[Federal Register: March 5, 2007 (Volume 72, Number 42)]
[Notices]
[Page 9787-9792]
[DOCID:fr05mr07-82]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-27745; 812-13344]

BLDRS Index Funds Trust, et al.; Notice of Application

February 28, 2007.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order under section 6(c) of the
Investment Company Act of 1940 (``Act'') for an exemption from sections
2(a)(32), 4(2), 22(d), 24(d) and 26(a)(2)(C) of the Act and rule 22c-1
under the Act; under sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and (a)(2) of the Act; and under
section 17(d) of the Act and rule 17d-1 under the Act to permit certain
joint transactions.

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SUMMARY OF APPLICATION: Applicants request an order that would permit:
(a) BLDRS Index Funds Trust (the ``Fund''), a unit investment trust
(``UIT'') with multiple series (each series, a ``Trust'') whose
portfolios will consist of the component stocks of various specified
indices (collectively, the ``Benchmark Indices,'' and each, a
``Benchmark Index''), to issue shares (``Trust Shares'') that are only
redeemable in large aggregations; (b) secondary market transactions in
Trust Shares to occur at negotiated prices; (c) dealers to sell Trust
Shares to purchasers in the secondary market unaccompanied by a
prospectus when prospectus delivery is not required by the Securities
Act of 1933 (``Securities Act''); (d) the Trusts, rather than the
Sponsor (as defined below), to bear certain expenses associated with
maintaining the Trusts; (e) certain ``affiliated persons'' of the
Trusts to deposit securities into, and receive securities from, the
Trusts in connection with the purchase and redemption of Trust Shares;
and (f) the Trusts to reimburse the Sponsor for payment of an annual
licensing fee to The Bank of New York (``BoNY'').

APPLICANTS: The Fund, PowerShares Capital Management LLC
(``PowerShares,'' together with its successor in interest \1\ and with
any person, directly or indirectly, controlling, controlled by, or
under common control with, PowerShares, ``Sponsor''), and ALPS
Distributors, Inc. (``Distributor'').
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    \1\ ``Successors in interest'' means any entity or entities that
result from a reorganization into another jurisdiction or a change
in the type of business organization.

FILING DATES: The application was filed on November 20, 2006.
Applicants have

agreed to file an amendment during the notice period, the substance of
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which is reflected in this notice.

HEARING OR NOTIFICATION OF HEARING: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on March 20, 2007, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.

ADDRESSES: Addresses: Secretary, U.S. Securities and Exchange
Commission, 100 F Street, NE., Washington, DC 20549-1090. Applicants:
H. Bruce Bond, PowerShares Capital Management LLC, 301 West Roosevelt
Road, Wheaton, IL 60187.

FOR FURTHER INFORMATION CONTACT: Jaea F. Hahn, Senior Counsel, at (202)
551-6870, or Janet M. Grossnickle, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Office of Investment Company
Regulation).

Applicants' Representations

    1. Each Trust is a unit investment trust that is or will be
organized under the laws of the State of New York. The Sponsor is a
wholly owned subsidiary of AIM Management Group Inc.\2\ The Bank of New
York (``BoNY'') acts as trustee to each Trust (``Trustee'') pursuant to
a trust agreement entered into by and between BoNY and the Initial
Sponsor (each a ``Trust Agreement''). The Distributor is registered as
a broker-dealer under the Securities Exchange Act of 1934 (``Exchange
Act'') and serves, on an agency basis, as principal underwriter of the
Trusts.
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    \2\ On October 18, 2006, PowerShares entered into a Transaction
Agreement (``Transaction Agreement'') with The Nasdaq Stock Market
(``Nasdaq''), the parent of Nasdaq Global Funds, Inc. (formerly
named Nasdaq AMEX Investment Product Services, Inc., and later
renamed Nasdaq Financial Products Services, Inc., the ``Initial
Sponsor'') pursuant to which the Initial Sponsor will transfer
sponsorship of the Trusts to PowerShares. In connection with the
Transaction Agreement, PowerShares is seeking exemptive relief
substantially identical to the relief granted to the Trust pursuant
to a Commission order (Investment Company Act Release No. 25797
(Nov. 8, 2002), as amended by Investment Company Act Release No.
26415 (Apr. 9, 2004)). The transfer of sponsorship of the Trust from
the Initial Sponsor to PowerShares is contingent upon receipt of the
exemptive relief requested in the application.
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    2. Each Trust holds a portfolio of securities (``Portfolio
Securities'') consisting of substantially all of the securities in
substantially the same weighting as the component securities of the
Benchmark Index that it tracks (the ``Index Securities''). There are
currently four Trusts (``Current Trusts'').\3\ The Benchmark Indices
for the Current Trusts (the ``Initial Benchmark Indices'') are compiled
by BoNY (the ``BoNY Index Provider'').\4\ Pursuant to guidelines
adopted by BoNY for the Index Provider, the BoNY personnel involved in
compiling the Benchmark Indices cannot include any BoNY employees who
are members of the BoNY division that provides trustee services to the
Trusts, any broker-dealer affiliated with BoNY, BoNY's asset management
division, or BoNY's private banking group.
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    \3\ The Current Trusts are the BLDRS Asia 50 ADR Index Fund,
BLDRS Developed Markets 100 ADR Index Fund, BLDRS Emerging Markets
50 ADR Index Fund and BLDRS Europe 100 ADR Index Fund. All Trusts
that currently intend to rely on the requested order have been named
as applicants. Any other existing Trust or any Trust organized in
the future that relies on the requested order will comply with the
terms and conditions of the application.
    \4\ The Benchmark Indices are the (a) BoNY Asia 50 ADR Index,
(b) BoNY Developed Markets 100 ADR Index, (c) BoNY Emerging Markets
50 ADR Index and (d) BoNY Europe 100 ADR Index. The Initial
Benchmark Indices are sub-indices of the BoNY ADR Index, which is an
index of all U.S. exchange-listed Depositary Receipts (``DRs''),
subject to certain eligibility requirements. Applicants note that
BoNY is a prominent participant in the DR market, and receives
various fees and commissions in connection with its DR program
functions. BoNY has informed applicants that the index compilation
is bound by objective criteria, and that the identity of the
depositary bank for a DR is never a criterion in the selection of
Index Securities. As discussed in the application, BoNY represents
that its DR sales efforts are not coordinated with the compilation
of the Benchmark Indices.
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    3. In the future, applicants may offer additional Trusts based on
other Benchmark Indices (``Future Trusts''). Any Future Trust will (a)
be organized under New York state law pursuant to a trust agreement
substantially identical to the Trust Agreements, (b) be sponsored by
the Sponsor, and (c) comply with the terms and conditions of the
requested order. No entity that creates, compiles, sponsors or
maintains a Benchmark Index will be an affiliated person, as defined in
section 2(a)(3) of the Act, or an affiliated person of an affiliated
person, of the Sponsor, Distributor or promoter of a Trust.
    4. Trust Shares, units of beneficial interest in the Trusts, are
designed to provide investors with an instrument that closely tracks
the Benchmark Indices, trades like a share of common stock, and pays
periodic dividends proportionate to those paid by the Index Securities
to the extent they exceed the Trust's fees and expenses.\5\ The Trustee
makes adjustments to the Portfolio Securities to reflect changes made
by the BoNY Index Provider to the composition and weighting of the
Index Securities.\6\ All adjustments to the Portfolio Securities are
made by the Trustee as set forth in the Trust Agreements and are non-
discretionary. Applicants state that the Trustee, consistent with its
fiduciary duties, may utilize a broker-dealer that is an ``affiliated
person,'' as defined in section 2(a)(3) of the Act, of the Trustee
(each, an ``Affiliated Broker-Dealer'') in executing the transactions
that are necessitated by the required adjustment(s).\7\ Applicants
state that neither BoNY nor any Affiliated Broker-Dealer purchases or
sells DRs on a principal basis, or intends to sell DRs or any other
securities to any Trust on a principal basis. BoNY and its Affiliated
Broker-Dealers would engage in transactions with a Trust on an agency
basis only.
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    \5\ The Trusts make quarterly distributions when dividends on
the Portfolio Securities and other income of the Trust, if any,
exceed fees and expenses accrued by the Trust during the previous
quarter. The Trustee may vary the frequency of dividend
distributions under certain circumstances.
    \6\ The BoNY Index Provider determines, comprises and calculates
Benchmark Indices without regard to any Trust. BoNY has instituted
formal firewall procedures to ensure that no BoNY personnel involved
in providing trustee services to the Trusts have access to
information regarding changes to the Benchmark Indices prior to
their public announcement.
    \7\ BoNY has adopted firewall procedures that prohibit
communications regarding changes or proposed changes to the
Benchmark Indices between any Affiliated Broker-Dealer and the BoNY
personnel involved in the compilation of the Benchmark Indices.
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    5. Trust fees and expenses are first paid out of income received by
the Trust in the form of dividends and other distributions on Portfolio
Securities.\8\ Each Trust pays the Trustee a fee ranging from 0.06% to
0.10% of the net asset value (``NAV'') of the Trust on an annualized
basis, such percentage to vary based on the NAV of the Trust. The
Trustee in its discretion may waive all or any portion of such fee.
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    \8\ Applicants expect that the income of the Trust may be
insufficient to pay the fees and expenses of the Trust. In such
circumstances, the Trustee will sell Portfolio Securities to
generate sufficient cash to pay the Trust fees and expenses in
excess of Trust income. The Trustee is ordinarily required to sell
Portfolio Securities whenever the Trustee determines that accrued
fees and expenses exceed dividends and other Trust accrued income on
a projected basis by more than 0.01% of the NAV of the Trust.
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    6. Pursuant to a license agreement (``License Agreement''), the
BoNY Index

Provider has granted the Sponsor a license to use the Benchmark Indices
and certain trademarks of BoNY. The Sponsor will pay the BoNY Index
Provider an annual licensing fee for each Benchmark Index and will seek
reimbursement from each Trust for the fee charged in connection with
its Benchmark Index. The Sponsor will pay the Distributor a flat annual
fee for services provided to the Trusts. The Sponsor will not seek
reimbursement from any Trust for such payment without obtaining prior
exemptive relief from the Commission.
    7. Trust Shares are issued in aggregations of 50,000 shares
(``Creation Units''). Orders to purchase Creation Units generally must
be delivered to the Distributor through a party that has executed a
participant agreement with the Distributor and Trustee, and is either
(a) a participant in the Continuous Net Settlement System of the
National Securities Clearing Corporation (``NSCC,'' and the NSCC
process of placing orders, the ``Trust Shares Clearing Process''), or
(b) a Depository Trust Company (``DTC'') participant, but such entity
or person is not required to be a Nasdaq member.
    8. An investor wishing to purchase a Creation Unit from the Trust
will have to transfer to the Trustee a ``Portfolio Deposit,''
consisting of the following: (a) A portfolio of securities
substantially similar in composition and weighting to the Index
Securities (``Deposit Securities''); \9\ (b) a cash payment equal to
the dividends accrued on the Portfolio Securities since the last
dividend payment on the Portfolio Securities, net of expenses and
liabilities (``Income Net of Expense Amount''); and (c) a cash payment
or credit to equalize any differences between the market value of the
Deposit Securities and the NAV of the Trust on a per Creation Unit
basis (``Balancing Amount,'' and together with the Income Net of
Expense Amount, the ``Cash Component'').\10\ The Sponsor or its
designee makes available on each Business Day a list of the names and
the required number of shares of each of the Deposit Securities in the
current Portfolio Deposit, as well as the Income Net of Expense Amount,
effective through and including the previous Business Day, per
outstanding Trust Share.\11\ The Sponsor or its designee makes
available on the Exchange, every 15 seconds of each Business Day, the
sum of the Income Net of Expense Amount and the value of the Deposit
Securities, on a per Trust Share basis. An investor making a Portfolio
Deposit is charged a service fee (``Transaction Fee'') to be paid to
the Trustee to defray the Trustee's costs in processing transactions
for the Trust.\12\
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    \9\ The Trusts will comply with the federal securities laws in
accepting Deposit Securities and satisfying redemptions with
Redemption Securities (as defined below), including that the Deposit
Securities and Redemption Securities are sold in transactions that
would be exempt from registration under the Securities Act of 1933.
The specified Deposit Securities and Redemption Securities generally
will correspond pro rata to the Portfolio Securities.
    \10\ At the close of the market on each Business Day (as defined
below), the Trustee calculates the NAV of each Trust, divides that
amount by the total number of shares outstanding (yielding a ``Per
Trust Share NAV''), multiplies the Per Trust Share NAV by the number
of Trust Shares in a Creation Unit (e.g., 50,000), thereby
calculating the NAV per Creation Unit. The Trustee then calculates
the required number of shares of Index Securities and the Cash
Component that will comprise a Portfolio Deposit for the following
Business Day. A ``Business Day'' is any day that the Nasdaq or any
other Exchange that lists Trust Shares is open for business and any
day that the Trusts are open for business as required by section
22(e) of the Act.
    \11\ The cash equivalent of an Index Security may be included in
the Cash Component of a Portfolio Deposit in lieu of the Index
Security if (a) the Trustee determines that an Index Security is
likely to be unavailable or available in insufficient quantity for
inclusion in a Portfolio Deposit, or (b) a particular investor is
restricted from investing or engaging in transactions in the Index
Security (for example, when the investor is a broker-dealer
restricted by regulation or internal policy from investing in
securities issued by a company on whose board of directors one of
its principals serves or when the investor is a broker-dealer and
the security is on its ``restricted list'').
    \12\ The Transaction Fee will be $10 per each security ``name''
(i.e., each security identified by a separate CUSIP number) in the
Portfolio Deposit, rounded to the nearest $500 for BLDRS Asia 50 ADR
Index Fund and BLDRS Emerging Markets 50 ADR Index Fund and $1,000
for BLDRS Developed Markets 100 ADR Index Fund and BLDRS Europe 100
ADR Index Fund per Participating Party (as defined below) per day,
regardless of the number of Creation Units purchased by such
Participating Party on such day. ``Participating Party'' means an
NSCC participant who may place orders through the Trust Shares
Clearing Process. The Transaction Fee may be changed by the Trustee
with the Sponsor's consent, but will not exceed 0.20% of the value
of a Creation Unit. Investors who purchase Creation Units outside
the Trust Shares Clearing Process will pay the Transaction Fee plus
an amount not to exceed three times the Transaction Fee. The amount
of the Transaction Fee is disclosed in the prospectus for the Trust.
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    9. Orders to purchase Creation Units are placed with the
Distributor, who is responsible for transmitting orders to the Trustee.
The Distributor issues confirmations of acceptance, issues delivery
instructions to the Trustee to implement the delivery of Creation
Units, and maintains records of the orders and the confirmations. The
Distributor also is responsible for delivering prospectuses to
purchasers of Creation Units and may provide certain other
administrative services.
    10. Persons purchasing Creation Units from the Trust may hold the
Trust Shares or sell some, or all, of them in the secondary market.
Trust Shares of the Current Trusts are listed on Nasdaq and all Trust
Shares will be listed on a national securities exchange as defined in
section 2(a)(26) of the Act (``Exchange''). Trust Shares are traded in
the secondary market as individual units (i.e., in less than Creation
Units) in the same manner as other equity securities. Participating
Parties act as market makers (``Market Makers'') on Nasdaq and maintain
a market for Trust Shares.\13\ The price of each Trust Share that
trades on Nasdaq is based on the current bid-offer market. Transactions
involving Trust Shares on Nasdaq are subject to customary brokerage
commissions and charges. Applicants state that the price at which Trust
Shares trade is disciplined by arbitrage opportunities created by the
continuous ability to purchase or redeem Creation Units at their NAV,
which ensures that Trust Shares do not trade at a material premium or
discount in relation to their NAV.\14\
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    \13\ No particular Market Maker is contractually obligated to
make a market in Trust Shares although Nasdaq's listing requirements
stipulate that at least two Market Makers must be registered in
Trust Shares to maintain a listing on Nasdaq. Applicants state that
no Market Maker will be an affiliated person, promoter, or principal
underwriter of the Trusts, or an affiliated person of such persons,
within the meaning of section 2(a)(3) of the Act, except pursuant to
section 2(a)(3)(A) or (C) of the Act due to ownership of Trust
Shares, as described below.
    \14\ Applicants do not believe there are any special liquidity
issues as to constituents in the Benchmark Indices, in light of the
fact that constituent DRs are selected based on liquidity that is
high relative to DRs that would otherwise fit the relevant criteria.
The constituent DRs of the Benchmark Indices are traded and priced
on national securities exchanges, as are the constituent securities
of other indices on which exchange-traded funds investing in
domestic securities are based. Accordingly, applicants believe that
the pricing transparency for DRs should be equivalent to that of
other securities that are traded and priced on national securities
exchanges. Because there are no apparent differences in the pricing
transparency between DRs and such other equity securities,
applicants believe that there are no corresponding differences in,
and no deleterious effects on, the arbitrage efficiency of the
Trusts.
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    11. Purchasers of Creation Units include institutional investors
and arbitrageurs, which include institutional investors. Market Makers
or specialists of an Exchange also may purchase Trust Shares in
connection with their market making activities. Secondary market
purchasers of Trust Shares include both institutional and retail
investors.\15\
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    \15\ Trust Shares are registered in book-entry form only. DTC or
its nominee is the record owner of all outstanding Trust Shares.
Beneficial ownership of Trust Shares is shown on the records of DTC
or its participants.
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    12. Applicants make available a standard Trust Shares product
description (``Product Description'') to members and member
organizations for

distribution to investors purchasing Trust Shares in accordance with
Exchange rules. Currently, the rules of the National Association of
Securities Dealers (``NASD'') require that NASD members distribute a
Product Description to all purchasers of Trust Shares. The Product
Description provides a plain English overview of a Trust, including the
material risks and potential rewards of owning Trust Shares, and
discloses the salient aspects of Trust Shares. The Product Description
advises investors that a prospectus for Trust Shares is available
without charge from the investor's broker or from the Distributor.
Applicants believe that the volume of purchase transactions in which an
investor will not receive a Product Description does not constitute a
significant portion of the market activity in Trust Shares.
    13. Trust Shares are not individually redeemable, except upon
termination of the Trust. Trust Shares are redeemable in Creation Units
only. An investor redeeming a Creation Unit will receive a portfolio of
securities typically identical in composition and weighting to the
Deposit Securities as of the date the redemption request was made
(``Redemption Securities''). The redeeming investor may receive the
cash equivalent of an Index Security (a) when the Trustee determines
that an Index Security is likely to be unavailable or available in
insufficient quantity for delivery by the Trust, or (b) upon the
request of the redeeming investor (because, for example, the redeeming
investor is restricted by regulation or otherwise from holding an Index
Security). The redeeming investor also may receive, or may pay, cash in
an amount equal to the Cash Component in effect on the relevant
Business Day for Portfolio Deposits (``Cash Redemption Amount''). The
redeeming investor will pay a Transaction Fee, which will be calculated
in the same manner as a Transaction Fee payable in connection with the
purchase of a Creation Unit on the relevant Business Day.
    14. Because each Trust ordinarily redeems in kind, rather than in
cash, the Trustee will not have to maintain cash reserves for
redemptions. This allows the assets of each Trust to be committed as
fully as possible to tracking the relevant Benchmark Index, and allows
each Trust to track the relevant Benchmark Index more closely than
other market basket products that must allocate a portion of their
assets to cash for redemptions.

Applicants' Legal Analysis

    1. Applicants request an order under (a) section 6(c) of the Act
granting an exemption from sections 2(a)(32), 4(2), 22(d), 24(d) and
26(a)(2)(C) of the Act and rule 22c-1 under the Act; (b) sections 6(c)
and 17(b) of the Act granting an exemption from sections 17(a)(1) and
(2) of the Act; and (c) section 17(d) and rule 17d-1 under the Act to
permit certain joint transactions.
    2. Section 6(c) of the Act provides that the Commission may exempt
any person, security, or transaction, or any class of persons,
securities, or transactions, if and to the extent that such exemption
is necessary or appropriate in the public interest and consistent with
the protection of investors and the purposes fairly intended by the
policy and provisions of the Act.

Sections 4(2) and 2(a)(32) of the Act

    3. Section 4(2) of the Act defines a UIT as an investment company
that, among other things, issues only redeemable securities. Section
2(a)(32) of the Act defines a redeemable security as any security,
other than short-term paper, under the terms of which the holder, upon
its presentation to the issuer is entitled to receive approximately a
proportionate share of the issuer's current net assets, or the cash
equivalent. Because Trust Shares would not be individually redeemable,
applicants request an order that would permit the Trust to register as
a UIT and issue Trust Shares that are redeemable in Creation Units
only. Applicants state that investors may purchase and redeem Trust
Shares through the Trust in Creation Units. Applicants further state
that, because the market price of Creation Units is disciplined by
arbitrage opportunities, investors should be able to sell individual
Trust Shares in the secondary market at approximately NAV.

Section 22(d) of the Act and Rule 22c-1 Under the Act

    4. Section 22(d) of the Act, among other things, prohibits a dealer
from selling a redeemable security that is being currently offered to
the public by or through an underwriter, except at the current public
offering price described in the prospectus. Rule 22c-1 under the Act
generally requires that a dealer selling, redeeming, or repurchasing a
redeemable security do so only at a price based on its NAV next
computed after receipt of a tender of the security for redemption or of
an order to purchase or sell the security. Applicants state that
secondary market trading in Trust Shares takes place at negotiated
prices, not at a current offering price described in the prospectus and
not at a price based on NAV. Thus, purchases and sales of Trust Shares
in the secondary market do not comply with section 22(d) and rule 22c-
1, and applicants request an exemption from these provisions.
    5. Applicants maintain that, while there is little legislative
history regarding section 22(d), its provisions and those of rule 22c-1
appear to have been designed to (a) prevent dilution caused by certain
riskless trading schemes by principal underwriters and contract
dealers, (b) prevent unjust discrimination or preferential treatment
among buyers, and (c) assure an orderly distribution of shares by
eliminating price competition from dealers offering shares at less than
the published sales price and repurchasing shares at more than the
published redemption price. Applicants believe that none of these
purposes is thwarted by permitting Trust Shares to trade in the
secondary market at negotiated prices. Applicants state that secondary
market trading in Trust Shares does not involve the Trust directly and
cannot, therefore, result in dilution of Trust assets. Applicants also
state that, to the extent different prices exist during a trading day,
or from day to day, for Trust Shares, such variances occur as a result
of third-party market forces, such as supply and demand, and not as a
result of unjust or discriminatory manipulation. Therefore, applicants
assert that secondary market transactions in Trust Shares do not create
discrimination or preferential treatment among buyers. Finally,
applicants contend that the proposed distribution system is orderly
because arbitrage activity ensures that the difference between the
market price of Trust Shares and their NAV remains narrow.

Section 24(d) of the Act

    6. Section 24(d) of the Act provides, in pertinent part, that the
prospectus delivery exemption provided to dealer transactions by
section 4(3) of the Securities Act does not apply to any transaction in
a redeemable security issued by a UIT. Applicants request an exemption
from section 24(d) to permit dealers in Trust Shares to rely on the
prospectus delivery exemption provided by section 4(3) of the
Securities Act.\16\
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    \16\ Applicants are not seeking relief from the prospectus
delivery requirement for non-secondary market transactions,
including purchases of Creation Units or those involving an issuer.
Applicants state that persons purchasing Creation Units will be
cautioned in the prospectus that some activities on their part may,
depending on the circumstances, result in their being deemed
statutory underwriters and subject them to the prospectus delivery
and liability provisions of the Securities Act. For example, a
broker-dealer firm and/or its client may be deemed a statutory
underwriter if it takes Creation Units after placing an order with
the Distributor, breaks them down into the constituent Trust Shares,
and sells Trust Shares directly to its customers, or if it chooses
to couple the purchase of a supply of new Trust Shares with an
active selling effort involving solicitation of secondary market
demand for Trust Shares. The prospectus states that whether a person
is an underwriter depends upon all the facts and circumstances
pertaining to that person's activities. The prospectus also states
that dealers who are not ``underwriters'' but are participating in a
distribution (as contrasted to ordinary secondary market trading
transactions), and thus dealing with Trust Shares that are part of
an ``unsold allotment'' within the meaning of section 4(3)(C) of the
Securities Act, would be unable to take advantage of the prospectus
delivery exemption provided by section 4(3) of the Securities Act.

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    7. Applicants state that the secondary market for Trust Shares is
significantly different from the typical secondary market for UIT
securities, which is usually maintained by the sponsor of the UIT.
Trust Shares are listed on an Exchange and trade in the same manner as
listed securities issued by operating companies and closed-end
investment companies. Dealers selling shares of operating companies and
closed-end investment companies in the secondary market are generally
not required to deliver a prospectus to a purchaser.
    8. Applicants contend that Trust Shares, as listed securities,
merit a reduction in the compliance costs and regulatory burdens
resulting from the imposition of prospectus delivery obligations in the
secondary market. Because Trust Shares are exchange-listed, prospective
investors have access to several types of market information about the
product. Applicants state that quotations, last sale price, and volume
information are continually available on a real-time basis through the
consolidated tape and are available throughout the day on brokers'
computer screens and other electronic services. The previous day's
price and volume information also is published in the financial section
of newspapers. The Sponsor publishes daily, on a per Trust Share basis,
the Income Net of Expense Amount. The Fund's Web site contains
quantitative information, updated on a daily basis, regarding the
previous Business Day's NAV and the reported closing price. The Web
site also includes for each Trust, a calculation of the premium or
discount of the closing price against NAV and data, in chart format,
displaying the frequency distribution of discounts and premiums of the
closing price against the NAV, within appropriate ranges, for each of
the four previous calendar quarters.
    9. In addition, secondary market purchasers generally receive the
Product Description. Applicants state that, while the Product
Description is not intended as a substitute for a prospectus, it
contains pertinent information about Trust Shares. Applicants also note
that Trust Shares are understandable to retail investors as a product
that tracks the Benchmark Indices.

Section 26(a)(2)(C) of the Act

    10. Section 26(a)(2)(C) of the Act requires, among other things,
that a UIT's trust indenture prohibit payments to the trust's depositor
(in the case of a Trust, the Sponsor), and any affiliated person of the
depositor, except payments for performing certain administrative
services. Applicants request an exemption from section 26(a)(2)(C) to
permit any Trust to reimburse the Sponsor for certain licensing,
registration, and marketing expenses.
    11. Applicants state that, ordinarily, a sponsor of a UIT has an
opportunity to profit in connection with the creation of a trust in two
ways--through the difference between the acquisition cost of the
securities and their value on the date of deposit in the trust and, to
the extent a secondary market is maintained for units, through the
imposition of sales charges on resales of units. Expenses normally
incurred in the creation and maintenance of a trust can then be offset
against such profits. Applicants assert, however, that under the
proposed structure, the usual sources of income are not available
because the Sponsor does not impose a sales load or deposit Index
Securities into the Trust. Applicants contend that the motivation for
the limitations imposed in section 26(a)(2)(C) of the Act was the fear
that sponsors could take unfair advantage of a trust to profit, when
profits were already being generated through sales charges and market
gains (on the securities deposited by the sponsor). Applicants contend
that no such opportunity to profit exists for Sponsor.
    12. Applicants state that permitting a Trust to reimburse the
Sponsor for certain of the Trust's expenses is no more disadvantageous
to the holders of Trust Shares than allowing the expenses to be imposed
indirectly as offsets to sales loads and other charges, as is done by
typical UITs. Applicants state that a Trust pays the Sponsor only its
actual out-of-pocket expenses. Finally, applicants state that the
payment is capped at 30 basis points of the Trust's NAV on an
annualized basis, with any expenses in excess of that amount to be
absorbed by the Sponsor.

Section 17(a) of the Act

    13. Section 17(a) of the Act generally prohibits an affiliated
person of a registered investment company, or an affiliated person of
such person, from selling any security to or purchasing any security
from, the investment company. Section 2(a)(3) defines ``affiliated
person'' to include any person directly or indirectly owning,
controlling, or holding with power to vote, 5% or more of the
outstanding voting securities of the other person, and any person
controlling, controlled by or under common control with the other
person. Section 2(a)(9) provides that a control relationship will be
presumed where one person owns 25% or more of another person's voting
securities. Applicants state that, because the definition of
``affiliated person'' includes any person owning 5% or more, or more
than 25%, of an issuer's outstanding voting securities, every purchaser
of a Creation Unit will be an affiliated person of the Trust so long as
20 or fewer Creation Units are in existence. Applicants request an
exemption from section 17(a) under sections 6(c) and 17(b) to permit
persons that are affiliated persons solely by virtue of a 5% or more,
or more than 25%, ownership interest in a Trust (or affiliated persons
of such persons that are not otherwise affiliated with the Trusts) to
purchase and redeem Creation Units through in-kind transactions.
    14. Section 17(b) authorizes the Commission to exempt a proposed
transaction from section 17(a) if the terms of the transaction,
including the consideration to be paid or received, are reasonable and
fair and do not involve overreaching, and the proposed transaction is
consistent with the policies of the registered investment company and
with the general purposes of the Act. Applicants assert that no useful
purpose would be served by prohibiting the affiliated persons described
above from making in-kind purchases and redemptions of Creation Units.
The composition of a Portfolio Deposit made by a purchaser, like the
Redemption Securities and Cash Redemption Amount given to a redeeming
investor, is the same regardless of the investor's identity, and is
valued under the same objective standards applied to valuing the
Portfolio Securities in connection with determining the Trust's NAV.
Therefore, applicants state that in-kind purchases and redemptions
afford no opportunity for the affiliated persons described above to
effect a transaction detrimental to other holders of Trust Shares.
Applicants also believe that in-kind

purchases and redemptions do not result in abusive self-dealing or
overreaching by affiliated persons of the Funds.

Section 17(d) of the Act and Rule 17d-1 Under the Act

    15. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
any affiliated person of, or principal underwriter for, a registered
investment company, or any affiliated person of the affiliated person
or the principal underwriter, acting as principal, from effecting any
transaction in connection with any joint enterprise or other
arrangement or profit-sharing plan in which the investment company
participates, unless an application regarding the joint transaction has
been filed with the Commission and granted by order. Under rule 17d-1,
in passing upon such applications, the Commission considers whether the
participation of the registered investment company in the joint
transaction is consistent with the provisions, policies and purposes of
the Act and the extent to which such participation is on a basis
different from or less advantageous than that of other participants.
    16. Applicants request an order under rule 17d-1 that would permit
a Trust to reimburse the Sponsor for the payment to the BoNY Index
Provider of an annual license fee under the License Agreement.
Applicants believe that relief is necessary because the Sponsor may be
deemed an affiliated person of the Trust, as defined in section 2(a)(3)
of the Act, and the Trust's undertaking to reimburse the Sponsor might
be deemed a joint enterprise or other joint arrangement in which the
Trust is a participant, in contravention of section 17(d) and rule 17d-
1.
    17. The License Agreement allows applicants to use the Benchmark
Indices as bases for Trust Shares and to use certain of BoNY's trade
name and trademark rights. Applicants believe that BoNY is a valuable
name that is well-known to investors and believe that investors wish to
invest in instruments that closely mirror the Benchmark Indices. In
view of this, applicants state that it is necessary to obtain from BoNY
the License Agreement so that appropriate reference to BoNY may be made
in materials describing Trust Shares and the Trust. Applicants assert
that the terms and provisions of the License Agreement are comparable
to the terms and provisions of other similar license agreements and
that the annual license fee is for fair value, is in an amount
comparable to that which would be charged by the BoNY Index Provider
for similar arrangements, and is in an amount comparable to that
charged by licensors in connection with the formation of other UITs
based on other indices. For these reasons, applicants state that the
proposed license fee arrangement satisfies the standards of section
17(d) and rule 17d-1.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will
be subject to the following conditions:
    1. Each Trust's prospectus and Product Description will clearly
disclose that, for purposes of the Act, Trust Shares are issued by a
registered investment company, and the acquisition of Trust Shares by
investment companies is subject to the restrictions of Section 12(d)(1)
of the Act, except as permitted by an exemptive order that permits
registered investment companies to invest in Trust Shares beyond the
limits in Section 12(d)(1)(A), subject to certain terms and conditions,
including that the registered investment company enter into an
agreement with the Trust regarding the terms of the investment.
    2. As long as a Trust operates in reliance on the requested order,
the Trust Shares will be listed on an Exchange.
    3. The Web site for the Trusts, which will be publicly accessible
at no charge, will contain the following information, on a per Trust
Share basis, for each Trust: (a) The prior Business Day's NAV and the
reported closing price, and a calculation of the premium or discount of
such price against such NAV; and (b) data in chart format displaying
the frequency distribution of discounts and premiums of the daily
closing price against the NAV, within appropriate ranges, for each of
the four previous calendar quarters. In addition, the Product
Description for each Trust will state that the Web site for the Trusts
has information about the premiums and discounts at which the Trust
Shares have traded.
    4. The prospectus and annual report for each Trust will also
include: (a) The information listed in condition 3(b) above, (i) in the
case of the prospectus, for the most recently completed year (and the
most recently completed quarter or quarters, as applicable), and (ii)
in the case of the annual report, for the immediately preceding five
years, as applicable; and (b) the following data, calculated on a per
Trust Share basis for one, five and ten year periods (or life of that
Trust), (i) the cumulative total return and the average annual total
return based on NAV and closing price, and (ii) the cumulative total
return of the relevant Benchmark Index.
    5. Before a Trust may rely on the order, the Commission will have
approved pursuant to rule 19b-4 under the Exchange Act, an Exchange
rule requiring Exchange members and member organizations effecting
transactions in Trust Shares to deliver a Product Description to
purchasers of Trust Shares.

    For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-3784 Filed 3-2-07; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 76, Number 71 (Wednesday, April 13, 2011)]
[Notices]
[Pages 20792-20793]
[FR Doc No: 2011-8792]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64228; File No. SR-CHX-2011-06]

Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Extend the Pilot Program Relating to Clearly Erroneous Transactions

April 7, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\, and Rule 19b-4 \2\ thereunder, notice is hereby given
that on April 5, 2010, the Chicago Stock Exchange, Inc. (``CHX'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the CHX. CHX has filed this
proposal pursuant to Exchange Act Rule 19b-4(f)(6) \3\ which is
effective upon filing with the Commission.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    CHX proposes to amend its rules to extend the pilot program
relating to clearly erroneous transactions. The text of this proposed
rule change is available on the Exchange's Web site at (http://www.chx.com) and in the Commission's Public Reference Room.

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

    In its filing with the Commission, the CHX included statements
concerning the purpose of and basis for the proposed rule changes and
discussed any comments it received regarding the proposal. The text of
these statements may be examined at the places specified in Item IV
below. The CHX 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 Changes

1. Purpose
    In September, 2010, CHX obtained Commission approval of a filing
amending its rules relating to clearly erroneous transactions on a
pilot basis until December 10, 2010.\4\ This program was subsequently
extended until April 11, 2011.\5\ The proposed rule change merely
extends the duration of the pilot program to the earlier of August 11,
2011 or the date on which a limit up/limit down mechanism to address
extraordinary market volatility, if adopted, applies. Extending the
pilot in this manner will allow it to continue until the limit up/limit
down mechanism to address extraordinary market volatility is adopted.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 34-62886 (September
10, 2010), 75 FR 56613 September 16, 2010) approving SR-CHX-2010-13.
    \5\ See Securities Exchange Act Release No. 34-63487 (December
9, 2010), 75 FR 78279 December 15, 2010).
---------------------------------------------------------------------------

2. Statutory Basis
    Approval of the rule change proposed in this submission is
consistent with the requirements of the Act and the rules and
regulations thereunder that are applicable to a national securities
exchange, and, in particular, with the requirements of Section 6(b) of
the Act.\6\

In particular, the proposed change is consistent with Section 6(b)(5)
of the Act,\7\ because it would promote just and equitable principles
of trade, remove impediments to, and perfect the mechanism of, a free
and open market and a national market system, and, in general, protect
investors and the public interest. The proposed rule change is also
designed to support the principles of Section 11A(a)(1) \8\ of the Act
in that it seeks to assure fair competition among brokers and dealers
and among exchange markets. The Exchange believes that the proposed
rule meets these requirements in that it promotes transparency and
uniformity across markets concerning reviews of potentially clearly
erroneous executions in various contexts, including reviews in the
context of a Multi-Stock Event involving twenty or more securities and
reviews resulting from a Trigger Trade and any executions occurring
immediately after a Trigger Trade but before a trading pause is in
effect on the Exchange. Further, the Exchange believes that the
proposed changes enhance the objectivity of decisions made by the
Exchange with respect to clearly erroneous executions.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will
impose 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 Regarding the
Proposed Rule Changes Received From Members, Participants or Others

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6)(iii) thereunder.\10\ The Exchange has asked the Commission to
waive the 30-day operative delay so that the proposal may become
operative immediately upon filing. The Commission believes that waiving
the 30-day operative delay is consistent with the protection of
investors and the public interest because such waiver will allow the
pilot program to continue uninterrupted and help ensure uniformity
among the national securities exchanges and FINRA with respect to the
treatment of clearly erroneous transactions.\11\ Accordingly, the
Commission waives the 30-day operative delay requirement and designates
the proposed rule change as operative upon filing with the Commission.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to
the Commission written notice of its intent to file the proposed
rule change, along with a brief description and text of the proposed
rule change, at least five business days prior to the filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Commission notes that the Exchange has satisfied
this requirement.
    \11\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend 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.

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-CHX-2011-06 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CHX-2011-06. 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 Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the Exchange. 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 publicly available. All
submissions should refer to File Number SR-CHX-2011-06 and should be
submitted on or before May 4, 2011.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

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

Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-8792 Filed 4-12-11; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 84, Number 129 (Friday, July 5, 2019)]
[Rules and Regulations]
[Pages 32028-32030]
[FR Doc No: 2019-14205]

=======================================================================
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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2019-0361; Product Identifier 2019-SW-015-AD; Amendment
39-19673; AD 2019-12-18]
RIN 2120-AA64

Airworthiness Directives; Robinson Helicopter Company Helicopters

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule; request for comments.

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

SUMMARY: The FAA is adopting a new airworthiness directive (AD) for
Robinson Helicopter Company (Robinson) Model R44 II helicopters. This
AD requires inspecting the engine air induction hose (hose) and
replacing any hose that is not airworthy. This AD was prompted by
multiple reports of separation between the outer and inner layers of
the hoses. The FAA is issuing this AD to address the unsafe condition
on these products.

DATES: This AD is effective July 5, 2019.
    The FAA must receive comments on this AD by August 19, 2019.

ADDRESSES: You may send comments, using the procedures found in 14 CFR
11.43 and 11.45, by any of the following methods:
     Federal eRulemaking Portal: Go to 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 20590, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays.
    For service information identified in this final rule, contact
Robinson Helicopter Company, 2901 Airport Drive, Torrance, CA 90505;
phone<PHONE_NUMBER>; fax<PHONE_NUMBER>; or at https://robinsonheli.com/robinson-r44-service-bulletins/. You may view this service information
at the FAA, Office of the Regional Counsel, Southwest Region, 10101
Hillwood Pkwy., Room 6N-321, Fort Worth, TX 76177.

Examining the AD Docket

    You may examine the AD docket on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2019-
0361; or in person at Docket Operations between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays. The AD docket contains
this final rule, the regulatory evaluation, any comments received, and
other information. The street address for Docket Operations is listed
above. Comments will be available in the AD docket shortly after
receipt.

FOR FURTHER INFORMATION CONTACT: Roger Gretler, Aviation Safety
Engineer, Los Angeles ACO Branch, Compliance & Airworthiness Division,
FAA, 3960 Paramount Blvd., Lakewood, CA 90712; phone<PHONE_NUMBER>;
email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Discussion

    The FAA has received reports of separation between the outer and
inner layers of the hose part number (P/N) A785-31. The FAA's
investigation shows that, to date, 12 hoses have been inspected and all
12 out of a suspect population of 100 exhibit this condition. The
suspect population is traced to a specific manufacturing batch marked
by code 1Q18. This condition, if not addressed, could result in
blockage of air flow to the engine, engine stoppage, and subsequent
loss of control of the helicopter. The FAA is issuing this AD to
address the unsafe condition on these products.

Record of Ex Parte Communication

    In preparation of AD actions such as notices of proposed rulemaking
and immediately adopted final rules, it is the practice of the FAA to
obtain technical information and information on operational and
economic impacts from design approval holders and aircraft operators.
The FAA discussed certain aspects of this AD by email and telephone
with Robinson. A summary of the discussions can be found in the
rulemaking docket. For information on locating the docket, see
``Examining the AD Docket.''

Related Service Information

    The FAA reviewed Robinson R44 Service Bulletin SB-97, dated April
11, 2019 (SB). The SB applies to Robinson Model R44 II helicopters
serial numbers (S/N) 14248 through 14286, except 14269, and to any
A785-31 hoses shipped as spares from May through November 2018. The SB
specifies, within 1 flight hour or prior to further flight if engine
roughness or power loss is, or has been encountered, visually
inspecting the hose for separation, flexing the hose to listen for a
crinkling sound, which is an indication of separation, and replacing
any hose that shows indication of separation. The SB also specifies
replacing or discarding all affected hoses by June 30, 2019.

FAA's Determination

    The FAA is issuing this AD because the FAA evaluated all the
relevant information and determined the unsafe condition described
previously is likely to exist or develop in other products of the same
type design.

AD Requirements

    This AD requires, for Robinson R44 II helicopters S/N 14248 through
14268 and 14270 through 14286 or with a hose P/N A785-31 installed
after April 30, 2018, within 10 hours time-in-service (TIS), inspecting
the inside of the hose for separation between the outer and inner
layers, and flexing the hose in all directions while listening for a
crinkling sound, which is an indication of separation. If there is any
separation or a crinkling sound, this AD requires replacing the hose
before further flight. If there is no separation and no crinkling
sound, this AD requires replacing the hose within 50 hours TIS.
Finally, after the effective date of this AD, installing on any
helicopter a hose

P/N A785-31 marked with code 1Q18 is prohibited.

Differences Between the AD and the Service Information

    The SB specifies corrective action within one flight hour or prior
to further flight if engine roughness or power loss is, or has been,
encountered. This AD requires corrective action within 10 hours TIS.
The compliance times specified in this AD differ from the SB because
the FAA determined 10 hours TIS is a reasonable amount of time to
comply with the required corrective actions. The SB applies only to
those serial-numbered helicopters with an affected hose installed,
whereas this AD also applies to helicopters with a hose that has been
replaced after April 30, 2018.

Justification for Immediate Adoption and Determination of the Effective
Date

    Section 553(b)(3) of the Administrative Procedure Act (APA) (5
U.S.C.) authorizes agencies to dispense with notice and comment
procedures for rules when the agency, for ``good cause,'' finds that
those procedures are ``impracticable, unnecessary, or contrary to the
public interest.'' Under this section, an agency, upon finding good
cause, may issue a final rule without seeking comment prior to the
rulemaking.
    An unsafe condition exists that requires the immediate adoption of
this AD without providing an opportunity for public comments prior to
adoption. The FAA has found that the risk to the flying public
justifies waiving notice and comment prior to adoption of this rule
because corrective actions must be made within 10 hours TIS. Therefore,
notice and opportunity for prior public comment are impracticable and
contrary to public interest pursuant to 5 U.S.C. 553(b)(3)(B). In
addition, for the reasons stated above, the FAA finds that good cause
exists pursuant to 5 U.S.C. 553(d) for making this amendment effective
in less than 30 days.

Comments Invited

    This AD is a final rule that involves requirements affecting flight
safety and was not preceded by notice and an opportunity for public
comment. However, the FAA invites you to send any written data, views,
or arguments about this final rule. Send your comments to an address
listed under the ADDRESSES section. Include the docket number FAA-2019-
0361 and Product Identifier 2019-SW-015-AD at the beginning of your
comments. The FAA specifically invites comments on the overall
regulatory, economic, environmental, and energy aspects of this final
rule. The FAA will consider all comments received by the closing date
and may amend this final rule because of those comments.
    The FAA will post all comments received, without change, to http://www.regulations.gov, including any personal information you provide.
The FAA will also post a report summarizing each substantive verbal
contact received about this final rule.

Costs of Compliance

    The FAA estimates that this AD may affect up to 88 helicopters of
U.S. registry. The FAA estimates the following costs to comply with
this AD. Labor costs are estimated at $85 per work-hour. Inspecting the
hose takes about 0.5 work-hour and replacing it takes about 0.5 work-
hour. Parts cost are about $134 per hose for an estimated cost of $219
per helicopter.
    According to Robinson's service information, some of the costs of
this AD may be covered under warranty, thereby reducing the cost impact
on affected individuals. The FAA does not control warranty coverage for
affected individuals. As a result, the FAA has included all costs in
the cost estimate.

Authority for This Rulemaking

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

Regulatory Findings

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

List of Subjects in 14 CFR Part 39

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

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 airworthiness
directive (AD):

2019-12-18 Robinson Helicopter Company: Amendment 39-19673; Docket
No. FAA-2019-0361; Product Identifier 2019-SW-015-AD.

(a) Effective Date

    This AD is effective July 5, 2019.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to Robinson Helicopter Company Model R44 II
helicopters certificated in any category.

(d) Subject

    Joint Aircraft System Component (JASC)/Air Transport Association
(ATA) of America Code: 7160, Engine Air Intake System.

(e) Unsafe Condition

    This AD was prompted by a report of separation between the outer
and inner layers of a hose. This condition, if not addressed, could
result in blockage of air flow to the engine, engine stoppage, and
subsequent loss of control of the helicopter. The FAA is issuing
this AD to prevent the unsafe condition on these helicopters.

(f) Compliance

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

(g) Required Actions

    (1) For helicopters with an engine air induction hose (hose)
part number A785-31 installed after April 30, 2018 or helicopter
serial numbers 14248 through 14268 and 14270 through 14286, within
10 hours time-in-service (TIS):

    (i) Inspect the inside of the hose for separation between the
outer and inner layers, and flex the hose in all directions while
listening for a crinkling sound, which is an indication of
separation.
    (ii) If there is any separation or a crinkling sound, replace
the hose before further flight.
    (iii) If there is no separation and no crinkling sound, replace
the hose within 50 hours TIS.
    (2) After the effective date of this AD, do not install on any
helicopter a hose part number A785-31 marked with code 1Q18.

(h) Alternative Methods of Compliance (AMOCs)

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

(i) Related Information

    (1) For more information about this AD, contact Roger Gretler,
Aviation Safety Engineer, Los Angeles ACO Branch, Compliance &
Airworthiness Division, FAA, 3960 Paramount Blvd., Lakewood, CA
90712; phone<PHONE_NUMBER>; email<EMAIL_ADDRESS>    (2) For information about AMOCs, contact<EMAIL_ADDRESS>    (3) For copies of the service information referenced in this AD,
contact: Robinson Helicopter Company, 2901 Airport Drive, Torrance,
CA 90505; phone<PHONE_NUMBER>; fax<PHONE_NUMBER>; or at https://robinsonheli.com/robinson-r44-service-bulletins/. You may view this
referenced service information at the FAA, Office of the Regional
Counsel, Southwest Region, 10101 Hillwood Pkwy., Room 6N-321, Fort
Worth, TX 76177.

(j) Material Incorporated by Reference

    None.

    Issued in Fort Worth, Texas, on June 25, 2019.
James A. Grigg,
Acting Deputy Director for Regulatory Operations, Compliance &
Airworthiness Division, Aircraft Certification Service.
[FR Doc. 2019-14205 Filed 7-3-19; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 79, Number 201 (Friday, October 17, 2014)]
[Notices]
[Page 62436]
[FR Doc No: 2014-24734]

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ENVIRONMENTAL PROTECTION AGENCY

[ER-FRL-9017-5]

Environmental Impact Statements; Notice of Availability

    Responsible Agency: Office of Federal Activities, General
Information<PHONE_NUMBER> or http://www.epa.gov/compliance/nepa/.

Weekly Receipt of Environmental Impact Statements

Filed 10/06/2014 Through 10/10/2014
Pursuant to 40 CFR 1506.9.

Notice

    Section 309(a) of the Clean Air Act requires that EPA make public
its comments on EISs issued by other Federal agencies. EPA's comment
letters on EISs are available at: http://www.epa.gov/compliance/nepa/eisdata.html.

EIS No. 20140301, Draft EIS, FHWA, FL, SR 87 Connector, Comment Period
Ends: 12/01/2014, Contact: Joseph Sullivan<PHONE_NUMBER>.
EIS No. 20140302, Final EIS, FERC, TX, Corpus Christi LNG Project,
Review Period Ends: 11/17/2014, Contact: Kandilarya Barakat 202-502-
6365.
EIS No. 20140303, Final EIS, EPA, FL, Designation of an Ocean Dredged
Material Disposal Site Offshore of Jacksonville, Review Period Ends:
11/17/2014, Contact: Christopher J. McArthur<PHONE_NUMBER>.
EIS No. 20140304, Final EIS, USACE, CA, Berths 212-224 (YTI) Container
Terminal Improvements Project, Review Period Ends: 11/17/2014, Contact:
Theresa Stevens<PHONE_NUMBER>.

Amended Notices

EIS No. 20140240, Draft Supplement, USACE, WA, Mount St. Helens Long-
Term Sediment Management Plan, Comment Period Ends: 10/21/2014,
Contact: Tina Teed<PHONE_NUMBER>.
Revision to FR Notice Published 09/26/2014;
Extending Comment Period from 10/06/2014 to 10/21/2014.

    Dated: October 14, 2014.
Dawn Roberts,
Management Analyst, NEPA Compliance Division, Office of Federal
Activities.
[FR Doc. 2014-24734 Filed 10-16-14; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 78, Number 242 (Tuesday, December 17, 2013)]
[Proposed Rules]
[Pages 76265-76268]
[FR Doc No: 2013-29744]

=======================================================================
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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 529 Through 578, Except Parts 571 and 575

[Docket No. NHTSA-2013-0116]

Federal Motor Vehicle Safety Standards; Small Business Impacts of
Motor Vehicle Safety

AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).

ACTION: Notice of regulatory review; Request for comments.

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

SUMMARY: NHTSA seeks comments on the economic impact of its regulations
on small entities. As required by the Regulatory Flexibility Act, we
are attempting to identify rules that may have a significant economic
impact on a substantial number of small entities. We also request
comments on ways to make these regulations easier to read and
understand. The focus of this notice is rules that specifically relate
to passenger cars, multipurpose passenger vehicles, trucks, buses,
trailers, motorcycles, and motor vehicle equipment.

DATES: You should submit comments early enough to ensure that Docket
Management receives them not later than February 18, 2014.

ADDRESSES: You may submit comments [identified by Docket Number NHTSA-
2013-0116] by any of the following methods:
     Internet: To submit comments electronically, go to the
U.S. Government regulations Web site at http://www.regulations.gov.
Follow the

online instructions for submitting comments.
     Mail: Send comments to Docket Management Facility, U.S.
Department of Transportation, 1200 New Jersey Avenue SE., West Building
Ground Floor, Room W12-140, Washington, DC 20590.
     Hand Delivery: If you plan to submit written comments by
hand or courier, please do so at 1200 New Jersey Avenue SE., West
Building Ground Floor, Room W12-140, Washington, DC between 9 a.m. and
5 p.m. Eastern Time, Monday through Friday, except federal holidays.
     Fax: Written comments may be faxed to<PHONE_NUMBER>.
     You may call Docket Management at 1-800-647-5527.
    Instructions: For detailed instructions on submitting comments and
additional information see the Comments heading of the Supplementary
Information section of this document. Note that all comments received
will be posted without change to http://www.regulations.gov, including
any personal information provided. Please see the Privacy Act heading
in the SUPPLEMENTARY INFORMATION.

FOR FURTHER INFORMATION CONTACT: Juanita Kavalauskas, Office of
Regulatory Analysis and Evaluation, National Center for Statistics and
Analysis, National Highway Traffic Safety Administration, U.S.
Department of Transportation, 1200 New Jersey Avenue SE., Washington,
DC 20590 (telephone<PHONE_NUMBER>, fax<PHONE_NUMBER>).

SUPPLEMENTARY INFORMATION:

I. Section 610 of the Regulatory Flexibility Act

A. Background and Purpose

    Section 610 of the Regulatory Flexibility Act of 1980 (Pub. L. 96-
354), as amended by the Small Business Regulatory Enforcement Fairness
Act of 1996 (Pub. L. 104-121), requires agencies to conduct periodic
reviews of final rules that have a significant economic impact on a
substantial number of small business entities. The purpose of the
reviews is to determine whether such rules should be continued without
change, or should be amended or rescinded, consistent with the
objectives of applicable statutes, to minimize any significant economic
impact of the rules on a substantial number of such small entities.

B. Review Schedule

    On November 24, 2008, NHTSA published in the Federal Register (73
FR 71401) a 10-year review plan for its existing regulations. The
National Highway Traffic Safety Administration (NHTSA, ``we'') has
divided its rules into 10 groups by subject area. Each group will be
reviewed once every 10 years, undergoing a two-stage process--an
Analysis Year and a Review Year. For purposes of these reviews, a year
will coincide with the fall-to-fall publication schedule of the
Semiannual Regulatory Agenda, see http://www.regulations.gov. Year 1
(2008) begins in the fall of 2008 and ends in the fall of 2009; Year 2
(2009) begins in the fall of 2009 and ends in the fall of 2010; and so
on.
    During the Analysis Year, we will request public comment on and
analyze each of the rules in a given year's group to determine whether
any rule has a significant impact on a substantial number of small
entities and, thus, requires review in accordance with section 610 of
the Regulatory Flexibility Act. In each fall's Regulatory Agenda, we
will publish the results of the analyses we completed during the
previous year. For rules that have subparts, or other discrete sections
of rules that do have a significant impact on a substantial number of
small entities, we will announce that we will be conducting a formal
section 610 review during the following 12 months.
    The section 610 review will determine whether a specific rule
should be revised or revoked to lessen its impact on small entities. We
will consider: (1) The continued need for the rule; (2) the nature of
complaints or comments received from the public; (3) the complexity of
the rule; (4) the extent to which the rule overlaps, duplicates, or
conflicts with other federal rules or with state or local government
rules; and (5) the length of time since the rule has been evaluated or
the degree to which technology, economic conditions, or other factors
have changed in the area affected by the rule. At the end of the Review
Year, we will publish the results of our review. The following table
shows the 10-year analysis and review schedule:

   National Highway Traffic Safety Administration Section 610 Reviews
------------------------------------------------------------------------
                     Regulations to be
       Year               reviewed         Analysis year    Review year
------------------------------------------------------------------------
1................  49 CFR 571.223                   2008            2009
                    through 571.500, and
                    parts 575 and 579.
2................  23 CFR parts 1200 and            2009            2010
                    1300.
3................  49 CFR parts 501                 2010            2011
                    through 526 and
                    571.213.
4................  49 CFR 571.131,                  2011            2012
                    571.217, 571.220,
                    571.221, and 571.222.
5................  49 CFR 571.101                   2012            2013
                    through 571.110, and
                    571.135, 571.138 and
                    571.139.
6................  49 CFR parts 529                 2013            2014
                    through 578, except
                    parts 571 and 575.
7................  49 CFR 571.111                   2014            2015
                    through 571.129 and
                    parts 580 through
                    588.
8................  49 CFR 571.201                   2015            2016
                    through 571.212.
9................  49 CFR 571.214                   2016            2017
                    through 571.219,
                    except 571.217.
10...............  49 CFR parts 591                 2017            2018
                    through 595 and new
                    parts and subparts.
------------------------------------------------------------------------

C. Regulations Under Analysis

    During Year 6, we will continue to conduct a preliminary assessment
of the following sections of 49 CFR parts 529 through 578, except parts
571 and 575:

------------------------------------------------------------------------
       Section                               Title
------------------------------------------------------------------------
529.................  Manufacturers of Multistage Automobiles.
531.................  Passenger Automobile Average Fuel Economy.
533.................  Light Truck Fuel Economy Standards.
534.................  Rights and Responsibilities of Manufacturers in
                       the Context of Changes in Corporate
                       Relationships.
535.................  Medium- and Heavy-Duty Vehicle Fuel Efficiency
                       Program.
536.................  Transfer and Trading of Fuel Economy Credits.

537.................  Automotive Fuel Economy Reports.
538.................  Manufacturing Incentives for Alternative Fuel
                       Vehicles.
541.................  Federal Motor Vehicle Theft Prevention Standard.
542.................  Procedures for Selecting Light Duty Truck Lines to
                       be Covered by the Theft Prevention Standard.
543.................  Exemption from Vehicle Theft Prevention Standard.
545.................  Federal Motor Vehicle Theft Prevention Standard
                       Phase-In and Small-Volume Line Reporting
                       Requirements.
551.................  Procedural Rules.
552.................  Petitions for Rulemaking, Defect, and
                       Noncompliance Orders.
553.................  Rulemaking Procedures.
554.................  Standards Enforcement and Defects Investigation.
555.................  Temporary Exemption from Motor Vehicle Safety and
                       Bumper Standards.
556.................  Exemption for Inconsequential Defect or
                       Noncompliance.
557.................  Petitions for Hearings on Notification and Remedy
                       of Defects.
563.................  Event Data Recorders.
564.................  Replaceable Light Source and Sealed Beam Headlamp
                       Information.
565.................  Vehicle Identification Number (VIN) Requirements.
566.................  Manufacturer Identification.
567.................  Certification.
568.................  Vehicles Manufactured in Two or More Stages--All
                       Incomplete, Intermediate and Final-Stage
                       Manufacturers of Vehicles Manufactured in Two or
                       More Stages.
569.................  Regrooved Tires.
570.................  Vehicle In Use Inspection Standards.
572.................  Anthropomorphic Test Devices.
573.................  Defect and Noncompliance Responsibility and
                       Reports.
574.................  Tire Identification and Recordkeeping.
576.................  Record Retention.
577.................  Defect and Noncompliance Notification.
578.................  Civil and Criminal Penalties.
------------------------------------------------------------------------

    We are seeking comments on whether any requirements in 49 CFR parts
529 through 578, except parts 571 and 575 have a significant economic
impact on a substantial number of small entities. ``Small entities''
include small businesses, not-for-profit organizations that are
independently owned and operated and are not dominant in their fields,
and governmental jurisdictions with populations under 50,000. Business
entities are generally defined as small businesses by Standard
Industrial Classification (SIC) code, for the purposes of receiving
Small Business Administration (SBA) assistance. Size standards
established by SBA in 13 CFR 121.201 are expressed either in number of
employees or annual receipts in millions of dollars, unless otherwise
specified. The number of employees or annual receipts indicates the
maximum allowed for a concern and its affiliates to be considered
small. If your business or organization is a small entity and if any of
the requirements in 49 CFR parts 529 through 578, except parts 571 and
575 have a significant economic impact on your business or
organization, please submit a comment to explain how and to what degree
these rules affect you, the extent of the economic impact on your
business or organization, and why you believe the economic impact is
significant.
    If the agency determines that there is a significant economic
impact on a substantial number of small entities, it will ask for
comment in a subsequent notice during the Review Year on how these
impacts could be reduced without reducing safety.

II. Plain Language

A. Background and Purpose

    Executive Order 12866 and the President's memorandum of June 1,
1998, require each agency to write all rules in plain language.
Application of the principles of plain language includes consideration
of the following questions:
     Have we organized the material to suit the public's needs?
     Are the requirements in the rule clearly stated?
     Does the rule contain technical language or jargon that is
not clear?
     Would a different format (grouping and order of sections,
use of headings, paragraphing) make the rule easier to understand?
     Would more (but shorter) sections be better?
     Could we improve clarity by adding tables, lists, or
diagrams?
     What else could we do to make the rule easier to
understand?
    If you have any responses to these questions, please include them
in your comments on this document.

B. Review Schedule

    In conjunction with our section 610 reviews, we will be performing
plain language reviews over a ten-year period on a schedule consistent
with the section 610 review schedule. We will review 49 CFR parts 529
through 578, except parts 571 and 575 to determine if these regulations
can be reorganized and/or rewritten to make them easier to read,
understand, and use. We encourage interested persons to submit draft
regulatory language that clearly and simply communicates regulatory
requirements, and other recommendations, such as for putting
information in tables that may make the regulations easier to use.

Comments

How do I prepare and submit comments?

    Your comments must be written and in English. To ensure that your
comments are correctly filed in the Docket, please include the docket
number of this document in your comments.
    Your comments must not be more than 15 pages long. (49 CFR 553.21.)
We established this limit to encourage you to write your primary
comments in a concise fashion. However, you may attach necessary
additional documents to your comments. There is no limit on the length
of the attachments.
    Please submit one copy of your comments, including the attachments,
to Docket Management at the address given above under ADDRESSES.
    Please note that pursuant to the Data Quality Act, in order for
substantive data to be relied upon and used by the

agency, it must meet the information quality standards set forth in the
OMB and DOT Data Quality Act guidelines. Accordingly, we encourage you
to consult the guidelines in preparing your comments. OMB's guidelines
may be accessed at http://www.whitehouse.gov/omb/fedreg_reproducible.
DOT's guidelines may be accessed at http://dmses.dot.gov/submit/DataQualityGuidelines.pdf.
    Privacy Act: Anyone is able to search the electronic form of all
comments received into any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). You may review DOT's
complete Privacy Act Statement in the Federal Register published on
April 11, 2000 (65 FR 19477-78) or you may visit http://www.regulations.gov.

How can I be sure that my comments were received?

    If you wish Docket Management to notify you upon its receipt of
your comments, enclose a self-addressed, stamped postcard in the
envelope containing your comments. Upon receiving your comments, Docket
Management will return the postcard by mail.

How do I submit confidential business information?

    If you wish to submit any information under a claim of
confidentiality, you should submit three copies of your complete
submission, including the information you claim to be confidential
business information, to the Chief Counsel, NHTSA, U.S. Department of
Transportation, 1200 New Jersey Avenue SE., Washington, DC 20590. In
addition, you should submit a copy, from which you have deleted the
claimed confidential business information, to Docket Management at the
address given above under ADDRESSES. When you send a comment containing
information claimed to be confidential business information, you should
include a cover letter setting forth the information specified in our
confidential business information regulation. (49 CFR Part 512.)

Will the agency consider late comments?

    We will consider all comments that Docket Management receives
before the close of business on the comment closing date indicated
above under DATES. To the extent possible, we will also consider
comments that Docket Management receives after that date.

How can I read the comments submitted by other people?

    You may read the comments received by Docket Management at the
address given above under ADDRESSES. The hours of the Docket are
indicated above in the same location.
    You may also see the comments on the Internet. To read the comments
on the Internet, take the following steps:
    (1) Go to the Federal Docket Management System (FDMS) at http://www.regulations.gov.
    (2) FDMS provides two basic methods of searching to retrieve
dockets and docket materials that are available in the system: (a)
``Quick Search'' to search using a full-text search engine, or (b)
``Advanced Search,'' which displays various indexed fields such as the
docket name, docket identification number, phase of the action,
initiating office, date of issuance, document title, document
identification number, type of document, Federal Register reference,
CFR citation, etc. Each data field in the advanced search may be
searched independently or in combination with other fields, as desired.
Each search yields a simultaneous display of all available information
found in FDMS that is relevant to the requested subject or topic.
    (3) You may download the comments. However, since the comments are
imaged documents, instead of word processing documents, the ``pdf''
versions of the documents are word searchable.
    Please note that even after the comment closing date, we will
continue to file relevant information in the Docket as it becomes
available. Further, some people may submit late comments. Accordingly,
we recommend that you periodically check the Docket for new material.

    Authority:  49 U.S.C. 30111, 30168; delegation of authority at
49 CFR 1.50 and 501.8.

    Issued in Washington, DC, on December 10, 2013.
Terry Shelton,
Associate Administrator for the National Center for Statistics and
Analysis.
[FR Doc. 2013-29744 Filed 12-16-13; 8:45 am]
BILLING CODE 4910-59-P