[Federal Register: December 27, 2005 (Volume 70, Number 247)]
[Notices]
[Page 76480-76482]
[DOCID:fr27de05-73]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52981; File No. SR-NASD-2005-133]

Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to an Increase in Fees for Certain Qualification
Examinations

December 19, 2005.
    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 November 15, 2005, the National Association of Securities Dealers,
Inc. (``NASD'') 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 NASD.
NASD has designated the proposed rule change as one establishing or
changing a due, fee, or other charge under Section 19(b)(3)(A)(ii) of
the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the
proposal effective upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

    NASD is proposing to amend Section 4 of Schedule A to the NASD By-
Laws (``Schedule A'') to increase examination fees that shall be
assessed persons taking certain qualifications examinations as of
January 1, 2006. Below is the text of the proposed rule change.
Proposed new language is in italics; proposed deletions are in
[brackets].
* * * * *
B. SCHEDULE A TO NASD BY-LAWS
* * * * *
C. Section 4--Fees
    (a) and (b) No change.
    (c) The following fees shall be assessed to each individual who
registers to take an examination as described below as of January 1,
200[5]6. These fees are in addition to the registration fee described
in paragraph (b).

Series 4......................  Registered Options                   $80
                                 Principal.
Series 6......................  Investment Company             [$70] $75
                                 Products/Variable
                                 Contracts
                                 Representative.
Series 7......................  General Securities           [$225] $250
                                 Representative.
Series 9......................  General Securities                   $60
                                 Sales Supervisor--
                                 Options Module.
Series 10.....................  General Securities            [$95] $100
                                 Sales Supervisor--
                                 General Module.
Series 11.....................  Assistant                            $60
                                 Representative--Order
                                 Processing.
Series 17.....................  Limited Registered                   $65
                                 Representative.
Series 22.....................  Direct Participation           [$70] $75
                                 Programs
                                 Representative.
Series 23.....................  General Securities                   $75
                                 Principal Sales
                                 Supervisor Module.
Series 24.....................  General Securities             [$85] $95
                                 Principal.
Series 26.....................  Investment Company                   $75
                                 Products/Variable
                                 Contracts Principal.
Series 27.....................  Financial and                  [$85] $95
                                 Operations Principal.
Series 28.....................  Introducing Broker/                  $75
                                 Dealer Financial and
                                 Operations Principal.
Series 37.....................  Canada Module of S7                 $150
                                 (Options Required).
Series 38.....................  Canada Module of S7                 $150
                                 (No Options Required).
Series 39.....................  Direct Participation                 $75
                                 Programs Principal.
Series 42.....................  Registered Options                   $60
                                 Representative.
Series 55.....................  Limited                        [$80] $85
                                 Representative--Equit
                                 y Trader.
Series 62.....................  Corporate Securities           [$70] $75
                                 Limited
                                 Representative.
Series 72.....................  Government Securities          [$80] $85
                                 Representative.
Series 82.....................  Limited                              $75
                                 Representative--Priva
                                 te Securities
                                 Offering.
Series 86.....................  Research Analyst--                  $150
                                 Analysis.
Series 87.....................  Research Analyst--                  $105
                                 Regulatory.

    (1) through (3) No change.
    (d) through (h) No change.
* * * * *

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

    In its filing with the Commission, NASD 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. NASD 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
    This proposed rule change amends Schedule A to increase examination
fees that shall be assessed persons taking certain qualification
examinations as of January 1, 2006. Any person associated with a member
firm who is engaged in the securities business of the firm must
register with the NASD. As part of the registration process, securities
professionals must pass a qualification examination to demonstrate
competence in each area in which they intend to work.
    Some of these examinations are sponsored (i.e., developed) by NASD,
and others are sponsored by the New York Stock Exchange, Inc.
(``NYSE''), the Municipal Securities Rulemaking Board (``MSRB''), or
other self-regulatory organizations (``SROs'').\5\ NASD administers
qualification examinations via computer through the PROCTOR[supreg]
system \6\ at test centers operated by vendors under contract with
NASD. NASD charges an examination fee to candidates for NASD-sponsored
examinations. For

those examinations sponsored by a NASD client and administered/
delivered by NASD, NASD charges a delivery fee that comprises either a
part or all of the examination fee for these examinations.\7\
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    \5\ For example, NASD administers and delivers the Series 6, 24,
and 27 examinations, which are sponsored by NASD. NASD also
administers and delivers client examinations, such as the Series 7,
which is sponsored by the NYSE, and the Series 10, which is
sponsored jointly by several SROs (the American Stock Exchange LLC
(``Amex''), the Chicago Board Options Exchange, Inc. (``CBOE''),
MSRB, NASD, NYSE, the Pacific Exchange, Inc. (``PCX''), and the
Philadelphia Stock Exchange, Inc. (``Phlx'')).
    \6\ PROCTOR[supreg] is a technology system that supports
computer-based testing and training.
    \7\ For additional discussion of the examination and delivery
fee structure, see Securities Exchange Act Release No. 50575
(October 20, 2004), 69 FR 62732 (October 27, 2004) (Notice of Filing
and Immediate Effectiveness of Proposed Rule Change and Amendment
No. 1 Thereto Relating to Amendments to Section 4 of Schedule A to
the NASD By-Laws (Fees for Qualification Examinations)) (SR-NASD-
2004-145).
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    Each year, NASD conducts a comprehensive review of the licensing
examination fee structure, which includes an analysis of the costs of
developing, administering, and delivering examinations. NASD's review
in 2005 showed that certain operational costs are rising. In
particular, these costs consist of (1) the cost of providing the
extensive network of test delivery centers; and (2) technology costs
required to maintain the current PROCTOR[supreg] system and to redesign
the PROCTOR[supreg] system. The proposed rule change will increase
examination fees for certain NASD-sponsored examinations. In addition,
NASD has advised its client examination sponsors of the impact of the
higher costs on delivery fees for client-sponsored examinations.
Accordingly, NASD is proposing to amend Schedule A to reflect the
following increases in examination fees (which includes NASD-sponsored
and client-sponsored examinations, as well as joint SRO examinations):

Series 6................................  Investment Company Products/      From $70 to $75.
                                           Variable Contracts
                                           Representative (NASD-sponsored).
Series 7................................  General Securities                From $225 to $250.
                                           Representative (NYSE-sponsored).
Series 10...............................  General Securities Sales          From $95 to $100.
                                           Supervisor--General Module
                                           (Sponsored jointly by AMEX,
                                           CBOE, NASD, NYSE, PCX, and
                                           PHLX).
Series 22...............................  Direct Participation Programs     From $70 to $75.
                                           Representative (NASD-sponsored).
Series 24...............................  General Securities Principal      From $85 to $95.
                                           (NASD-sponsored).
Series 27...............................  Financial and Operations          From $85 to $95.
                                           Principal (NASD-sponsored).
Series 55...............................  Limited Representative--Equity    From $80 to $85.
                                           Trader (NASD-sponsored).
Series 62...............................  Corporate Securities Limited      From $70 to $75.
                                           Representative (NASD-sponsored).
Series 72...............................  Government Securities             From $80 to $85.
                                           Representative (NASD-sponsored).

    The proposed rule change is effective upon filing pursuant to
Section 19(b)(3)(A) of the Act \8\ and paragraph (f)(2) of Rule 19b-4
thereunder,\9\ in that the proposed rule change establishes or changes
a due, fee, or other charge imposed by NASD. The new fees will be
become effective for ``120-day examination windows'' opened in the
Central Registration Depository (CRD[supreg]) on or after January 1,
2006.\10\ NASD will continue to conduct an annual review of its costs
and adjust examination and delivery fees, if necessary, as of January 1
each year after making the appropriate rule filings.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(2).
    \10\ The published fee represents the fee that will be charged
at the time the individual registers for the examination. The
individual then has 120 days to take the examination.
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2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(5) of the Act,\11\ which requires, among
other things, that NASD 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 NASD operates or
controls. NASD believes that the rule change is consistent with Section
15A(b)(5) of the Act in that the fee changes reflect NASD's increased
costs in delivering the examinations and in maintaining and upgrading
the examination delivery system.\12\
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    \11\ 15 U.S.C. 78o-3(b)(5).
    \12\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD 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.

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

    Because the foregoing rule change establishes or changes a due,
fee, or other charge imposed by NASD, it has become effective pursuant
to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(2)
thereunder.\14\ At any time within 60 days of the filing of the
proposed rule change, the Commission may summarily abrogate such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(2).
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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 e-mail to<EMAIL_ADDRESS>Please include

File Number SR-NASD-2005-133 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-NASD-2005-133. This
file number should be included on the subject line if e-mail 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 Web site (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 inspection
and copying in the Commission's Public Reference

Room. Copies of such filing also will be available for inspection and
copying at the principal office of the NASD. All comments received will
be posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASD-2005-133 and should be submitted on
or before January 17, 2006.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).

Jonathan G. Katz,
Secretary.
 [FR Doc. E5-7840 Filed 12-23-05; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 83, Number 168 (Wednesday, August 29, 2018)]
[Notices]
[Pages 44109-44114]
[FR Doc No: 2018-18656]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83928; File No. SR-OCC-2017-810]

Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of No Objection to Advance Notice, as Modified by Partial
Amendment No. 3, Concerning Updates to and Formalization of OCC's
Recovery and Orderly Wind-Down Plan

August 23, 2018.

I. Introduction

    On December 8, 2017, The Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'')
advance notice SR-OCC-2017-810 (``Advance Notice'') pursuant to Section
806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, entitled Payment, Clearing and Settlement
Supervision Act of 2010 (``Clearing Supervision Act'') \1\ and Rule
19b-4(n)(1)(i) \2\ under the Securities Exchange Act of 1934
(``Exchange Act'') \3\ to formalize and update its Recovery and Orderly
Wind-Down Plan (``RWD Plan''). The Advance Notice was published for
public comment in the Federal Register on January 23, 2018.\4\ On
January 23, 2018, the Commission requested that OCC provide it with
additional information regarding the Advance Notice.\5\ OCC responded
to the request, and the Commission received the information on July 13,
2018.\6\
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    \1\ 12 U.S.C. 5465(e)(1).
    \2\ 17 CFR 240.19b-4(n)(1)(i).
    \3\ 15 U.S.C. 78a et seq.
    \4\ See Exchange Act Release No. 82514 (January 17, 2018), 83 FR
3224 (January 23, 2018) (SR-OCC-2017-810) (hereinafter referred to
as the ``Notice of Filing''). On December 18, 2017, OCC also filed a
related proposed rule change (SR-OCC-2017-020) with the Commission
pursuant to Section 19(b)(1) of the Exchange Act and Rule 19b-4
thereunder, seeking approval of changes to its rules necessary to
implement the Advance Notice (``Proposed Rule Change''). 15 U.S.C.
78s(b)(1) and 17 CFR 240.19b-4, respectively. The Proposed Rule
Change was published in the Federal Register on December 26, 2017.
Exchange Act Release No. 82352 (Dec. 19, 2017), 82 FR 61072 (Dec.
26, 2017) (SR-OCC-2017-021).
    \5\ See Memorandum from Office of Clearance and Settlement,
Division of Trading and Markets, dated January 23, 2018, available
at https://www.sec.gov/rules/sro/occ-an/2018/34-83305.pdf.
    \6\ See Memorandum from Office of Clearance and Settlement,
Division of Trading and Markets, dated July 17, 2018, available at
https://www.sec.gov/comments/sr-occ-2017-810/occ2017810-4062513-169149.pdf.
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    On July 11, 2018, OCC filed Partial Amendment No. 1 to the Advance
Notice.\7\ On July 12, 2018, OCC filed Partial Amendment No. 2 and
Partial Amendment No. 3 to the Advance Notice.\8\ Notice of the
Amendments to the Advance Notice was published for public comment in
the Federal Register on August 7, 2018,\9\ and the Commission has
received no comments in response.
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    \7\ In Amendment No. 1, OCC made three modifications to the
Notice of Filing: (1) Removal of sections of the RWD Plan concerning
OCC's proposed authority to require cash settlement of certain
physically delivered options and single stock futures; (2) updating
the list of OCC's Critical Support Functions; and (3) making three
changes to the RWD Plan to conform to a change contemporaneously
proposed in Amendment No. 2 to OCC filing SR-OCC-2017-809 concerning
enhanced and new tools for recovery scenarios.
    \8\ Partial Amendment No. 2 superseded and replaced Partial
Amendment No. 1 in its entirety, due to technical defects in Partial
Amendment No. 1. Partial Amendment No. 3 then superseded and
replaced Partial Amendment No. 1 in its entirety, due to technical
defects in Partial Amendment No. 2.
    \9\ See Exchange Act Release No. 83762 (Aug. 1, 2018), 83 FR
38750 (Aug. 7, 2018) (``Notice of Amendment'').
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    This publication serves as notice that the Commission does not
object to the changes set forth in the Advance Notice, as amended by
Partial Amendment No. 3 (``Amended Advance Notice'').

II. Background \10\
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    \10\ Capitalized terms used but not defined herein have the
meanings specified in OCC's Rules and By-Laws, available at https://www.theocc.com/about/publications/bylaws.jsp.
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    OCC's proposal would formalize and update its RWD Plan. The purpose
of the RWD Plan is to: (i) Demonstrate that OCC has considered the
scenarios which may potentially prevent it from being able to provide
the services OCC determined to be critical as a going-concern; (ii)
provide appropriate plans for OCC's recovery or orderly wind-down based
on the results of such consideration; and (iii) impart to relevant
authorities the information reasonably anticipated to be necessary for
purposes of recovery and orderly wind-down planning.
    The RWD Plan would identify the services provided by OCC that OCC
has determined to be critical, and it would set forth five qualitative
events that could trigger a recovery scenario and six qualitative
events that could trigger an orderly wind-down. It would also address
six scenarios that describe OCC's possible responses to series of
stresses. The RWD Plan would also include an overview designed to
provide information that OCC believes would be essential to relevant
authorities for purposes of recovery and orderly wind-down planning, as
well as to provide readers of the Plan with necessary context for
subsequent discussion and analysis. The overview would also include a
detailed description of OCC's business, summarizing the role OCC has in
the options market as well as the services and products it provides to
its clearing members and market participants. The RWD Plan would
identify fourteen internal support functions at OCC and provide a brief
description of the activities performed by each support function.
Similar to the information regarding OCC's business, this information
is designed to inform the relevant authorities for orderly wind-down
planning and as necessary context for understanding other elements of
the RWD Plan.

A. Designating Critical Services and Critical Support Functions

    The RWD Plan would define the terms ``Critical Services'' and
``Critical Support Functions.'' Specifically, a Critical Service would
be a service provided by OCC that, if interrupted, would likely have a
material negative impact on participants or significant third parties,
give rise to contagion, or undermine the general confidence of markets
that OCC serves. A Critical Support Function would be a function within
OCC that must continue in some capacity for OCC to be able to continue
providing its Critical Services.
    The RWD Plan would describe the framework that OCC uses to
determine whether a service is critical. This framework includes four
criteria to determine if failure or discontinuation of a particular
service would impact financial and operational capabilities of OCC's
clearing members, other FMUs, or the broader financial system: (1)
Market dominance, (2) substitutability, (3) interconnectedness, and (4)
barriers to entry. The current set of services designated as Critical
Services under the RWD Plan is based on the analysis of these
measureable indicators and subsequent internal discussion at OCC. The
Critical Services currently include, but are not limited to, clearance
services for listed options and clearance services for futures.

B. Recovery Plan

    The RWD Plan would include plans for recovery from scenarios that
could prevent OCC from providing Critical Services.\11\ After
discussing particular

scenarios, the RWD Plan identifies the tools that OCC could use as
warranted in such scenarios. These tools fall into two categories: (1)
Enhanced Risk Management Tools, and (2) Recovery Tools. An Enhanced
Risk Management Tool is a tool that is designed to supplement OCC's
existing processes and other existing tools in scenarios where OCC
faces heightened stresses, while a Recovery Tool is a tool that is
generally limited to a scenario in which a specific trigger has
occurred. In its RWD Plan, OCC would define a set of five such
qualitative trigger events (``Recovery Trigger Events'').
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    \11\ For the purposes of the RWD Plan, OCC defines ``recovery''
as ``the actions of [a financial market utility], consistent with
its rules, procedures, and other ex-ante contractual arrangements,
to address any uncovered credit loss, liquidity shortfall, capital
inadequacy, or business, operational or other structural weakness,
including the replenishment of any depleted pre-funded financial
resources and liquidity arrangements, as necessary to maintain the
[financial market utility's] viability as a going concern.''
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    The sequence and timing of the deployment of each Recovery Tool is
more structured and lacks the flexibility inherent in the sequence and
timing for use of the Enhanced Risk Management Tools. For each tool,
the RWD Plan provides an overview of the tool, and, as appropriate, a
discussion of its implementation with an estimated time frame for use
of the tool, key risks associated with use of the tool, and the
expected impact and incentives of using the tool.
1. Enhanced Risk Management Tools
    OCC stated that the Enhanced Risk Management Tools would be used
prophylactically in an effort to prevent the occurrence of a Recovery
Trigger Event and would not be limited to recovery. OCC would not
anticipate applying a rigid order or timing for the deployment of the
Enhanced Risk Management Tools. The RWD Plan would include five
Enhanced Risk Management Tools: (1) Use of Current/Retained Earnings;
(2) Minimum Clearing Fund Cash Contribution; (3) Borrowing Against
Clearing Fund; (4) Credit Facility; and (5) Non-Bank Facility.
    Use of Current/Retained Earnings. Under its By-Laws, OCC may use
current and/or retained earnings to discharge a loss that would be
chargeable against the Clearing Fund, but would require unanimous
consent from the holders of OCC's Class A and Class B common stock. The
RWD Plan acknowledges that the utility of this tool is limited by the
requirement for shareholder consent and that OCC's retained earnings
presently amount to a small fraction of OCC's existing prefunded
Clearing Fund resources. OCC stated that, given this amount, the
maximum utility of this tool may be realized in specific circumstances
at either the beginning of OCC's loss waterfall or toward the end of
OCC's loss waterfall, where it would be sufficient to fully extinguish
liabilities without triggering the use of another tool.
    Minimum Clearing Fund Cash Contribution. Under its current rules,
OCC Clearing Members collectively contribute $3 billion in cash to
OCC's Clearing Fund.\12\ In addition, OCC may, in certain limited
circumstances, increase the minimum cash requirement up to the then-
minimum size of the Clearing Fund.\13\ The RWD Plan would acknowledge
that increasing the minimum cash requirement would require preparation
of OCC documentation that considers the projected liquidity demands for
successful management of a defaulted Clearing Member.
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    \12\ See OCC By-Laws, Art. VIII, Section 3(a)(i). The Commission
recently approved a proposal by OCC that, after implementation,
would move this section of the OCC By-Laws to OCC Rule 1002(a)(i).
See Exchange Act Release No. 83735 (Jul. 27, 2018), 83 FR 37855,
37859 (Aug. 2, 2018) (SR-OCC-2018-008) (``Order Approving Proposed
Rule Change, as Modified by Amendments No. 1 and 2, Related to OCC's
Stress Testing and Clearing Fund Methodology'').
    \13\ See OCC By-Laws, Art. VIII, Section 3(a)(i).
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    Borrowing Against Clearing Fund. OCC has the authority to borrow
against the Clearing Fund in three circumstances: (1) To meet
obligations arising out of the default or suspension of a Clearing
Member or any action taken by OCC under Chapter XI of its rules
pertaining to the suspension of a clearing member; (2) to borrow or
otherwise obtain funds from third parties in lieu of immediately
charging the Clearing Fund for a loss that is reimbursable out of the
Clearing Fund; and (3) to meet liquidity needs for same-day settlement
as a result of the failure of any bank or securities or commodities
clearing organization to achieve daily settlement.\14\ The RWD Plan
would acknowledge that any borrowing would require preparation of OCC
documentation in accordance with OCC procedures. Further, the RWD Plan
would recognize that the availability of this tool in advance of a
heightened stress scenario would be unknown because OCC's primary
liquidity facilities could already be fully or partially utilized.
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    \14\ See OCC By-Laws, Art. VIII, Section 5(e). The Commission
recently approved a proposal by OCC that, after implementation,
would move this section of the OCC By-Laws to OCC Rule 1006(f). See
Order Approving Proposed Rule Change Related to OCC Stress Testing
and Clearing Fund Methodology, supra note 12, 83 FR at 37859.
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    Credit Facility and Non-Bank Liquidity Facility. OCC maintains a $2
billion dollar senior secured 364-day revolving credit facility with a
syndicate of lenders for the purpose of providing OCC with liquidity to
meet settlement obligations as a central counterparty. The RWD Plan
would recognize that an inherent risk of the credit facility is that a
portion of the syndicate may not provide funds in timely response to
OCC's request. OCC also maintains a $1 billion dollar secured non-bank
liquidity facility for the purpose of providing OCC with a non-bank
liquidity resource to meet settlement obligations as a central
counterparty. Similar to the risk associated with the credit facility,
the RWD Plan would recognize the risk that OCC's counterparty may not
timely execute the transaction under the non-bank liquidity facility.
2. Recovery Tools
    Under the RWD Plan, Recovery Tools would be different from Enhanced
Risk Management Tools because OCC's use of a Recovery Tool is generally
limited to a scenario in which a Recovery Trigger has occurred. The RWD
Plan would identify five Recovery Tools, the last four of which would
generally be deployed in the order they are described here: (1)
Replenishment Capital; (2) Assessment Powers; (3) Voluntary Payments;
(4) Voluntary Tear-Up; and (5) Partial Tear-Up.\15\ As noted above, the
sequence and timing of deployment of the Recovery Tools would be more
structured than the sequence and timing of the use of Enhanced Risk
Management Tools.
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    \15\ For a more detailed description of the Recovery Tools
numbered (2) through (5) here, please see Exchange Act Release No.
83927 (Aug. 23, 2018).
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    Replenishment Capital. OCC holds capital contributed by its
stockholder exchanges who have committed to replenish OCC's capital if
it falls below a certain threshold.\16\ The RWD Plan would include the
replenishment of capital by OCC's stockholder exchanges as a recovery
tool.
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    \16\ The requirement to replenish OCC's capital was adopted as
part of OCC's plan to raise and maintain capital at a specified
level (``Capital Plan''). See Exchange Act Release No. 77112
(February 11, 2016), 81 FR 8294 (February 18, 2016) (SR-OCC-2015-
02). The Capital Plan was later subject to judicial review by the
U.S. Court of Appeals for the District of Columbia Circuit, which
remanded for the Commission to further analyze whether the Capital
Plan is consistent with the Exchange Act. Susquehanna Int'l Grp.,
LLP v. SEC, 866 F.3d 442 (D.C. Cir. 2017). The Commission's review
of the Capital Plan on remand is ongoing, and the Capital Plan
remains in effect during this ongoing review.
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    Assessment Powers. Under OCC's rules, OCC has authority to assess a
non-defaulting Clearing Member during any cooling-off period for an
amount equal to 200 percent of the Clearing Member's then-required
contribution to the Clearing Fund.\17\ Following the end of

the cooling-off period, each remaining Clearing Member must replenish
the Clearing Fund in the amount necessary to meet its then-required
contribution.\18\ The RWD Plan would recognize the risk that the use of
assessment powers may incentivize Clearing Members to withdraw from
membership in OCC to avoid replenishment, and that such withdrawals
would limit the resources available to OCC for future assessments.
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    \17\ The cooling-off period is the period following a
proportionate charge assessed by OCC against the Clearing Members'
Clearing Fund contributions. It is a minimum of fifteen days, but
could extend to as much as twenty days from the date of the
proportionate charge based on intervening events.
    \18\ A Clearing Member may avoid liability for replenishment by
terminating its membership in OCC prior to the end of the cooling-
off period.
---------------------------------------------------------------------------

    Voluntary Payments. OCC's rules provide a framework by which OCC
can receive voluntary payments in response to a Clearing Member
default. Use of this tool is permissible only where OCC has determined
that it may not have sufficient resources to satisfy its obligations
and liabilities arising out of the default. The RWD Plan would describe
the processes involved in calling for and receiving voluntary payments,
including the issuance of a notice to Clearing Members. The RWD Plan
would recognize the risk that Clearing Members would be unwilling or
unable to make voluntary payments. As an incentive for Clearing Members
to provide voluntary payments, a non-defaulting Clearing Member who
made a voluntary payment would receive priority in reimbursement from
amounts recovered by OCC from the estate of a defaulting Clearing
Member.
    Voluntary Tear-up. OCC's rules provide a framework by which non-
defaulting Clearing Members and customers could be permitted to
voluntarily extinguish (i.e., voluntarily tear-up) open positions in
response to a Clearing Member default. Voluntary Tear-up is permissible
only where OCC has determined that it may not have sufficient resources
to satisfy its obligations and liabilities arising out of the default.
The RWD Plan would contemplate that OCC would initiate any tear-up
process after the market close on the day that OCC determines it may
have insufficient resources. The RWD Plan would further anticipate that
OCC would publish notice of tear-up no later than the following morning
(prior to the market open), and that positions would be extinguished
following the market close. The RWD Plan would also recognize the risk
that Clearing Members would be unwilling or unable to participate in
the voluntary tear-up process. A non-defaulting Clearing Member that
faced losses, costs, or expenses in reestablishing voluntarily torn-up
positions could receive compensation from amounts recovered by OCC from
the estate of a defaulting Clearing Member ahead of other Clearing
Members that faced such losses, costs, or expenses after reestablishing
torn up positions.
    Partial Tear-up. OCC's rules provide a framework by which OCC could
extinguish the remaining open positions of a defaulted Clearing Member
or its customers (i.e., Partial Tear-up) in response to a Clearing
Member default. The RWD Plan would anticipate that the Partial Tear-up
process would be intertwined with the Voluntary Tear-up process
described above. The RWD Plan also would contemplate the compensation
of Clearing Members facing losses, costs, or expenses after
reestablishing torn up positions from Clearing Fund contributions.
    The RWD Plan also would provide a mapping of Enhanced Risk
Management Tools and Recovery Tools to different types of risk
exposures. Such risk exposures include: (1) Uncovered credit losses;
(2) liquidity shortfalls; (3) replenishment of financial resource; (4)
losses related to business, operational, or other structural
weaknesses; and (5) re-establishment of a matched book. The RWD Plan
discusses how each tool would apply to these risk categories and would
reference the stress scenarios contemplated by the RWD Plan.
    The RWD Plan would outline an escalation process for the occurrence
of each Recovery Trigger.\19\ Under the RWD Plan, OCC's Enterprise Risk
Management and Financial Risk Management groups would be responsible
for recommending which, if any, of the tools described above should be
used in a given situation. Further, OCC's Chief Executive Officer and
Executive Chairman would be responsible for approval of such
recommendations, and OCC's Chief Risk Officer and Management Committee
would be responsible for overseeing deployment of such tools. Finally,
OCC's Board and the Risk Committee of the Board would be responsible
for generally overseeing OCC's recovery efforts.
---------------------------------------------------------------------------

    \19\ The RWD Plan also would discuss notification of regulators,
including the Commission, the U.S. Commodity Futures Trading
Commission, and the Federal Deposit Insurance Corporation, in
response to the occurrence of a Recovery Trigger.
---------------------------------------------------------------------------

C. Orderly Wind-Down Plan

    The RWD Plan would also include OCC's wind-down plan and include
scenarios that could prevent OCC from being able to provide Critical
Services as a going-concern. OCC would identify its wind-down objective
as the pursuit of financial stability and ensuring the continuity of
critical functions. The RWD Plan would provide OCC's assumptions
concerning the wind-down process regarding: (1) Duration of wind-down;
(2) cost of wind-down; (3) OCC's capitalization; and (4) the
maintenance of Critical Services and Critical Support Functions. It
also would identify six wind-down triggers (``WDP Trigger Events''),
the occurrence of which could jeopardize the viability of OCC's
recovery. Under the RWD Plan, the occurrence of a WDP Trigger Event
would necessitate notification of regulators, including the Commission,
the U.S. Commodity Futures Trading Commission, and the Federal Deposit
Insurance Corporation, as well as internal notifications to OCC senior
management.
    The RWD Plan would reference critical interconnections and key
agreements for consideration in the context of wind-down. The RWD Plan
also would discuss OCC's key actions in wind-down including the: (1)
Decision by OCC's Board to initiate wind-down; (2) institution of
heightened clearing member requirements; (3) imposition of heightened
capital requirements for clearing members; (4) imposition of increased
margin requirements; (5) cessation of investment by OCC; (6)
institution of new operational practices; and (7) targeted reductions
in force.
    The RWD Plan also would identify transactions that could be entered
into to accomplish OCC's wind-down objectives: (1) Stock transactions;
(2) merger transactions; and (3) asset transactions. The RWD Plan
focuses discussion of wind-down transactions on issues including, but
not limited to, governance and regulatory issues. The goal of any such
transaction would be to transfer ownership of OCC in a manner that
ensures the continuation of OCC's critical services; however, the RWD
Plan also would contemplate the cessation of Critical Services through
OCC's existing close-out netting rules.\20\
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    \20\ See also OCC By-Laws, Art. VI, Section 27.
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D. Governance

    The RWD Plan would also memorialize the governance processes for
maintenance, review, and approval of the RWD Plan. Under the RWD Plan,
all changes would originate in a recommendation from OCC's RWD Working
Group. Changes would go through a series of consecutive rounds of
review and approval by OCC's Management Committee, the Risk Committee
of OCC's Board of Directors, and the full Board of Directors, which
would have final approval authority.

III. Discussion and Commission Findings

    Although the Clearing Supervision Act does not specify a standard
of review for an advance notice, the stated purpose of the Clearing
Supervision Act is instructive: To mitigate systemic risk in the
financial system and promote financial stability by, among other
things, promoting uniform risk management standards for systemically
important financial market utilities (``SIFMUs'') and strengthening the
liquidity of SIFMUs.\21\
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    \21\ See 12 U.S.C. 5461(b).
---------------------------------------------------------------------------

    Section 805(a)(2) of the Clearing Supervision Act \22\ authorizes
the Commission to prescribe regulations containing risk-management
standards for the payment, clearing, and settlement activities of
designated clearing entities engaged in designated activities for which
the Commission is the supervisory agency. Section 805(b) of the
Clearing Supervision Act \23\ provides the following objectives and
principles for the Commission's risk-management standards prescribed
under Section 805(a):
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    \22\ 12 U.S.C. 5464(a)(2).
    \23\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

     To promote robust risk management;
     to promote safety and soundness;
     to reduce systemic risks; and
     to support the stability of the broader financial system.
    Section 805(c) provides, in addition, that the Commission's risk-
management standards may address such areas as risk-management and
default policies and procedures, among others areas.\24\
---------------------------------------------------------------------------

    \24\ 12 U.S.C. 5464(c).
---------------------------------------------------------------------------

    The Commission has adopted risk-management standards under Section
805(a)(2) of the Clearing Supervision Act and Section 17A of the
Exchange Act (the ``Clearing Agency Rules'').\25\ The Clearing Agency
Rules require, among other things, each covered clearing agency to
establish, implement, maintain, and enforce written policies and
procedures that are reasonably designed to meet certain minimum
requirements for its operations and risk-management practices on an
ongoing basis.\26\ As such, it is appropriate for the Commission to
review advance notices against the objectives and principles of these
risk management standards as described in Section 805(b) of the
Clearing Supervision Act and the Clearing Agency Rules.\27\ As
discussed below, the Commission believes the proposal in the Amended
Advance Notice is consistent with the objectives and principles
described in Section 805(b) of the Clearing Supervision Act,\28\ and in
the Clearing Agency Rules, in particular Rules 17Ad-22(e)(2)(i), (iii),
and (v), 17Ad-22(e)(3)(ii), and 17Ad-22(e)(15)(i) under the Exchange
Act.\29\
---------------------------------------------------------------------------

    \25\ 17 CFR 240.17Ad-22. See Securities Exchange Act Release No.
68080 (October 22, 2012), 77 FR 66220 (November 2, 2012) (S7-08-11).
See also Securities Exchange Act Release No. 78961 (September 28,
2016), 81 FR 70786 (October 13, 2016) (S7-03-14) (``Covered Clearing
Agency Standards''). The Commission established an effective date of
December 12, 2016, and a compliance date of April 11, 2017, for the
Covered Clearing Agency Standards. OCC is a ``covered clearing
agency'' as defined in Rule 17Ad-22(a)(5).
    \26\ 17 CFR 240.17Ad-22.
    \27\ 12 U.S.C. 5464(b) and 17 CFR 240.17Ad-22.
    \28\ 12 U.S.C. 5464(b).
    \29\ 17 CFR 240.17Ad-22(e)(2)(i), (iii), and (v); (e)(3)(ii);
(e)(15)(i).
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A. Consistency With Section 805(b) of the Clearing Supervision Act

    The Commission believes that the proposal contained in OCC's
Amended Advance Notice is consistent with the stated objectives and
principles of Section 805(b) of the Clearing Supervision Act.
Specifically, as discussed below, the Commission believes that the
changes proposed in the Amended Advance Notice are consistent with
promoting robust risk management, promoting safety and soundness,
reducing system risks, and supporting the stability of the broader
financial system.\30\
---------------------------------------------------------------------------

    \30\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

    First, the Commission believes that the proposed changes are
consistent with reducing systemic risks and supporting the stability of
the broader financial system. OCC is the sole registered clearing
agency for the U.S. listed options markets and a SIFMU. By specifying
the steps that OCC would take in either a recovery or an orderly wind-
down, the Commission believes that the proposed changes would enhance
OCC's ability to address circumstances specific to an extreme stress
event, thereby increasing the likelihood that it could execute a
successful recovery or orderly wind-down in such an event. As such, the
Commission believes that the RWD Plan would help reduce systemic risk
by decreasing the likelihood of a disorderly or unsuccessful recovery
or wind-down, which could otherwise disrupt the markets for which OCC
clears, thereby leading to the transmission of risk across market
participants. For the same reason, the Commission also believes the RWD
Plan would support the stability of the broader financial system.
    Second, the RWD Plan would, as described above, specify the
Enhanced Risk Management Tools and Recovery Tools available to OCC in
recovery, as well as the governance framework applicable to the use of
such tools. It would analyze the use of the Enhanced Risk Management
Tools and Recovery Tools, the incentives created by such tools, and the
risks associated with using such tools. The Commission believes that by
specifying the tools that OCC would use to address, or preferably
prevent, a recovery scenario, the RWD Plan would increase the
likelihood that recovery would be orderly, efficient, and successful.
By doing so, the Commission believes that the RWD Plan would enhance
OCC's ability to maintain the continuity of its critical services
(including clearance and settlement services) during, through, and
following periods of extreme stress giving rise to the need for
recovery, thereby promoting both robust risk management and safety and
soundness in the clearance and settlement in the listed-options and
futures markets.
    Similarly, the Commission believes that the RWD Plan would enhance
OCC's ability to promote robust risk management and safety and
soundness by establishing a plan to effectuate an orderly wind-down.
The RWD Plan's governance processes and regulatory notice provisions
could facilitate either the orderly transfer of OCC's Critical Services
to another entity or the orderly close-out of positions. Providing
additional information regarding the potential orderly transfer of
services or close-out of positions would benefit Clearing Members and
their customers by providing greater transparency and certainty
regarding the potential disposition or treatment of their positions and
assets at OCC, thereby benefiting market participants more broadly.
Therefore, the Commission believes that these provisions would enhance
OCC's ability to promote robust risk management and safety and
soundness in the clearance and settlement of the listed-options and
futures markets by assuring that transactions are transferred to
another entity or closed out in an orderly and transparent manner.
    Accordingly, and for the reasons stated, the Commission believes
the changes proposed in the Amended Advance Notice are consistent with
Section 805(b) of the Clearing Supervision Act.\31\
---------------------------------------------------------------------------

    \31\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

B. Consistency With Rules 17Ad-22(e)(2)(i), (iii), and (v) Under the
Exchange Act

    Rules 17Ad-22(e)(2)(i), (iii), and (v) require that OCC establish,
implement,

maintain and enforce written policies and procedures reasonably
designed to provide for governance arrangements that are clear and
transparent, that support the public interest requirements in Section
17A of the Exchange Act applicable to clearing agencies, and the
objectives of owners and participants, and that specify clear and
direct lines of responsibility.\32\
---------------------------------------------------------------------------

    \32\ 17 CFR 240.17Ad-22(e)(2)(i), (iii), and (v).
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    The RWD Plan would outline an escalation process for the occurrence
of a Recovery Trigger Event, which would provide a governance framework
for the use and functioning of the Enhanced Risk Management Tools and
Recovery Tools in addition to those specified elsewhere in OCC's rules.
It would also identify the internal notification requirements that
would apply to WDP Trigger Events and establish the role of the Board
in determining whether to enter into a wind-down or take other key
actions, consistent with the governance specified elsewhere in OCC's
rules.
    Moreover, the RWD Plan would identify the internal governance
process for the approval of subsequent changes to OCC's RWD Plan. The
RWD Plan would also specify the process OCC would take to receive input
from various parties at OCC, including management and the Board.
    Taken together, the Commission believes that these lines of control
could contribute to establishing, implementing, maintain and enforcing
clear and transparent governance arrangements that support the public
interest requirements in Section 17A of the Exchange Act applicable to
clearing agencies, and the objectives of owners and participants.
    Therefore, the Commission believes that the proposed changes are
consistent with Rules 17Ad-22(e)(2)(i), (iii), and (v).\33\
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    \33\ 17 CFR 240.17Ad-22(e)(2)(i), (iii), and (v).
---------------------------------------------------------------------------

C. Consistency With Rule 17Ad-22(e)(3)(ii) Under the Exchange Act

    Rule 17Ad-22(e)(3)(ii) requires that OCC establish, implement,
maintain and enforce written policies and procedures reasonably
designed to maintain a sound risk management framework for
comprehensively managing legal, credit, liquidity, operational, general
business, investment, custody, and other risks that arise in or are
borne by OCC, which includes plans for the recovery and orderly wind-
down of OCC necessitated by credit losses, liquidity shortfalls, losses
from general business risk, or any other losses.\34\
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    \34\ 17 CFR 240.17Ad-22(e)(3)(ii).
---------------------------------------------------------------------------

    The Commission believes that the information the RWD Plan would
provide about the OCC's recovery tools would enhance OCC's ability to
recover from credit losses, liquidity shortfalls, general business risk
losses, or other losses, consistent with Rule 17Ad-22(e)(3)(ii).\35\
Specifically, the information from the RWD Plan would enable OCC to
prepare in advance for the use of such tools, which would in turn
enhance OCC's ability to use such tools effectively to carry out a
successful recovery. In addition, by establishing a single source of
information about, and steps needed to effectuate, a recovery of OCC,
the RWD Plan would allow OCC personnel to effectuate a recovery in a
consistent and coordinated fashion, and would thereby increase the
likelihood of a successful recovery. Moreover, by identifying and
assessing available Enhanced Risk Management Tools and Recovery Tools,
the Commission believes that the RWD Plan would enhance OCC's ability
to use such tools effectively to bring about a recovery by identifying
in advance which tools may be most effective for different situations
or needs, consistent with Rule 17Ad-22(e)(3)(ii).\36\
---------------------------------------------------------------------------

    \35\ Id.
    \36\ Id.
---------------------------------------------------------------------------

    Similarly, in providing detailed information about the assumptions,
actions, and objectives related to triggering and implementing the
wind-down portion of the RWD Plan, discussed in more detail above, the
Commission believes that the RWD Plan would enhance OCC's ability to
effectuate an orderly wind-down, consistent with Rule 17Ad-
22(e)(3)(ii).\37\ Specifically, by setting out in advance the potential
events that could cause OCC to trigger, and transactions by which OCC
would effectuate, a wind-down, the RWD Plan would enable OCC to prepare
in advance for a wind-down, which the Commission believes would enhance
OCC's ability to use the RWD Plan effectively to carry-out an orderly
wind-down. In addition, by establishing a single source of information
about, and steps needed to effectuate, a wind-down of OCC, the
Commission believes the RWD Plan would allow OCC personnel to
effectuate a wind-down in a consistent and coordinated fashion, and
would thereby increase the likelihood of an orderly wind-down. Finally,
the RWD Plan would identify the legal basis for OCC's actions with
respect to a potential wind-down, including relevant citations to
provisions of the rule books of its various clearing services and
contractual agreements, which the Commission believes would further
facilitate an orderly wind-down process by providing OCC with a single
source of information and steps needed for a wind-down, consistent with
Rule 17Ad-22(e)(3)(ii).\38\
---------------------------------------------------------------------------

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

    Therefore, the Commission believes that the proposed changes to
adopt plans for the orderly recovery and wind down of OCC are
consistent with Rule 17Ad-22(e)(3)(ii).\39\
---------------------------------------------------------------------------

    \39\ Id.
---------------------------------------------------------------------------

D. Consistency With Rules 17Ad-22(e)(15)(i) Under the Exchange Act

    Rule 17Ad-22(e)(15)(i) requires OCC to establish, implement,
maintain and enforce written policies and procedures reasonably
designed to identify, monitor, and manage its general business risk and
hold sufficient liquid net assets funded by equity to cover potential
general business losses so that OCC can continue operations and
services as a going concern if those losses materialize, including by
determining the amount of liquid net assets funded by equity based upon
its general business risk profile and the length of time required to
achieve a recovery or orderly wind-down, as appropriate, of its
critical operations and services if such action is taken.\40\
---------------------------------------------------------------------------

    \40\ 17 CFR 240.17Ad-22(e)(15)(i).
---------------------------------------------------------------------------

    OCC's RWD Plan would estimate costs related to a wind-down based on
a series of assumptions laid out in the RWD Plan. These assumptions
include duration of the wind-down process, OCC's capitalization through
the wind-down process, the maintenance of Critical Services and
Critical Support Functions, and the retention of personnel and
contractual relationships. OCC also provided information regarding its
assumption about the cost of the wind-down process. Further, the RWD
Plan identifies potential transactions that could be effected to
accomplish the objectives of wind-down with the ultimate goal of
transferring ownership of OCC itself by the consummation or a
consensual sale or similar transaction, in a manner that ensures the
continuation of OCC's Critical Services. The Commission considered the
assumptions that the RWD Plan makes regarding wind-down as well as the
potential transactions in which OCC might engage in the event of a
wind-down. The Commission also considered the estimated cost of wind-
down noted in the RWD Plan in light of OCC's rules regarding the
maintenance of certain capital levels and qualifying liquid resources.
The Commission

believes that the RWD Plan, which indicates the cost at which OCC could
effectuate an orderly wind-down, i.e., at a lower cost than the amount
of its liquid resources is consistent with Rule 17Ad-22(e)(15)(i).\41\
---------------------------------------------------------------------------

    \41\ 17 CFR 240.17Ad-22(e)(15)(i).
---------------------------------------------------------------------------

    Therefore, the Commission believes that the proposed changes that
would determine costs associated with an orderly wind-down and that
would further ensure that OCC holds liquid net assets greater than
these costs, are consistent with Rule 17Ad-22(e)(15)(i).\42\
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    \42\ 17 CFR 240.17Ad-22(e)(15)(i).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore noticed, pursuant to Section 806(e)(1)(I) of the
Clearing Supervision Act,\43\ that the Commission does not object to
Advance Notice (SR-OCC-2017-810), as modified by Partial Amendment No.
3, and that OCC is authorized to implement the proposed change as of
the date of this notice or the date of an order by the Commission
approving proposed rule change SR-OCC-2017-021, as modified by Partial
Amendment No. 3, whichever is later.
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    \43\ 12 U.S.C. 5465(e)(1)(I).

    By the Commission.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-18656 Filed 8-28-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 72 (Friday, April 13, 2012)]
[Rules and Regulations]
[Pages 22188-22190]
[FR Doc No: 2012-7183]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2012-0296; Directorate Identifier 2010-NM-106-AD;
Amendment 39-17000; AD 2012-06-19]
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 certain
Airbus Model A330-201, -202, -203, -223, -243, -301, -302, -303, -321,
-322, -323, -341, -342, and -343 airplanes; and Model A340-200 and -300
series airplanes. This AD requires repetitive inspections of the main
fitting and sliding tube of the nose landing gear (NLG) for defects,
damage, and cracks, and corrective actions if necessary. This AD was
prompted by reports of a cracked main fitting and sliding tube during
overhaul of NLGs. We are issuing this AD to detect and correct cracks,
defects, or damage of the main fitting and sliding tube of the NLG,
which could result in failure of the main fitting or sliding tube, and
consequent NLG collapse.

DATES: This AD becomes effective April 30, 2012.
    The Director of the Federal Register approved the incorporation by
reference of certain publications listed in the AD as of April 30,
2012.
    We must receive comments on this AD by May 29, 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 2010-0034, dated March 5, 2010, corrected March
8, 2010 (referred to after this as ``the MCAI''), to correct an unsafe
condition for the specified products. The MCAI states:

    During the overhaul of two different Nose Landing Gears (NLG),
cracks were found on the main fitting of one and the sliding tube of
the other. Investigations concluded that the cracks initiated as a
result of residual stress in the parts following damage due to
impact during towing incidents.
    A subsequent review of the reported incidents has led to
conclude that an inspection of the main fitting and sliding tube is
required on those NLG that have sustained impacts as result of
towing incidents.
    The failure of the main fitting or sliding tube could lead to
NLG collapse.
    To prevent the above unsafe condition, this [EASA] AD requires a
one-time [detailed] inspection followed by repetitive inspections of
the main fitting and sliding tube of the NLG serial numbers listed
in the Applicability section of this [EASA] AD:

--One time Magnetic Particle Inspection (MPI) of the affected areas
to detect any crack,
--Repetitive Detailed Visual Inspections (DVI) of the affected areas
to detect any damage of the surface protections or corrosion.

    This [EASA] AD also requires the accomplishment of the
associated corrective actions, as necessary.
* * * * *
Required corrective actions include removing the labels if there is
evidence of sealant damage or moisture ingress behind the labels. If
surface treatment damage is found, the required actions are removing
the paint and cadmium prior to the MPI, removing any surface defects,
flap peening and replacing protective coatings, and replacing cracked
parts with serviceable parts. You may obtain further information by
examining the MCAI in the AD docket.

Relevant Service Information

    Airbus has issued Mandatory Service Bulletin A330-32-3233, dated
October 22, 2009 (for Model A330 airplanes); and Mandatory Service
Bulletin A340-32-4275, dated October 22, 2009 (for Model A340
airplanes). 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-2012-0296; Directorate
Identifier 2010-NM-106-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 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:

2012-06-19 Airbus: Amendment 39-17000. Docket No. FAA-2012-0296;
Directorate Identifier 2010-NM-106-AD.

(a) Effective Date

    This airworthiness directive (AD) becomes effective April 30,
2012.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to the airplanes identified in paragraphs (c)(1)
and (c)(2) of this AD, certificated in any category, all serial
numbers, if fitted with the nose landing gear (NLG) identified in
table 1 of this AD.
    (1) Airbus Model A330-201, -202, -203, -223, -243, -301, -302, -
303, -321, -322, -323, -341, -342, and -343 airplanes.
    (2) Airbus Model A340-211, -212, -213, -311, -312, and -313
airplanes.

               Table 1--Applicable NLG and Serial Numbers
------------------------------------------------------------------------
                   Part No.                            Serial No.
------------------------------------------------------------------------
D23285200.....................................  B2
D23285101-7...................................  B58
D23285101-10..................................  B75
D23581100-1...................................  B124
D23581100-1...................................  B159
D23581100-7...................................  B386
D23581100-7...................................  B398
D23581100-7...................................  B400
D23581100-7...................................  B403
------------------------------------------------------------------------

(d) Subject

    Air Transport Association (ATA) of America Code 32: Landing
Gear.

(e) Reason

    This AD was prompted by reports of a cracked main fitting and
sliding tube during overhaul of NLGs. We are issuing this AD to
detect and correct cracks, defects, or damage of the main fitting
and sliding tube of the NLG, which could result in failure of the
main fitting or sliding tube, and consequent NLG collapse.

(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) Detailed Inspection and Corrective Actions

    Within 900 flight hours after the effective date of this AD: Do
a detailed inspection of the NLG main fitting and sliding tube for
any cracks, defects, and damage of the paint or surface protection,
including paint removal and cracking of the surface treatment.
Before further flight after doing the detailed inspection of the
NLG, remove the labels, paint, surface protection coatings, and
cadmium from the NLG main fitting; do a detailed inspection for any
damage to the surface that will impair the magnetic particle
inspection (MPI); and, if any defects are found, before further
flight remove any defects by polishing. Do all actions specified in
paragraph (g) of this AD in accordance with the Accomplishment
Instructions of Airbus Mandatory Service Bulletin A330-32-3233,
dated October 22, 2009 (for Model A330 airplanes); or Airbus
Mandatory Service Bulletin A340-32-4275, dated October 22, 2009 (for
Model A340 airplanes).

(h) Magnetic Particle Inspection

    Before further flight after doing the actions required in
paragraph (g) of this AD: Do an MPI for cracking of the NLG main
fitting and sliding tube, in accordance with the Accomplishment
Instructions of Airbus Mandatory Service Bulletin A330-32-3233,
dated October 22, 2009 (for Model A330 airplanes); or Airbus
Mandatory Service Bulletin A340-32-4275, dated October 22, 2009 (for
Model A340 airplanes).
    (1) If no crack is detected during the MPI required by paragraph
(h) of this AD: Before further flight, flap peen the inspected area
where the paint and cadmium has been removed, and replace the
protective coatings, in accordance with the Accomplishment
Instructions of Airbus Mandatory Service Bulletin A330-32-3233,
dated October 22, 2009 (for Model A330 airplanes); or Airbus
Mandatory Service Bulletin A340-32-4275, dated October 22, 2009 (for
Model A340 airplanes).
    (2) If any crack is detected during the MPI required by
paragraph (h) of this AD: Before further flight, replace the damaged
part with a new or serviceable part, in accordance with the
Accomplishment Instructions of Airbus Mandatory Service Bulletin
A330-32-3233, dated October 22, 2009 (for Model A330 airplanes); or
Airbus Mandatory Service Bulletin A340-32-4275, dated October 22,
2009 (for Model A340 airplanes).

(i) Repetitive Inspections

    Within 900 flight hours after accomplishing the actions in
paragraphs (g) and (h) of this AD: Do a detailed inspection of the
surface treatment of the NLG main fitting and sliding tube for any
cracks, defects, and damage of the paint or surface protection,
including paint removal and cracking, in accordance with the
Accomplishment Instructions of Airbus Mandatory Service Bulletin
A330-32-3233, dated October 22, 2009 (for Model A330 airplanes); or
Airbus Mandatory Service Bulletin A340-32-4275, dated October 22,
2009 (for Model A340 airplanes).
    (1) If no crack, defect, or damage is detected during the
detailed inspection required by paragraph (i) of this AD: Repeat the
inspection thereafter at intervals not to exceed 900 flight hours.
    (2) If any crack, defect, or damage is detected during the
detailed inspection

required by paragraph (i) of this AD: Before further flight, inspect
for damage to the label surface and around the labels for signs of
sealant damage and moisture ingress behind labels; do a detailed
inspection for any damage to the surface that will impair the MPI;
and, if any defects are found, remove any defects by polishing, and
do an MPI for cracking of the NLG main fitting and sliding tube. Do
all actions specified in paragraph (i)(2) of this AD in accordance
with the Accomplishment Instructions of Airbus Mandatory Service
Bulletin A330-32-3233, dated October 22, 2009 (for Model A330
airplanes); or Airbus Mandatory Service Bulletin A340-32-4275, dated
October 22, 2009 (for Model A340 airplanes).
    (i) If no crack is detected during the MPI required by paragraph
(i)(2) of this AD: Before further flight, flap peen the inspected
area where the paint and cadmium has been removed, and replace the
protective coatings, in accordance with the Accomplishment
Instructions of Airbus Mandatory Service Bulletin A330-32-3233,
dated October 22, 2009 (for Model A330 airplanes); or Airbus
Mandatory Service Bulletin A340-32-4275, dated October 22, 2009 (for
Model A340 airplanes).
    (ii) If any crack is detected during the MPI required by
paragraph (i)(2) of this AD: Before further flight, replace the
damaged part with a new or serviceable part, in accordance with the
Accomplishment Instructions of Airbus Mandatory Service Bulletin
A330-32-3233, dated October 22, 2009 (for Model A330 airplanes); or
Airbus Mandatory Service Bulletin A340-32-4275, dated October 22,
2009 (for Model A340 airplanes). Repeat the inspection required by
paragraph (i) of this AD thereafter at intervals not to exceed 900
flight hours.

(j) Other FAA AD Provisions

    The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager,
International Branch, ANM-116, Transport Airplane Directorate, 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<PHONE_NUMBER>; 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.

(k) Related Information

    Refer to Mandatory Continuing Airworthiness Information (MCAI)
European Aviation Safety Agency (EASA) Airworthiness Directive 2010-
0034, dated March 5, 2010, corrected March 8, 2010, and the
following service information, for related information.
    (1) Airbus Mandatory Service Bulletin A330-32-3233, dated
October 22, 2009.
    (2) Airbus Mandatory Service Bulletin A340-32-4275, dated
October 22, 2009.

(l) 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 A330-32-3233, dated
October 22, 2009.
    (ii) Airbus Mandatory Service Bulletin A340-32-4275, dated
October 22, 2009.
    (2) For 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 NARA, call<PHONE_NUMBER>, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.

    Issued in Renton, Washington, on March 15, 2012.
John P. Piccola,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 2012-7183 Filed 4-12-12; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register: January 12, 2010 (Volume 75, Number 7)]
[Rules and Regulations]
[Page 1533-1535]
[DOCID:fr12ja10-5]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2009-0655; Directorate Identifier 2008-NM-192-AD;
Amendment 39-16157; AD 2010-01-01]
RIN 2120-AA64

Airworthiness Directives; The Boeing Company Model 747-200F, 747-
200C, 747-400, 747-400D, and 747-400F Series Airplanes

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

ACTION: Final rule.

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

SUMMARY: The FAA is superseding an existing airworthiness directive
(AD), which applies to all Model 747-200F, 747-200C, 747-400, 747-400D,
and 747-400F series airplanes. That AD currently requires repetitive
inspections for cracking of certain fuselage internal structure (i.e.,
Sections 42 and 46 fuselage frames, upper deck floor beams, electronic
bay access door cutout, nose wheel well, and main entry doors and door
cutouts), and repair if necessary. This new AD requires additional
repetitive inspections for cracking of certain fuselage structure
(i.e., Section 41 fuselage frames where they connect to upper deck
floor beams, and Section 41 fuselage frames between stringers (S-8 and
S-12)), and related investigative/corrective actions if necessary. This
AD also reduces the inspection threshold and repetitive inspection
intervals for certain airplanes. This AD results from fatigue tests and
analysis that identified additional areas of the fuselage where fatigue
cracks can occur. We are issuing this AD to prevent the loss of
structural integrity of the fuselage, which could result in rapid
depressurization of the airplane.

DATES: This AD becomes effective February 16, 2010.
    The Director of the Federal Register approved the incorporation by
reference of a certain publication listed in the AD as of February 16,
2010.
    The Director of the Federal Register approved the incorporation by
reference of Boeing Alert Service Bulletin 747-53A2500, dated December
21, 2004, as of April 6, 2006 (71 FR 10605, March 2, 2006).

ADDRESSES: For service information identified in this AD, contact
Boeing Commercial Airplanes, Attention: Data & Services Management,
P.O. Box 3707, MC 2H-65, Seattle, Washington 98124-2207; telephone 206-
544-5000, extension 1; fax<PHONE_NUMBER>; e-mail<EMAIL_ADDRESS>
Internet https://www.myboeingfleet.com.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://
www.regulations.gov; or in person at the Docket Management Facility
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 address for the
Docket Office (telephone<PHONE_NUMBER>) is the Document Management
Facility, U.S. Department of Transportation, Docket Operations, M-30,
West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE.,
Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Ivan Li, Aerospace Engineer, Airframe
Branch, ANM-120S, FAA, Seattle Aircraft Certification Office, 1601 Lind
Avenue, SW., Renton, Washington 98057-3356; telephone<PHONE_NUMBER>;
fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Discussion

    The FAA issued a notice of proposed rulemaking (NPRM) to amend 14
CFR part 39 to include an AD that supersedes AD 2006-05-02, Amendment
39-14499 (71 FR 10605, March 2, 2006). The existing AD applies to all
Model 747-200F, 747-200C, 747-400, 747-400D, and 747-400F series
airplanes. That NPRM was published in the Federal Register on July 23,
2009 (74 FR 36417). That NPRM proposed to continue to require
repetitive inspections for cracking of certain fuselage internal
structure (i.e., Sections 42 and 46 fuselage frames, upper deck floor
beams, electronic bay access door cutout, nose wheel well, and main
entry doors and door cutouts), and repair if necessary. That NPRM
proposed to require additional repetitive inspections for cracking of
certain fuselage structure (i.e., Section 41 fuselage frames where they
connect to upper deck floor beams, and Section 41 fuselage frames
between stringer (S-8 and S-12)), and related investigative/corrective
actions if necessary. That NPRM also proposed to reduce the inspection
threshold and repetitive inspection intervals for certain airplanes.
That NPRM resulted from fatigue tests and analysis that identified
areas of the fuselage where fatigue cracks can occur.

Comments

    We provided the public the opportunity to participate in the
development of this AD. We have

considered the comments that have been received on the NPRM.

Request To Revise References in Paragraph (m)(4) of the NPRM

    Boeing requests that paragraph (m)(4) of the NPRM be revised to
reference paragraphs (h) and (i)--not paragraphs (c) and (d). Boeing
states that in AD 2004-07-22 R1, Amendment 39-15326 (73 FR 1052,
January 7, 2008), paragraph identifiers (c) and (d) were revised to (h)
and (i).
    We agree. We have revised paragraph (m)(4) of this final rule
accordingly. In addition, we have revised paragraph (m)(4)(i) of this
AD to change the reference from paragraph (d) to paragraph (i) of AD
2004-07-22 R1.
    Boeing also requests that paragraph (m)(4)(ii) of the NPRM be
revised to add a reference to Boeing Alert Service Bulletin 747-
53A2500, Revision 1, dated September 25, 2008. Boeing states that both
the original and Revision 1 of Boeing Alert Service Bulletin 747-
53A2500 provide inspections that are an AMOC to AD 2004-07-22 R1.
    We agree for the reasons provided by the commenter. We have revised
paragraph (m)(4)(ii) of this AD accordingly.

Conclusion

    We have carefully reviewed the available data, including the
comments that have been received, and determined that air safety and
the public interest require adopting the AD with the changes described
previously. We have determined that these changes will neither increase
the economic burden on any operator nor increase the scope of the AD.

Explanation of Changes Made to This AD

    We have revised this AD to identify the legal name of the
manufacturer as published in the most recent type certificate data
sheet for the affected airplane models.

Costs of Compliance

    There are about 640 airplanes of the affected design in the
worldwide fleet. The following table provides the estimated costs for
U.S. operators to comply with this AD. The average labor rate is $80
per work hour.

                                                 Estimated Costs
----------------------------------------------------------------------------------------------------------------
                                                                                Number of U.S.-
            Action               Work hours         Parts           Cost per       registered       Fleet cost
                                                                    airplane        airplanes
----------------------------------------------------------------------------------------------------------------
Inspections (required by AD               260  None required..  $20,800 per                  71  $1,476,800 per
 2006-05-02).                                                    inspection                       inspection
                                                                 cycle.                           cycle.
Inspections of additional                   7  None required..  $560 per                     71  $39,760 per
 areas (new required action).                                    inspection                       inspection
                                                                 cycle.                           cycle.
----------------------------------------------------------------------------------------------------------------

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 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 DOT Regulatory Policies and
Procedures (44 FR 11034, February 26, 1979); and
    (3) Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.
    We prepared a regulatory evaluation of the estimated costs to
comply with this AD and placed it in the AD docket. See the ADDRESSES
section for a location to examine the regulatory evaluation.

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

0
Accordingly, under the authority delegated to me by the Administrator,
the FAA amends 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

0
2. The Federal Aviation Administration (FAA) amends Sec.  39.13 by
removing Amendment 39-14499 (71 FR 10605, March 2, 2006) and by adding
the following new airworthiness directive (AD):

2010-01-01 The Boeing Company: Amendment 39-16157. Docket No. FAA-
2009-0655; Directorate Identifier 2008-NM-192-AD.

Effective Date

    (a) This AD becomes effective February 16, 2010.

Affected ADs

    (b) This AD supersedes AD 2006-05-02, Amendment 39-14499.

Applicability

    (c) This AD applies to all The Boeing Company Model 747-200F,
747-200C, 747-400, 747-400D, and 747-400F series airplanes;
certificated in any category.

Subject

    (d) Air Transport Association (ATA) of America Code 53:
Fuselage.

Unsafe Condition

    (e) This AD results from fatigue tests and analysis that
identified additional areas of the fuselage where fatigue cracks can
occur. We are issuing this AD to prevent the loss of structural
integrity of the fuselage, which could result in rapid
depressurization of the airplane.

Compliance

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

Restatement of Requirements of AD 2006-05-02, With Updated Service
Information and Reduced Compliance Times for Group 8 Airplanes

Inspections

    (g) Do initial and repetitive inspections for fuselage cracks
using applicable internal and external detailed inspection methods,
and repair all cracks, by doing all the actions specified in the
Accomplishment Instructions of Boeing Alert Service Bulletin 747-
53A2500, dated December 21, 2004; or Revision 1, dated September 25,
2008; except as required by paragraph (h) or provided by paragraph
(l) of this AD. After the effective date of this AD, Boeing Alert
Service Bulletin 747-53A2500, Revision 1, dated September 25, 2008,
must be used. Do the initial and repetitive inspections at the
applicable times specified in paragraph (g)(1) or (g)(2) of this AD,
except as required by paragraph (j) of this AD. Repair any crack
before further flight after detection.
    (1) For Groups 1 through 7, 9, and 10 identified in Boeing Alert
Service Bulletin 747-53A2500, Revision 1, dated September 25, 2008:
Do the initial and repetitive inspections at the times specified in
paragraph 1.E. of Boeing Alert Service Bulletin 747-53A2500, dated
December 21, 2004, except as required by paragraph (i) of this AD.
    (2) For Group 8 airplanes identified in Boeing Alert Service
Bulletin 747-53A2500, Revision 1, dated September 25, 2008: Do the
initial and repetitive inspections at the applicable time specified
in paragraph 1.E. of Boeing Alert Service Bulletin 747-53A2500,
Revision 1, dated September 25, 2008, except as required by
paragraph (k) of this AD.

Exceptions to Service Bulletin Procedures

    (h) If any crack is found during any inspection required by this
AD, and Boeing Alert Service Bulletin 747-53A2500, dated December
21, 2004; or Revision 1, dated September 25, 2008; specifies to
contact Boeing for appropriate action: Before further flight, repair
the crack using a method approved in accordance with the procedures
specified in paragraph (m) of this AD.
    (i) Where Boeing Alert Service Bulletin 747-53A2500, dated
December 21, 2004; or Revision 1, dated September 25, 2008;
specifies a compliance time after the date on the original issue of
the service bulletin, this AD requires compliance within the
specified compliance time after April 6, 2006 (the effective date of
AD 2006-05-02).

New Requirements of This AD

Actions for Additional Areas

    (j) For the additional inspection areas of Groups 1 through 7,
9, and 10 airplanes, identified in Boeing Alert Service Bulletin
747-53A2500, Revision 1, dated September 25, 2008: Do initial and
repetitive inspections for cracking of the inspection areas, and, as
applicable, repair cracking, by doing all the actions specified in
the Accomplishment Instructions of Boeing Alert Service Bulletin
747-53A2500, Revision 1, dated September 25, 2008; except as
required by paragraph (h) of this AD. Do the initial and repetitive
inspections at the times specified in paragraph 1.E. of Boeing Alert
Service Bulletin 747-53A2500, Revision 1, dated September 25, 2008,
except as required by paragraph (k) of this AD. Repair all cracking
before further flight.
    (k) Where Boeing Alert Service Bulletin 747-53A2500, Revision 1,
dated September 25, 2008, specifies a compliance time after the date
on Revision 1 of the service bulletin, this AD requires compliance
within the specified compliance time after the effective date of
this AD.
    (l) For Group 8 airplanes, inspection of Areas 2 and 5
identified in Boeing Alert Service Bulletin 747-53A2500, dated
December 21, 2004, as required by paragraph (g) of this AD, is no
longer required.

Alternative Methods of Compliance (AMOCs)

    (m)(1) The Manager, Seattle ACO, FAA, has the authority to
approve AMOCs for this AD, if requested using the procedures found
in 14 CFR 39.19. Send information to ATTN: Ivan Li, Aerospace
Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft
Certification Office, 1601 Lind Avenue, SW., Renton, Washington
98057-3356; telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>. Or, e-mail
information to<EMAIL_ADDRESS>    (2) To request a different method of compliance or a different
compliance time for this AD, follow the procedures in 14 CFR 39.19.
Before using any approved AMOC on any airplane to which the AMOC
applies, notify your principal maintenance inspector (PMI) or
principal avionics inspector (PAI), as appropriate, or lacking a
principal inspector, your local Flight Standards District Office.
The AMOC approval letter must specifically reference this AD.
    (3) AMOCs approved previously in accordance with AD 2006-05-02
are approved as alternative methods of compliance with the
corresponding requirements of this AD.
    (4) Accomplishment of the inspections specified in this AD is
considered an AMOC for the applicable requirements of paragraphs (h)
and (i) of AD 2004-07-22 R1, Amendment 39-15326, under the
conditions specified in paragraphs (m)(4)(i) and (m)(4)(ii) of this
AD.
    (i) The inspections specified in this AD must be done within the
compliance times specified in AD 2004-07-22 R1. The initial
inspection specified in this AD must be done at the times specified
in paragraph (i) of AD 2004-07-22 R1, and the inspections specified
in this AD must be repeated within the intervals specified in
paragraph (g) of this AD.
    (ii) The AMOC specified in paragraph (m)(4) of this AD applies
only to the areas of Boeing Supplemental Structural Inspection
Document for Model 747 Airplanes, Document D6-35022, Revision G,
dated December 2000, that are specified in Boeing Alert Service
Bulletin 747-53A2500, dated December 21, 2004; or Boeing Alert
Service Bulletin 747-53A2500, Revision 1, dated September 25, 2008.
    (5) An AMOC that provides an acceptable level of safety may be
used for any repair required by this AD, if it is approved by an
Authorized Representative for the Boeing Commercial Airplanes
Delegation Option Authorization Organization who has been authorized
by the Manager, Seattle ACO, to make those findings. For a repair
method to be approved, the repair must meet the certification basis
of the airplane, and the approval must specifically refer to this
AD.

Material Incorporated by Reference

    (n) You must use Boeing Alert Service Bulletin 747-53A2500,
dated December 21, 2004, as of April 6, 2006: or Boeing Alert
Service Bulletin 747-53A2500, Revision 1, dated September 25, 2008;
as applicable; to do the actions required by this AD, unless the AD
specifies otherwise.
    (1) The Director of the Federal Register approved the
incorporation by reference of Boeing Alert Service Bulletin 747-
53A2500, Revision 1, dated September 25, 2008, under 5 U.S.C. 552(a)
and 1 CFR part 51.
    (2) The Director of the Federal Register approved the
incorporation by reference of Boeing Alert Service Bulletin 747-
53A2500, dated December 21, 2004, as of April 6, 2006 (71 FR 10605,
March 2, 2006).
    (3) For service information identified in this AD, contact
Boeing Commercial Airplanes, Attention: Data & Services Management,
P.O. Box 3707, MC 2H-65, Seattle, Washington 98124-2207; telephone
206-544-5000, extension 1; fax<PHONE_NUMBER>; e-mail
<EMAIL_ADDRESS>Internet https://www.myboeingfleet.com.
    (4) 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> or<PHONE_NUMBER>.
    (5) You may also review copies of the service information that
is incorporated by reference at the National Archives and Records
Administration (NARA). For information on the availability of this
material at NARA, call<PHONE_NUMBER>, or go to: http://
www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.

    Issued in Renton, Washington, on December 17, 2009.
Stephen P. Boyd,
Acting Manger, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. E9-30968 Filed 1-11-10; 8:45 am]
BILLING CODE 4910-13-P