[Federal Register Volume 83, Number 31 (Wednesday, February 14, 2018)]
[Notices]
[Pages 6718-6722]
[FR Doc No: 2018-03033]

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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

[Docket No. FMCSA-2016-0167]

Parts and Accessories Necessary for Safe Operation, Lamps and
Reflective Devices; Application for an Exemption From STEMCO LP

AGENCY: Federal Motor Carrier Safety Administration (FMCSA), DOT.

ACTION: Notice of final disposition; grant of application for
exemption.

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SUMMARY: The Federal Motor Carrier Safety Administration (FMCSA)
announces its decision to grant STEMCO LP's (STEMCO) application for a
limited 5-year exemption to allow motor carriers to operate certain
commercial motor vehicles (CMVs) that are equipped with STEMCO's
TrailerTail[supreg] aerodynamic device with rear identification lamps
and rear clearance lamps that are mounted lower than currently
permitted by the Agency's regulations. The Federal Motor Carrier Safety
Regulations (FMCSRs) require rear identification lamps and rear
clearance lamps to be located ``as close as practicable to the top of
the vehicle.'' While the TrailerTail[supreg] aerodynamic device is
currently mounted slightly below the roof of the vehicle, STEMCO states
that this offset prevents the device from delivering the maximum
available fuel economy benefit as opposed to mounting it flush with the
top of the vehicle which may block the visibility of the rear
identification lamps and rear clearance lamps. The Agency has
determined that locating the rear identification lamps and rear
clearance lamps lower on the trailers and semitrailers, mounted at the
same level as the stop lamps, tail lamps, and turn signals will
maintain a level of safety that is equivalent to, or greater than, the
level of safety achieved without the exemption.

FOR FURTHER INFORMATION CONTACT: Mr. Jose Cestero, Vehicle and Roadside
Operations Division, Office of Bus and Truck Standards and Operations,
MC-PSV,<PHONE_NUMBER>; Federal Motor Carrier Safety Administration,
1200 New Jersey Avenue SE, Washington, DC 20590-0001.

SUPPLEMENTARY INFORMATION:

Background

    Pursuant to 49 CFR part 381, FMCSA has authority to grant
exemptions from certain Federal Motor Carrier Safety Regulations
(FMCSRs). FMCSA must publish a notice of each exemption request in the
Federal Register (49 CFR 381.315(a)). The Agency must provide the
public with an opportunity to inspect the information relevant to the
application, including any safety analyses that have been conducted.
The Agency must also provide an opportunity for public comment on the
request.
    The Agency reviews the safety analyses and the public comments and
determines whether granting the exemption would likely achieve a level
of safety equivalent to or greater than the level that would be
achieved by the current regulation (49 CFR 381.305(a)).
    The decision of the Agency must be published in the Federal
Register (49 CFR 381.315(b)). If the Agency denies the request, it must
state the reason for doing so. If the decision is to grant the
exemption, the notice must specify the person or class of persons
receiving the exemption and the regulatory provision or provisions from
which an exemption is granted. The notice must specify the terms and
conditions of the exemption, as well as its effective period (up to 5
years). The exemption may be renewed (49 CFR 381.315(c) and 49 CFR
381.300(b)).

STEMCO Application for Exemption

    STEMCO, on behalf of motor carriers utilizing its
TrailerTail[supreg] aerodynamic devices, applied for an exemption from
49 CFR 393.11 to allow rear identification lamps and rear clearance
lamps to be mounted lower than currently permitted by the Agency's
regulations.
    Table 1 of section 393.11, ``Required lamps and reflectors on
commercial motor vehicles,'' specifies the requirements for lamps,
reflective devices and associated equipment by the type of CMV. All
CMVs manufactured on or after December 25, 1968, must, at a minimum,
meet the applicable requirements of Federal Motor Vehicle Safety
Standard (FMVSS) No. 108, ``Lamps, reflective devices, and associated
equipment,'' in effect at the time of manufacture of the vehicle. Rear
identification lamps must be mounted as close as practicable to the top
of the vehicle. One lamp must be as close as practicable to the
vertical centerline and one on each side of the center lamp with the
lamp centers spaced not less than 6 inches or more than 12 inches
apart, and all on the same level. One rear clearance lamp must be
located on each side of the vertical centerline of the vehicle to
indicate overall width, both of which must be on the same level and as
high as practicable.
    In February 2015, STEMCO purchased ATDynamics and its
TrailerTail[supreg] product line, a collapsible

boat tail technology that improves the rear aerodynamic shape of CMV
trailers. In its application, STEMCO states that motor carriers are
evaluating the TrailerTail[supreg] rear aerodynamic device to help meet
(1) proposed standards from the U.S. Environmental Protection Agency
(EPA) and the Department of Transportation's National Highway Traffic
Safety Administration (NHTSA) that would establish the next phase of
greenhouse gas (GHG) emissions and fuel efficiency standards for
medium- and heavy duty vehicles,1 2 and (2) the California
Air Resources Board (CARB) Tractor-Trailer Greenhouse Gas Regulation
for dry van and refrigerated van type trailers that has been in effect
since 2010.
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    \1\ On October 25, 2016, EPA and NHTSA jointly published a final
rule establishing rules for a comprehensive Phase 2 Heavy-Duty (HD)
National Program that will reduce greenhouse gas (GHG) emissions and
fuel consumption from new on-road medium- and heavy-duty vehicles
and engines, helping to address the challenges of global climate
change and energy security (81 FR 73478). NHTSA's fuel consumption
standards and EPA's carbon dioxide (CO2) emission
standards are tailored to each of four regulatory categories of
heavy-duty vehicles: Combination tractors; trailers used in
combination with those tractors; heavy-duty pickup trucks and vans;
and vocational vehicles. The rule also includes separate standards
for the engines that power combination tractors and vocational
vehicles.
    \2\ In response to letters submitted by the Truck Trailer
Manufacturers Association seeking reconsideration of the October
2016 final rule, both EPA and NHTSA decided on August 17, 2017 to
conduct additional rulemaking on the issues of GHG emissions and
fuel efficiency standards for medium- and heavy-duty vehicles.
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    For newly manufactured trailers, STEMCO states that the
TrailerTail[supreg] top panel is mounted 1.5-3.5 inches below the roof
of the trailer in order to comply with the FMVSS No. 108 and FMCSR
mounting location requirements for rear identification and clearance
lamps. However, STEMCO states:

    This inset creates an unaerodynamic gap as airflow transitions
from the trailer roof onto the TrailerTail panels and has prevented
TrailerTails from delivering the maximum available fuel economy
benefit. Wind tunnel flow visualization highlights the contrast in
airflow between flush and inset panels and our own internal testing
estimates an additional 0.14 delta CDA (measured drag
area) gain and 70 million gallons of annual diesel fuel savings can
be achieved simply by installing TrailerTails flush with the trailer
roof. In order to evaluate the actual performance of flush mounted
TrailerTail aerodynamic systems on actual fleet based fuel economy,
it is necessary to request relief from the location requirements for
upper identification lamps and rear clearance lamps on commercial
van trailers and box trucks. Additionally, these lower clearance and
identification lamp locations will pave the way for the commercial
launch of collapsible boat tails for roll door box trailers, where
the rear upper header is a critical mounting location of boat tail
components.

    In support of its application, STEMCO states that ``The relocation
of the rear identification lamps and rear clearance lamps to a lower
location on the trailer or box truck are equivalent to the current
required lamp location on a flatbed trailer or intermodal chassis, so
no safety impact is anticipated.'' In addition, according to the
application:

    STEMCO believes that there will be no safety impact from the
relocation of both the rear identification lamps and the rear
clearance lamps to a location on an approximate horizontal plane
with other rear lamps. NHTSA issued legal interpretations from 1968
until approximately 1999 to trailer manufacturers to allow the lower
mounting location for rear identification lamps and rear clearance
lamps when there was no ``practicable'' means of installing the
lamps ``as close as practicable to the top of the vehicle.'' NHTSA
subsequently issued an interpretative rule on April 5, 1999, 64 FR
16358, suggesting that trailer manufacturers could no longer mount
lamps at the lower location as narrow lamps were now readily
available, and NHTSA would no longer defer to a manufacturer's
subjective determination of practicability for locating lamps in the
rear upper header location on van trailers and box trucks. However,
NHTSA noted in that same Notice that they did not intend to bring
enforcement actions based on this interpretive rule immediately.
Subsequently, trailer manufacturers continued to manufacture van
trailers and box trucks with the rear identification lamps and rear
clearance lamps mounted lower on the vehicles on an approximate
horizontal plane with the other required lamps.

    STEMCO states that without the exemption, it will be unable to
verify fleet performance of a higher performance TrailerTail[supreg]
design that is expected to provide the maximum available fuel economy
benefit that may be necessary in order to meet future fuel efficiency
requirements.

Comments

    On June 10, 2016, FMCSA published a notice of the STEMCO
application and asked for public comment (81 FR 37662). The Agency
received comments from the American Trucking Associations (ATA), the
Transportation Safety Equipment Institute (TSEI), and Wabash National
Corporation (Wabash).
    ATA supported STEMCO's application, stating:

    Efficiency-improving technologies include tractor aerodynamics,
fuel-efficient tires, idle reduction equipment, speed governors, use
of lighter weight equipment and aerodynamic trailer skirts and
tails. ATA supports efforts to improve fuel efficiency and actions
to improve coordination between federal agencies to advance fuel
efficiency in the trucking industry . . .
    According to the U.S. Environmental Protection Agency's SmartWay
program trailer tails can improve heavy truck fuel efficiency by
five percent. STEMCO's wind tunnel testing suggests that an
additional 0.14 percent improvement can be achieved if its trailer
tail is mounted flush with the top of the trailer. In order to
verify this finding, STEMCO should be allowed to test the device in
an actual on-road environment with a fleet of heavy trucks.
    As FMCSA is aware, there are many trailer types throughout the
motor carrier industry. Some trailers, like flatbeds and intermodal
chassis, are required to have lighting systems on the rear frame of
the trailer to comply with FMVSS 108 and 49 CFR 393.11. And, since
these trailer types have no upper frame or doors at the rear of the
trailer, it is not possible for them to have marker or
identification lamps similar to those required on van trailers.
Unless the FMCSA has research and data showing the marker and
identification lights on a van trailer improve safety over and above
the light configuration on flatbed trailers and/or intermodal
chassis, etc., the agency should grant the exemption for evaluation
purposes.

    TSEI and Wabash both expressed concerns that allowing the
identification and clearance lamps to be mounted lower than currently
required, on the same horizontal plane with the stop, turn, and tail
lamps, may not maintain a level of safety that is equivalent to or
greater than the level of safety without the exemption because other
motorists might not be able to adequately distinguish large trucks and
trailers from other passenger other vehicles. TSEI stated:

    STEMCO's application does not appear to take into account the
important role signal lighting plays in vehicle conspicuity. The
signal lighting on heavy duty vehicles does more than provide
``intention'' (e.g., stop or turn) signals; it also provides
conspicuity (e.g., conspicuity triangle created between the
identification lamp cluster and the stop/tail/turn lamps. The Agency
should be cautious about infringing upon the longstanding
relationship between the signal and conspicuity aspects of heavy
duty lighting in the absence of supporting data concerning the
effects on trailer conspicuity.
    TSEI acknowledges that many vehicles utilize low mounting
positions due to the construction of the vehicle. Presumably, the
practicability language in FMCSR and FMVSS accounts for differences
in mounting positions. As NHTSA has explained, ``[s]ince the various
types of trailers differ from one another in their configuration,
NHTSA believes that the method of compliance that may be appropriate
for one type may not be for another. For example, van-type trailers
have distinct rectangular side and rear perimeters to which
conspicuity enhancing materials could be easily applied, while tank-
type, platform trailers, or others do not.'' 56 FR 63475 (Dec. 4,
1991) (Notice of proposed rulemaking regarding increasing
conspicuity of trailers which have an overall width of 80 inches or
more to enhance the likelihood of

their detection at night and conditions of reduced visibility).
    But acknowledging these differences does not demonstrate that
lowering the mounting position to accommodate an aerodynamic device
would not adversely affect safety. Because STEMCO has not provided
any data on the safety impact of lowering the height of rear
identification lamps and rear clearance lamps, STEMCO has not
provided a basis for evaluating their statement that the lower
placement will not adversely affect safety, particularly with
respect to the trailers' conspicuity.

    Similarly, Wabash stated:

    The ability of motorists to distinguish large trucks and
trailers from passenger vehicles is an essential component of crash
avoidance because of size, maneuvering, and the speed differences
between the two types of vehicles. High mounted identification lamps
uniquely identify large trucks and wide trailers and do so with the
longest possible sight preview of the lamps. Clearance lamps show
the overall width of the vehicle to alert drivers of its large size.
NHTSA has already concluded that, if rear identification lamps were
lowered, the purpose of uniquely identifying large vehicles with the
longest possible sight preview of the lamps would be compromised. As
the mounting height of identification lamps is lowered, the time
that nearby drivers have to identify the vehicle as a large truck,
including drivers not located immediately behind the truck, is
reduced and is contrary to the safety objective of the mounting
height requirement.
    NHTSA's conclusions regarding the safety implications of
unnecessarily lowering the mounting height for rear identification
lamps and rear clearance lamps are supported by a recent FMCSA
sponsored study which observed that, with respect to large vehicles,
``[p]assive crash avoidance can be accomplished by the conspicuity
of the vehicle, that is, the extent to which the vehicle is readily
perceived by other road users. In terms of the physical and
mechanical systems of the vehicle, conspicuity is primarily
accomplished through the light system on the vehicle. The light
system includes tail and top lamps, marker and identification lamps,
as well as the reflective tape systems on trailers.

    TSEI noted that if the exemption is granted, vehicle and trailer
manufacturers would still be required to comply with the requirements
of FMVSS No. 108 (install the identification and clearance lamps as
high as practicable), and repair businesses would not be permitted to
move the lamps to a lower position because Title 49, U.S. Code 30122(b)
of the Motor Vehicle Safety Act ``prohibits a manufacturer,
distributor, dealer, or motor vehicle repair business from knowingly
making inoperative any part of a device or element of design installed
on or in a motor vehicle in compliance with an applicable motor vehicle
safety standard.'' Because of the above, TSEI expressed concerns that
some fleets and small-scale operators my not have the technical
expertise to change the positioning of the identification and clearance
lamps to a lower position.
    TSEI also noted that S6.2.2 of FMVSS No. 108 states ``If any
required lamp or reflective device is obstructed by motor vehicle
equipment (e.g., mirrors, snow plows, wrecker booms, backhoes, winches,
etc.) including dealer installed equipment, and cannot meet the
applicable photometry and visibility requirements, the vehicle must be
equipped with an additional lamp or device of the same type which meet
all applicable requirements of this standard, including photometry and
visibility.'' TSEI stated ``STEMCO could equip vehicles with additional
lamps or devices that meet FMVSS 108 to accommodate for the lamps that
would be obstructed by the aerodynamic device. Such an approach would
not require an exemption.''
    Wabash stated that it is possible--and practicable--to attach an
aerodynamic tail device to the rear top sill of a trailer without
blocking rear identification lamps and rear clearance lamps while still
meeting the new GHG regulations. Wabash stated:

    Wabash's innovative aerodynamic tail devices--which are known as
the AeroFin\TM\ and AeroFin\TM\ XL--can be attached to the rear top
sill of the trailer without blocking the rear identification lamps
and rear clearance lamps. Further, STEMCO's argument that the
exemption is needed to meet the current requirements of the
California Air Resource Board (CARB) Tractor-trailer Greenhouse Gas
regulations and proposed Greenhouse Gas Phase 2 regulations is
unpersuasive. By using the AeroFin\TM\ in combination with certain
of its trailer aerodynamic technologies, Wabash has achieved
improvement of 9% or greater in fuel economy. In addition, the
AeroFin\TM\ XL is CARB compliant. Again, technological advancements
have made it possible for manufacturers to meet the safety
objectives of FMVSS 108 without compromising other performance
related considerations.

FMCSA Analysis

    FMCSA agrees that it is important for motorists to be able to
readily distinguish large trucks and trailers from other passenger
vehicles. FMVSS No. 108 and section 393.11 of the FMCSRs ensure this by
requiring large vehicles to be equipped with a combination of lights,
reflectors, and conspicuity treatments that help indicate the overall
height, width, and length of these vehicles. Specifically, all CMVs
manufactured on or after December 25, 1968, must, at a minimum, meet
the applicable requirements of FMVSS No. 108 in effect at the time of
manufacture of the vehicle. The purpose of FMVSS No. 108 is to reduce
crashes and deaths and injuries from crashes, by providing adequate
illumination of the roadway, and by enhancing the conspicuity of motor
vehicles on the public roads so that their presence is perceived and
their signals understood, both in daylight and in darkness or other
conditions of reduced visibility. FMVSS No. 108 specifies requirements
for original and replacement lamps, reflective devices, and associated
equipment. The standard applies to passenger cars, multipurpose
passenger vehicles, trucks, buses, trailers, and motorcycles.
    Specifically with respect to clearance lamps and identification
lamps, all (1) trucks and buses 80 inches or more in width, (2)
semitrailers and full trailers 80 inches or more in width (except
converter dollies), and (3) pole trailers must be equipped with:
     Two red clearance lamps, one on each side of the vertical
centerline of the vehicle, mounted as high as practicable to indicate
the overall width of the vehicle; and
     A group of three red identification lights on the rear of
the vehicle, mounted as close as practicable to the top of the vehicle.
One lamp is required to be mounted as close as practicable to the
vertical centerline of the vehicle, and one on each side with lamp
centers spaced not less than 6 inches or more than 12 inches apart.
    The grouping of three identification lamps on the top rear of large
vehicles is intended to uniquely identify large vehicles with the
longest sight preview possible. On February 5, 2003, NHTSA denied a
petition for rulemaking from Sierra Products, Inc. (Sierra), which--
among other things--requested that NHTSA amend FMVSS No. 108 to require
the identification lights to be mounted at eye height on heavy trucks
(68 FR 5863). In denying Sierra's petition, NHTSA stated ``As the
mounting height of identification lamps is lowered, the time that
nearby drivers will have to identify the vehicle, as a heavy truck will
lessen. This is contrary to the intent of the requirement. On the other
hand, the mounting height of identification lamps has been long
established to be `as high as practicable.' This is to make nearby
drivers aware of the vehicle's size. If these lamps were lowered to eye
level, approaching drivers may not be able to distinguish large
commercial vehicles from passenger vehicles.'' [Emphasis added.]
    Notwithstanding the above, FMCSA notes that the three
identification lamps are not the only means by which drivers

are ``able to distinguish large commercial vehicles from passenger
vehicles,'' as stated in NHTSA's denial of the petition from Sierra.
While FMCSA agrees that mounting identification lamps ``as high as
practicable'' provides approaching motorists maximum time to identify a
CMV, and that lowering the mounting location of the identification
lamps reduces that time, FMVSS No. 108 (and, by incorporation, section
393.11 of the FMCSRs) also requires the rear of all trailers and
semitrailers to be equipped with conspicuity materials (a strip of
alternating red and white retroreflective sheeting or reflex
reflectors) installed across both:
    (1) The full width of the trailer, as close to the extreme edges as
practicable, and as close to practicable to not less than 375 mm (14.77
in) and not more than 1525 mm (60.05 in) above the road surface at the
centerline with the trailer at curb weight, and
    (2) The full width of the horizontal member of the rear underride
protection device required by FMVSS No. 224, ``Rear impact
protection.'' The horizontal member is required to extend to within 100
mm (4 in) of the side extremity of the vehicle, and be located not more
than 560 mm (20.05 in) above the ground at any point.
    The presence of these two separate conspicuity treatments on the
rear of all trailers and semitrailers, consisting of alternating red
and white retroreflective material or reflex reflectors, serves as a
clear indication to the motoring public that the vehicle is a large
commercial vehicle as opposed to a passenger car. While these
conspicuity treatments are not located at or near the very top of the
trailer or semitrailer, FMCSA believes that they provide a very
distinctive visual pattern on the rear of trailers and semitrailers
that easily enables motorists to be aware that they are approaching a
large vehicle.\3\
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    \3\ FMCSA also notes that, per STEMCO's product literature, each
side component of its aerodynamic device has red and white
conspicuity tape applied to the outward face of the device, further
enhancing the visibility of the vehicle.
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    It is important to note that STEMCO is proposing that the required
clearance and identification lights be relocated lower on vehicles
using the aerodynamic devices, and is not simply requesting an
exception to the regulation because the required lights are obscured by
the device. FMCSA believes that relocating the lamps to a lower
position is an acceptable approach and ensures an equivalent level of
safety for two separate reasons. First, and as STEMCO notes in its
application, FMVSS No. 108 and section 393.11 of the FMCSRs permit the
clearance and identification lamps to be mounted lower on flatbed
trailers and intermodal chassis simply because there is no other
position to mount the lamps due to the vehicle designs. FMCSA does not
believe that locating the clearance and identification lamps in the
same manner on trailers and semitrailers using STEMCO's aerodynamic
devices will pose an unreasonable risk, especially given the
conspicuity requirements discussed above. Second, and as noted by TSEI
in its comments, S6.2.2 of FMVSS No. 108 directly addresses vehicle
designs whereby required lamps or reflective devices are obscured by
motor vehicle equipment such as ``mirrors, snow plows, wrecker booms,
backhoes, winches,'' which would also include STEMCO's aerodynamic
devices. In these instances, S6.2.2 of FMVSS No. 108 requires the
vehicle to ``be equipped with an additional lamp or device of the same
type which meet all applicable requirements of this standard, including
photometry and visibility.'' This is exactly what STEMCO is proposing
to do--to install the same clearance and identification lamps, but in a
lower position on the vehicle.
    Regarding TSEI's concern that some fleets and small-scale operators
may not have the technical expertise to change the positioning of the
identification and clearance lamps to a lower position, FMCSA notes
that it is the responsibility of each motor carrier to ensure that its
vehicles fully comply with the FMCSRs at all times (see 49 CFR
393.1(c)), which includes the terms and conditions of this temporary
exemption. As such, if a motor carrier chooses to use STEMCO's device,
it must ensure that the required lights are properly moved and are
fully operational at all times.
    FMCSA acknowledges Wabash's comment that it has developed a
solution whereby its aerodynamic device can be fitted to a trailer
without obscuring the required clearance and identification lights
located at the top of the trailer. While Wabash has designed a solution
that does not require relief from the current standards, STEMCO has
applied for a temporary exemption in order to test an alternative
design based on its contention that use of that design will provide an
equivalent or greater level of safety than without the exemption.
Because of reasons discussed above, FMCSA believes that an equivalent
level of safety will be maintained.
    While FMVSS No. 108 and section 393.11 of the FMCSRs require the
two conspicuity treatments to be installed on the rear of trailers and
semitrailers, FMCSA notes that neither of the conspicuity treatments is
required to be installed on single unit trucks (box trucks). For this
reason, FMCSA believes that it is appropriate to limit the use of
STEMCO's aerodynamic device, when mounted at the top of the vehicle and
obscuring the clearance and identification lights, to trailers and
semitrailers only at this time.

FMCSA Decision

    FMCSA has evaluated the STEMCO exemption application. For the
reasons discussed above, the Agency believes that granting the
temporary exemption to allow rear identification lamps and rear
clearance lamps to be located lower on trailers and semitrailers,
mounted at the same level as the stop lamps, tail lamps, and turn
signals, will maintain a level of safety that is equivalent to, or
greater than, the level of safety achieved without the exemption.

Terms and Conditions for the Exemption

    The Agency hereby grants the exemption for a 5-year period,
beginning February 14, 2018 and ending February 14, 2023. During the
temporary exemption period, motor carriers will be allowed to mount
STEMCO's TrailerTail[supreg] aerodynamic device at the top of trailers
and semitrailers, provided that the rear clearance and identification
lights are mounted at the same level as the stop lamps, tail lamps, and
turn signals. The exemption will be valid for 5 years unless rescinded
earlier by FMCSA. The exemption will be rescinded if: (1) Motor
carriers and/or CMVs fail to comply with the terms and conditions of
the exemption; (2) the exemption has resulted in a lower level of
safety than was maintained before it was granted; or (3) continuation
of the exemption would not be consistent with the goals and objectives
of 49 CFR part 381.
    Interested parties possessing information that would demonstrate
that motor carriers using trailers or semitrailers with STEMCO's
TrailerTail[supreg] aerodynamic device are not achieving the requisite
statutory level of safety should immediately notify FMCSA. The Agency
will evaluate any such information and, if safety is being compromised
or if the continuation of the exemption is not consistent with 49 CFR
part 381, will take immediate steps to revoke the exemption.

Preemption

    In accordance with 49 U.S.C. 31315(d), as implemented by 49 CFR
381.600, during the period this

exemption is in effect, no State shall enforce any law or regulation
applicable to interstate commerce that conflicts with or is
inconsistent with this exemption with respect to a firm or person
operating under the exemption. States may, but are not required to,
adopt the same exemption with respect to operations in intrastate
commerce.

    Issued on: February 8, 2018.
Cathy F. Gautreaux,
Deputy Administrator.
[FR Doc. 2018-03033 Filed 2-13-18; 8:45 am]
BILLING CODE 4910-EX-P


[Federal Register Volume 84, Number 48 (Tuesday, March 12, 2019)]
[Notices]
[Pages 8931-8935]
[FR Doc No: 2019-04423]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85251; File No. SR-EMERALD-2019-01]

Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Establish an Options Regulatory Fee

March 6, 2019.
    Pursuant to the provisions of 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 February 27, 2019, MIAX Emerald, LLC (``MIAX
Emerald'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Emerald Fee
Schedule (the ``Fee Schedule'') to establish an Options Regulatory Fee
(``ORF'').
    While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative on March 1, 2019.
    The text of the proposed rule change is available on the Exchange's
website at http://www.miaxoptions.com/rule-filings/emerald, at MIAX's
principal office, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange 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. The Exchange 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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to establish an ORF in
the amount of $0.00060 per contract side. The amount of the proposed
fee is based on historical industry volume, projected volumes on the
Exchange, and projected Exchange regulatory costs. The Exchange's
proposed ORF should balance the Exchange's regulatory revenue against
the anticipated regulatory costs.
    The per-contract ORF will be assessed by MIAX Emerald to each MIAX
Emerald Member for all options transactions, including Mini Options,
cleared or ultimately cleared by the Member which are cleared by the
Options Clearing Corporation (``OCC'') in the ``customer'' range,
regardless of the exchange on which the transaction occurs. The ORF
will be collected by OCC on behalf of MIAX Emerald from either (1) a
Member that was the ultimate clearing firm for the transaction or (2) a
non-Member that was the ultimate clearing firm where a Member was the
executing clearing firm for the transaction. The Exchange will use
reports from OCC to determine the identity of the executing clearing
firm and ultimate clearing firm.
    To illustrate how the ORF will be assessed and collected, the
Exchange provides the following set of examples. If the transaction is
executed on the Exchange and the ORF is assessed, if there is no change
to the clearing account of the original transaction, then the ORF is
collected from the Member that is the executing clearing firm for the
transaction. (The Exchange notes that, for purposes of the Fee
Schedule, when there is no change to the clearing account of the
original transaction, the executing clearing firm is deemed to be the
ultimate clearing firm.) If there is a change to the clearing account
of the original transaction (i.e., the executing clearing firm ``gives-
up'' or ``CMTAs'' the transaction to another clearing firm), then the
ORF is collected from the clearing firm that ultimately clears the
transaction--the ultimate clearing firm. The ultimate clearing firm may
be either a Member or non-Member of the Exchange. If the transaction is
executed on an away exchange and the ORF is assessed, then the ORF is
collected from the ultimate clearing firm for the transaction. Again,
the ultimate clearing firm may be either a Member or non-Member of the
Exchange. The Exchange notes, however, that when the transaction is
executed on an away exchange, the Exchange does not assess the ORF when
neither the executing clearing firm nor the ultimate clearing firm is a
Member (even if a Member is ``given-up'' or ``CMTAed'' and then such
Member subsequently ``gives-up'' or ``CMTAs'' the transaction to
another non-Member via a CMTA reversal). Finally, the Exchange will not
assess the ORF on outbound linkage trades, whether executed at the
Exchange or an away exchange. ``Linkage trades'' are tagged in the
Exchange's system, so the Exchange can readily tell them apart from
other trades. A customer order routed to another exchange results in
two customer trades, one from the originating exchange and one from the
recipient exchange. Charging ORF on both trades could result in double-
billing of ORF for a single customer order, thus the Exchange will not
assess ORF on outbound linkage trades in a linkage scenario. This
assessment practice is identical to the assessment practice currently
utilized by the Exchange's affiliates, Miami International Securities
Exchange, LLC (``MIAX Options'') and MIAX PEARL, LLC (``MIAX
PEARL'').\3\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release Nos. 80875 (June 7,
2017), 82 FR 27096 (June 13, 2017) (SR-PEARL-2017-26); 81063 (June
30, 2017), 82 FR 31668 (July 7, 2017) (SR-MIAX-2017-31).
---------------------------------------------------------------------------

    As a practical matter, when a transaction that is subject to the
ORF is not executed on the Exchange, the Exchange lacks the information
necessary to identify the order entering member for that transaction.
There are countless order entering market participants, and each day
such participants can and often do drop their connection to one market
center and establish themselves as participants on another. For these
reasons, it is not possible for the Exchange to identify, and thus
assess fees such as an ORF, on order entering participants on away
markets on a given trading day.
    Clearing members, however, are distinguished from order entering
participants because they remain identified to the Exchange on
information the Exchange receives from OCC regardless of the identity
of the order entering participant, their location, and the market
center on which they execute transactions. Therefore, the Exchange
believes it is more efficient for the operation of the Exchange and for
the marketplace as a whole to collect the ORF from clearing members.
    The Exchange will monitor the amount of revenue collected from the
ORF to ensure that it, in combination with other regulatory fees and
fines, does not exceed regulatory costs. In determining whether an
expense is considered a regulatory cost, the Exchange will review all
costs and makes determinations if there is a nexus between the expense
and a regulatory function. The Exchange notes that fines collected by
the Exchange in connection with a disciplinary matter offset ORF.
    As discussed below, the Exchange believes it is appropriate to
charge the ORF only to transactions that clear as customer at the OCC.
The Exchange believes that its broad regulatory responsibilities with
respect to a Member's activities supports applying the ORF to
transactions cleared but not executed by a Member. The Exchange's
regulatory responsibilities are the same regardless of whether a Member
enters a transaction or clears a transaction executed on its behalf.
The Exchange will regularly review all such activities, including
performing surveillance for position limit violations, manipulation,
front-running, contrary exercise advice violations and insider trading.
These activities span across multiple exchanges.
    The ORF is designed to recover a material portion of the costs to
the Exchange of the supervision and regulation of Members' customer
options business, including performing routine surveillances and
investigations, as well as policy, rulemaking, interpretive and
enforcement activities. The Exchange believes that revenue generated
from the ORF, when combined with all of the Exchange's other regulatory
fees and fines, will cover a material portion, but not all, of the
Exchange's regulatory costs. The Exchange notes that its regulatory
responsibilities with respect to Member compliance with options sales
practice rules have been allocated to the Financial Industry Regulatory
Authority (``FINRA'') under a 17d-2 Agreement. The ORF is not designed
to cover the cost of options sales practice regulation.
    The Exchange will monitor the amount of revenue collected from the
ORF to ensure that it, in combination with its other regulatory fees
and fines, does not exceed the Exchange's total regulatory costs. The
Exchange will monitor MIAX Emerald regulatory costs and revenues at a
minimum on a semi-annual basis. If the Exchange determines regulatory
revenues exceed or are insufficient to cover a material portion of its
regulatory costs, the Exchange will adjust the ORF by submitting a fee
change filing to the Commission. Going forward, the Exchange will
notify Members of adjustments to the ORF via regulatory

circular at least 30 days prior to the effective date of the change.
    The Exchange believes it is reasonable and appropriate for the
Exchange to charge the ORF for options transactions regardless of the
exchange on which the transactions occur. The Exchange has a statutory
obligation to enforce compliance by Members and their associated
persons under the Act and the rules of the Exchange and to surveil for
other manipulative conduct by market participants (including non-
Members) trading on the Exchange. The Exchange cannot effectively
surveil for such conduct without looking at and evaluating activity
across all options markets. Many of the Exchange's market surveillance
programs require the Exchange to look at and evaluate activity across
all options markets, such as surveillance for position limit
violations, manipulation, front-running and contrary exercise advice
violations/expiring exercise declarations. While much of this activity
relates to the execution of orders, the ORF is assessed on and
collected from clearing firms. The Exchange, because it lacks access to
information on the identity of the entering firm for executions that
occur on away markets, believes it is appropriate to assess the ORF on
its Members' clearing activity, based on information the Exchange
receives from OCC, including for away market activity. Among other
reasons, doing so better and more accurately captures activity that
occurs away from the Exchange over which the Exchange has a degree of
regulatory responsibility. In so doing, the Exchange believes that
assessing ORF on Member clearing firms equitably distributes the
collection of ORF in a fair and reasonable manner. Also, the Exchange
and the other options exchanges are required to populate a consolidated
options audit trail (``COATS'') \4\ system in order to surveil a
Member's activities across markets.
---------------------------------------------------------------------------

    \4\ COATS effectively enhances intermarket options surveillance
by enabling the options exchanges to reconstruct the market promptly
to effectively surveil certain rules.
---------------------------------------------------------------------------

    In addition to its own surveillance programs, the Exchange will
work with other SROs and exchanges on intermarket surveillance related
issues. Through its participation in the Intermarket Surveillance Group
(``ISG''),\5\ the Exchange will share information and coordinate
inquiries and investigations with other exchanges designed to address
potential intermarket manipulation and trading abuses. The Exchange's
participation in ISG helps it to satisfy the requirement that it has
coordinated surveillance with markets on which security futures are
traded and markets on which any security underlying security futures
are traded to detect manipulation and insider trading.\6\
---------------------------------------------------------------------------

    \5\ ISG is an industry organization formed in 1983 to coordinate
intermarket surveillance among the SROs by co-operatively sharing
regulatory information pursuant to a written agreement between the
parties. The goal of the ISG's information sharing is to coordinate
regulatory efforts to address potential intermarket trading abuses
and manipulations.
    \6\ See Section 6(h)(3)(I) of the Act.
---------------------------------------------------------------------------

    The Exchange believes that charging the ORF across markets will
avoid having Members direct their trades to other markets in order to
avoid the fee and to thereby avoid paying for their fair share for
regulation. If the ORF did not apply to activity across markets then a
Member would send their orders to the least cost, least regulated
exchange. Other exchanges do impose a similar fee on their member's
activity, including the activity of those members on MIAX Emerald.\7\
---------------------------------------------------------------------------

    \7\ Similar regulatory fees have been instituted by Nasdaq PHLX
LLC (``Phlx'') (See Securities Exchange Act Release No. 61133
(December 9, 2009), 74 FR 66715 (December 16, 2009) (SR-Phlx-2009-
100)); Nasdaq ISE, LLC (``ISE'') (See Securities Exchange Act
Release No. 61154 (December 11, 2009), 74 FR 67278 (December 18,
2009) (SR-ISE-2009-105)); and Nasdaq GEMX, LLC (``GEMX'') (See
Securities Exchange Act Release No. 70200 (August 14, 2013) 78 FR
51242 (August 20, 2013) (SR-Topaz-2013-01)).
---------------------------------------------------------------------------

    The Exchange notes that there is established precedent for an SRO
charging a fee across markets, namely, FINRAs Trading Activity Fee \8\
and the NYSE American LLC (``NYSE American''), NYSE Arca, Inc. (``NYSE
Arca''), Cboe Exchange, Inc. (``CBOE''), Nasdaq PHLX LLC (``Phlx''),
Nasdaq ISE, LLC (``ISE''), Nasdaq GEMX, LLC (``GEMX'') and BOX Exchange
LLC (``BOX'') ORF. While the Exchange does not have all the same
regulatory responsibilities as FINRA, the Exchange believes that, like
other exchanges that have adopted an ORF, its broad regulatory
responsibilities with respect to a Member's activities, irrespective of
where their transactions take place, supports a regulatory fee
applicable to transactions on other markets. Unlike FINRA's Trading
Activity Fee, the ORF would apply only to a Member's customer options
transactions.
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 47946 (May 30,
2003), 68 FR 34021 (June 6, 2003) (SR-NASD-2002-148).
---------------------------------------------------------------------------

    The purpose of the proposed rule change is to establish an ORF in
the amount of $0.00060 per contract side. The amount of the proposed
fee is based on historical industry volume, projected volumes on the
Exchange, and projected Exchange regulatory costs. The Exchange's
proposed ORF should balance the Exchange's regulatory revenue against
the anticipated regulatory costs.
    Additionally, the Exchange proposes to specify in the Fee Schedule
that the Exchange may only increase or decrease the ORF semi-annually,
and any such fee change will be effective on the first business day of
February or August. In addition to submitting a proposed rule change to
the Commission as required by the Act to increase or decrease the ORF,
the Exchange will notify participants via a Regulatory Circular of any
anticipated change in the amount of the fee at least 30 calendar days
prior to the effective date of the change. The Exchange believes that
by providing guidance on the timing of any changes to the ORF, the
Exchange would make it easier for participants to ensure their systems
are configured to properly account for the ORF.
    The Exchange is proposing to establish an ORF in the amount of
$0.00060 per contract side, to be operative on March 1, 2019. The
amount of the proposed fee is based on historical industry volume,
projected volumes on the Exchange, and projected Exchange regulatory
costs. As noted above, the Exchange will regularly review its ORF to
ensure that the ORF, in combination with its other regulatory fees and
fines, does not exceed regulatory costs. The Exchange believes that
this proposal will permit the Exchange to cover a material portion of
its regulatory costs, while not exceeding regulatory costs.
    The Exchange notified future Members via a Regulatory Circular of
the proposed ORF at least thirty (30) calendar days prior to the
proposed operative date, on December 31, 2018.\9\ The Exchange believes
that the prior notification to future market participants will ensure
that the future market participants are prepared to configure their
systems to properly account for the proposed ORF.
---------------------------------------------------------------------------

    \9\ See MIAX Emerald Regulatory Circular 2019-01 available at
https://www.miaxoptions.com/sites/default/files/circular-files/MIAX_Emerald_RC_2019_01.pdf.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \10\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \11\ in
particular, in that it is an equitable allocation of reasonable dues,
fees, and other charges among its members and issuers and other persons
using its

facilities. The Exchange also believes the proposal furthers the
objectives of Section 6(b)(5) of the Act \12\ in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest and is not designed to permit unfair discrimination between
customers, issuers, brokers and dealers.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that establishing an ORF in the amount of
$0.00060 is reasonable because the Exchange's collection of ORF needs
to be balanced against the amount of regulatory costs incurred by the
Exchange. The Exchange believes that the amount proposed herein will
serve to balance the Exchange's regulatory revenue against the
anticipated regulatory costs.
    The Exchange believes the proposed ORF is equitable and not
unfairly discriminatory because it is objectively allocated to Members
in that it is charged to all Members on all their transactions that
clear as customer at the OCC. Moreover, the Exchange believes the ORF
ensures fairness by assessing fees to those Members that are directly
based on the amount of customer options business they conduct.
Regulating customer trading activity is much more labor intensive and
requires greater expenditure of human and technical resources than
regulating non-customer trading activity, which tends to be more
automated and less labor-intensive. As a result, the costs associated
with administering the customer component of the Exchange's overall
regulatory program are materially higher than the costs associated with
administering the non-customer component (e.g., Member proprietary
transactions) of its regulatory program.
    The ORF is designed to recover a material portion of the costs of
supervising and regulating Members' customer options business including
performing routine surveillances and investigations, as well as policy,
rulemaking, interpretive, and enforcement activities. The Exchange will
monitor the amount of revenue collected from the ORF to ensure that it,
in combination with its other regulatory fees and fines, does not
exceed the Exchange's total regulatory costs. The Exchange has designed
the ORF to generate revenues that, when combined with all of the
Exchange's other regulatory fees, will be less than or equal to the
Exchange's regulatory costs, which is consistent with the Commission's
view that regulatory fees be used for regulatory purposes and not to
support the Exchange's business side. In this regard, the Exchange
believes that the amount of the fee is reasonable.
    The Exchange believes that the proposal to limit changes to the ORF
to twice a year on specific dates with advance notice is reasonable
because it will give participants certainty on the timing of changes,
if any, and better enable them to properly account for ORF charges
among their customers. The Exchange believes that limiting changes to
the ORF to twice a year on specific dates is equitable and not unfairly
discriminatory because it will apply in the same manner to all Members
that are subject to the ORF and provide them with additional advance
notice of changes to that fee.
    The Exchange believes that the proposal to collect the ORF from
non-Members when such non-Members ultimately clear the transaction
(that is, when the non-Member is the ``ultimate clearing firm'' for a
transaction in which a Member was assessed the ORF) is an equitable
allocation of reasonable dues, fees, and other charges among its
members and issuers and other persons using its facilities. The
Exchange notes that there is a material distinction between
``assessing'' the ORF and ``collecting'' the ORF. The ORF is only
assessed to a Member with respect to a particular transaction in which
it is either the executing clearing firm or ultimate clearing firm. The
Exchange does not assess the ORF to non-Members. Once, however, the ORF
is assessed to a Member for a particular transaction, the ORF may be
collected from the Member or a non-Member, depending on how the
transaction is cleared at OCC. If there was no change to the clearing
account of the original transaction, the ORF would be collected from
the Member. If there was a change to the clearing account of the
original transaction and a non-Member becomes the ultimate clearing
firm for that transaction, then the ORF will be collected from that
non-Member. The Exchange believes that this collection practice is
reasonable and appropriate, and was originally instituted for the
benefit of clearing firms that desired to have the ORF be collected
from the clearing firm that ultimately clears the transaction.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. This proposal will not create
an unnecessary or inappropriate intra-market burden on competition
because the ORF will apply to all customer activity, and is designed to
enable the Exchange to recover a material portion of the Exchange's
cost related to its regulatory activities. It will supplement the
regulatory revenue derived from non-customer activity. This proposal
will not create an unnecessary or inappropriate inter-market burden on
competition because it will be a regulatory fee that supports
regulation in furtherance of the purposes of the Act. The Exchange is
obligated to ensure that the amount of regulatory revenue collected
from the ORF, in combination with its other regulatory fees and fines,
does not exceed regulatory costs. Unilateral action by MIAX Emerald in
establishing fees for services provided to its Members and others using
its facilities will not have an impact on competition. As a new entrant
in the highly competitive environment for equity options trading, MIAX
Emerald does not have the market power necessary to set prices for
services that are unreasonable or unfairly discriminatory in violation
of the Act. MIAX Emerald's proposed ORF, as described herein, is
comparable to fees charged by other options exchanges for the same or
similar services. The proposal to limit the changes to the ORF to twice
a year on specific dates with advance notice is not intended to address
a competitive issue but rather to provide Members with better notice of
any change that the Exchange may make to the ORF.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\13\ and Rule 19b-4(f)(2) \14\ thereunder.
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. If the Commission

takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File No. SR-EMERALD-2019-01 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-EMERALD-2019-01. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File No. SR-EMERALD-2019-01, and should be submitted on
or before April 2, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-04423 Filed 3-11-19; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 3 (Monday, January 6, 2014)]
[Rules and Regulations]
[Pages 549-551]
[FR Doc No: 2013-31525]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2012-0945; Directorate Identifier 2010-SW-110-AD;
Amendment 39-17722; AD 2013-26-13]
RIN 2120-AA64

Airworthiness Directives; Sikorsky Aircraft Corporation
(Sikorsky) Helicopters

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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

SUMMARY: We are adopting a new airworthiness directive (AD) for
Sikorsky Model S-70, S-70A, S-70C, S-70C (M), and S-70C (M1)
helicopters with General Electric (GE) T700-GE-401C or T700-GE-701C
engines installed. This AD requires establishing new fatigue life
limits for certain GE engine gas generator turbine (GGT) rotor parts.
This AD was prompted by a reevaluation of the method for determining
the life limit for certain GE engine GGT rotor parts and the
determination that these life limits should be based on low cycle
fatigue (LCF) events instead of hours time-in-service (TIS). The
actions are intended to prevent fatigue failure of a GGT rotor part,
engine failure, and subsequent loss of control of the helicopter.

DATES: This AD is effective February 10, 2014.
    The Director of the Federal Register approved the incorporation by
reference of certain documents listed in this AD as of February 10,
2014.

ADDRESSES: For service information identified in this AD, contact
Sikorsky Aircraft Corporation, Attn: Manager, Commercial Technical
Support, mailstop s581a, 6900 Main Street, Stratford, CT, telephone
(800) 562-4409, email address<EMAIL_ADDRESS>or at http://www.sikorsky.com. You may review a copy of the referenced service
information at the FAA, Office of the Regional Counsel, Southwest
Region, 2601 Meacham Blvd., Room 663, Fort Worth Texas 76137.

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, any incorporated-by-reference
service information, the economic evaluation, any comments received,
and other information. The street address for the Docket Operations
Office (phone:<PHONE_NUMBER>) is U.S. Department of Transportation,
Docket Operations Office, M-30, West Building Ground Floor, Room W12-
140, 1200 New Jersey Avenue SE., Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Michael Davison, Flight Test Engineer,
New England Regional Office, FAA, 12 New England Executive Park,
Burlington, MA 01803; phone:<PHONE_NUMBER>; fax:<PHONE_NUMBER>;
email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Discussion

    On September 7, 2012, at 77 FR 55166, the Federal Register
published our notice of proposed rulemaking (NPRM), which proposed to
amend 14 CFR part 39 by adding an AD that would apply to Sikorsky Model
S-70, S-70A, S-70C, S-70C (M), and S-70C (M1) helicopters with GE T700-
GE-401C or T700-GE-701C engines installed. The NPRM proposed
establishing new fatigue life limits for certain GE engine GGT rotor
parts, based upon a formula in GE's service information. The NPRM was
prompted by the determination that the affected engines could fail due
to fatigue unless the life limits of certain GE engine rotor parts are
changed from hours TIS to LCF events.
    On July 23, 2013, at 78 FR 44052, the Federal Register published
our supplemental notice of proposed rulemaking (SNPRM), which proposed
to revise the formula in the NPRM for establishing the new fatigue life
limits by using the correct formula in a newer revision of GE's service
information. Also, the SNPRM corrected a typographical error made in
the preamble of the previous NPRM in the ``Related Service
Information,'' which referenced the service bulletin number as 72-041
rather than the correct service bulletin number 72-0041.
    The proposed actions in the SNPRM were intended to prevent failure
of a GGT rotor part, engine failure, and subsequent loss of control of
the helicopter.

Comments

    We gave the public the opportunity to comment on the NPRM (77 FR
55166, September 7, 2012), and the SNPRM (78 FR 44052, July 23, 2013),
but we did not receive any comments.

FAA's Determination

    We have reviewed the relevant information and determined that an
unsafe condition exists and is likely to exist or develop on other
products of these same type designs and that air safety and the public
interest require adopting the AD requirements as proposed in the SNPRM
(78 FR 44052, July 23, 2013).

Costs of Compliance

    We estimate that this AD will affect 9 helicopters of U.S.
registry. We estimate that operators may incur the following costs in
order to comply with this AD: A minimal amount for work hours and labor
costs because these parts are replaced as part of the periodic
maintenance on the helicopter; a minimal amount of time to calculate
the new retirement life; $360,000 to replace the GGT rotor parts per
helicopter; and $3,240,000 to replace the GGT rotor parts for the
entire U.S. operator fleet.

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

    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);
    (3) Will not affect intrastate aviation in Alaska to the extent
that it justifies making a regulatory distinction; 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 an economic 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 airworthiness
directive (AD):

2013-26-13 Sikorsky Aircraft Corporation: Amendment 39-17722; Docket
No. FAA-2012-0945; Directorate Identifier 2010-SW-110-AD.

 (a) Applicability

    This AD applies to Model S-70, S-70A, S-70C, S-70C (M), and S-
70C (M1) helicopters with General Electric (GE) T700-GE-401C or
T700-GE-701C part-numbered engines, certificated in any category.

 (b) Unsafe Condition

    This AD defines the unsafe condition as a critical engine part
remaining in service beyond its fatigue life because the current
life limit is based on hours time-in-service (TIS) instead of
fatigue cycles. This condition could result in fatigue failure of an
engine rotor part, engine failure, and subsequent loss of control of
the helicopter.

(c) Effective Date

    This AD becomes effective February 10, 2014.

 (d) Compliance

    You are responsible for performing each action required by this
AD within the specified compliance time unless it has already been
accomplished prior to that time.

 (e) Required Actions

    (1) Before further flight, insert into the airworthiness
limitations section of the maintenance manual or instructions for
continued airworthiness the low cycle fatigue (LCF) limit diagrams
shown in Figures 2 through 7 (pages 9 through 14) of GE T700
Turboshaft Engine Service Bulletin T700 S/B 72-0041, Revision 1,
dated March 12, 2010, for helicopters with the GE T700-GE-401C
engine, or Figures 2 through 4 (pages 10 through 12) of GE T700
Turboshaft Engine Service Bulletin T700 S/B 72-0038, dated October
1, 2008, for helicopters with the GE T700-GE-701C engine. The
diagonal line on each diagram represents the new cycle life limit (a
combination of full low cycle fatigue events (LCF1) and partial low
cycle fatigue events (LCF2) as those terms are defined in the
Accomplishment Instructions, paragraphs 3.A.(1) and 3.A.(2) of each
service bulletin) for each gas generator turbine (GGT) rotor part. A
combination of LCF1 and LCF2, which results in a number below the
diagonal line of the applicable diagram for each engine, indicates
that the part has not reached its fatigue life limit.
    (2) Before further flight:
    (i) Obtain the actual LCF1 and LCF2 count from the engine
``history recorder'' (HR);
    (ii) Calculate the LCF1 and LCF2 fatigue retirement life for
each GGT rotor part as follows:
    (A) Determine the actual LCF ratio by dividing the total actual
LCF2 cycle count obtained from the HR by the total actual LCF1 cycle
count obtained from the HR. Add to the actual counts from the HR any
actual additional fatigue cycle incurred during any period in which
the HR was inoperative.
    (B) Determine the LCF1 retirement life by dividing the maximum
number of LCF2 events obtained from the applicable diagram for each
engine by the sum of the actual LCF ratio obtained by following
paragraph (e)(2)(ii)(A) of this AD plus the quotient of the maximum
number of LCF2 events from the applicable diagram for each engine
divided by the maximum number of LCF1 events from the applicable
diagram for each engine.
    (C) Determine the LCF2 retirement life by multiplying the actual
LCF ratio obtained by following paragraph (e)(2)(ii)(A) of this AD
times the LCF1 retirement life determined by following paragraph
(e)(2)(ii)(B) of this AD.
    (iii) Replace each GGT rotor part that has reached the new
fatigue cycle life limit with an airworthy rotor part.
    (3) For helicopters with the GE T700-GE-401C engine, if you
cannot determine the number of low cycle fatigue events manually
from the HR or by combining both manual and HR counts, then the life
limit for the GGT rotor part is the hours TIS for the part as shown
in Table 1 of GE T700 Turboshaft Engine Service Bulletin T700 S/B
72-0041, dated August 21, 2009.
    (4) Before further flight, begin or continue to count the full
and partial low fatigue cycle events and record on the component
card or equivalent record that count at the end of each day for
which the HR is inoperative.

 (f) Special Flight Permit

    Special flight permits will not be issued to allow flight in
excess of life limits.

 (g) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Boston Aircraft Certification Office, FAA, may
approve AMOCs for this AD. Send your proposal to: Michael Davison,
Flight Test Engineer, New England Regional Office, FAA, 12 New
England Executive Park, Burlington, MA 01803; phone:<PHONE_NUMBER>;
fax:<PHONE_NUMBER>; email<EMAIL_ADDRESS>    (2) For operations conducted under 14 CFR part 119 operating
certificate or under 14 CFR part 91, subpart K, we suggest that you
notify your principal inspector, or lacking a principal inspector,
the manager of the local flight standards district office or
certificate holding district office before operating any aircraft
complying with this AD through an AMOC.

(h) Subject

    Joint Aircraft Service Component (JASC) Code: 7250: Turbine
Section.

 (i) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the
incorporation by reference (IBR) of the service information listed
in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
    (2) You must use this service information as applicable to do
the actions required by this AD, unless the AD specifies otherwise.
    (i) General Electric (GE) T700 Turboshaft Engine Service
Bulletin T700 S/B 72-0038, dated October 1, 2008.
    (ii) GE T700 Turboshaft Engine Service Bulletin T700 S/B 72-
0041, dated August 21, 2009.

    (iii) GE T700 Turboshaft Engine Service Bulletin T700 S/B 72-
0041, Revision 1, dated March 12, 2010.
    (3) For GE service information identified in this AD, contact
Sikorsky Aircraft Corporation, Attn: Manager, Commercial Technical
Support, mailstop s581a, 6900 Main Street, Stratford, CT, telephone
(800) 562-4409, email address<EMAIL_ADDRESS>or at http://www.sikorsky.com.
    (4) You may view this service information at FAA, Office of the
Regional Counsel, Southwest Region, 2601 Meacham Blvd., Room 663,
Fort Worth, Texas 76137. For information on the availability of this
material at the FAA, call<PHONE_NUMBER>.
    (5) You may view this 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/cfr/ibr-locations.html.

    Issued in Fort Worth, Texas, on December 24, 2013.
Kim Smith,
Directorate Manager, Rotorcraft Directorate, Aircraft Certification
Service.
[FR Doc. 2013-31525 Filed 1-3-14; 8:45 am]
BILLING CODE 4910-13-P


10  2 0 2 4Metals, Method 1620Metals, 1620 CADMIUM, UG/ LCADMIUM, L calibration: 1calibration: 1 Standardized Residuals vs Spike ConcentrationEpisode 6000 DataPage 1 of 3APPENDIX B  6  3 Standardized Residuals Log 10 of Spike Concentration no valid MLE estimate Metals, Method 1620Metals, 1620 CADMIUM, UG/ LCADMIUM, L calibration: 3calibration: 3 10  4  2 0 2 4 Metals, Method 1620Metals, 1620 CHROMIUM, UG/ LCHROMIUM, L calibration: 1calibration: 1 0.1  2 0 2 4Metals, Method 1620Metals, 1620 CHROMIUM, UG/ LCHROMIUM, L calibration: 3calibration: 3 100  2 0 2 4Metals, Method 1620Metals, 1620 LEAD, UG/ LLEAD, L calibration: 1calibration: 1 1  2  1 0 1 2 3Metals, Method 1620Metals, 1620 LEAD, UG/ LLEAD, L calibration: 3calibration: 3 100  2  1 0 1 2 Metals, Method 1620Metals, 1620 MOLYBDENUM, UG/ LMOLYBDENUM, L calibration: 1calibration: 1 100  1 0 1 2Metals, Method 1620Metals, 1620 TIN, UG/ LTIN, L calibration: 1calibration: 1 1  2  1 0 1 2 Metals, Method 1620Metals, 1620 TIN, UG/ LTIN, L calibration: 3calibration: 3 1001000  2  1 0 1 2 Metals, Method 200.8Metals, 200.8 ALUMINUM, UG/ LALUMINUM, L calibration: 1calibration: 1 110  2 0 2 4Metals, Method 200.8Metals, 200.8 ALUMINUM, UG/ LALUMINUM, L calibration: 3calibration: 3 10  2  1 0 1 2 Metals, Method 200.8Metals, 200.8 ANTIMONY, UG/ LANTIMONY, L calibration: 1calibration: 1 1 10100  2  1 0 1 2 3Metals, Method 200.8Metals, 200.8 ARSENIC, UG/ LARSENIC, L calibration: 1calibration: 1 Standardized Residuals vs Spike ConcentrationEpisode 6000 DataPage 2 of 3 Standardized Residuals Log 10 of Spike Concentration 0.11  2  1 0 1 2 3Metals, Method 200.8Metals, 200.8 ARSENIC, UG/ LARSENIC, L calibration: 2calibration: 2 10  2  1 0 1 2 3Metals, Method 200.8Metals, 200.8 BARIUM, UG/ LBARIUM, L calibration: 1calibration: 1 0.1  3  2  1 0 1 2 3 Metals, Method 200.8Metals, 200.8 BARIUM, UG/ LBARIUM, L calibration: 2calibration: 2 0.11  3  2  1 0 1 2 3 Metals, Method 200.8Metals, 200.8 BERYLLIUM, UG/ LBERYLLIUM, L calibration: 1calibration: 1 0.01  2  1 0 1 2 3Metals, Method 200.8Metals, 200.8 BERYLLIUM, UG/ LBERYLLIUM, L calibration: 2calibration: 2 10  6  4  2 0 2 4 6 Metals, Method 200.8Metals, 200.8 CHROMIUM, UG/ LCHROMIUM, L calibration: 1calibration: 1 0.1  4  2 0 2 4 Metals, Method 200.8Metals, 200.8 CHROMIUM, UG/ LCHROMIUM, L calibration: 2calibration: 2 0.11  2 0 2 4Metals, Method 200.8Metals, 200.8 COBALT, UG/ LCOBALT, L calibration: 1calibration: 1 10  3  2  1 0 1 2 3 Metals, Method 200.8Metals, 200.8 COPPER, UG/ LCOPPER, L calibration: 1calibration: 1 0.1  6  4  2 0 2 4 6 Metals, Method 200.8Metals, 200.8COPPER, UG/ LCOPPER, L calibration: 2calibration: 2 10  2  1 0 1 2 Metals, Method 200.8Metals, 200.8 LEAD, UG/ LLEAD, L calibration: 1calibration: 1 1 1 11 0.1  4  2 0 2 4 Metals, Method 200.8Metals, 200.8 LEAD, UG/ LLEAD, L calibration: 2calibration: 2 Standardized Residuals vs Spike ConcentrationEpisode 6000 DataPage 3 of 3 Standardized Residuals Log 10 of Spike Concentration 110  0.5 0.0 0.5 1.0Metals, Method 200.8Metals, 200.8 MERCURY, UG/ LMERCURY, L calibration: 1calibration: 1 10  5 0 5 Metals, Method 200.8Metals, 200.8NICKEL, UG/ LNICKEL, L calibration: 1calibration: 1 0.010.1  6  4  2 0 2 4 6 Metals, Method 200.8Metals, 200.8 NICKEL, UG/ LNICKEL, L calibration: 2calibration: 2 10100  4  2 0 2 4 Metals, Method 200.8Metals, 200.8 SELENIUM, UG/ LSELENIUM, L calibration: 1calibration: 1 0.11  4  2 0 2 4 Metals, Method 200.8Metals, 200.8 SELENIUM, UG/ LSELENIUM, L calibration: 2calibration: 2 10100  2  1 0 1 2 3Metals, Method 200.8Metals, 200.8 VANADIUM, UG/ LVANADIUM, L calibration: 1calibration: 1 1  2  1 0 1 2 3Metals, Method 200.8Metals, 200.8 VANADIUM, UG/ LVANADIUM, L calibration: 2calibration: 2 10100  3  2  1 0 1 2 3 Metals, Method 200.8Metals, 200.8 ZINC, UG/ LZINC, L calibration: 1calibration: 1 1  4  2 0 2 4 Metals, Method 200.8Metals, 200.8ZINC, UG/ LZINC, L calibration: 2calibration: 2 1