[Federal Register Volume 85, Number 207 (Monday, October 26, 2020)]
[Notices]
[Pages 67794-67802]
[FR Doc No: 2020-23633]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90227; File No. SR-FINRA-2020-035]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend
the FINRA Codes of Arbitration Procedure To Increase Arbitrator
Chairperson Honoraria and Certain Arbitration Fees

October 20, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 16, 2020, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FINRA is proposing to amend the Code of Arbitration Procedure for
Customer Disputes (``Customer Code'') and the Code of Arbitration
Procedure for Industry Disputes (``Industry Code'') (together,
``Codes'') to increase arbitrator chairperson (``Chair'') honoraria.
Specifically, the proposed rule change would: (1) Increase the
additional hearing-day honorarium Chairs receive for each hearing on
the merits from $125 to $250 and (2) create a new $125 Chair honorarium
for each prehearing conference in which the Chair participates. Under
the proposed rule change, these increases would be funded primarily by
minimal increases to the member surcharge and process fees for claims
of more than $250,000 or claims for non-monetary or unspecified
damages. The proposed rule change would also increase filing fees and
hearing session fees for customers, associated persons and members
bringing claims of more than $500,000

or claims for non-monetary or unspecified damage.
    The text of the proposed rule change is available on FINRA's
website at http://www.finra.org, at the principal office of FINRA and
at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
(I) Background and Discussion
    FINRA makes arbitrator honoraria payments to its arbitrators for
the services arbitrators provide to FINRA's dispute resolution forum.
Currently, under FINRA Rule 12214(a), arbitrators receive $300 for each
hearing session in which the arbitrator participates.\3\ In recognition
of their increased experience and the extra responsibilities they must
perform during an arbitration,\4\ Chairs currently receive an
additional $125 for serving as Chair during a hearing (``hearing-day
honorarium'').\5\ The Chair receives the additional honorarium for each
hearing day, regardless of the number of hearing sessions held per day.
Currently, Chairs do not receive an additional honorarium for
prehearing conferences, even though Chairs are required to lead the
prehearing conferences and perform additional tasks in connection with
the prehearings, such as setting discovery, briefing, and motion
deadlines, scheduling subsequent hearing sessions, and drafting
prehearing orders.\6\
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    \3\ A ``hearing session'' is any meeting between the parties and
arbitrator(s) of four hours or less, including a hearing or a
prehearing conference. A typical day has two hearing sessions. See
FINRA Rules 12100(p) and 13100(p).
    \4\ For example, during a typical arbitration, the Chair
oversees the discovery process, conducts the initial prehearing
conference (``IPHC'') and subsequent prehearing conferences as
needed, drafts rulings and orders, and manages efficient hearings.
For more information on Chair responsibilities and training, see
https://www.finra.org/sites/default/files/FINRA_Chairperson_Training.pdf.
    \5\ The term ``hearing'' means the hearing on the merits of an
arbitration under FINRA Rules 12600 and 13600. See FINRA Rules
12100(o) and 13100(o).
    \6\ See FINRA Rules 12500(c) and 13500(c).
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    In addition, several hearing locations lack a sufficient number of
local Chairs. Chairs are often the most experienced arbitrators on
FINRA's roster and must meet additional requirements to serve as Chair.
To qualify as a Chair, an arbitrator must complete Chair training and
have served on at least three arbitrations through award in which
hearings were held, or be a lawyer who served on at least one
arbitration through award in which hearings were held.\7\ The low
number of Chairs in some hearing locations can result in parties being
presented a list with a majority of non-local Chairs. Parties have
expressed concern about using non-local arbitrators to complete Chair
lists. Parties typically prefer arbitrators from the same general
geographic area to hear their cases because they live in the same
community as the parties who bring their claims, and are familiar with
local law and customs. Appointing arbitrators who live outside of the
local hearing location may result in scheduling delays and requires
FINRA to pay additional travel expenses.
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    \7\ See FINRA Rules 12400(c) and 13400(c).
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    Chair-eligible arbitrators have indicated that they are not
interested in completing the required Chair training and serving on the
Chair roster because of the extra work required compared to the modest,
additional Chair honorarium currently offered. To provide more of an
incentive for eligible arbitrators to become Chairs and to more
adequately compensate Chairs for their additional work, FINRA is
proposing to increase the current per-day Chair honorarium for hearings
on the merits and establish a Chair honorarium for prehearing
conferences.\8\ These increases would be funded primarily by minimal
increases to the member surcharge and process fees for claims of more
than $250,000 or claims for non-monetary or unspecified damages.\9\ The
proposed rule change would also increase filing fees and hearing
session fees for customers, associated persons and members bringing
claims of more than $500,000 or claims for non-monetary or unspecified
damages.\10\
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    \8\ Discovery issues can be particularly time-consuming; among
other things, the new prehearing honorarium would recognize the
additional work Chairs put in when ruling on discovery issues. See
also supra note 4.
    \9\ The FINRA Dispute Resolution Task Force (``Task Force'')
suggested raising arbitration fees to fund arbitrator honoraria
increases. The Task Force recommended that the proposed fee
increases should be consistent with the current arbitration fee
structure, which assigns a majority of the costs of the forum to
firms through the member surcharge and process fees. The Task Force
issued its Final Report and Recommendations, available at https://www.finra.org/arbitration-mediation/finra-dispute-resolution-task-force.
    \10\ In 2014, FINRA increased arbitrator honoraria for the first
time in 15 years to help retain a roster of high-quality arbitrators
and attract qualified individuals. See Securities Exchange Act
Release No. 73245 (September 29, 2014), 79 FR 59876 (October 3,
2014) (Order Approving File No. SR-FINRA-2014-026). From the end of
2014 through 2019, FINRA has increased the arbitrator roster by
1,478. At the end of 2014, there were 6,361 arbitrators on the
roster, and by the end of 2019, there were 7,839, an increase of 23
percent.
    FINRA also recently increased the honorarium to Chairs who rule
on motions or subpoenas without a hearing. See Securities Exchange
Act Release No. 84418 (October 12, 2018), 83 FR 52857 (October 18,
2018) (Order Approving File No. SR-FINRA-2018-026).
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    In all, on average the fees for an arbitration case would increase
by $252, or 2.65 percent. FINRA believes that the cost of arbitration
should be borne by the users of the forum, without imposing a
significant barrier to public customers who bring arbitration claims to
the forum. Thus, the fees are designed to be borne 85 percent by member
firms and 15 percent by claimants.\11\
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    \11\ The proposed rule change would apply to all members,
including members that are funding portals or have elected to be
treated as capital acquisition brokers (``CABs''), given that the
funding portal and CAB rule sets incorporate the impacted FINRA
rules by reference.
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(II) Proposed Rule Change

A. Proposed Arbitrator Chair Honoraria Increases

    The proposed rule change would amend FINRA Rules 12214 and 13214 to
increase the arbitrator Chair honoraria. Specifically, the proposed
rule change would increase the hearing-day honorarium from $125 to $250
to better compensate the Chair for the additional training and
responsibilities required of the position.\12\ In addition, the
proposed rule change would establish a new honorarium to pay a Chair an
additional $125 for each prehearing conference in which he or she
participates. Under the proposed rule change, Chairs would receive this
additional compensation even if an arbitration case closes without a
hearing. Thus, if the Chair participates in a prehearing
conference,\13\ but the parties settle the case (as often occurs),\14\
the Chair would

still receive some compensation for serving as Chair.\15\
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    \12\ From 2014 through 2019, FINRA paid the hearing-day
honorarium on an average of 2,569 times per year. In order to fund
the proposed hearing-day honorarium increase from $125 to $250,
FINRA would need to raise revenue by approximately $368,000
annually. This estimate is an average of the projected revenue
required in 2019-2021 to fund the increase to the Chair hearing-day
honorarium.
    \13\ See FINRA Rules 12500(a) and 13500(a).
    \14\ See FINRA Rules 12701(a) and 13701(a).
    \15\ From 2014 through 2019, FINRA conducted an average of 4,954
prehearing conferences per year. In order to pay the proposed
additional Chair prehearing honorarium of $125, FINRA would need to
raise revenue by approximately $724,000 annually. This estimate is
an average of the projected revenue required in 2019-2021 to fund
the new Chair honorarium for prehearing conferences.
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    FINRA recognizes that the proposed increase in the Chair honorarium
for hearings and the new prehearing honorarium may not meet market
rates.\16\ FINRA believes, however, these adjustments would better
compensate Chairs for their important role in the proceedings requiring
a minimal increase to the fees that customers, associated persons and
members would be assessed.\17\
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    \16\ In other private arbitration forums like the American
Arbitration Association (``AAA'') and JAMS, arbitrators set their
own rates, which can be significantly higher than the honoraria
FINRA provides. For example, a FINRA Chair would receive $600 for a
full hearing day (two hearing sessions at $300 each) plus an
additional $125 for serving as Chair; whereas, a AAA or JAMS
arbitrator could receive $4,000 ($500/hour) for the same amount of
time.
    \17\ Together, the changes to the Chair honoraria would add
approximately $1.1 million to FINRA's annual expenses. See supra
notes 1212 and 15.
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B. Proposed Increases to Arbitration Fees

    To fund increases in the arbitrator Chair honoraria, FINRA is
proposing to increase the member surcharge, member process fees, filing
fees, and hearing session fees that the forum assesses the parties
during the course of an arbitration case. FINRA believes the proposed
fee increases would generate sufficient revenue to offset the proposed
increases in the arbitrator Chair honoraria without placing an undue
burden on users of the forum, particularly customers and claimants with
small claims.
(i) Proposed Member Surcharge Increases
    The Codes provide that a surcharge will be assessed against each
member that: (1) Files a claim, counterclaim, cross claim, or third
party claim under the Codes; (2) is named as a respondent in a claim,
counterclaim, cross claim, or third party claim filed and served under
the Codes; or (3) employed, at the time the dispute arose, an
associated person who is named as a respondent in a claim,
counterclaim, cross claim, or third party claim filed and served under
the Codes.\18\ The member is assessed one surcharge per arbitration
case.\19\ Member surcharges are intended to allocate the costs of
administering the arbitration case to the firms that are involved in
those cases. Thus, each member is assessed a member surcharge, based on
the aggregate claim amount, when it is brought into the case, whether
through a claim, counterclaim, cross claim or third party claim. The
member surcharge is the responsibility of the member party and cannot
be allocated to any other party (``non-allocable'').\20\
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    \18\ See FINRA Rules 12901 and 13901.
    \19\ See FINRA Rules 12901(a)(6) and 13901(f).
    \20\ See supra note 19.
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    FINRA is proposing to amend FINRA Rules 12901 and 13901 to increase
the member surcharge for claims of more than $250,000 and claims for
non-monetary or unspecified damages.
    Table 1 illustrates the proposed dollar and percentage changes for
each tier.

                                       Table 1--Member Surcharge Schedule
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   Amount of claim (exclusive of interest and         Current                                       Percentage
                    expenses)                        surcharge     Proposed Fee       Change          change
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$.01 to $5,000..................................            $150            $150              $0               0
$5,000.01-$10,000...............................             325             325               0               0
$10,000.01-$25,000..............................             450             450               0               0
$25,000.01-$50,000..............................             750             750               0               0
$50,000.01-$100,000.............................           1,100           1,100               0               0
$100,000.01-$250,000............................           1,700           1,700               0               0
$250,000.01-$500,000............................           1,900           2,025             125               7
$500,000.01-$1,000,000..........................           2,475           2,625             150               6
$1,000,000.01-$5,000,000........................           3,025           3,200             175               6
$5,000,000.01-$10,000,000.......................           3,600           3,850             250               7
Over $10,000,000................................           4,025           4,325             300               7
Non-Monetary/Not Specified......................           1,900           2,000             100               5
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    The member surcharge would remain non-allocable under the proposed
rule change and, therefore, would not result in any additional costs to
other parties to the arbitration, including customer claimants.
(ii) Proposed Filing Fee Increases
    Under the Codes, if a customer, associated person, member, or other
non-member files a claim, counterclaim, cross claim or third party
claim, they must pay a filing fee to initiate an arbitration.\21\ The
filing fee is based on the claim amount or type of damages
requested.\22\
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    \21\ See FINRA Rules 12900(a)(1) and 13900(a)(1).
    \22\ See supra note 21.
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    FINRA is proposing to amend FINRA Rules 12900 and 13900 to increase
the filing fees for customers, associated persons, other non-members,
or members bringing claims of more than $500,000 and claims for non-
monetary or unspecified damages.
(1) Proposed Filing Fees Paid by Customers, Associated Persons or Other
Non-Members
    To minimize the impact of the proposed rule change on customers or
claimants with small claims, the proposed rule change would amend FINRA
Rule 12900(a) to increase the filing fees for claims of more than
$500,000 and claims for non-monetary or unspecified damages.\23\ Table
2 shows the proposed dollar and percentage changes.
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    \23\ FINRA Rule 13900(a) applies filing fees for claims filed by
associated persons. The claim amount tiers and filing fee amounts
are the same as those in Rule 12900(a)(1). The proposed rule change
would similarly amend Rule 13900(a) to increase the filing fees for
claims of more than $500,000 and claims for non-monetary or
unspecified damages.

              Table 2--Filing Fees for Customers, Associated Persons or Other Non-Member Claimants
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   Amount of claim (exclusive of interest and      Current claim  Proposed claim                    Percentage
                    expenses)                       filing fee      filing fee        Change          change
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$.01 to $1,000..................................             $50             $50              $0               0
$1,000.01-$2,500................................              75              75               0               0
$2,500.01-$5,000................................             175             175               0               0
$5,000.01-$10,000...............................             325             325               0               0
$10,000.01-$25,000..............................             425             425               0               0
$25,000.01-$50,000..............................             600             600               0               0
$50,000.01-$100,000.............................             975             975               0               0
$100,000.01-$500,000............................           1,425           1,425               0               0
$500,000.01-$1,000,000..........................           1,725           1,740              15               1
$1,000,000.01-$5,000,000........................           2,000           2,025              25               1
Over $5,000,000.................................           2,250           2,300              50               2
Non-Monetary/Not Specified......................           1,575           1,600              25               2
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(2) Proposed Filing Fees Paid by Members
    The proposed rule change would also amend FINRA Rules 12900(b) and
13900(b) to increase the filing fees that members pay for claims of
more than $500,000 and claims for non-monetary or unspecified damages.
The filing fee for claims of more than $500,000 would increase by $100
to $200, and for non-monetary claims, by $100.\24\ Table 3 shows the
proposed dollar and percentage changes.
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    \24\ The partial refund amounts for settlements or withdrawals
more than 10 days before the hearing on the merits would remain the
same. See FINRA Rules 12900(c)(1) and 13900(c)(1).

                                    Table 3--Filing Fees for Member Claimant
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   Amount of claim (exclusive of interest and      Current claim  Proposed claim                    Percentage
                    expenses)                       filing fee      filing fee        Change          change
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$.01 to $1,000..................................            $225            $225              $0               0
$1,000.01-$2,500................................             350             350               0               0
$2,500.01-$5,000................................             525             525               0               0
$5,000.01-$10,000...............................             750             750               0               0
$10,000.01-$25,000..............................           1,050           1,050               0               0
$25,000.01-$50,000..............................           1,450           1,450               0               0
$50,000.01-$100,000.............................           1,750           1,750               0               0
$100,000.01-$500,000............................           2,125           2,125               0               0
$500,000.01-$1,000,000..........................           2,550           2,650             100               4
$1,000,000.01-$5,000,000........................           3,400           3,550             150               4
Over $5,000,000.................................           4,000           4,200             200               5
Non-Monetary/Not Specified......................           1,700           1,800             100               6
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(iii) Proposed Process Fee Increases
    The Codes provide that each member that is a party to an
arbitration or employed an associated person who is a party to an
arbitration in which the claim amount is more than $25,000 must pay a
process fee based on the amount of the claim.\25\ FINRA assesses the
member the applicable process fee when the parties are sent the
arbitrator lists or notification of the hearing. Like the member
surcharge, the process fee is non-allocable to other parties to the
arbitration.\26\
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    \25\ See FINRA Rules 12903 and 13903. If a claim amount is less
than $25,000, the member would not be assessed any process fees.
    \26\ See FINRA Rules 12903(d) and 13903(d). See also FINRA Rules
12701(b) and 13701(b).
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    The proposed rule change would amend FINRA Rules 12903 and 13903 to
increase the member process fees for claim amounts larger than $250,000
and for claims for non-monetary or unspecified damages. Table 4
illustrates the proposed dollar and percentage changes.

                                      Table 4--Member Process Fee Schedule
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   Amount of claim (exclusive of interest and         Current                                       Percentage
                    expenses)                       process fee    Proposed fee       Change          change
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$.01-$25,000....................................              $0              $0              $0               0
$25,000.01-$50,000..............................           1,750               0               0               0
$50,000.01-$100,000.............................           2,250               0               0               0
$100,000.01-$250,000............................           3,250               0               0               0
$250,000.01-$500,000............................           3,750           3,875             125               3
$500,000.01-$1,000,000..........................           5,075           5,225             150               3
$1,000,000.01-$5,000,000........................           6,175           6,375             200               3
$5,000,000.01-$10,000,000.......................           6,800           7,050             250               4
Over $10,000,000................................           7,000           7,300             300               4
Non-Monetary/Not Specified......................           3,750           3,850             100               3
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    The member process fees would remain non-allocable under the
proposed rule change and, therefore, would not result in any additional
costs to other parties to the arbitration, including customer
claimants.
(iv) Proposed Hearing Session Fee Increases
    FINRA assesses hearing session fees against the parties for each
hearing and pre-hearing session conducted by a panel.\27\ In the award,
the panel determines the amount of the hearing session fees that each
party is required to pay.\28\ The arbitrators may apportion the fees in
any manner, including assessing the entire amount against one
party.\29\
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    \27\ See FINRA Rules 12902(a) and 13902(a). See also supra note
3.
    \28\ The term ``panel'' means the arbitration panel, whether it
consists of one or more arbitrators. See FINRA Rules 12100(u) and
13100(s).
    \29\ See FINRA Rules 12902(a)(1) and 13902(a)(1).
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    As the panel can allocate hearing session fees to customer
claimants, the proposed rule change would amend FINRA Rules 12902 and
13902 to increase the fees for claims of more than $500,000 and for
claims for non-monetary or unspecified damages, and would be small,
ranging from $25 to $75. There are different hearing session fees for
hearings with one arbitrator versus hearings with three arbitrators.
Under the proposed rule change, the fees would not change for hearings
with one arbitrator, so that the forum remains accessible and
affordable to customer claimants with small claims. Table 5 illustrates
the proposed dollar and percentage changes.

                        Table 5--Hearing Session Fees for Session With Three Arbitrators
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                                                    Current fee    Proposed fee
   Amount of claim (exclusive of interest and     for session w/  for session w/                    Percentage
                    expenses)                          three           three          Change          change
                                                    arbitrators     arbitrators
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Up to $2,500....................................              NA              NA              NA              NA
$2,500.01-$5,000................................              NA              NA              NA              NA
$5,000.01-$10,000...............................              NA              NA              NA              NA
$10,000.01-$25,000..............................              NA              NA              NA              NA
$25,000.01-$50,000..............................            $600            $600              $0               0
$50,000.01-$100,000.............................             750             750               0               0
$100,000.01-$500,000............................           1,125           1,125               0               0
$500,000.01-$1,000,000..........................           1,300           1,325              25               2
$1,000,000.01-$5,000,000........................           1,400           1,435              35               3
Over $5,000,000.................................           1,500           1,575              75               5
Non-Monetary/Not Specified......................           1,125           1,150              25               2
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    The effects of the proposed hearing session fee increases may be
minimized under the Codes. For example, if the parties settle the
arbitration before any hearings are held, the parties will not be
assessed hearing fees.\30\ During settlement negotiations, parties have
the opportunity to determine how to share any hearing session fees, if
hearings are held.\31\ For cases that result in an award, the panel has
discretion to assess hearing session fees as part of the award,\32\
which allows them to consider numerous factors to determine each
party's appropriate share and assign the costs accordingly. The
proposed rule change would not change a party's ability to settle or
arbitrators' discretion to assess the hearing session fees.
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    \30\ The panel will assess a hearing session fee against the
parties for an IPHC, if one is held, in the award. See FINRA Rules
12902(b)(1) and 13902(b)(1). See also FINRA Rules 12500(c) and
13500(c).
    \31\ See FINRA Rules 12701(b) and 13701(b).
    \32\ See FINRA Rules 12902(a)(1) and 13902(a)(1).
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C. Examples of How the Proposed Honoraria and Fee Increases Would Be
Applied

    The following two examples help illustrate how the proposed fee
increases would affect a typical arbitration. FINRA notes that the fees
associated with an arbitration claim depend on multiple factors
including: The claim amount, the number of arbitrators, the number of
hearing sessions conducted, how the arbitrators decide to assess the
fees among the parties, and whether the case is settled or withdrawn.
(i) Claims Alleging Damages of $100,000.01 to $500,000
    For a claim between $100,000.01 and $500,000, the customer would
pay a filing fee of $1,425 to initiate the claim.\33\ For this claim
amount tier, there would be no increase to the filing fee. The member
surcharge assessed against the firm would increase by $125, from $1,900
to $2,025. The member process fees would also increase by $125, from
$3,750 to $3,875. In total, the fees members would pay for cases in
this claim amount tier would be $5,900, an increase of approximately
four percent. The hearing session fees for this claim amount would
remain unchanged at $1,125 per hearing session.
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    \33\ Between 2014-2019, FINRA closed on average 830 cases out of
2,428 customer cases with damages in this range.
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(ii) Claims Alleging Damages Over $1,000,000.01 to $5,000,000
    For a claim between $1,000,000.01 and $5,000,000, the customer
would pay $2,025, an increase of $25 from $2,000, to initiate the
claim.\34\ The member surcharge to the firm would increase by $175,
from $3,025 to $3,200. The member process fees would increase by $200,
from $6,175 to $6,375. Together, the fees members would pay for cases
in this claim amount tier would be $9,575, an increase of approximately
four percent. The proposed hearing session fees for this claim amount
tier would increase by $35, from $1,400 to $1,435.
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    \34\ Between 2014-2019, FINRA closed on average 283 cases out of
2,428 customer cases with damages in this range.
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D. Technical Changes

    The proposed rule change would amend FINRA Rules 12901 and 13901 to
make the formatting more consistent in the fee schedules. In addition,
the proposed rule change would amend FINRA Rule 12900(c)(3) to change
the cross-reference in the rule from Rule 12202(c) to Rule 12202.
    If the Commission approves the proposed rule change, FINRA will
announce the effective date of the

proposed rule change in a Regulatory Notice to be published no later
than 60 days following Commission approval. The effective date will be
no later than 120 days following publication of the Regulatory Notice
announcing Commission approval.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\35\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest, and Section 15A(b)(5) of the Act,\36\ which requires,
among other things, that FINRA rules provide for the equitable
allocation of reasonable dues, fees and other charges among members and
issuers and other persons using any facility or system that FINRA
operates or controls.
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    \35\ 15 U.S.C. 78o-3(b)(6).
    \36\ 15 U.S.C. 78o-3(b)(5).
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    FINRA believes the proposed increase to the hearing-day Chair
honorarium and the addition of a Chair honorarium for prehearing
conferences will provide more of an incentive for eligible arbitrators
to become Chairs and more adequately compensate Chairs for their
additional work. These changes, in turn, will help FINRA attract both
new and experienced arbitrators to become Chairs, increasing the number
of arbitrators on the Chair roster as well as the quality and depth of
the roster, which is necessary for protecting investors and the public
interest.
    In addition, the proposed fee increases to the member surcharge,
member process fees, filing fees, and hearing session fees will enable
FINRA to cover the proposed changes to arbitrator Chair honoraria while
helping to ensure that FINRA's arbitration forum remains accessible and
affordable to parties, particularly customers and claimants with small
claims.
    FINRA believes the proposed rule change appropriately allocates the
proposed fee increases among users of the forum by spreading the
increases among high claim amounts and continuing to ensure that the
costs of the forum are borne 85 percent by members and 15 percent by
customers. In particular, the proposed Chair honoraria changes will be
funded primarily by the minimal increases to the surcharge and process
fees assessed to member firms for claims of more than $250,000. In
addition, the filing and hearing session fee increases, which impact
customer claimants, will apply only to claims of more than $500,000,
and will be small. For example, the filing fee increases will range
from $15 to $50. The hearing session fee increases will range from $25
to $75. Thus, FINRA believes the proposed rule change provides for the
equitable allocation of reasonable fees for users of the arbitration
forum, and protects investors and the public interest by keeping the
forum accessible and affordable for customers.

B. Self-Regulatory Organization's Statement on Burden on Competition
Economic Impact Assessment

    FINRA has undertaken an economic impact assessment, as set forth
below, to analyze the regulatory need for the proposed change, its
potential economic impacts, including anticipated costs, benefits, and
competitive effects, relative to the current baseline, and the
alternatives FINRA considered in assessing how best to meet FINRA's
regulatory objectives.
Regulatory Need
    The proposed amendments are intended to address the issue of a lack
of local public Chairs on the roster. As stated earlier, several FINRA
hearing locations lack a sufficient number of local public Chairs.
Hearing sites without a sufficient number of local Chairs draw from
non-local arbitrators. Arbitration parties have reported that they
prefer local arbitrators to preside over their cases. Appointing Chairs
who live outside of the local hearing location may also result in
scheduling delays of hearings and prehearing conferences. Further, non-
local arbitrators who serve on a case incur additional expenses related
to air, rail, and local ground transportation and hotels, which are
then reimbursed by FINRA.
Economic Baseline
    The economic baseline for the proposed amendments is the current
rules under the Codes that address the Chair honoraria and forum fees
that parties to an arbitration incur. The economic baseline also
includes the roster of local public Chairs in each hearing location.
    Currently, Chairs receive an additional $125 per day for each
hearing on the merits (no additional compensation if cases are closed
by settlement or other means prior to the first hearing on the merits).
Chairs do not receive an additional honorarium when attending
prehearing conferences. Anecdotal evidence suggests that the current
Chair honorarium is not commensurate with the additional work required
of Chairs in the arbitration process.\37\
---------------------------------------------------------------------------

    \37\ The anecdotal evidence is mainly based on feedback that
FINRA has received from Chair-eligible arbitrators who revealed a
lack of interest in completing the required Chair training.
---------------------------------------------------------------------------

    FINRA collects information detailing the number of open cases and
public Chairs per hearing location. As of April 30, 2020, across the 69
domestic hearing locations, there were 4,788 open cases.\38\
Additionally, the arbitrator roster included 1,118 local public Chairs,
and 1,531 non-local public Chairs who served in these locations.\39\
The average number of local public Chairs and open cases was 16 and 69,
respectively; thus, non-local Chairs were used in some cases.\40\
---------------------------------------------------------------------------

    \38\ Among the 4,788 open cases, 1,373 of them are in San Juan,
Puerto Rico due to the downgrade of Puerto Rican bonds to ``junk
status.''
    \39\ Arbitrators, including Chairs, can serve in multiple
hearing locations.
    \40\ The median number of local public Chairs and open cases was
9 and 26, respectively.
---------------------------------------------------------------------------

    Hearing locations with fewer than 20 local public Chairs pose a
particular concern for the forum. FINRA's arbitrator appointment
process uses the Neutral List Selection System (``NLSS''), a computer
algorithm, to randomly generate lists of arbitrators from FINRA's
arbitrator roster. NLSS generates a random list of 10 arbitrators from
the public Chair roster. Each party in the case receives the list, and
each separately-represented party may strike up to four names.\41\ The
system generates the random list from the local Chair roster first. If
the hearing location does not have at least 20 local Chairs, the system
will pull in non-local Chairs. The use of non-local Chairs to complete
the list increases the probability that the final list of 10 Chairs
will include one or more non-local Chairs.
---------------------------------------------------------------------------

    \41\ For example, each separately represented party may strike
an arbitrator as a potential Chair because of a conflict of
interest. In some cases, a conflict would preclude an arbitrator
from even appearing on a list. For example, if an arbitrator has a
current brokerage account with a party involved in the case, that
arbitrator would not appear on the list involving the same party.
---------------------------------------------------------------------------

    In the sample, 51 out of 69 hearing locations had fewer than 20
local public Chairs. Among the 43 most active hearing locations (those
with 20 or more open cases), 25 locations had fewer than 20 local
public Chairs. The majority of these locations are midsize cities, for
example, Birmingham (Alabama) with seven local public Chairs and 31
open cases, and Columbia (South Carolina) with three local public
Chairs and 72 open cases.\42\ On average, these 25 hearing locations
had 10 local public

Chairs and 32 open cases.\43\ This indicates that if FINRA is able to
fill the gap by recruiting, on average, 10 additional local Chairs in
these cities, it can greatly decrease the probability that the final
list of 10 public Chairs presented to arbitration parties will include
one or more non-local Chairs.
---------------------------------------------------------------------------

    \42\ These 25 hearing locations also include San Juan, Puerto
Rico, which had 1,373 open cases and three local public Chairs. See
supra note 38.
    \43\ The median number of local public Chairs and open cases
across these 25 hearing locations was 10 and 89, respectively.
---------------------------------------------------------------------------

    FINRA also collects information on the use of non-local public
Chairs based on closed arbitration cases. During 2019, 3,556
arbitration cases were closed in which public Chairs were appointed to
the arbitration panels. Of these 3,556 cases, 2,162 (60 percent) of
them were customer cases. Forty percent of these arbitration cases and
48 percent of the customer cases had non-local public Chairs appointed
on the arbitration panels.
    In the 25 active hearing locations with fewer than 20 local public
Chairs, 1,296 arbitration cases were closed during 2019 in which public
Chairs were appointed to the arbitration panels. Of these 1,296 cases,
980 (76 percent) of them were customer cases. Seventy-nine percent of
these arbitration cases and 83 percent of the customer cases had non-
local public Chairs appointed on the arbitration panels.
Economic Impact
    The proposed amendments are expected to affect the parties to an
arbitration such as customers, member firms, and associated persons.
The proposed rule change is also expected to affect FINRA arbitrators
and its dispute resolution forum. The proposed amendments would
increase the honoraria that a Chair receives, increasing the incentives
of arbitrators to become Chairs or serve as Chairs. The proposed rule
change would likely increase the pool of arbitrators available to serve
as Chairs, thereby increasing the probability that more local public
Chairs would be proposed for selection. FINRA believes that the
proposed rule change could help retain experienced arbitrators who
currently serve as Chairs and increase the total number of arbitrators
on the Chair roster.
    In order to estimate potential increases in Chair honoraria
following the proposed rule change, FINRA analyzes 3,993 arbitration
cases in total that were closed during 2019.\44\ FINRA estimates that
under the proposed rule change, there would have been an aggregate
increase of $345,500 to $691,000 in hearing-day honoraria, and an
addition of $649,375 in Chair honoraria for prehearing conferences.
Together, the aggregate Chair honoraria for these cases would have
increased by $994,875 to $1,340,375.
---------------------------------------------------------------------------

    \44\ There were 2,125 customer cases among the 3,993 arbitration
cases (or 55 percent).
---------------------------------------------------------------------------

    The primary benefits of the proposed rule change would be the
reduction in travel costs for non-local Chairs as well as the increased
satisfaction of the parties in the case from having a local Chair due
to the local Chair's knowledge of local laws and customs. In addition,
arbitration parties may benefit from fewer scheduling delays of
hearings and prehearing conferences following the proposed amendments.
    The increase in the number of arbitrators willing to serve in the
role of a Chair depends on the sensitivity of arbitrator incentives to
honoraria changes. The impact on the Chair roster may be higher for the
hearing sites of small and midsize cities than for the hearing sites of
large cities for two reasons. First, the increase in the incentive of
arbitrators may be more pronounced in small and midsize cities because
the cost of living is relatively lower in these locations. Second,
adding even a few arbitrators to the Chair roster for small and midsize
cities would likely have a greater impact than for larger cities
because Chair rosters in these cities tend to be smaller.
    The proposed amendments may not fill the gap of local public Chair
rosters in the immediate term or in all locations, as some hearing
locations may lack a sufficient number of Chair-eligible public
arbitrators. In order to be eligible for the Chair roster, FINRA
requires an arbitrator to have a minimum amount of arbitration
experience.\45\ Thus, the immediate increase in the local public Chair
roster following the proposed rule change would be capped at the number
of experienced local public arbitrators.\46\ Twenty-four hearing
locations, for instance, had fewer than 20 local public arbitrators
through April 30, 2020 in the sample. This suggests that the proposed
rule change may be less likely to fill the gap of public Chair rosters
at these locations even if all these public arbitrators, regardless of
their experience, could become Chairs. The local Chair roster could
increase over time, however, as the local public arbitrators gain more
experience.\47\ Taken together, FINRA acknowledges that there is
limited direct evidence to establish that the proposed rule change will
have an immediate effect on mitigating the issue of a lack of local
public Chairs in the most acute locations.
---------------------------------------------------------------------------

    \45\ FINRA requires that an arbitrator: (1) Have a law degree
and be a member of a bar of at least one jurisdiction and have
served as an arbitrator through award on at least one arbitration
administered by a self-regulatory organization (``SRO'') in which
hearings were held; or (2) have served as an arbitrator through
award on at least three arbitrations administered by a SRO in which
hearings were held.
    \46\ According to FINRA's estimate, there are 48 Chair-eligible
public arbitrators who could potentially become Chairs in the 25
active hearing locations that had fewer than 20 public Chairs in the
sample. Thus, on average, approximately two additional Chair-
eligible public arbitrators could potentially become Chairs
immediately following the proposed increases in Chair honoraria.
Similarly, the median number of Chair-eligible public arbitrators
who can potentially become Chairs is two across these 25 hearing
locations.
    \47\ Such an increase in the Chair roster could be significant
in the next few years as the number of public arbitrators has grown
significantly in the past two years.
---------------------------------------------------------------------------

    The direct costs of the proposed rule change would arise from the
increase in forum fees that parties to an arbitration would incur.
Among the 3,993 cases closed in 2019, 1,773 cases (44 percent of all
cases) with claims of equal to or less than $250,000 would not be
subject to any increases in forum fees following the proposed rule
change. The remaining 2,220 cases (56 percent of all cases) would be
subject to increases in forum fees: 1,662 cases (42 percent of all
cases) with non-monetary/non-specified claims or claims of greater than
$500,000 would be subject to higher filing fees, member surcharges and
process fees, and hearing session fees; 558 cases (14 percent of all
cases) with claims of larger than $250,000 but smaller than or equal to
$500,000 would be subject to higher member surcharges and process fees.
    Subject to the proposed rule change, the total forum fees
associated with the 3,993 cases closed in 2019 would have increased by
$1,006,365 (a 2.65 percent increase relative to the existing fee
level).\48\ While 44 percent of the 3,993 cases closed in 2019 would
not have been subject to any fee increases under the proposed rule
change, the remaining 2,220 cases would have been subject to an average
increase of $453 in forum fees. When considering all cases that were
closed in 2019, total forum fees would have increased around $252 on
average. Note that this analysis is based on the assumption that
changes in forum fees would not affect the decisions of arbitration
parties on whether to file a case, how much to claim in damages, and
whether to settle a case after the case is filed. FINRA

acknowledges the possibility that the proposed rule change may affect
strategic decisions for certain arbitration parties at the margin or
under certain circumstances. However, FINRA believes that the proposed
rule change would not significantly impact such decisions for a
majority of the arbitration parties due to the proposed increases in
forum fees.
---------------------------------------------------------------------------

    \48\ Specifically, the percentage increase in forum fees is
broken down as follows: 1.28 percent in filing fees (from $6,129,675
to $6,208,395), 4.72 percent in member surcharges (from $7,652,050
to $8,012,875), 2.49 percent in member process fees (from
$14,677,250 to $15,042,000), and 2.13 percent in hearing session
fees (from $9,495,500 to $9,697,570).
---------------------------------------------------------------------------

    Currently, the arbitration fee structure distributes much of the
costs of the forum to member firms that are party to an arbitration
proceeding and to parties associated with large claims or non-monetary/
unspecified claims. The proposed rule change would retain this
approach. FINRA believes its current and proposed fee structures are
designed to keep its arbitration program accessible and affordable to
parties, especially customers and claimants with small claims.
    Under the proposed rule change, all members involved in an
arbitration would be subject to the same new fee schedule. FINRA
recognizes that increases in forum fees due to the proposed rule change
could have a bigger impact on small firms where claims are larger or
non-monetary/unspecified as they may be more resource-constrained
compared with large members.
    FINRA recognizes that under the proposed rule change, there is
likely to be a transfer of wealth from those that pay the higher fees
to those that benefit from the proposed rule change if those parties
are different. The proposed fee schedule would allocate the majority of
the costs in customer cases to those with larger claim amounts or those
with non-monetary/unspecified claims, although customers in cases with
small claims could still benefit from an expanded public Chair roster.
Further, most of the benefits would likely accrue to customers in cases
situated in those locations that are currently lacking a sufficient
number of local public Chairs by gaining new local public Chairs as a
result of the proposed rule change. However, customers in cases
situated in locations not lacking a sufficient number of local public
Chairs would also likely incur fee increases.
    Similar to customer cases, a majority of the benefits would likely
accrue to parties to industry disputes that require a public Chair and
are situated in locations lacking such Chairs. Thus, parties to
industry disputes that require a non-public Chair would likely not
benefit from additional local public Chairs due to the proposed
changes, even though non-public Chairs would be compensated at the
same, higher rate and these parties would incur the same fee increases
as parties to customer cases or parties to industry disputes that
require a public Chair.\49\ FINRA notes, however, that a majority of
industry disputes filed in the forum require a public Chair, for
example, those involving a broker as a party. Industry parties to these
disputes, therefore, could benefit from greater choice of local public
Chairs if their hearing locations lack such Chairs.
---------------------------------------------------------------------------

    \49\ FINRA believes that current hearing locations already have
a sufficient number of non-public Chairs. As of July 8, 2020, the
number of non-public Chairs on FINRA's roster was 741, whereas only
nine open industry disputes in total required a non-public Chair.
These nine open cases were situated in four different hearing
locations. For example, New York City had four open industry
disputes that required a non-public Chair and 119 local non-public
Chairs; Los Angeles had three open industry disputes that required a
non-public Chair and 53 local non-public Chairs.
---------------------------------------------------------------------------

    FINRA does not believe that the proposed rule change would result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. Specifically, FINRA does not
expect that the proposed rule change would impact FINRA's competitive
position relative to other arbitration forums.\50\
---------------------------------------------------------------------------

    \50\ As FINRA arbitrator compensation tends to be significantly
lower than the rate in other forums, the proposed increases in Chair
honoraria are not expected to significantly affect other forums in
attracting and retaining qualified Chairs. See supra note 16.
---------------------------------------------------------------------------

Alternatives Considered
    An alternative to the proposed amendments is a higher or lower
amount of increase in Chair honoraria. A higher amount would further
incentivize arbitrators to serve as Chair, and FINRA would incur fewer
expenses reimbursing non-local arbitrators for their travel. A higher
amount, however, would also increase the fees on the parties to the
arbitration, potentially making the forum less accessible.
    Parties would incur fewer expenses for a lower amount of increase
in Chair honoraria. A lower amount, however, may not be able to provide
sufficient incentives for arbitrators to become a Chair, and FINRA
would incur a higher level of expense to reimburse non-local
arbitrators. FINRA believes the proposed level of increase in honoraria
balances the expected increase in the number of local Chairs with the
higher fees that would be paid by the parties to an arbitration.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) by order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-FINRA-2020-035 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2020-035. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10 a.m. and 3
p.m. Copies of such filing

also will be available for inspection and copying at the principal
office of FINRA. All comments received will be posted without change.
Persons submitting comments are cautioned that we do not redact or edit
personal identifying information from comment submissions. You should
submit only information that you wish to make available publicly.

All submissions should refer to File Number SR-FINRA-2020-035 and
should be submitted on or before November 16, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\51\
---------------------------------------------------------------------------

    \51\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-23633 Filed 10-23-20; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 88, Number 124 (Thursday, June 29, 2023)]
[Notices]
[Pages 42065-42066]
[FR Doc No: 2023-13836]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings #1

    Take notice that the Commission received the following electric
rate filings:

    Docket Numbers: ER10-2126-007; ER10-2126-006; EL23-9-000.
    Applicants: Idaho Power Company, Idaho Power Company.
    Description: Supplement to March 7, 2023, Idaho Power Company to
Notice of Change in Status and Response to Letter Requesting Additional
Information, et al.
    Filed Date: 6/15/23.
    Accession Number: 20230615-5178.
    Comment Date: 5 p.m. ET 7/6/23.

    Docket Numbers: ER18-2358-007.
    Applicants: GridLiance High Plains LLC, Southwest Power Pool, Inc.
    Description: Compliance filing: Southwest Power Pool, Inc. submits
tariff filing per 35: GridLiance--Compliance Filing in Response to
Order issued in ER18-2358 to be effective 11/1/2018.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5055.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-1765-001.
    Applicants: Duke Energy Florida, LLC.
    Description: Tariff Amendment: DEF-CFOTD Amended NITSA SA 147 to be
effective 4/1/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5128.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-1814-001.
    Applicants: Public Service Company of Colorado.
    Description: Tariff Amendment: 2023-06-23-CSU SISA-744-Errata
Filing to be effective 7/1/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5086.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-1854-001.
    Applicants: Public Service Company of Colorado.
    Description: Tariff Amendment: 2023-06-23-GrndVly-Ute Hydro-DWA-
734-Errata Filing to be effective 6/1/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5081.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-1856-001.
    Applicants: Arizona Public Service Company.
    Description: Tariff Amendment: Rate Schedule No. 217, Exhibit B
Administrative Filing, Amendment No. 1 to be effective 11/15/2010.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5143.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2217-000.
    Applicants: AEP Texas Inc.
    Description: Sec.  205(d) Rate Filing: AEPTX-AP Sunray 2nd A&R
System Upgrade Agreement to be effective 6/1/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5036.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2218-000.
    Applicants: PJM Interconnection, L.L.C.
    Description: Sec.  205(d) Rate Filing: Amendment to ISA and ICSA,
SA Nos. 6606 and 6607; Queue No. AD1-022 to be effective 9/2/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5047.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2219-000.
    Applicants: Kentucky Utilities Company.
    Description: Sec.  205(d) Rate Filing: Revisions to Wholesale
Requirements Contracts for Bardstown and Nicholasville to be effective
7/1/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5054.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2220-000.
    Applicants: Midcontinent Independent System Operator, Inc.
    Description: Sec.  205(d) Rate Filing: 2023-06-23_SA 4094 NIPSCO-
Valpo Solar GIA (J1332) to be effective 8/23/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5067.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2221-000.
    Applicants: Big Savage, LLC.
    Description: Sec.  205(d) Rate Filing: Normal filing 2023 name
change to be effective 6/24/2023.
    Filed Date: 6/23/23.

    Accession Number: 20230623-5073.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2222-000.
    Applicants: Southwest Power Pool, Inc.
    Description: Sec.  205(d) Rate Filing: 2881R16 City of Chanute, KS
NITSA NOA to be effective 9/1/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5084.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2223-000.
    Applicants: San Diego Gas & Electric Company.
    Description: Sec.  205(d) Rate Filing: Arizona Transmission System
Participation Agreement to be effective 7/18/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5088.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2224-000.
    Applicants: Southwest Power Pool, Inc.
    Description: Sec.  205(d) Rate Filing: 1976R13 FreeState Electric
Cooperative, Inc. NITSA and NOA to be effective 9/1/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5090.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2225-000.
    Applicants: PJM Interconnection, L.L.C.
    Description: Sec.  205(d) Rate Filing: Original ISA, SA No. 6949;
Queue No. NQ-173 to be effective 5/26/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5094
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2226-000.
    Applicants: Southwest Power Pool, Inc.
    Description: Sec.  205(d) Rate Filing: 3620R5 Kansas City Board of
Public Utilities NITSA NOA to be effective 9/1/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5098.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2227-000.
    Applicants: PJM Interconnection, L.L.C.
    Description: Sec.  205(d) Rate Filing: Original ISA, SA No. 6963;
Queue No. AF2-150 to be effective 5/24/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5108.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2228-000.
    Applicants: Southwest Power Pool, Inc.
    Description: Sec.  205(d) Rate Filing: 1636R29 Kansas Electric
Power Cooperative, Inc. NITSA and NOA to be effective 9/1/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5111.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2229-000.
    Applicants: San Diego Gas & Electric Company.
    Description: Sec.  205(d) Rate Filing: Service Agreement No. 67 to
be effective 6/24/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5116.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2230-000.
    Applicants: Boulder Solar II, LLC.
    Description: Sec.  205(d) Rate Filing: Boulder SFA, Boulder Shared
Facilities Agreement No. 1 to be effective 6/26/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5136.
    Comment Date: 5 p.m. ET 7/14/23.

    Docket Numbers: ER23-2231-000.
    Applicants: Idaho Power Company.
    Description: Sec.  205(d) Rate Filing: IPC/PAC B2H Transmission
Project Construction Funding Agreement to be effective 6/7/2023.
    Filed Date: 6/23/23.
    Accession Number: 20230623-5141.
    Comment Date: 5 p.m. ET 7/14/23.

    The filings are accessible in the Commission's eLibrary system
(https://elibrary.ferc.gov/idmws/search/fercgensearch.asp) by querying
the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified comment date. Protests may be
considered, but intervention is necessary to become a party to the
proceeding.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.
    The Commission's Office of Public Participation (OPP) supports
meaningful public engagement and participation in Commission
proceedings. OPP can help members of the public, including landowners,
environmental justice communities, Tribal members and others, access
publicly available information and navigate Commission processes. For
public inquiries and assistance with making filings such as
interventions, comments, or requests for rehearing, the public is
encouraged to contact OPP at<PHONE_NUMBER> or [email protected].

    Dated: June 23, 2023.
Debbie-Anne A. Reese,
Deputy Secretary.
[FR Doc. 2023-13836 Filed 6-28-23; 8:45 am]
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[Federal Register: April 13, 2009 (Volume 74, Number 69)]
[Proposed Rules]
[Page 16807-16809]
[DOCID:fr13ap09-21]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2009-0331; Directorate Identifier 2008-NE-40-AD]
RIN 2120-AA64

Airworthiness Directives; Honeywell International Inc. TFE731
Series Turbofan Engines

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

ACTION: Notice of proposed rulemaking (NPRM).

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

SUMMARY: The FAA proposes to adopt a new airworthiness directive (AD)
for Honeywell International Inc. TFE731 series turbofan engines with
certain second and third stage low-pressure compressor rotor (LPCR)
discs installed. This proposed AD would require removing from service,
certain second and third stage LPCR discs, part numbers (P/Ns) 3072396-
1, 3072397-1, 3075109-1, or 2075192-1. This proposed AD results from a
report of cracks found during a fluorescent penetrant inspection (FPI)
of the disc bore. We are proposing this AD to prevent an uncontained
failure of a second and third stage LPCR disc due to cracks in the
bore, which could result in damage to the airplane.

DATES: We must receive any comments on this proposed AD by June 12,
2009.

ADDRESSES: Use one of the following addresses to comment on this
proposed AD.
     Federal eRulemaking Portal: Go to http://
www.regulations.gov and follow the instructions for sending your
comments electronically.
     Mail: Docket Management Facility, U.S. Department of
Transportation, 1200 New Jersey Avenue, SE., West Building Ground
Floor, Room W12-140, Washington, DC 20590-0001.
     Hand Delivery: Deliver to Mail address above between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
     Fax:<PHONE_NUMBER>.
    You can get the service information identified in this proposed AD
from Honeywell Engines and Systems Technical Publications and
Distribution, M/S 2101-201, P.O. Box 52170, Phoenix, AZ 85072-2170,
telephone: Global Customer Care toll free<PHONE_NUMBER>; International
callers<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Joseph Costa, Aerospace Engineer, Los
Angeles Aircraft Certification Office, FAA, Transport Airplane
Directorate, 3960 Paramount Blvd., Lakewood, CA 90712-4137; e-mail:
<EMAIL_ADDRESS>telephone:<PHONE_NUMBER>; fax:<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to send us any written relevant data, views, or
arguments regarding this proposal. Send your comments to an address
listed under ADDRESSES. Include ``Docket No. FAA-2009-0331; Directorate
Identifier 2008-NE-40-AD'' in the subject line of your comments. We
specifically invite comments on the overall regulatory, economic,
environmental, and energy aspects of the proposed AD. We will consider
all comments received by the closing date and may amend the proposed AD
in light of those comments.
    We will post all comments we receive, without change, to http://
www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact
with FAA personnel concerning this proposed AD. Using the search
function of the Web site, anyone can find and read the comments in any
of our dockets, including, if provided, the name of the individual who
sent the comment (or signed the comment on behalf of an association,
business, labor union, etc.). You may review the DOT's complete Privacy
Act Statement in the Federal Register published on April 11, 2000 (65
FR 19477-78).

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 this proposed AD, the regulatory
evaluation, any comments received, and other information. The street
address for the Docket Operations office (telephone<PHONE_NUMBER>) is
the same as the Mail address provided in the ADDRESSES section.
Comments will be available in the AD docket shortly after receipt.

Discussion

    A routine FPI of a second stage LPCR disc, P/N 3072396-1, revealed
three indications in the disc bore. The LPCR disc had accumulated 6,874
cycles-since-new (CSN). All three indications were determined to be
cracks initiating from a titanium hard-alpha inclusion incurred during
the alloy melting process. Oremet Corporation produced the heat lot,
which was part of Heat No. WRT2053, in January 1982. We have determined
that other second and third stage LPCR discs made from the same heat
lot might also contain similar inclusions that could adversely affect
the lives of those LPCR discs. Based on billet stacking and billet
orientation, six discs were determined to be adjacent or near the
cracked disc. We propose more expedient corrective action for these
higher-risk discs than other LPCR discs made from the same heat lot.
This condition, if not corrected, could result in an uncontained
failure of a second and third stage LPCR disc due to cracks in the
bore, which could result in damage to the airplane.

Relevant Service Information

    We have reviewed and approved the technical contents of Honeywell
International Inc. Alert Service Bulletins (ASBs) TFE731-72-A3748,
dated August 21, 2008, and TFE731-72-A3749, dated August 21, 2008.
Those ASBs describe procedures for removing certain second and third
stage LPCR discs specified by serial number (SN) in the ASBs.

Differences Between the Proposed AD and the Manufacturer's Service
Information

    Alert Service Bulletins TFE731-72-A3748, dated August 21, 2008, and
TFE731-72-A3749, dated August 21, 2008, require removing at the next
access, second and third stage LPCR discs that have an SN specified in
Table 5 or Table 6 of those ASBs. This proposed AD would require
removing those discs that have an SN specified in Table 5 within 100
cycles-in-service (CIS) after the effective date of the proposed AD or
at the next access, whichever occurs first. This proposed AD would
require removing those discs that have an SN specified in Table 6
within 2,000 CIS after the effective date of the proposed AD or at the
next access, whichever occurs first.

FAA's Determination and Requirements of the Proposed AD

    We have evaluated all pertinent information and identified an
unsafe condition that is likely to exist or develop on other products
of this same type design. We are proposing this AD, which would require
removing from service engines with LPCR discs that have SN:
     In Table 5 of ASBs TFE731-72-A3748, dated August 21, 2008,
or TFE731-72-A3749, dated August 21, 2008, within 100 CIS after the
effective date of this proposed AD, and

     In Table 6 of ASBs TFE731-72-A3748, dated August 21, 2008,
or TFE731-72-A3749, dated August 21, 2008, within 2,000 CIS or the next
access after the effective date of this proposed AD, whichever occurs
first.
    The proposed AD would require you to use the service information
described previously to perform these actions.

Costs of Compliance

    We estimate that this proposed AD would affect 27 engines installed
on airplanes of U.S. registry. We also estimate that it would take
about 4 work-hours per engine to perform the proposed actions during
scheduled maintenance and 140 work-hours per engine for the proposed
actions during unscheduled maintenance. The average labor rate is $80
per work-hour. Required parts would cost about $31,000 per engine.
Based on these figures, we estimate the total cost of the proposed AD
to U.S. operators to be $900,000.

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, Section 106, describes the
authority of the FAA Administrator. Subtitle VII, Aviation Programs,
describes in more detail the scope of the Agency's authority.
    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 have determined that this proposed AD would not have Federalism
implications under Executive Order 13132. This proposed AD would not
have a substantial direct effect on the States, on the relationship
between the national Government and the States, or on the distribution
of power and responsibilities among the various levels of government.
    For the reasons discussed above, I certify that the proposed 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. Would 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 proposed AD. You may get a copy of this summary at the
address listed under ADDRESSES.

List of Subjects in 14 CFR Part 39

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

The Proposed Amendment

    Under the authority delegated to me by the Administrator, the
Federal Aviation Administration proposes to amend 14 CFR part 39 as
follows:

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

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

Honeywell International Inc. (Formerly AlliedSignal Inc., formerly
Garret Turbine Engine Company): Docket No. FAA-2009-0331;
Directorate Identifier 2008-NE-40-AD.

Comments Due Date

    (a) The Federal Aviation Administration (FAA) must receive comments
on this airworthiness directive (AD) action by June 12, 2009.

Affected ADs

    (b) None.

Applicability

    (c) This AD applies to Honeywell International Inc. TFE731-2,
TFE731-2A, TFE731-2C, TFE731-3, TFE731-3A, TFE731-3AR, TFE731-3B,
TFE731-3BR, TFE731-3C, TFE731-3CR, TFE731-3D, TFE731-3DR, TFE731-3R,
TFE731-4, TFE731-4R, TFE731-5, TFE731-5AR, TFE731-5BR, and TFE731-5R
series turbofan engines with certain low-pressure compressor rotor
(LPCR) discs, part number (P/Ns) 3072396-1, 3072397-1, 3075190-1, or
2075192-1, installed. These engines are installed on, but not limited
to, the airplanes listed in Table 1 of this AD.

             Table 1--Installed on Airplanes by Manufacturer
------------------------------------------------------------------------
              Manufacturer                            Model
------------------------------------------------------------------------
Dassault-Aviation or Dassault Aviation.  Falcon 10 (Falcon 100) and
                                          Mystere-Falcon 20, 50, 900 and
                                          MF900 series.
Cessna Aircraft Company................  Model 650, Citation III, VI,
                                          and VII.
Gulfstream Aerospace LP................  1125 Westwind Astra.
Israel Aircraft Industries.............  1124 and 1124A (Westwind).
Learjet Inc............................  31, 31A, 35, 35A, 36, 36A, 55,
                                          55B, 55C, and M31.
Lockheed Martin Corporation (formerly    1329-23A, 1329-23D, 1329-23E,
 Lockheed-Georgia).                       and 1329-25.
Raytheon Corporate Jets (formerly        DH.125 Series 1A, 3A, and 3A/
 British Aerospace and Hawker             RA, HS.125 Series F3B and F3B/
 Beechcraft Corporation).                 RA, BH.125 and DH.125 Series
                                          400A, HS.125 Series 403B,
                                          F400B, and F403B, HS.125
                                          Series 600A, BH.125 Series
                                          600A, HS.125 Series F600B,
                                          700A, and 700B, BAe.125 Series
                                          800 and 1000, and Hawker 800
                                          and 850XP series.
------------------------------------------------------------------------

Unsafe Condition

    (d) This AD results from a report of cracks found during a
fluorescent penetrant inspection (FPI) of the disc bore. We are issuing
this AD to prevent an uncontained failure of a second and third stage
LPCR disc due to cracks in the bore, which could result in damage to
the airplane.

Compliance

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

Removing LPCR Discs from Service

    (f) For engines with a second and third stage LPCR disc that has a
serial number (SN) listed in Table 5 of Honeywell International Inc.
Alert Service Bulletins (ASBs) TFE731-72-A3748, dated August 21, 2008,
or TFE731-72-A3749, dated August 21, 2008, remove the second and third
stage LPCR disc from service within 100 cycles-in-service (CIS) after
the effective date of this AD.
    (g) For engines with a second and third stage LPCR disc that has an
SN listed in Table 6 of Honeywell International Inc. ASBs TFE731-72-
A3748, dated August 21, 2008, or TFE731-72-A3749, dated August 21,
2008, do the earlier of the following:
    (1) Remove the second and third stage LPCR disc from service within
2,000 CIS after the effective date of this AD, or
    (2) Remove the second and third stage LPCR disc from service the
next time the intermediate case is removed from the LPC case.

Installation Prohibition

    (h) After the effective date of this AD, don't install any second
and third stage LPCR disc removed as required in paragraphs (f) or (g)
of this AD.

Alternative Methods of Compliance

    (i) The Manager, Los Angeles Aircraft Certification Office, has the
authority to approve alternative methods of compliance for this AD if
requested using the procedures found in 14 CFR 39.19.

Related Information

    (j) Contact Joseph Costa, Aerospace Engineer, Los Angeles Aircraft
Certification Office, FAA, Transport Airplane Directorate, 3960
Paramount Blvd., Lakewood, CA 90712-4137; e-mail<EMAIL_ADDRESS>
telephone:<PHONE_NUMBER>; fax:<PHONE_NUMBER>, for more information
about this AD.
    (k) Honeywell International Inc. ASBs TFE731-72-A3748, dated August
21, 2008, and TFE731-72-A3749, dated August 21, 2008, pertain to the
subject of this AD. Contact Honeywell Engines and Systems Technical
Publications and Distribution, M/S 2101-201, P.O. Box 52170, Phoenix,
AZ 85072-2170, telephone: Global Customer Care toll free (800) 601-
3099; International callers<PHONE_NUMBER>, for a copy of this service
information.

    Issued in Burlington, Massachusetts, on April 6, 2009.
Peter A. White,
Assistant Manager, Engine and Propeller Directorate, Aircraft
Certification Service.
[FR Doc. E9-8309 Filed 4-10-09; 8:45 am]

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