-707-8112<EMAIL_ADDRESS>Sara Johnson, New Hampshire Small Business Ombudsman/Small Business Environmental Assistance Provider
603-271-1379<EMAIL_ADDRESS>
Donavan Grimwood, Tennessee Small Business Environmental Assistance Provider
615-532-4966<EMAIL_ADDRESS>Christine Hoefler, Colorado Small Business Environmental Assistance Provider
303-692-3148<EMAIL_ADDRESS>

      Those listed above were provided the opportunity to comment on the burden associated with the standard. The general consensus was that the current collection form adequately captures the program metrics for the majority of assistance efforts.

	3(d)	Effects of Less Frequent Collection

      The submission of this information on less than an annual basis will make it difficult for EPA to monitor and adequately report on the effectiveness of the program which is outlined under Section 507 of the CAA. Annual reporting assures uniformity and consistency. Many of the states also use their annual data collected from the EPA SBO report form to organize and communicate their effectiveness and program success to their management and overall promotion within their own state.

	3(e)	General Guidelines

      These reporting or recordkeeping requirements do not violate any of the regulations promulgated by OMB under 5 CFR Part 1320, Section 1320.5.

	3(f)	Confidentiality/Sensitive Questions

      Information in the Annual Report is aggregated and is not of confidential nature. None of the information collected by this action results in or requests sensitive information of any nature.

4.	THE RESPONDENTS AND THE INFORMATION REQUESTED

	4(a)	Respondents/SIC Codes

      These departments/agencies typically are responsible for the conduct of the State 507 Programs. Respondents will be one of the following state offices.

--------------------------------------------------------------------------------
Respondents/SIC Codes
--------------------------------------------------------------------------------
Environmental Agency
--------------------------------------------------------------------------------
SIC 9511
--------------------------------------------------------------------------------
Commerce or Economic Development Department
--------------------------------------------------------------------------------
SIC 9611
--------------------------------------------------------------------------------
Governor's Office
--------------------------------------------------------------------------------
SIC 9111
--------------------------------------------------------------------------------
Ombudsman's Office
--------------------------------------------------------------------------------
SIC 9511

4(b)	Information Requested

      A copy of the reporting form is attached as Attachment A.

      (i)  Data Items

      States will report on the data items shown in the following table.  Each item is designated as a record keeping or reporting item; activities that are customary and usual business practices (CBP) also are indicated, as required in the following section. The EPA SBO imposes no record keeping requirements on any respondent. Each state may have its own requirement for retention of records. There have been no changes to the data items since the last clearance.

                                   DATA ITEM
                                RECORD KEEPING
                                   REPORTING
                                      CBP
Program Information
Name of State, Territory, or Local Agency

                                       X
                                       X
Reporting Form Contact

                                       X
                                       X
Combined SBO/SBAP/CAP Budget

                                       X
                                       X
Budgetary Funding Sources

                                       X
                                       X
Staffing

                                       X
                                       X
SBO/SBAP FTEs

                                       X
                                       X
Status of CAP

                                       X
                                       X
Outreach and Technical Assistance
Air-only or Multimedia Assistance

                                       X
                                       X
Data on Offered Services/Activities
                                       X

                                       X
Data on Promotional Activities
                                       X

                                       X
Data on Website Activities

                                       X
Significant Accomplishments, Awards, Highlights

                                       X
                                       X
Outcome Measures
                                       X

                                       X

      	(ii)	Respondent Activities (see draft survey below)

      The respondents will engage in the following activities to assemble, submit, and store the data items listed in the previous section. These activities reflect the items of burden mandated by the 1995 Paperwork Reduction Act.

Review Instructions  -  The instructions are straight forward, include several examples, and makes note that the Form will remain the same for the next three years.

Acquire, Install, and Utilize Technology and Systems -- Information requested in this ICR is typical of information gathered as part of good business practices and anticipates future data needs.  No special technology or systems are required for this collection.  However programs will be encouraged to share methods they have developed to make the data collection easier.

Adjust the Existing Ways to Comply with Any Previously Applicable Instructions and Requirements -- The Reporting Form will remain the same from year to year. Respondents have consistently found the basic structure and breadth of questions to remain the same as the previously approved versions.

Search Data Sources -- Gathering and updating information is an annual task and states have been reporting on the activities of their programs since 1995. Most data items requested are in the current Form and all data are collected as a customary business practice.

Complete and Review the Collection of Information -- Programs will provide data and one narrative to complete their submissions.  Most of the information should be readily available.  For their narrative submission, states are encouraged to select examples that best demonstrate the operations and accomplishments of their programs. Recording and reviewing the required information should be straightforward and procedural. Completion and review of the Reporting Form is anticipated to be a cooperative effort among the key program staff.

Transmit or Otherwise Disclose the Information -- The Reporting Form will be given to the respondents via email.  Each respondent will then complete the information and return it to the ASBO using the same method. This approach will enable the ASBO to efficiently compile the information from the individual programs and prepare a periodic report.

Store, File, and Maintain -- The EPA ASBO does not mandate any requirement on file storage and retention.  Each state may set its own requirements on the length of time and the manner in which they store and retain their files.

5.	THE INFORMATION COLLECTED -- AGENCY ACTIVITIES, COLLECTION METHODOLOGY, AND INFORMATION MANAGEMENT

	5(a)	Agency Activities

      The electronic Reporting Form will be available to states and territories near the beginning of each calendar year. Respondents will have at least 60-90 days to respond to the request for information.  The EPA's SBO will answer questions from the respondents regarding the Reporting Form.

      The EPA ASBO will collect, assemble, analyze, and store the information provided by the 507 programs. The ASBO will use this information to prepare the periodic report made available to the Congress. The periodic report, which will contain summary information developed from the data collection forms from the states, a perspective on the materials provided, selected highlights, conclusions, and recommendations on the overall effectiveness of the 507 program. The EPA ASBO will maintain copies of state submittals and the Annual Report electronically.

	5(b)	Collection Methodology and Management

--------------------------------------------------------------------------------
      EPA conducts the following activities in connection with the acquisition, analysis, storage, and distribution of the required information.

1. Respondents receive electronic Reporting Form and instructions via email
2. Data quality will be checked upon receipt of each state's Reporting Form during analysis and the final Review
3. Data is processed using spreadsheet software and input manually
4. Data is made publicly accessible through Period Report made available to Congress and is accessible on-line

	5(c)	Small Entity Flexibility

The completion of the Reporting Form does not require any input or action by any small entity.

	5(d)	Collection Schedule

      This is an annual (calendar year) collection of information on the states' activities,
accomplishments, and data outputs under Section 507 of the CAA. A typical reporting schedule would look as follows:

      * Electronic Reporting Form is made available to states: January-March
      * States complete Reporting Form: March-June
      * State agency submits reporting form to EPA SBO: May 31 with option for extension if needed, provided on a case by case basis.
      * EPA ASBO Transfers Data to Spread sheet and conducts Analysis: June/July
      * Data is made available to state programs: July or as requested
      * EPA ASBO prepares a periodic report (per the 1990 CAA Amendment requirements) and obtains final EPA approvals: Typically on a bi-annual basis
      * EPA ASBO makes the report available to congress: Fall of the Reporting Year, which is posted online with a memo to the Congress, notifying them of the report and how to access it.

6.	ESTIMATING THE BURDEN AND COST OF THE COLLECTION

	6(a)	Estimating Respondent Burden Hours

      There are a total of 53 respondents with a total of 40 burden hours in responding to this data collection request. On average, the requested information can be compiled readily and maintained by the state within 40 hours (assuming the state organization continuously maintains their records in a reasonably efficient manner) using experienced professional or technical staff. The 40-hour forecast includes 36 hours for record keeping and 4 hours for reporting the required information.

      Burden hour estimates are based on the results of a pretest of the original survey information and report preparation cycle, and experience with similar past surveys.  The revised 2012 Reporting Form (which continues to be used to collect data) was discussed in great detail prior to the 2012 ICR renewal package with state program staff, included state ombudsmen and/or small business assistance program managers from ten of the 53 Section 507 reporting state programs (i.e., comprising the 50 states, the District of Columbia, the Virgin Islands, and Puerto Rico). They formulated a general consensus of how long it would take to complete the reporting form and who would likely be responsible from each state to complete the task.

      The information requested was confirmed to be normal program activity information the 507 programs collect on an ongoing basis. Where a few state environmental agencies have delegated or contracted management of their technical assistance program, this information is part of the project management responsibilities. This requested reporting information typically would be compiled by experienced professional or technical staff.

	6(b)	Estimating the Respondent Burden Costs

      The burden costs were derived from the labor hours, which remain consistent from the current ICR collection of 53 respondents, but have slightly increased due to inflation and the increase in salary costs for respondents. Labor rates were derived from the Bureau of Labor Statistics, Employment Cost Trends, Table 4: State and Local Government by Occupational and Industry Group (http://data.bls.gov/cgi-bin/print.pl/news.release/ecec.t04.htm). Please refer to Worksheet 1.

	6(c)	Estimating Agency Burden and Cost

      Agency rates are based on the US Office of Personnel Management 2015 General Schedule Locality Pay Tables.  EPA estimates an average hourly regional labor cost of $68.56 for GS-15, $49.32 for GS-13; and $41.69 for GS-12 (all hourly rates are for step 5). Refer to Worksheet 2

	6(d)	Estimating the Respondent Universe and Total Burden and Costs

	The Respondent Burden hours have remained consistent and have not changed since the last
approved ICR. The burden hours continue to total 40 hours per each respondent. The total cost of these burden hours has slightly increased due to inflation. The total respondent cost is estimated to be $112,105.60 per year, which is a $7,441.6 increase from the 2012 estimate of $104,664, due to inflation and wage rate increases. Refer to Worksheet 1.

      The Agency Burden has increased both in burden hours and in direct labor costs. Due to diminish financial resources EPA's Ombudsman office is compiling the data forms and reports without contractor support that was once available to assist in this effort. The previous 2012 ICR package included the contract support rates but that has been omitted from this package. EPA staff hours have increased to fill in this gap of support. Activities include Review/update survey instrument (not including the cost of renewing the ICR every three years), maintaining a master informational data base, answering respondent questions, review of submissions for accuracy and completeness, preparing a report from the data, Agency review and approval process, and distributing the report. Refer to Worksheet 2.

      The Respondent Universe Burden and Costs is lower in both hourly burden and cost.  The hours were less overall due to moving the data collection, review and reporting in-house, rather than having both agency and contractor hours and costs included as in previous years. The total cost is roughly $383,000 for the full three years of the ICR, which is significantly lower than the previous 2012 ICR package of $418,776. Refer to Worksheet 3.

		6(e)	Bottom Line Burden Hours and Cost Tables

      Fifty-three states and territories will complete the Reporting form annually during the period covered by this ICR.  No significant variation (more than 25 percent) in the annual reporting/record keeping burden over the life of this ICR is expected for the agency or the respondents. Please see Worksheets 1, 2 and 3. The cost over the entire period covered by the ICR is in Table 3.

		6(f)	Reasons for Change in Burden

      There is no change in the total estimated respondent burden compared with the ICR currently approved by OMB.

		6(g)	Burden Statement

      The annual public reporting and recordkeeping burden for this collection is estimated to average 40 hours per response. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purpose of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjusting the existing ways to comply with any previous applicable instructions and requirements; train personnel to respond to the collection of information; and transmit or otherwise disclose the information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control number for EPA's regulations are listed in 40 CFR Part 9 and 48 CFR Chapter 15.

 To comment on the Agency's need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimizing respondent burden, including the use of Automated Collection techniques, EPA has established a public docket for this ICR under Docket ID Number EPA-HQ-OA-2007-0706 , which is available for online viewing at www.regulations.gov, or in person viewing at the EPA Docket Center (EPA/DC), EPA West, Room 3334, 1301 Constitution Avenue, NW, Washington, D.C. The EPA Docket Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Reading Room is<PHONE_NUMBER>, and the telephone number for the OEI Docket is<PHONE_NUMBER>.  An electronic version of the public docket is available at www.regulations.gov. This site can be used to submit or view public comments, access the index listing of the contents of the public docket, and to access those documents in the public docket that are available electronically. When in the system, select "search," then key in the Docket ID Number identified above.  Also, you can send comments to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street, NW, Washington, D.C. 20503, Attention: Desk Officer for EPA. Please include the EPA Docket ID Number EPA-HQ-OA-2007-0706 and OMB Control Number 2060-0337 in any correspondence.

             WORKSHEET 1:  ANNUAL RESPONDENT BURDEN/COST ESTIMATE
                              Collection Activity
                                 Burden Hours
                          Total Labor Costs Per Year*
                                 Capital Costs
                                O & M Costs
                              Respondent Universe
                     Total Hours Per Year-all respondents
                      Total Cost Per Year-all respondents
Annual Recordkeeping burden
                                      36
                                   $1,903.68
                                       0
                                       0
                                      53
                                     1,908
                                  $100,895.04
Annual Reporting Burden
                                       4
                                    $211.52
                                       0
                                       0
                                      53
                                      212
                                  $11,210.56
TOTALS
                                      40
                                   $2,115.20
                                       0
                                       0
                                      53
                                     2,120
                                  $112,105.60
* Based on Prof/Tech rate of $52.88 per hour, a $3.51 an hour increase from the 2012 rate of $49.37 per hour

               WORKSHEET 2:  ANNUAL AGENCY BURDEN/COST ESTIMATE
                                   GS Level
                              Agency Burden Hours
                           Federal pay rate (step 5)
                                 Annual Cost
                                 Capital Costs
                                O & M Costs
                                  Total Costs
                                     GS15
                                      75
                                   $68.56/hr
                                    $5,142
                                       0
                                       0
                                    $5,142
                                     GS13
                                      130
                                   $49.32/hr
                                   $6,411.60
                                       0
                                       0
                                   $6,411.60
                                     GS12
                                      100
                                   $41.69/hr
                                    $4,169
                                       0
                                       0
                                    $4,169

                                     Total
                                      305

                                  $15,722.60
                                       0
                                       0
                                  $15,722.60

         WORKSHEET 3: COSTS OVER THE ENTIRE PERIOD COVERED BY THE ICR

                              Total Annual Costs
                              Costs over 3 years
                                    Agency
                                  $15,722.60
                                  $47,167.80
                                All respondents
                                  $112,105.60
                                  $336,316.80
                                     TOTAL

                                  $383,484.60