[Federal Register Volume 77, Number 62 (Friday, March 30, 2012)]
[Rules and Regulations]
[Pages 19059-19061]
[FR Doc No: 2012-7374]

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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.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.

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Federal Register / Vol. 77, No. 62 / Friday, March 30, 2012 / Rules
and Regulations

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2012-0297; Directorate Identifier 2011-NM-093-AD;
Amendment 39-17003; AD 2012-06-22]
RIN 2120-AA64

Airworthiness Directives; Airbus Airplanes

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

ACTION: Final rule; request for comments.

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SUMMARY: We are adopting a new airworthiness directive (AD) for all
Airbus Model A340-500 and Model -600 series airplanes. This AD requires
performing repetitive high frequency eddy current inspections of the
external radius on upper horizontal cruciform fitting at frame (FR) 47
on the left- and right-hand sides for cracks, and repairing the cracks
if necessary. This AD was prompted by reports that during fatigue
testing, damages occurred in the external radius on the upper
horizontal cruciform fitting at FR47 on the left- and right-hand sides.
We are issuing this AD to detect and correct fatigue cracking, which
could adversely affect the structural integrity of the airplane.

DATES: This AD becomes effective April 16, 2012.
    The Director of the Federal Register approved the incorporation by
reference of the service information listed in the AD as of April 16,
2012.
    We must receive comments on this AD by May 14, 2012.

ADDRESSES: You may send comments by any of the following methods:
     Federal eRulemaking Portal: Go to http://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: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.

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

FOR FURTHER INFORMATION CONTACT: Vladimir Ulyanov, Aerospace Engineer,
International Branch, ANM-116, Transport Airplane Directorate, FAA,
1601 Lind Avenue SW., Renton, Washington 98057-3356; telephone (425)
227-1138; fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Discussion

    The European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Community, has issued EASA
Airworthiness Directive 2011-0075, dated April 29, 2011 (referred to
after this as ``the MCAI''), to correct an unsafe condition for the
specified products. The MCAI states:

    During the A340-600 EF2 fatigue test, damages occurred in
external radius on upper horizontal cruciform in rear corner at FR47
respectively on Right-Hand-(RH) side and on Left-Hand-(LH) side.
These damages were detected after tear down inspections using High
Frequency Eddy Current method.
    This condition, if not corrected, could impair the structural
integrity of the aeroplane.
    For the reasons described above, this [EASA] AD requires to
perform repetitive Special Detailed Inspections for early detection
of cracks on upper horizontal cruciform fitting at FR47 on LH and RH
sides, and the accomplishment of corrective actions [repair], as
applicable.

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

Relevant Service Information

    Airbus has issued Mandatory Service Bulletin A340-57-5029,
including Appendices 01 and 02, dated February 25, 2011.
    For the initial inspection, the compliance time ranges between
4,450 total flight cycles or 35,600 total flight hours and 9,750 total
flight cycles or 63,600 total flight hours, whichever occurs first,
depending on airplane configuration. For the repetitive intervals, the
compliance time ranges between 2,350 flight cycles or 19,000 flight
hours, whichever occurs first; and 6,050 flight cycles or 46,200 flight
hours, whichever occurs first, depending on airplane configuration.
    The actions described in this service information are intended to
correct the unsafe condition identified in the MCAI.

FAA's Determination and Requirements of This AD

    This product has been approved by the aviation authority of another
country, and is approved for operation in the United States. Pursuant
to our bilateral agreement with the State of Design Authority, we have
been notified of the unsafe condition described in the MCAI and service
information referenced above. We are issuing this AD because we
evaluated all pertinent information and determined the unsafe condition
exists and is likely to exist or develop on other products of the same
type design.
    There are no products of this type currently registered in the
United States. However, this rule is necessary to ensure that the
described unsafe condition is addressed if any of these products are
placed on the U.S. Register in the future.

FAA's Determination of the Effective Date

    Since there are currently no domestic operators of this product,
notice and opportunity for public comment before issuing this AD are
unnecessary.

Comments Invited

    This AD is a final rule that involves requirements affecting flight
safety, and we did not precede it by notice and opportunity for public
comment. We invite you to send any written relevant

data, views, or arguments about this AD. Send your comments to an
address listed under the ADDRESSES section. Include ``Docket No. FAA-
2012-0297; Directorate Identifier 2011-NM-093-AD'' at the beginning of
your comments. We specifically invite comments on the overall
regulatory, economic, environmental, and energy aspects of this AD. We
will consider all comments received by the closing date and may amend
this AD because 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 we
receive about this AD.

Authority for This Rulemaking

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

Regulatory Findings

    We determined that this AD will not have federalism implications
under Executive Order 13132. This AD will not have a substantial direct
effect on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.
    For the reasons discussed above, I certify that this AD:
    1. Is not a ``significant regulatory action'' under Executive Order
12866;
    2. Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979);
    3. Will not affect intrastate aviation in Alaska; and
    4. Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.
    We prepared a regulatory evaluation of the estimated costs to
comply with this AD and placed it in the AD docket.

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

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

2012-06-22 Airbus: Amendment 39-17003. Docket No. FAA-2012-0297;
Directorate Identifier 2011-NM-093-AD.

(a) Effective Date

    This airworthiness directive (AD) becomes effective April 16,
2012.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to Airbus Model A340-541 and -642 airplanes,
certificated in any category, all manufacturer serial numbers.

(d) Subject

    Air Transport Association (ATA) of America Code 57: Wings.

(e) Reason

    This AD was prompted by reports that during fatigue testing,
damages occurred in the external radius on the upper horizontal
cruciform fitting at frame (FR) 47 on the left- and right-hand
sides. We are issuing this AD to detect and correct fatigue
cracking, which could adversely affect the structural integrity of
the airplane.

(f) Compliance

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

(g) Inspection

    Before the accumulation of the applicable threshold specified in
paragraph 1.E. Compliance, Table 2, of Airbus Mandatory Service
Bulletin A340-57-5029, including Appendices 01 and 02, dated
February 25, 2011, or within 90 days after the effective date of
this AD, whichever occurs later: Do a high frequency eddy current
inspection of the external radius on upper horizontal cruciform
fitting at FR47 on the left- and right-hand sides for cracks, in
accordance with the Accomplishment Instructions of Airbus Mandatory
Service Bulletin A340-57-5029, including Appendices 01 and 02, dated
February 25, 2011. Where the ``Threshold'' column of Table 2,
specified in paragraph 1.E., ``Compliance,'' of Airbus Mandatory
Service Bulletin A340-57-5029, including Appendices 01 and 02, dated
February 25, 2011, specifies the compliance time as ``FC'' and
``FH,'' this AD requires the compliance times as ``total flight
cycles'' and ``total flight hours.'' The thresholds for airplane
post-modification number 56558S19405 must be counted from the
airplane's first flight and not from the accomplishment of Airbus
Service Bulletin A340-57-5010.

(h) Repetitive Inspections

    Repeat the inspection required by paragraph (g) of this AD at
intervals not to exceed the times specified in the ``Repetitive
Interval'' column of Table 2, specified in paragraph 1.E.
Compliance, of Airbus Mandatory Service Bulletin A340-57-5029,
including Appendices 01 and 02, dated February 25, 2011. Where the
``Repetitive Interval'' column of Table 2, specified in paragraph
1.E. Compliance, of Airbus Mandatory Service Bulletin A340-57-5029,
including Appendices 01 and 02, dated February 25, 2011, specifies
the compliance times as ``FC'' and ``FH,'' this AD requires the
compliance times as ``flight cycles'' and ``flight hours.''

(i) Corrective Action

    If any crack is found during the initial or repetitive
inspections required by paragraphs (g) and (h) of this AD: Before
further flight, contact the Manager, International Branch, ANM-116,
FAA; or the European Aviation Safety Agency (EASA) (or its delegated
agent); for repair instructions and do the repair.

(j) Reporting Requirement

    Submit a report of the findings (both positive and negative) of
the inspections required by paragraphs (g) and (h) of this AD, in
accordance with the Inspection Report of Airbus Mandatory Service
Bulletin A340-57-5029, Appendix 01, dated February 25, 2011, at the
applicable time specified in paragraph (j)(1) or (j)(2) of this AD.
    (1) If the inspection was done on or after the effective date of
this AD: Submit the report within 90 days after the inspection.
    (2) If the inspection was done before the effective date of this
AD: Submit the report within 90 days after the effective date of
this AD.

(k) Credit for Previous Actions

    This paragraph provides credit for inspections required by
paragraph (g) of this AD, if those inspections were performed before
the effective date of this AD using Airbus A340-500/-600
Nondestructive Testing Manual Task 57-18-07, Revision 35, dated
April 1, 2011. As of the effective date of this AD, inspections must
be repeated in accordance with the requirements of paragraph (h) of
this AD.

(l) Other FAA AD Provisions

    The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager,
International Branch, ANM-116, 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 International
Branch, send it to ATTN: Vladimir Ulyanov, Aerospace Engineer,
International Branch, ANM-116, Transport Airplane Directorate, FAA,
1601 Lind Avenue SW., Renton, Washington 98057-3356; telephone (425)
227-1138; fax<PHONE_NUMBER>. Information may be emailed to<EMAIL_ADDRESS>Before using any approved AMOC, notify
your appropriate principal inspector, or lacking a principal
inspector, the manager of the local flight standards district
office/certificate holding district office. The AMOC approval letter
must specifically reference this AD.
    (2) Airworthy Product: For any requirement in this AD to obtain
corrective actions from a manufacturer or other source, use these
actions if they are FAA-approved. Corrective actions are considered
FAA-approved if they are approved by the State of Design Authority
(or their delegated agent). You are required to assure the product
is airworthy before it is returned to service.
    (3) Reporting Requirements: A federal agency may not conduct or
sponsor, and a person is not required to respond to, nor shall a
person be subject to a 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 current 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 5
minutes per response, including the time for reviewing instructions,
completing and reviewing the collection of information. All
responses to this collection of information are mandatory. Comments
concerning the accuracy of this burden and suggestions for reducing
the burden should be directed to the FAA at: 800 Independence Ave.
SW., Washington, DC 20591, Attn: Information Collection Clearance
Officer, AES-200.
    (4) Special Flight Permits: Special flight permits, as described
in Section 21.197 and Section 21.199 of the Federal Aviation
Regulations (14 CFR 21.197 and 21.199), are not allowed.

(m) Related Information

    Refer to Mandatory Continuing Airworthiness Information (MCAI)
EASA Airworthiness Directive 2011-0075, dated April 29, 2011; and
Airbus Mandatory Service Bulletin A340-57-5029, including Appendices
01 and 02, dated February 25, 2011; for related information.

(n) Material Incorporated by Reference

    (1) You must use the following service information to do the
actions required by this AD, unless the AD specifies otherwise. The
Director of the Federal Register approved the incorporation by
reference (IBR) of the following service information under 5 U.S.C.
552(a) and 1 CFR part 51:
    (i) Airbus Mandatory Service Bulletin A340-57-5029, including
Appendices 01 and 02, dated February 25, 2011.
    (2) For Airbus service information identified in this AD,
contact Airbus SAS--Airworthiness Office--EAL, 1 Rond Point Maurice
Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96;
fax +33 5 61 93 45 80; email<EMAIL_ADDRESS>
Internet http://www.airbus.com.
    (3) You may review copies of the service information at the FAA,
Transport Airplane Directorate, 1601 Lind Avenue SW., Renton,
Washington. For information on the availability of this material at
the FAA, call<PHONE_NUMBER>.
    (4) You may also review copies of the service information that
is incorporated by reference at the National Archives and Records
Administration (NARA). For information on the availability of this
material at an NARA facility, call<PHONE_NUMBER>, or go to http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.

    Issued in Renton, Washington, on March 19, 2012.
Ali Bahrami,
Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 2012-7374 Filed 3-29-12; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 85, Number 216 (Friday, November 6, 2020)]
[Notices]
[Pages 71120-71125]
[FR Doc No: 2020-24629]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90302; File No. SR-FINRA-2020-038]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Proposed Amendments to FINRA Rules
5122 (Private Placements of Securities Issued by Members) and 5123
(Private Placements of Securities) That Would Require Members To File
Retail Communications Concerning Private Placement Offerings That Are
Subject to Those Rules' Filing Requirements

November 2, 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 28, 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 FINRA Rules 5122 (Private Placements of
Securities Issued by Members) and 5123 (Private Placements of
Securities) that would require members to file retail communications
concerning private placement offerings that are subject to those rules'
filing requirements.
    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
FINRA Rules 5122 and 5123
    Rule 5122 applies to private placements of unregistered securities
issued by a member or a control entity \3\ (``member private
offerings''). The rule requires the member or control entity to provide
prospective investors with a private placement memorandum (``PPM''),
term sheet or other offering document that discloses the intended use
of the offering proceeds, the offering expenses and the amount of
selling compensation that will be paid to the member and its associated
persons.
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    \3\ A ``control entity'' means any entity that controls or is
under common control with a member, or that is controlled by a
member or its associated persons. See FINRA Rule 5122(a)(2). Control
means beneficial interest, as defined in FINRA Rule 5130(i)(1), of
more than 50 percent of the outstanding voting shares of a
corporation, or the right to more than 50 percent of the
distributable profits or losses of a partnership or other non-
corporate legal entity. Control is determined immediately after the
closing of an offering, and in the case of an offering with multiple
intended closings, immediately following each closing. See FINRA
Rule 5122(a)(3).
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    The rule also requires a member to file the PPM, term sheet or
other offering document with the FINRA Corporate Financing Department
(``Corp Fin'') at or prior to the first time the document is provided
to any prospective investor.\4\ Many member private offerings are
exempt from the rule's requirements, including among others, offerings
sold only to institutional accounts, as defined in FINRA Rule
4512(c),\5\ qualified purchasers, as defined in the Investment Company
Act of 1940,\6\ and qualified institutional buyers,\7\ as defined in
Rule 144A under the Securities Act of 1933 (``Securities Act'').\8\
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    \4\ Rule 5122 also requires the filing of any amendments to such
documents within 10 days of being provided to any investor or
prospective investor. See FINRA Rule 5122(b)(2).
    \5\ Rule 4512(c) defines ``institutional account'' as the
account of:
    (1) A bank, savings and loan association, insurance company or
registered investment company;
    (2) an investment adviser registered either with the SEC under
Section 203 of the Investment Advisers Act or with a state
securities commission (or any agency or office performing like
functions); or
    (3) any other person (whether a natural person, corporation,
partnership, trust or otherwise) with total assets of at least $50
million.
    \6\ See 15 U.S.C. 80a-2(a)(51).
    \7\ See 17 CFR 230.144A(a)(1).
    \8\ Rule 5122 exempts the following member private offerings:
    (1) Offerings sold solely to:
    (A) Institutional accounts, as defined in Rule 4512(c);
    (B) qualified purchasers, as defined in Section 2(a)(51)(A) of
the Investment Company Act;
    (C) qualified institutional buyers, as defined in Securities Act
Rule 144A;
    (D) investment companies, as defined in Section 3 of the
Investment Company Act;
    (E) an entity composed exclusively of qualified institutional
buyers, as defined in Securities Act Rule 144A; and
    (F) banks, as defined in Section 3(a)(2) of the Securities Act;
    (2) offerings of exempted securities, as defined in Section
3(a)(12) of the Exchange Act;
    (3) offerings made pursuant to Securities Act Rule 144A or
Regulation S;
    (4) offerings in which a member acts primarily in a wholesaling
capacity (i.e., it intends, as evidenced by a selling agreement, to
sell through its affiliate broker-dealers, less than 20% of the
securities in the offering);
    (5) offerings of exempt securities with short term maturities
under Section 3(a)(3) of the Securities Act;
    (6) offerings of subordinated loans under Exchange Act Rule
15c3-1, Appendix D (see NASD Notice to Members 02-32 (June 2002));
    (7) offerings of ``variable contracts'', as defined in FINRA
Rule 2320(b);
    (8) offerings of modified guaranteed annuity contracts and
modified guaranteed life insurance policies, as referenced in FINRA
Rule 5110(h)(2)(D);
    (9) offerings of unregistered investment grade rated debt and
preferred securities;
    (10) offerings to employees and affiliates of the issuer or its
control entities;
    (11) offerings of securities issued in conversions, stock splits
and restructuring transactions that are executed by an already
existing investor without the need for additional consideration or
investments on the part of the investor;
    (12) offerings of securities of a commodity pool operated by a
commodity pool operator, as defined under Section 1a(5) of the
Commodity Exchange Act;
    (13) offerings of equity and credit derivatives, including OTC
options; provided that the derivative is not based principally on
the member or any of its control entities; and
    (14) offerings filed with Corp Fin under FINRA Rules 2310, 5110
or Rule 5121.

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    Rule 5123 requires members to file with FINRA any PPM, term sheet
or other offering document, including any material amended versions
thereof, used in connection with a private placement of securities
within 15 calendar days of the date of first sale. Rule 5123 exempts
private placements that are filed under other FINRA Corporate Financing
Rules, as well as most of the same categories of private placements
that are exempt from filing under Rule 5122.\9\ As a result of these
exemptions, both rules apply predominately to private placements sold
to retail investors.
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    \9\ See FINRA Rule 5123(b); see also note 8, supra. In addition
to the exemptions contained in Rule 5122, Rule 5123(b) exempts
offerings sold by the member or person associated with the member to
(a) employees and affiliates, as defined in Rule 5121, of the
issuer; (b) knowledgeable employees as defined in Investment Company
Act Rule 3c-5; (c) eligible contract participants, as defined in
Section 3(a)(65) of the Exchange Act; and (d) accredited investors
described in Securities Act Rule 501(a)(1), (2), (3), and (7); and
exempts business combination transactions as defined in Securities
Act Rule 165(f), and standardized options as defined in Securities
Act Rule 238.
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    FINRA received 2,509 unique Rule 5122 and 5123 filings in 2019.
FINRA uses analytics to conduct a risk-based review for each filing.
This analysis of an offering's risk to investors and its ability to
identify potential rule violations and other potential problems begins
with the information and documents submitted. Members that sell private
placements may use a PPM or term sheet alone, or may use a variety of
other offering documents in addition to, or instead of, a PPM or term
sheet.
    Because members use a wide variety of materials, Rules 5122 and
5123 do not enumerate the types of information that might be considered
``offering documents.'' FINRA has stated previously that an example of
``other offering document'' is ``[a]ny other type of document that sets
forth the terms of the offering.'' \10\ The terms of an offering
include facts such as the amount of proceeds that the issuer intends to
raise, the type of security, descriptions or illustrations of the
intended use of proceeds, and explanations of tax benefits or other
information that would be relevant to an investor when deciding whether
to make an investment.
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    \10\ See ``Frequently Asked Questions (FAQ) About Private
Placements,'' Question #10, available on www.finra.org.
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    While Rules 5122 and 5123 do not require retail communications
governed by Rule 2210 (Communications with the Public) to be filed,
many members file these communications with their required
documents.\11\ Examples of these retail communications can include web
pages that promote the offering, slide presentations, pitch decks, one-
page ``teasers,'' fact sheets, sales brochures, executive summaries,
and investor packets. Corp Fin often forwards these retail
communications to FINRA's Advertising Regulation Department (``AdReg'')
for review.
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    \11\ See Regulatory Notice 09-27 (May 2009), which announced SEC
approval of Rule 5122, stated that the rule imposes no additional
requirements regarding the filing of advertisements or sales
materials. However, as noted, many firms do in fact file retail
communications concerning private placements under Rules 5122 and
5123.
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    Corp Fin staff triages the filings it receives under Rules 5122 and
5123 using a variety of criteria and selects a subset for further
analysis and review based on the relative risk of the offering. In some
cases, FINRA opens investigations of particular offerings, which may
lead to follow-up examinations by Member Supervision staff, and
potentially, referrals to the Department of Enforcement.
Advertising Regulation Review of Private Placement Retail
Communications
    In addition to reviewing private placement retail communications
that are filed under Rules 5122 and 5123 and referred by Corp Fin,
AdReg reviews private placement retail communications that it receives
through one of four other channels: (i) New member and voluntary
filings with AdReg; (ii) referrals from the Member Supervision
examination program and other surveillance groups; (iii) AdReg spot
checks; and (iv) assistance in Enforcement cases.
    AdReg has observed that retail communications that have been
directly filed by new members \12\ or voluntarily with AdReg for
private placements raise more compliance issues than those for other
products. Between January 1, 2017, and March 31, 2020, AdReg reviewed
1,726 new member and voluntary filings of private placement retail
communications. Of these filings, 41% required revisions to comply with
applicable standards, and 4% were so noncompliant with the rules that
FINRA issued ``do not use'' (DNU) review letters. In comparison, during
this same period, only 8% of overall AdReg filings reviewed required
revisions, and only 0.1% received a DNU letter.\13\
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    \12\ Rule 2210(c)(1)(A) requires new members to file all widely-
distributed retail communications (such as publicly available
websites) that promote products or services of the firm during the
first year after the member's broker-dealer membership with FINRA is
declared effective.
    \13\ During the same period, AdReg analyzed 1,328 private
placement retail communications that were referred from Corp Fin,
Member Supervision, or other FINRA departments. Seventy-one percent
(71%) of these communications required revisions to comply with
applicable standards and 13% resulted in a DNU letter. In contrast,
66% of all communications referred by other FINRA staff were
determined to require revisions and 4% resulted in a DNU letter.
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    In 2018, AdReg conducted a spot check of the private placement
retail communications provided to Corp Fin in connection with filings
under Rules 5122 and 5123 during the second and third quarters of 2018.
The review revealed significant and pervasive violations of Rule 2210;
overall, 806 of the 1,062 retail communications reviewed (76%) did not
comply with Rule 2210.
    The most common violation was the inclusion of prohibited
projections of performance or unreasonable forecasts, e.g., ``Return 4-
6x invested capital net of fees'' and ``Management projects a $100
million revenue stream can be built in 5 years.'' Numerous others
contained false or misleading statements, e.g., ``Safety of Principle''

[sic] and ``UTILIZES AI & MACHINE LEARNING TECHNOLOGY SIMILAR TO THAT
USED BY ONLINE GIANTS SUCH AS FACEBOOK, NETFLIX, AMAZON AND STITCH
FIX.'' Another common issue was the failure to balance promotional
content with the key risks associated with the investment, such as a
real estate offering touting the benefit of purchasing properties
leased by ``investment grade'' tenants without discussing that such
holdings do not assure a profit or protect against loss. Others failed
to disclose general risks, such as the speculative nature of the
securities and the lack of liquidity of the investment.
    Private placement retail communications also feature prominently in
FINRA's Enforcement program. Since January 1, 2014, FINRA has initiated
49 disciplinary actions related to non-compliant retail communications
concerning private placements. This number represents 21% of all
actions involving private placements.
Filing Proposal
    Given the comparatively high rate of non-compliance of private
placement retail communications, and the increased risk of investor
harm associated with those communications, FINRA proposes to amend
Rules 5122 and 5123 to require such retail communications to be filed,
in addition to the currently required PPMs, term sheets, and other
offering documents.
    Rules 5122 and 5123 focus on the private placements that raise the
greatest concerns--those sold to retail investors, whether or not
accredited. FINRA proposes to limit the new filing requirement to the
same offerings; it would not apply to any offerings that are currently
exempt from filing.\14\ A member would be required to file with FINRA
such retail communications no later than the date on which a filing is
required under Rules 5122 and 5123.\15\ The proposal would not require
members to file private placement retail communications for offerings
that are not subject to the filing requirements in Rules 5122 or 5123,
such as sales exclusively to institutional accounts. Moreover, because
Rules 5122 and 5123 do not impose any filing fees, members would not be
subject to higher fees because of this additional filing requirement.
---------------------------------------------------------------------------

    \14\ See supra notes 8 and 9.
    \15\ As discussed above, Rule 5122 requires a member subject to
the rule to file the PPM, term sheet or other offering document with
FINRA at or no later than the first time the document is provided to
a prospective investor. Any amendments or exhibits to such offering
documents also must be filed with FINRA within 10 days of being
provided to any investor or prospective investor. See Rule
5122(b)(2). Rule 5123 requires a member subject to the rule to file
with FINRA the PPM, term sheet or other offering document, including
any materially amended versions thereof, used in connection with the
sale of securities covered by the rule within 15 calendar days of
the date of first sale, or notify FINRA that no such offering
documents were used. See Rule 5123(a).
---------------------------------------------------------------------------

    FINRA anticipates that members would be able to file most retail
communications at the same time and in the same manner that they file
their PPMs, term sheets, and other offering documents. The rules'
requirements that material amendments to offering documents must be
filed also would apply to retail communications.
    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 180 days see
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,\16\ 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. FINRA believes that requiring the filing of retail
communications under Rules 5122 and 5123 will improve members'
compliance and understanding of the application of FINRA's
communications with the public rules and reduce the likelihood that
retail investors would receive false or misleading sales material for
private placements.\17\
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78o-3(b)(6).
    \17\ FINRA recently issued a Regulatory Notice providing
guidance under Rule 2210 to firms that distribute retail
communications concerning private placements. See Regulatory Notice
20-21 (July 1, 2020).
---------------------------------------------------------------------------

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

    FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
Economic Impact Assessment
    FINRA has undertaken an economic impact assessment, as set forth
below, to analyze the regulatory need for the proposed rule 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
    As discussed above, FINRA has seen significant problems with the
retail communications that have been voluntarily filed under Rules 5122
and 5123. In addition, as noted above, the 2018 spot check revealed
that 76% of retail communications filed under Rules 5122 and 5123
during the spot check review period involved significant violations of
Rule 2210.\18\ It is possible that significant violations may be even
more prevalent among retail communications that have not been
voluntarily filed or reviewed. Moreover, high-risk retail
communications concerning private placements feature prominently in
FINRA's Enforcement program.\19\ These communications often present
false or misleading information regarding the underlying offering,
which could result in significant losses to investors and could
undermine public trust in the private placement markets. The proposed
amendments, therefore, are intended to promote investor protection and
market integrity by expanding FINRA's oversight of high-risk retail
communications concerning private placements.
---------------------------------------------------------------------------

    \18\ Among the retail communications reviewed, 45% contained
prohibited projections or unreasonable forecasts; 44.6% failed to
provide a sound basis to evaluate the facts with respect to the
offering in that the benefits articulated in the marketing materials
were not balanced by key specific risks associated with an
investment or the issuer; 39.9% failed to adequately disclose the
general risks associated with private placement investments; 21.8%
contained readily apparent false or misleading statements or claims;
and 7.4% contained misleading references to FINRA, other regulators,
or the benefits of regulation generally.
    \19\ As mentioned earlier, retail communications concerning
private placements resulted in 49 FINRA disciplinary actions since
January 2014, representing 21% of FINRA's disciplinary actions
involving private placements during the period.
---------------------------------------------------------------------------

Economic Baseline
    The economic baseline includes the current regulation of retail
communications under Rule 2210 and current regulation of specified
private placements under Rules 5122 and 5123. All retail communications
are required to comply with the general, fair and balanced standards
detailed in Rule 2210; however, Rule 2210 generally does not require
members to file with FINRA the materials they use to communicate with
retail investors concerning private placements. Under Rules 5122 and
5123, members are required to file with FINRA any PPM,

term sheet, or other offering document used in connection with
specified private placements, although these rules do not currently
require retail communications governed by Rule 2210 to be filed.
Therefore, firms currently have no regulatory obligation to submit
these communications for review by FINRA.
    The economic baseline also includes members' existing practices
under Rules 2210, 5122 and 5123. Currently, some members submit retail
communications as part of their Rules 5122 and 5123 private placement
filings with Corp Fin; some members file these communications through
AdReg's filings review program under Rule 2210 either voluntarily or as
new members; and some members submit these communications to both or
neither of these departments.
    As discussed above, upon receiving filings under Rules 5122 and
5123, Corp Fin triages the filings to select a subset for further
review based on the relative risk of the offering. Corp Fin notifies
AdReg when it receives retail communications in connection with the
higher-risk offerings it assigns for reviews. AdReg then conducts its
own triage program based on the relative risk of these retail
communications.
    Once high-risk retail communications are identified, AdReg requests
Corp Fin to refer them to AdReg and opens a complex review matter to
assess whether the communications meet applicable communication
standards. If apparent rule violations are identified, AdReg will, as
needed, provide an analysis for an existing Corp Fin investigation or
contact the member firm to explain the concerns, ask the firm to
remediate the communications, and determine the extent of the
communications' use. AdReg may resolve the matter with informal
disciplinary action or, if severe violations are identified, may refer
the matter to FINRA's Department of Enforcement.\20\
---------------------------------------------------------------------------

    \20\ A similar procedure is followed when AdReg receives
referrals from the Member Supervision examination program or other
surveillance groups.
---------------------------------------------------------------------------

    The existing regulatory procedure concerning private placement
retail communications that are filed with AdReg under Rule 2210
voluntarily or by new members adopts a different approach from the
above. AdReg conducts a review in response to each retail communication
filing and provides a review letter indicating whether the
communication appears to be consistent with the applicable standards,
and if not, the bases for this determination.\21\
---------------------------------------------------------------------------

    \21\ Unlike Corp Fin's private placement review program under
Rules 5122 and 5123, filings through AdReg's filings review program
under Rule 2210 are subject to filing fees.
---------------------------------------------------------------------------

    FINRA has collected information for assessing the specified private
placement market under Rules 5122 and 5123. On average, FINRA receives
approximately 2,400 new offering filings annually, with approximately
10-15% of the filings representing a duplicate filing by separate firms
with respect to the same offering. As a reference, the Regulation D
data published by the SEC's Division of Economic and Risk Analysis in
August 2018 provided that approximately 20,000 new offering filings on
average were submitted via EDGAR each year from 2015 to 2017. Of this
total, roughly 4,000 (or 20%) of the new offerings that SEC identified
involved ``intermediaries'' such as brokers or finders, some of which
may not be FINRA members. Accordingly, FINRA's private placement review
program under Rules 5122 and 5123 accounts for approximately half of
the new offerings filed with the SEC that involve intermediaries and
approximately 10% of all new offering filings annually.
    To assess how likely the specified private placements use retail
communications, FINRA has analyzed information pertaining to 1,327
offerings filed with Corp Fin under Rules 5122 and 5123 during the
second and third quarters of 2018.\22\ Approximately 781 (or 59%) of
the offerings did not include retail communications as part of the
filing. There were 1,062 retail communications submitted by 132 members
for the remaining 546 offerings.\23\ The average (maximum) number of
retail communications submitted per member among these offerings was
eight (260), respectively. The average (maximum) number of retail
communications per offering was approximately two (23) retail
communications.
---------------------------------------------------------------------------

    \22\ The information was collected by AdReg in the 2018 spot
check. There were 2,269 filings inclusive of amendments by 309
member firms related to the 1,327 offerings. Among them, 1,208 had
projected proceeds totaling $37.6B while projected proceeds were
unknown for other offerings.
    \23\ Among the 546 offerings that included retail
communications, 524 of them had projected proceeds totaling $10.8B
with projected proceeds unknown for the remaining offerings.
---------------------------------------------------------------------------

    To further assess the existing regulatory procedure under Rules
5122 and 5123, FINRA collected review information regarding the 708
private placement filings with Corp Fin over the period February 1,
2020 to April 17, 2020.\24\ Corp Fin identified 274 (or 38.7%) of
filings that contained retail communications during this period. Among
these 274 filings, 37 (or 13.5%) were deemed by Corp Fin to be high
risk. AdReg triaged the retail communications in these 37 filings and
determined that 14 represented likely significant violations of Rule
2210 and opened 14 complex review matters. These 14 matters represented
5% of all filings containing retail communications under Rules 5122 and
5123 during this period.\25\
---------------------------------------------------------------------------

    \24\ This sample is different from the previous sample of the
2018 spot check: It is based on the most recent period for which
FINRA has reliable data on its triage and review process.
    \25\ FINRA recognizes that the percentage of retail
communications selected for complex review at any point in time
(including after the proposed rule change) may deviate from 5%, as
the time period used for deriving the estimate might be too short to
draw reliable inferences.
---------------------------------------------------------------------------

Economic Impacts
    The proposed rule change would directly impact members that
distribute retail communications concerning specified private
placements by requiring them to submit these communications to Corp Fin
at the time they file the PPM, term sheet, or other offering document.
Such an impact would be more pronounced for members that have not been
voluntarily filing private placement retail communications with Corp
Fin or AdReg. FINRA anticipates a considerable increase in the number
of retail communications filed under Rules 5122 and 5123 as a result of
the proposal. As was found during the 2018 spot check, approximately
41% of the offerings included retail communications voluntarily
submitted concerning these offerings. If each offering is associated
with an average of two retail communications, then the number of retail
communications could be increased by 3,124 retail communications
annually, totaling 5,308 retail communications per year.
    The estimate of two retail communications per offering may
overstate or understate the true amount. Note that the average of two
retail communications per offering found during the spot check may
understate the true average if members did not voluntarily file all
retail communications associated with these offerings. Alternatively,
the average retail communications per offering could be lower than two
if there were many offerings that did not submit any retail
communications because they did not distribute any such communications.

    In developing the proposal, FINRA staff does not expect it to have
a significant impact on AdReg's existing filings review program.
Members will continue to have the option (but not the obligation) to
file these communications through AdReg's filings review program
following the proposal.\26\
---------------------------------------------------------------------------

    \26\ FINRA believes that some members will continue to have
incentives to file voluntarily retail communications through AdReg's
filings review program following the proposed amendments. For
instance, members and related parties may still benefit from a
review letter indicating the material is consistent with applicable
standards.
---------------------------------------------------------------------------

    The primary benefit of the proposed rule change would arise from
FINRA's enhanced insight into and oversight of retail communications
concerning high-risk private placements.\27\ Specifically, the proposed
amendments would enable FINRA to review all retail communications
concerning the specified private placements through its triage program
and if warranted, open cases for complex review, thereby extending
FINRA's ability to potentially uncover significant violations of Rule
2210. In addition, retail communications that have not been filed
voluntarily with Corp Fin or AdReg may have contained violations of
greater severity or presented novel regulatory issues unknown to FINRA.
By allowing access to retail communications concerning private
placements from all filing members, the proposal would help FINRA staff
understand the scope and severity of existing issues in a more accurate
and efficient manner, which would further enhance FINRA's surveillance
and enforcement program.\28\
---------------------------------------------------------------------------

    \27\ FINRA recognizes that the proposal would not likely impact
FINRA's oversight of low-risk offerings or low-risk retail
communications as defined by the current triage process.
    \28\ Although FINRA does not anticipate immediate changes to its
existing triage programs, the additional knowledge that FINRA would
acquire following the proposal could potentially help FINRA refine
its triage programs in the long run.
---------------------------------------------------------------------------

    The proposal likely would increase members' incentives to
distribute retail communications concerning private placements that are
fair and balanced and deter them from presenting false or misleading
information that may cause investor harm. The proposed change may also
likely increase issuers' incentives to disclose the risks of private
placements in a fair and balanced manner in connection with retail
communications, thereby enhancing the capabilities of investors and
other related parties to assess these risks as part of their investment
decisions.
    FINRA believes that greater regulatory oversight, together with
changes in members' and issuers' incentives, would help promote greater
investor protection and public trust in the private placement markets.
The benefit from enhanced incentives and regulatory oversight would
more likely accrue with respect to members that frequently file private
placements that include retail communications. FINRA recognizes that
the proposal's investor protection benefits may be limited given that
members are required to file private placement offerings within 15
calendar days of the date of first sale under Rule 5123. (Rule 5122
requires member private offerings to be filed at or prior to the date
of first sale.) The proposal's investor protection benefits also may
vary depending on how long the Corp Fin triage process takes and how
quickly AdReg triages and reviews the communications and the available
remedying tools.
    FINRA believes that the proposal would impose a minimal increase in
direct costs to members that have not already been voluntarily filing
private placement retail communications with Corp Fin. Specifically,
the proposal would require these members to file any additional retail
communications that promote the offering at the time they file the PPM
or term sheet. Members also would be required to file retail
communications subsequent to the initial filing if they distribute new
retail communications promoting the offering or make material changes
to any previously filed retail communications. FINRA believes such
increases in direct costs would be minimal as Rules 5122 and 5123 do
not impose filing fees, and most filing members are already familiar
with the Corp Fin filing system.\29\
---------------------------------------------------------------------------

    \29\ FINRA believes that increases in direct costs may be even
lower for members that have been voluntarily filing private
placement retail communications with AdReg because they may already
be familiar with the applicable standards under Rule 2210. These
members will also have the option to file private placement retail
communications only with Corp Fin following the rule proposal. This
option could lead to a reduction in the filing fee for these
members. However, should firms choose to file only with Corp Fin,
there will not be a guaranteed review or review letter from FINRA.
---------------------------------------------------------------------------

    FINRA recognizes that members that distribute high-risk retail
communications concerning private placements may be subject to
additional regulatory review by FINRA as FINRA anticipates an expansion
in its complex review program following the proposal.\30\ FINRA
believes the overall increase in regulatory costs and uncertainty to
members associated with the additional review would likely be low
because only a very small percentage of retail communications with the
highest risk profile would be subject to the review. FINRA does not
expect increases in direct and indirect costs will deter firm entry or
private placement offerings or result in any significant burden on
competition that is not necessary or appropriate in furtherance of the
purpose of the Exchange Act.
---------------------------------------------------------------------------

    \30\ FINRA recognizes that misidentifications of high-risk
matters (i.e., subjecting members that are less likely to pose a
high risk to investors to the additional complex review) may induce
unintended indirect costs on these members.
---------------------------------------------------------------------------

Alternative Considered
    FINRA considered proposing an amendment to Rule 2210 that would
require members to submit private placement retail communications
through AdReg's filings review program. AdReg would review all private
placement retail communications filed under the alternative proposal.
The alternative, therefore, would enhance FINRA's oversight of both
high-risk and low-risk private placement retail communications, leading
to significant improvement in members' compliance and understanding of
applicable rules and greater benefit from market integrity and investor
protection.
    The alternative, however, would impose higher costs on members for
several reasons. First, members would be subject to filing fees under
Rule 2210, which would not apply to filings made under Rules 5122 or
5123. Second, members would have to file retail communications and
offering documents separately with AdReg and Corp Fin using different
filing systems. Third, all filing members would face additional
regulatory costs and uncertainty while the review is pending.\31\ FINRA
is also concerned that the alternative approach may divert limited
regulatory resources from high-risk matters. Overall, FINRA believes
that the current proposal would build on the risk-based regulatory
approach for private placements thereby promoting regulatory
consistency and impose lower costs to members than the alternative
FINRA has considered.
---------------------------------------------------------------------------

    \31\ The filing requirements under Rules 5122 and 5123 are
notice filings only and members do not wait for approval from FINRA
in connection with a private placement. However, if FINRA asks
questions of the member in response to its filing, the member may
become concerned that there may be a potential compliance issue with
the private placement or related documents. Similarly, the filing
requirement under Rule 2210 may not have required the member to be
issued a review letter from FINRA before using a retail
communication. However, some members may wait until the letter is
received before using such communication.

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

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-2020-038 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-2020-038. 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-2020-038 and should be submitted on or before November 27, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
---------------------------------------------------------------------------

    \32\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-24629 Filed 11-5-20; 8:45 am]
BILLING CODE 8011-01-P


From: Howard, Jodi
Sent: Wednesday, September 03, 2014 2:33 PM
To: 'Richard Krock'
Cc: J.C. Walker; Clark, Susan; Simpson, Alice; (john.hobbs@wacker.com); Wyatt, Christina; Mary
Bachynsky; Lassiter, Penny; Kataoka, Mark
Subject: RE: Vinyl Institute Letter on Process Flow Diagrams for Copolymer S114 Request

Mr. Krock,

We have reviewed your “generic” process flow diagram and have found it to be acceptable for
responding to the section 114 requests. I would ask that each of the facilities not only indicate the
number of pieces of equipment, as you have shown, but also whether the equipment is atmospheric
or rerouted to the recovery system or back into the process unit.

Thanks.

Jodi Howard

From: Richard Krock<EMAIL_ADDRESS>
Sent: Monday, August 25, 2014 2:36 PM
To: Howard, Jodi; Lassiter, Penny; Kataoka, Mark<EMAIL_ADDRESS>Cc: J.C. Walker; Clark, Susan; Simpson, Alice; (john.hobbs@wacker.com); Wyatt, Christina; Mary
Bachynsky
Subject: Vinyl Institute Letter on Process Flow Diagrams for Copolymer S114 Request

Dear Ms. Howard,

The attached letter and example process flow diagram are follow-up communication from our July 21,
2014 discussion on the amount of detail necessary in process flow diagrams.   VI’s Copolymer Subgroup
appreciates your consideration of the proposed simplification.  Please do not hesitate to contact me
with any questions or additional information.

Thank you.


[Federal Register: March 5, 2008 (Volume 73, Number 44)]
[Notices]
[Page 11902-11905]
[DOCID:fr05mr08-52]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RM07-16-000]

Filing Via the Internet; Notice of Release of efiling v7.0

February 28, 2008.
    Pursuant to the provisions of Commission Order No. 703, issued
November 15, 2007,\1\ the Commission will update its electronic filing
system to v7.0 (the next version of the Commission's system for filing
documents via the Internet) over the weekend of March 1, 2008. This
version includes, but is not limited to the following enhancements:
---------------------------------------------------------------------------

    \1\ Filing Via the Internet, Order No. 703, 72 FR 65,659
(November 23, 2007), FERC Stats. & Regs. ] 61,171 ] 31,259 (2007)
(Order No. 703).
---------------------------------------------------------------------------

    1. Expands the documents eligible for efiling to include most
application-type filings that receive a new docket number (with the
exception of filings containing tariff sheets) and those forms and
reports that are filed without a docket number.
    2. Permits documents containing Privileged and/or Critical Energy
Infrastructure Information (CEII) material to be submitted
electronically in their entirety.\2\
---------------------------------------------------------------------------

    \2\ Information subject to a Protective Order issued by an
Administrative Law Judge or for which a Protective Order is
requested is not eligible for efiling.
---------------------------------------------------------------------------

    3. Allows documents in Hydropower proceedings that are normally
submitted directly to a FERC Regional Office to be electronically
filed.
    4. Permits up to 200 files to be uploaded in each of the Public,
Privileged, and CEII security classes.
    5. Increases the maximum file size to 50 Mb.\3\
---------------------------------------------------------------------------

    \3\ The 50 Mb limit is intended for single maps and drawings
that cannot easily be split into smaller files. The practical limit
for most files remains 10-20 Mb in order to make files more
accessible.
---------------------------------------------------------------------------

    6. Expands the file name, including the dot/extension, to 60
characters, and allows certain special characters to be included.
    7. Adds an optional document-less alternative for filing Motions to
Intervene and Motions to Intervene Out-of-Time.
    8. Provides a Quick Comment option for comments on Hydropower
Licensing and Natural Gas Pipeline projects.
    In accordance with Order No. 703, the deadline for filing in order
to receive the same day's filed date remains 5 p.m. Eastern Time.
    Concurrent with the new release, the Commission Staff will update
information on its Web site that pertains to electronic filing. The
primary change will be an expanded Filing Guide/Qualified Documents
List that identifies filings types by regulation and indicates whether
the associated documents may be submitted electronically or not.\4\ The
Guide also indicates the appropriate menu choice for the various
filings and the number and routing of any ``courtesy'' paper copies for
staff, where such paper copies are required.
---------------------------------------------------------------------------

    \4\ The Filing Guide/Qualified Documents List also includes
those forms submitted through the eForms or Electric Quarterly
Reports (EQR) systems.
---------------------------------------------------------------------------

    In addition to the above enhancements, users should note the
following guidelines and staff preferences for using the new system.

Staff/Courtesy Copies of Certain eFiled Documents

    For certain documents submitted via efiling, the filer will be
obligated to provide one or more paper copies for staff use by the next
business day after efiling. The document types that require paper
copies are identified in the Filing Guide/Qualified Documents List; the
Guide also indicates the destination/routing for those copies. In
certain cases, the copies may have to be provided to the jurisdictional
Regional Office.
    Staff will post routing and forms of address for the various
locations for staff copies. In order to ensure that staff copies of
efiled documents are not treated as new paper submissions, each copy of
the document should have a cover letter indicating the destination
address with a paper copy of the Confirmation of Receipt e-mail from
the efiling session attached.

File Formats

    The acceptable file formats for electronic submission are listed in
Attachment A. They are the same as those permitted for filing on CD/DVD
posted at: http://www.ferc.gov/help/submission-guide/electronic-media/
acceptable.asp. Users may upload zipped files to simplify the browse,
select and attach process for submissions with a large number of files.
The system will explode the zipped file to display the individual files
in the file upload list. Embedded

.zip files within a .zip file are not permitted.

Text-Searchable vs. Image Formats

    In accordance with Order No. 703, PDF files must be submitted in a
manner that retains the ability to search the document (``print to
PDF'') except in cases where it is impractical for the filer to do
otherwise. The Commission's electronic filing system is not only for
the benefit of filers, it is also intended to make the information
submitted more usable for staff analysis. Image formats inhibit the
latter objective and must be reserved for documents not readily
available in a text-searchable format.

File Names and Security

    Since the new system accepts Public, Privileged, and CEII material,
file organization and the upload process will be critical to ensuring
that non-public information remains secure. Files should be organized
by security class in advance of filing, either by saving them in
security-specific directories or folders, or by beginning each file
name with ``PUBLIC,'' ``PRIVIL,'' or ``CEII.'' There is a separate
security tab on the file upload screen for each security class.

Service Lists

    In addition to updating service lists for Motions to Intervene, the
new system will automatically add the Applicant Name(s) and all
eRegistered contacts for the Applicant(s) to the service list for newly
created dockets. For any filing that receives a new Docket or Project
Number, the submitter must add the eregistered e-mail addresses for all
persons that should appear on the service list. Only those contacts
entered online by the filer will be added to the service list for a
particular filing. The system will also automatically update service
lists for the party and contacts in responses to formal complaints
under 18 CFR 385.206.

Document-less Intervention

    The new release provides an optional document-less method for
filing Motions to Intervene, including out-of-time motions. The
document-less alternative should only be used to intervene. Comments,
protests, and other motions should be filed separately. The traditional
file attachment method is also available.
    All contacts to be added to a service list must have validated
eRegistration accounts, regardless of the method used to intervene.
Instead of uploading a file, the document-less alternative prompts the
submitter to key or copy/pastes the basis for intervening (18 CFR
385.214(b)) in a text box.\5\ The system creates a placeholder document
from the information submitted for the record in eLibrary. Attachment B
contains the instructions for submitting a document-less Motion to
Intervene and displays a sample FERC Generated placeholder document in
eLibrary.
---------------------------------------------------------------------------

    \5\ Persons intervening ``out-of-time'' will also have to show
good cause why the time limitation should be waived.
---------------------------------------------------------------------------

Quick-Comment

    The Commission does not accept comments for the record via e-mail.
A number of users have complained that the existing efiling system is
too complicated for individuals to submit comments, particularly if
they are first-time filers. Version 7.0 adds a Quick Comment process
that addresses these concerns. It provides a simpler alternative to the
traditional electronic filing system for submitting comments to the
Commission in certain proceedings.
    Quick Comment does not require an FERC eRegistration account. It is
primarily intended for landowners and other stakeholders impacted by a
single Hydropower Licensing or Natural Gas Pipeline Project. Its use is
limited to the following docket/project designations: P (Hydro), PF
(Natural Gas Pre-Filing), and CP (Natural Gas Pipeline Certificate
Applications). Quick Comment relies on an e-mail-like process that both
validates the e-mail address of the commenter and prevents spam
attacks.
    Quick Comment has a limit of 6,000 characters. Persons submitting
more extensive comments, non-text or file attachments, or any material
that is Non-Public must use the efiling system.
    The system creates a placeholder document from the information
entered during the Quick Comment process and adds that document to the
applicable Public record(s) in eLibrary. Attachment C contains the
instructions for submitting a Quick Comment and displays a sample FERC
Generated placeholder document in eLibrary.

Kimberly D. Bose,
Secretary.

                 Attachment A.--Acceptable File Formats
------------------------------------------------------------------------
               Description                             Suffix
------------------------------------------------------------------------
Adobe Portable Document Format (Acrobat    .PDF
 4.x or higher).
Advantica SynerGEE compatible Microsoft    .MDB
 Access application MDB file \1\.
Advantica SynerGEE input data set for      .PD
 pipe flow program \1\.
Advantica SynerGEE xy coordinate text      .XY
 file \1\.
ASCII Comma Separated Value..............  .CSV
ASCII Text Format........................  .TXT
AutoCAD Drawing database \1\.............  .DWG
Corel WordPerfect........................  .WPD
ESRI Shape Format (vector format created   .SHP
 by the Environmental System Research
 Institute) main file \1\.
ESRI Shape Format (vector format created   .SHX
 by the Environmental System Research
 Institute) index file \1\.
ESRI Shape Format (vector format created   .DBF
 by the Environmental System Research
 Institute) dBase table \1\.
ESRI Shape Format (vector format created   .PRJ
 by the Environmental System Research
 Institute) projection file \1\.
ESRI ArcGIS auxiliary file \1\...........  .AUX
ESRI ArcGIS external pyramid layer file    .RRD
 used for rapid display of raster files
 \1\.
ESRI ArcMap project file \1\.............  .MXD
ESRI ArcIMS Project file (ArcXML) \1\....  .AXL
ESRI ArcView spatial bin file for          .SBN
 shapefiles \1\.
ESRI ArcView spatial bin index file for    .SBX
 shapefiles \1\.
ESRI TIFF world files \3\................  .TFW
ESRI ArcGIS MrSid (LizardTech) image       .SID
 raster file \1\.
ESRI ArcGIS MrSid georeferencing           .SDW
 information (world) file \1\.
Extensible Markup Language...............  .XML

Graphic Image Format.....................  .GIF
Gregg Engineering WinFlow library file     .LIB
 \1\.
Gregg Engineering WinFlow output file \1\  .LOG
Gregg Engineering WinFlow output file \1\  .NTP
Gregg Engineering WinFlow output file \1\  .OVR
Gregg Engineering WinFlow input file \1\.  .WFP
Gregg Engineering WinTran time-varying     .SCH
 schedule file \1\.
Gregg Engineering WinTran output file \1\  .WTO
Gregg Engineering WinTran output file \1\  .WTS
Joint Photographic Experts Group.........  .JPG
Keyhole Markup Language (xml-based         .KML
 structure for geographic data in an
 Earth browser such as Google Earth) \1\.
Keyhole Markup Language compressed file    .KMZ
 \1\.
Lotus....................................  .WK1, .WK3, .WK4
Microsoft Excel \3\......................  .XLS
Microsoft Media Player \2\...............  .WMV, .WMA
Microsoft Power Point....................  .PPT, .PPS
Microsoft Word \3\.......................  .DOC
Motion Picture Experts Group \2\.........  .MPG
MP3 audio file (mp3) \2\.................  .MP3
Managing and Utilizing System              .CON, .MON, .SUB, .TRA
 Transmission (MUST) Software \1\.
RAW Image File (RGB 24-bit Graphics).....  .RAW
Rich Text Format.........................  .RTF
Tagged Image File Format.................  .TIF
Waveform sound (Microsoft Windows) \2\...  .WAV
Web page file containing Hypertext Markup  .HTM
 Language (HTML) markup.
Windows bitmap...........................  .BMP
Zip file compressed archive (must not be   .ZIP
 self-extracting).
------------------------------------------------------------------------
\1\ A detailed description of the content of the file and instructions
  for the public on how to obtain resources to view it must be included
  with the submission in light of National Archives and Records
  Administration regulations. This file type must only be submitted with
  Advantica SynerGEE, AutoCAD, ESRI, WinFlow, or WinTran files.
\2\ A written transcript and a detailed description of the content of
  the file must be included with the submission in light of the
  Americans with Disabilities Act.
\3\ FERC is not able at this time to accept the following file types
  used by Microsoft Office 2007: .docx, .docm, .xlsb, .xlsm, .xltx,
  .xltm, .xlam. We will update these guidelines when we can accept these
  file types.

Attachment B: Document-less Intervention (with Sample FERC Generated
PDF document in eLibrary)

    Document-less intervention is an optional method for parties to
intervene in a proceeding. It is for intervention only. Substantive
comments on the merits of the proceeding, protests, or other motions
should be filed separately using the efiling system.
    Motions to Intervene are timely or out-of-time, depending on
whether they are submitted before or after 5 p.m. Eastern Time on the
deadline for filing specified in the Commission's Notice of Filing. The
filed date and time is normally determined at the time of file upload.
Since there is no file upload step for a document-less intervention,
all information should be submitted prior to 5 p.m. in order to receive
the same day's filing date.
    Filing Type Selection: On the Filing Type Screen
    (1) Select ``General'' in Column 1
    (2) Select ``Intervention'' in Column 2
    (3) In Column 3, select either
    a. ``(doc-less)'' Motion to Intervene, or
    b. ``(doc-less)'' Out-of-Time Motion to Intervene
    Select Docket: Query and select the applicable Docket or Project
Number(s). We currently maintain all service lists only at the -000
sub-docket level.
    Text Box Information: After you query and select the applicable
Docket (or Project) Number, you should key or copy/paste the basis for
intervening in the text box. This is the information in 18 CFR
385.214(b). For ``Out-of-time'' Motions to Intervene the submitter must
also show good cause why the time limitation should be waived.
    Filing Party(ies): On the Filing Party screen, query and select the
party or parties that should appear on the service list. In a joint or
several motion, select each party individually. Do not add the law firm
filing on behalf of a client company.
    Specify the Person(s) to Whom Communication Should Be Addressed:
There is now just one screen for entering all contacts. The filing
party or parties you selected on the previous screen appear at the top
of the Communications screen with a radio button adjacent to each
party. Select a party, enter the e-mail address for a contact, and add
the contact as either a signer/representative or other contact. You can
associate the same contact with multiple parties simply by selecting a
different radio button and adding the contact to the list. Repeat the
process for each additional contact.
    Each party must have at least one signer/representative on the
service list. This is the signer or other legal representative for the
party. In most cases it's the attorney at the company appearing on the
service list or at the law firm representing that company. You can
enter more than one signer/representative for a party.
    An Other Contact (optional) is normally a person affiliated with
the party on the service list that should be served. They are involved
in the proceeding but not necessarily as the legal representative of
the party. All entries will be added to the service list regardless of
how you designate them.
    After you have added all contact information, follow the remaining
screens. You must click on ``Submit'' on the last screen to confirm
that you want to make the filing.

Format of ``FERC Generated PDF'' in eLibrary for Document-Less
Intervention (system-generated from the information entered online)

    20080227-5041 FERC PDF (Unofficial) 2/27/2008 2:09:29 PM
    Submission Description: Motion to Intervene (document-less) of ABC
Pipeline Company, et. al. under CP05-1-000.
    Submission Date: 2/27/2008. 2:09:29 PM
    Filed Date: 2/27/2008. 2:11:24 PM
    Dockets
    CP05-1-000 Construct/Operate w/$; new supply attachment; proposes
to construct a new measurement and regulating station; requests
authorization in order to operate by 12/15/04.

                          Filing Party/Contacts
------------------------------------------------------------------------
                                     Signer             Other contact
        Filing party            (Representative)         (Principal)
------------------------------------------------------------------------
ABC Pipeline Company<EMAIL_ADDRESS>melissa.ferebee@ferc
                               ov.                   .gov.
XYZ Pipeline Company<EMAIL_ADDRESS><EMAIL_ADDRESS>                               ov.
------------------------------------------------------------------------

    Basis for Intervening [this is a system-generated label]:
    [Information inserted online in the text box begins here] This is
the information keyed or copy/pasted in the text box to comply with 18
CFR 385.214(b). There is a limit of 6,000 characters for the text box.
Substantive comments on the merits, protests, and other motions should
be filed separately using the file attachment process and appropriate
filing type.

Attachment C: Quick Comment in P, PF, and CP Dockets (With Sample FERC
Generated PDF Document in eLibrary)

    FERC's Quick Comment Option is an easy way for individuals and
other interested persons to submit text comments in the following
proceedings:
     Hydroelectric License/Relicense Proceedings (P--Project
Number),
     Pre-Filing Activity for Planned Natural Gas Projects (PF
Docket), and
     Applications for Authorization to Construct a Natural Gas
Pipeline, Liquefied Natural Gas (LNG) or Other Facility (CP Dockets).
    The Quick Comment system does not require an FERC eRegistration
account. There is a limit of 6,000 characters and all information must
be Public. The system is for text comments only and may not be used to
intervene or submit other information to the Commission.
    Persons filing more extensive comments (more than 6,000
characters), non-text material, other attachments, or filing Privileged
or Critical Energy Infrastructure Information (CEII) must use the
Commission's eFiling system instead of Quick Comments. The eFiling
system requires that you have an unrestricted eRegistration account
(unrestricted in this case means an account that is not limited to
eSubscription only).
    It makes no difference which system--Quick Comments or eFiling--you
use to submit comments. All comments submitted under either option are
placed in the Record for the specified docket or project number(s).
    To Use Quick Comment:
    1. From the FERC Online Home page, click on the ``Quick Comment''
link.
    2. The system returns an ``Authorize Quick Comment:'' screen. Key
in your Name, e-mail address, and Phone Number (optional) in the
labeled fields.
    3. Key in the characters in the picture in the field below the
picture. If you have difficulty reading the characters, click on the
speaker icon next to the picture to hear the code (be sure the volume
on your PC is high enough). After keying in the characters, click on
Submit.
    4. You will see the message: ``Thank you for your interest in
submitting Quick Comments to FERC. You will receive an e-mail with
detailed instructions on how you can submit your Quick Comment.'' The
e-mail is sent to the e-mail address you entered on the first screen.
    5. Check your e-mail account for a ``Confirmation of Quick
Comment'' e-mail. Click on the link in the e-mail to display the
``Submit Quick Comment'' screen.
    6. You can query and select the docket or project number(s)
applicable to your comment (click on Search) or you can use the Quick
Entry method. For Quick Entry, key in the docket or project number in
the box for the docket number. Use the Search option if you are unsure
about the format. You may add additional docket or project numbers
provided your comments pertain to them.
    7. Key or Copy/Paste your text comments in the large text box.
There is a counter below the box to tell you how much space you have
left for comments. If you entered a name at the beginning of the
process for an association or organization, you must include the name
of an individual responsible for the filing and contact information in
the text box.
    8. Click on Submit Comment.
    9. You will receive a Confirmation of Receipt e-mail. Your comments
will be added to the record in eLibrary in the docket or project
number(s) you selected at the beginning of the process.

Format of ``FERC Generated PDF'' in eLibrary for a Quick Comment
(System-Generated From the Information Entered Online)

20080227-5043 FERC PDF (Unofficial) 2/27/2008 3:07:27 PM
Comment of Brooks Carter in Docket(s)/Project(s) CP05-1-000
Submission Date: 2/27/2008
[Information keyed or copy/pasted in the text box begins here] These
are my comments on the -------- Project in CP05-1.* * * There is a
limit of 6,000 characters and all comments will be placed in the Public
record for the proceeding.
Name and Address [appears only if you added this information in the
text box after your comments]

 [FR Doc. E8-4218 Filed 3-4-08; 8:45 am]

BILLING CODE 6717-01-P