[Federal Register: January 21, 2009 (Volume 74, Number 12)]
[Proposed Rules]
[Page 3469-3475]
[DOCID:fr21ja09-29]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 121

[Docket No. FAA-2009-0022; Notice No. 09-01]
RIN 2120-AJ30

Crewmember Requirements When Passengers Are Onboard

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: Currently, during passenger boarding and deplaning, all flight
attendants are required to be on board the airplane. This rulemaking
would allow one required flight attendant to deplane during passenger
boarding, and conduct safety-related duties, as long as certain
conditions are met. In addition, this rulemaking would allow a
reduction of flight attendants remaining on board the airplane during
passenger deplaning, as long as certain conditions are met. The FAA has
determined that these revisions to current regulations can be made as a
result of recent safety enhancements to airplane equipment and
procedures. These changes have mitigated the risks to passengers during
ground operations that previously required all flight attendants on
board the airplane during passenger boarding and deplaning.

DATES: Send your comments on or before April 21, 2009.

ADDRESSES: You may send comments identified by Docket Number FAA-2009-
0022 using any of the following methods:
     Federal eRulemaking Portal: Go to http://
www.regulations.gov and follow the online instructions for sending your
comments electronically.
     Mail: Send comments to Docket Operations, M-30; U.S.
Department of Transportation, 1200 New Jersey Avenue, SE., Room W12-
140, West Building Ground Floor, Washington, DC 20590-0001.
     Hand Delivery or Courier: Bring comments to Docket
Operations in Room W12-140 of the West Building Ground Floor at 1200
New Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays.
     Fax: Fax comments to Docket Operations at<PHONE_NUMBER>.
    For more information on the rulemaking process, see the
SUPPLEMENTARY INFORMATION section of this document.
    Privacy: We will post all comments we receive, without change, to
http://www.regulations.gov, including any personal information you
provide. Using the search function of our docket Web site, anyone can
find and read the electronic form of all comments received into any of
our dockets,

including the name of the individual sending the comment (or signing
the comment for 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://
DocketsInfo.dot.gov.
    Docket: To read background documents or comments received, go to
http://www.regulations.gov at any time and follow the online
instructions for accessing the docket. Or, go to the Docket Operations
in Room W12-140 of the West Building Ground Floor at 1200 New Jersey
Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through
Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: For questions concerning this proposed
rule contact Jodi L. Baker, Air Transportation Division/Air Carrier
Operations Branch, AFS-220, Federal Aviation Administration, 800
Independence Avenue, SW., Washington, DC 20591; telephone (202) 267-
8166; facsimile<PHONE_NUMBER>, e-mail<EMAIL_ADDRESS>For legal
questions concerning this proposed rule contact Paul Greer, Operations
Law Branch, AGC-220; telephone<PHONE_NUMBER>, e-mail
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Later in this preamble under the Additional
Information section, we discuss how you can comment on this proposal
and how we will handle your comments. Included in this discussion is
related information about the docket, privacy, and the handling of
proprietary or confidential business information. Also, we discuss how
you can get a copy of this proposal and related rulemaking documents.

Authority for This Rulemaking

    The FAA's authority to issue rules on aviation safety is found in
Title 49 of the United States Code. Subtitle I, Section 106 describes
the authority of the FAA Administrator, including the authority to
issue, rescind, and revise regulations. Subtitle VII, Aviation
Programs, describes in more detail the scope of the agency's authority.
This rulemaking is promulgated under the authority described in
Subtitle VII, Part A, Chapter 447--Safety Regulation. Under section
44701(a)(5), the FAA is charged with promoting safe flight of civil
aircraft by, among other things, prescribing regulations the FAA finds
necessary for safety in air commerce.

Background

Statement of the Problem

    The FAA has decided to review its current regulation regarding
flight attendant requirements during passenger boarding and deplaning
in light of safety enhancements to airplane equipment and procedures,
and changes in airplane security procedures and requirements. These
changes have mitigated the risks to passengers during ground operations
that previously required all flight attendants be on board the airplane
during passenger boarding and deplaning.
    Current rules prohibit a required flight attendant from deplaning
an airplane for any reason during passenger boarding and deplaning,
even to conduct safety-related duties. This prohibition has
unintentional consequences that may adversely affect conditions inside
the passenger cabin. This proposed rule would allow air carriers to
permit one required flight attendant to deplane during passenger
boarding and one or more required flight attendants to deplane during
passenger deplaning, subject to certain conditions and limitations.

History

    This issue has been addressed numerous times over the last two
decades and has been the subject of guidance documents, legal
interpretations and petitions for exemption.
    In 1982, the FAA amended 14 CFR 121.391 and inserted Sec.
121.391(e) to allow a reduction in the number of required flight
attendants during stops where passengers remain on board (also called
``intermediate stops'') (47 FR 56460; December 16, 1982). Section
121.391(e) was recodified as Sec.  121.393(b) in 1995 (60 FR 65832;
December 20, 1995).
    On May 14, 1985, John Cassady, Assistant Chief Counsel for the
Regulations and Enforcement Division of the FAA, issued a written
interpretation to William Brennan, Manager of the Flight Standards
Service, Air Transportation Division, stating that ``during the
deplaning and boarding phase at an intermediate stop, all of the flight
attendants required by 14 CFR 121.391(a) must be on board the
aircraft.'' A copy of this document has been placed in the docket for
this rulemaking. This rulemaking is intended to codify a change to this
interpretation.
    On August 8, 1986, the Director of the Flight Standards Service
issued Action Notice A8430.5, FAR 121.391(a) and (e); Flight
Attendants, stating ``at intermediate stops where passengers remain on
board the aircraft, at least the number of persons specified in Sec.
121.391(e) must be aboard the aircraft. This includes that period of
time during which passengers are deplaning or boarding.'' This Action
Notice appeared to permit a reduction of required flight attendant
crewmembers during boarding and deplaning at intermediate stops,
possibly in conflict with the legal interpretation of 1985. Although
currently expired, a copy of this document has also been placed in the
docket for this rulemaking.
    On April 5, 1989, the FAA issued an NPRM, ``Flight Attendant
Requirements'' (54 FR 15134; April 14, 1989) proposing to allow a
reduced number of flight attendants aboard passenger-carrying airplanes
at all stops, during passenger boarding and deplaning, subject to
certain conditions and limitations. The NPRM was withdrawn in 1996 (61
FR 29000; June 6, 1996).
    In 2003, the Air Transport Association (ATA) petitioned for
rulemaking to amend Sec.  121.391 and permit flight attendants to use a
phone on the passenger loading bridge during boarding, deplaning and
stops where passengers remain on board (68 FR 61161; October 27, 2003).
The ATA subsequently withdrew the petition on December 12, 2003, noting
it cited an incorrect regulation (Regulatory Docket No. FAA-2003-
14594). The ATA did not re-petition.
    On May 8, 2001, the FAA's Assistant Chief Counsel for Regulations
affirmed the 1985 legal interpretation that all flight attendants
required by Sec.  121.391 needed to be on board the aircraft during
passenger boarding and deplaning in a memo to the Manager of the Air
Transportation Division. The Air Transportation Division subsequently
issued guidance in accordance with the 2001 legal interpretation via
Flight Standards Information Bulletin for Air Transportation, FSAT 01-
03, Number of Flight Attendants Required at Stops Where Passengers
Remain Onboard, 14 CFR 121.391 and 121.393. A copy of this document has
also been placed in the docket for this rulemaking. The information
contained in this FSAT is currently found in FAA Order 8900.1, Flight
Standards Information Management System (FSIMS) Volume 3, Chapter 33
Cabin Safety and Flight Attendant Management, section 4 Flight
Attendant Requirements (http://fsims.faa.gov/).
    In 2006, Southwest Airlines petitioned for an exemption to
substitute a pilot for one required flight attendant during boarding at
an intermediate stop and to reduce the number of required flight
attendants on board during the deplaning of passengers at an
intermediate stop. The FAA granted this exemption in 2007

(Exemption No. 9382, Regulatory Docket No. FAA-2006-25466). Three
additional air carriers have been issued similar grants of exemption
since the issuance of the original grant.

Current Requirements

    During any passenger boarding and deplaning, the full complement of
flight attendants required by Sec.  121.391(a) must be on board the
airplane at all times (See Memo from John Cassady to William Brennan,
dated May 14, 1985). However Sec.  121.393 permits a reduction of the
number of required flight attendants when passengers are on board the
airplane with the engines shut down and at least one floor level exit
is open to provide for the deplaning of passengers. The formula for
determining the reduction of flight attendants is: Half the number of
flight attendants required by Sec.  121.391(a), rounded down to the
next lower number in the case of a fraction, but never fewer than one.

General Discussion of the Proposal

    During passenger boarding and deplaning, it may be in the interest
of the traveling public for a flight attendant to conduct safety-
related duties outside the airplane cabin. However, current regulations
prohibit a flight attendant from performing these duties if the flight
attendant is one of the flight attendants required by Sec.  121.391(a).
    As previously noted, the number of flight attendants required
during passenger boarding and deplaning has been discussed numerous
times since 1985. Although the FAA consistently upheld the requirement
that all flight attendants required by Sec.  121.391(a) stay on board
the airplane during boarding and deplaning, changes to regulations
since 1985 have reduced the hazards to passengers during these phases
of operation. These changes have reduced risks to passengers by
improving firefighting equipment, increasing the time available to
evacuate an airplane and improving accessibility to exits. Examples
include:
     Requiring lavatory smoke detectors, automatic lavatory
waste receptacle fire extinguishers and Halon 1211 extinguishers;
     Improving cabin interior flammability standards to enhance
survivability by increasing the time before flashover occurs;
     Improving thermal insulation standards to reduce the risk
of fire in inaccessible parts of the airplane cabin and increase the
time available for a passenger evacuation; and
     Improving passenger access to Type III (typically
overwing) emergency exits.
    In addition to the above certification regulation changes, the FAA
has revised operational regulations since 1985, which has also reduced
the risks to passengers during boarding and deplaning. First, prior to
1987, air carriers were not required to screen passengers for excess or
oversized carry-on baggage prior to boarding the aircraft. Current
carry-on baggage regulations require this action, which has reduced
flight attendant workload in the handling of carry-on baggage during
passenger boarding. Flight attendants no longer have to stow an
unlimited amount of baggage carried on the airplane by passengers.
Second, Sec.  121.585, promulgated in 1990, requires an air carrier to
assign exit seats to passengers after considering a list of exit seat
selection criteria and the passenger's ability to perform exit seat
functions. Because the majority of passengers have been screened to
meet exit seat criteria, these considerations lead to exit seat
passengers being more likely to initiate ``self-help'' in the event of
an emergency during passenger boarding. Third, the changes to FAA
operational regulations have been complemented since 2001 by improved
Transportation Security Administration regulations, which have reduced
the risk of a security-related threat during passenger boarding or
deplaning even further.
    All of these changes mitigate the risks to which passengers are
exposed during boarding and deplaning. As a result, the FAA now
proposes to permit a reduced required flight attendant crew during
boarding and deplaning.

Limitations Applicable to Passenger Boarding

    The FAA believes it appropriate to permit one required flight
attendant to conduct safety-related duties either in the passenger
loading bridge connected to the airplane; or in another nearby
location, such as the bottom of the boarding stairs. To maintain the
current level of safety, however, the certificate holder would have to
comply with the following restrictions:
     The flight attendant deplaning the airplane must remain
within 30 feet of the passenger entry door;
     The flight attendant deplaning the airplane must be
conducting safety-related duties related to the flight being boarded.
The flight attendant may not conduct non-safety-related duties such as
personal business; and
     The airplane must be of a type that requires two or more
flight attendants in accordance with Sec.  121.391(a). A required
flight attendant may not leave an airplane with a passenger seating
capacity of less than 50, because one flight attendant must remain on
the airplane at all times.
    Typically, during passenger boarding, the airplane cabin starts
empty and becomes increasingly more populated by arriving passengers.
The increased number of passengers leads to an increased number of
safety duties inside the airplane cabin. Examples include: Scanning
passenger carry-on baggage to ensure compliance with both Sec.  121.585
and the air carrier's approved carry-on baggage program, and verifying
compliance with the approved exit seat program. The FAA believes
permitting only one flight attendant to deplane during boarding and
limiting the amount of time he or she is absent from the airplane cabin
(by limiting the type of duties he or she may perform) ensures the
remaining flight attendant(s) are able to effectively manage safety
duties inside the airplane. It may be necessary for the certificate
holder to revise other approved programs, such as its carry-on baggage
program or exit seat program, to ensure all required duties are
accomplished by the remaining flight attendant(s). Also, if the
airplane requires only one flight attendant in accordance with Sec.
121.391(a), the FAA is not permitting that flight attendant to deplane.
This ensures no passengers are left unattended on board the airplane.
    When the ATA petitioned for rulemaking in 2003, it proposed that a
flight attendant could use the telephone installed on the passenger
loading bridge to contact and coordinate with other airline personnel,
or local law enforcement, to assist with Federal regulation compliance
and to identify security issues or medical emergencies. The FAA agrees
that a flight attendant be permitted to use the telephone installed on
the passenger loading bridge to perform these functions, but is also
proposing to permit a flight attendant to deplane during boarding to
conduct other safety-related duties, provided he or she remains within
30 feet of the airplane's passenger entry door. This would allow a
flight attendant to use the telephone installed on the passenger
loading bridge and to conduct other duties, such as removing excess or
oversized carry-on baggage from the airplane and placing it on the
passenger loading bridge or adjacent to the bottom of the boarding
stairs. It would also permit a flight attendant to coordinate with
other airline personnel in cases where a telephone is not installed on
the passenger loading bridge or a passenger loading bridge is not used
for boarding. A flight attendant deplaning during passenger boarding
should not be carrying passenger carry-

on bags to the cargo hold for stowage or re-entering the passenger
terminal to coordinate with other employees. Also, by requiring a
flight attendant to remain within 30 feet of the door being used for
passenger boarding, the flight attendant is still quickly available to
assist passengers in the event of an emergency in the cabin. The FAA
specifically requests comments about the adequacy of the proposed 30
foot limitation.
    Finally, a flight attendant who deplanes during boarding is limited
to performing only safety-related duties related to the flight being
boarded. Existing regulations already restrict a flight attendant to
performing only safety-related duties during airplane movement on the
surface. A flight attendant who deplanes during boarding would not be
permitted to conduct non-safety-related duties, such as collecting
passenger tickets or calling for catering. A flight attendant who
deplanes during boarding also may not conduct personal business, such
as submitting bids related to crew scheduling, making layover
arrangements, or conducting family business. Allowing a flight
attendant to conduct business not related to the safety of the flight
would not be in the public interest and would not be permitted.

Substituting a Qualified Crewmember for a Required Flight Attendant
During Passenger Boarding

    Only two types of qualified crewmembers are used in air carrier
operations: Flightcrew members or flight attendants. This proposed rule
would allow a flightcrew member to substitute for one required flight
attendant during boarding. Nothing in the proposed rule, or the current
rule, prevents an air carrier from substituting a qualified flight
attendant for another qualified flight attendant; however, if the air
carrier chooses to substitute another qualified crewmember, such as a
pilot or flight engineer, the certificate holder must meet certain
conditions.
    The proposed rule addresses two possible scenarios during boarding
that involve a reduction, by one, of the number of flight attendants
required for boarding by Sec.  121.391(a), on an airplane that requires
more than one flight attendant. The first scenario, previously
discussed and addressed in proposed Sec.  121.394(a)(1), is when one
required flight attendant steps off the airplane during boarding to
perform safety related duties and remains within 30 feet of the
boarding door.
    The second scenario is when one required flight attendant is not
within 30 feet of the boarding door and is addressed in proposed Sec.
121.394(a)(2). In this case, a qualified flightcrew member, such as a
pilot or flight engineer, may substitute in the cabin for one required
flight attendant who is not on the airplane when boarding commences or
who leaves the vicinity of the aircraft during boarding.
    Under proposed Sec.  121.394(a)(2), the flightcrew member who
substitutes for the required flight attendant must be trained and
qualified on that airplane as a pilot or a flight engineer for that
certificate holder. This ensures that the flightcrew member has
received emergency and security training that is specific to that
airplane and that certificate holder.
    If the certificate holder chooses to substitute a flightcrew member
for a flight attendant in accordance with proposed Sec.  121.394(a)(2),
it must ensure the substitute crewmember is prepared to conduct his or
her duties by having in his or her possession all items required for
duty by the air carrier, such as a flight operations or flight
attendant manual. The substitute crewmember must also be identifiable
to the passengers as a working ``crewmember.''
    In addition, the certificate holder must ensure the use of a
substitute crewmember does not impinge on the duty and rest
requirements of Title 14 Code of Federal Regulations (14 CFR). The FAA
has previously stated via legal interpretation that pre- and post-
flight duties are part of a duty period (see August 12, 2008, FAA
letter to Brent Harper, Southwest Airlines). A copy of this document
has been placed in the docket for this rulemaking. Therefore, a
substitute crewmember is ``on duty'' while substituting for an assigned
flight attendant.
    Additional procedures that would have to be developed by the
certificate holder and described in its manual system under proposed
Sec.  121.394(a)(2) include:
     The functions to be performed by the substitute crewmember
and remaining flight attendants in an emergency or situation requiring
emergency evacuation. Similar to the requirements found in Sec.
121.397, the certificate holder must show that these functions are
realistic, can be practically accomplished and will meet any reasonably
anticipated emergency;
     A method to ensure that the substitution of a flightcrew
member for a flight attendant during passenger boarding does not
interfere with the safe operation of the flight (e.g. interfering with
the completion of the flightcrew member's pre-flight duties,
checklists, etc);
     A method to ensure that the flightcrew member is located
in the passenger cabin during the substitution; and
     A method to ensure that other regulatory safety functions
performed by a flight attendant, including but not limited to,
monitoring passengers during refueling, scanning passenger carry-on
baggage during boarding, and verifying suitability of exit seat
passengers, are accomplished by the flightcrew member and the remaining
flight attendants on the airplane.
     A method to ensure that the substitute flightcrew member
is trained in all assigned flight attendant duties.

Limitations Applicable to Passenger Deplaning

    A flight attendant may be asked to conduct other safety-related
duties during passenger deplaning, such as maintaining custody of an
unaccompanied minor or contacting local law enforcement to assist with
an unruly passenger. However, the conditions present during passenger
deplaning mitigate safety risks to passengers to allow a further
reduction in required flight attendants. The FAA proposes to permit a
reduction to half the number of flight attendants required by Sec.
121.391(a), rounded down to the next lower number in the case of a
fraction, but never fewer than one.
    At the time of deplaning, each passenger has already received all
required safety information briefings and had an opportunity to review
the passenger safety information card and all posted signs and
placards. In addition, a crewmember has verified the suitability of
exit seat passengers, and the exit seat passengers have had an
opportunity to ask questions about their exit seat responsibilities.
These passengers are better prepared to assist themselves in an
emergency evacuation than those passengers just boarding an airplane.
During deplaning, passengers are in the process of leaving the airplane
in an orderly fashion through one or more floor-level exits with pre-
positioned passenger loading bridges or boarding stairs. These factors
lessen the exposure time to the risk of an emergency or a possible
evacuation. Further, exiting passengers, as well as additional airline
personnel, are available to assist the remaining flight attendant(s)
with an unruly or threatening passenger during deplaning.

Limitations Applicable During Boarding and Deplaning Passengers

    In addition to the specific limitations described above, the FAA
proposes requiring a certificate holder to duplicate ground conditions
already designed to reduce risks to passengers

when a reduced number of flight attendants is on board an airplane. The
FAA required these conditions when risks were considered in reducing
the number of required flight attendants during stops where passengers
remain on board. The conditions are: The airplane is stationary in a
level attitude with at least one floor-level exit open; and all engines
are shut down, mitigating the risk of an engine torching or
overheating. These conditions must also exist to permit a reduction in
the number of required flight attendants during passenger boarding and
deplaning, in order to provide the same level of risk mitigation as at
a stop where passengers remain on board. If the certificate holder
cannot provide these conditions, it may not reduce the flight attendant
crew below the requirements of Sec.  121.391(a).
    Finally, the FAA proposes the flight attendants remaining on board
the airplane be evenly distributed near the floor-level exits. This
proposed requirement would assure that the flight attendants are
available to deal more effectively with an emergency evacuation, should
the need arise. If only one flight attendant remains on board the
airplane during passenger boarding, he or she must be located in
accordance with the air carrier's FAA-approved operating procedures.
The air carrier should consider items such as the location of the door
being used for passenger boarding, the configuration of the cabin, the
location of the emergency light switch, and the air carrier's emergency
procedures when determining the best location for the flight attendant.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires
that the FAA consider the impact of paperwork and other information
collection burdens imposed on the public. We have determined that there
is no new information collection requirement associated with this
proposed rule.

International Compatibility

    In keeping with U.S. obligations under the Convention on
International Civil Aviation, it is FAA policy to comply with
International Civil Aviation Organization (ICAO) Standards and
Recommended Practices to the maximum extent practicable. The FAA has
determined that there are no ICAO Standards and Recommended Practices
that correspond to these proposed regulations.

Regulatory Evaluation, Regulatory Flexibility Determination,
International Trade Impact Assessment, and Unfunded Mandates Assessment

    Changes to Federal regulations must undergo several economic
analyses. First, Executive Order 12866 directs that each Federal agency
shall propose or adopt a regulation only upon a reasoned determination
that the benefits of the intended regulation justify its costs. Second,
the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires
agencies to analyze the economic impact of regulatory changes on small
entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits
agencies from setting standards that create unnecessary obstacles to
the foreign commerce of the United States. In developing U.S.
standards, the Trade Act requires agencies to consider international
standards and, where appropriate, that they be the basis of U.S.
standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4) requires agencies to prepare a written assessment of the costs,
benefits, and other effects of proposed or final rules that include a
Federal mandate likely to result in the expenditure by State, local, or
tribal governments, in the aggregate, or by the private sector, of $100
million or more annually (adjusted for inflation with base year of
1995). This portion of the preamble summarizes the FAA's analysis of
the economic impacts of this proposed rule.
    The FAA has decided to review its current regulations regarding
flight attendant requirements during passenger boarding and deplaning,
in light of safety enhancements to airplane equipment and procedures,
and changes in airplane security procedures and requirements. These
changes have mitigated the risks to passengers during ground operations
that previously required all flight attendants on board the airplane
during passenger boarding and deplaning. This proposed rule merely
revises and clarifies existing FAA rules and is cost relieving and does
not impose any cost on any regulated entity.
    FAA has, therefore, determined that this proposed rule is not a
``significant regulatory action'' as defined in section 3(f) of
Executive Order 12866, and is not ``significant'' as defined in DOT's
Regulatory Policies and Procedures.

Regulatory Flexibility Determination

    The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA)
establishes ``as a principle of regulatory issuance that agencies shall
endeavor, consistent with the objectives of the rule and of applicable
statutes, to fit regulatory and informational requirements to the scale
of the businesses, organizations, and governmental jurisdictions
subject to regulation. To achieve this principle, agencies are required
to solicit and consider flexible regulatory proposals and to explain
the rationale for their actions to assure that such proposals are given
serious consideration.'' The RFA covers a wide-range of small entities,
including small businesses, not-for-profit organizations, and small
governmental jurisdictions. Agencies must perform a review to determine
whether a rule will have a significant economic impact on a substantial
number of small entities. If the agency determines that it will, the
agency must prepare a regulatory flexibility analysis as described in
the RFA. However, if an agency determines that a rule is not expected
to have a significant economic impact on a substantial number of small
entities, section 605(b) of the RFA provides that the head of the
agency may so certify and a regulatory flexibility analysis is not
required. The certification must include a statement providing the
factual basis for this determination, and the reasoning should be
clear.
    The FAA has decided to review its current regulation regarding
flight attendant requirements during passenger boarding and deplaning,
in light of safety enhancements to airplane equipment and procedures,
and changes in airplane security procedures and requirements. These
changes have mitigated the risks to passengers during ground operations
that previously required all flight attendants to be on board the
airplane during passenger boarding and deplaning. This proposed rule is
cost relieving and does not impose any cost on any regulated entity.
    Therefore, the FAA certifies that this proposed rule would not have
a significant economic impact on a substantial number of small
entities. The FAA solicits comments regarding this determination.

International Trade Impact Assessment

    The Trade Agreements Act of 1979 (Pub. L. 96-39) prohibits Federal
agencies from establishing any standards or engaging in related
activities that create unnecessary obstacles to the foreign commerce of
the United States. Legitimate domestic objectives, such as safety, are
not considered unnecessary obstacles. The statute also requires
consideration of international standards and, where appropriate, that
they be the basis for U.S. standards. The FAA has assessed the
potential effect of this proposed rule

and has determined that it would have only a domestic impact and
therefore no affect on international trade.

Unfunded Mandates Assessment

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each Federal agency to prepare a written statement
assessing the effects of any Federal mandate in a proposed or final
agency rule that may result in an expenditure of $100 million or more
(adjusted annually for inflation with the base year 1995) in any one
year by State, local, and tribal governments, in the aggregate, or by
the private sector; such a mandate is deemed to be a ``significant
regulatory action.'' The FAA currently uses an inflation-adjusted value
of $136.1 million in lieu of $100 million. This proposed rule does not
contain such a mandate.

Executive Order 13132, Federalism

    The FAA has analyzed this proposed rule under the principles and
criteria of Executive Order 13132, Federalism. We determined that this
action would not have a substantial direct effect on the States, on the
relationship between the national Government and the States, or on the
distribution of power and responsibilities among the various levels of
government, and, therefore, would not have federalism implications.

Environmental Analysis

    FAA Order 1050.1E identifies FAA actions that are categorically
excluded from preparation of an environmental assessment or
environmental impact statement under the National Environmental Policy
Act in the absence of extraordinary circumstances. The FAA has
determined this proposed rulemaking action qualifies for the
categorical exclusion identified in paragraph 312(f) and involves no
extraordinary circumstances.

Additional Information

Comments Invited

    The FAA invites interested persons to participate in this
rulemaking by submitting written comments, data, or views. We also
invite comments relating to the economic, environmental, energy, or
federalism impacts that might result from adopting the proposals in
this document. The most helpful comments reference a specific portion
of the proposal, explain the reason for any recommended change, and
include supporting data. To ensure the docket does not contain
duplicate comments, please send only one copy of written comments, or
if you are filing comments electronically, please submit your comments
only one time.
    We will file in the docket all comments we receive, as well as a
report summarizing each substantive public contact with FAA personnel
concerning this proposed rulemaking. Before acting on this proposal, we
will consider all comments we receive on or before the closing date for
comments. We will consider comments filed after the comment period has
closed if it is possible to do so without incurring expense or delay.
We may change this proposal in light of the comments we receive.

Availability of Rulemaking Documents

    You can get an electronic copy of rulemaking documents using the
Internet by--
    1. Searching the Federal eRulemaking Portal (http://
www.regulations.gov);
    2. Visiting the FAA's Regulations and Policies Web page at http://
www.faa.gov/regulations_policies/; or
    3. Accessing the Government Printing Office's Web page at http://
www.gpoaccess.gov/fr/index.html.
    You can also get a copy by sending a request to the Federal
Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence
Avenue, SW., Washington, DC 20591, or by calling<PHONE_NUMBER>. Make
sure to identify the docket number, notice number, or amendment number
of this rulemaking.
    You may access all documents the FAA considered in developing this
proposed rule, including economic analyses and technical reports, from
the Internet through the Federal eRulemaking Portal referenced in
paragraph 1.

List of Subjects in 14 CFR Part 121

    Aviation safety, Air carriers, Air transportation, Airplanes,
Airports, Boarding, Crewmembers, Deplaning, Flight attendants, Pilots,
Transportation, Common carriers.

    In consideration of the foregoing, the Federal Aviation
Administration proposes to amend Chapter I, Part 121 of Title 14, Code
of Federal Regulations, as follows:

PART 121--OPERATING REQUIREMENTS: DOMESTIC, FLAG, AND SUPPLEMENTAL
OPERATIONS

    1. The authority citation for part 121 continues to read as
follows:

    Authority: 49 U.S.C. 106(g), 40113, 40119, 41706, 44101, 44701-
44702, 44705, 44709-44711, 44713, 44716-44717, 44722, 46105.

    2. Revise Sec.  121.391(a) introductory text to read as follows:

Sec.  121.391  Flight attendants.

    (a) Except as specified in Sec.  121.393 and Sec.  121.394, each
certificate holder must provide at least the following flight
attendants on board each passenger-carrying airplane when passengers
are on board:
* * * * *
    3. Add Sec.  121.394 to read as follows:

Sec.  121.394  Flight attendant requirements during passenger boarding
and deplaning.

    (a) During passenger boarding, on each airplane for which more than
one flight attendant is required by Sec.  121.391(a), the certificate
holder may reduce the number of required flight attendants by one,
provided the requirements of either paragraph (a)(1) or (a)(2) of this
section are met.
    (1) When the flight attendant leaving the airplane remains within
30 feet of the door through which passengers are boarding:
    (i) The flight attendant may only conduct safety duties related to
the flight being boarded;
    (ii) The airplane engines are shut down; and
    (iii) At least one floor level exit remains open to provide for the
deplaning of passengers.
    (2) When the flight attendant leaving the airplane does not remain
within 30 feet of the door through which passengers are boarding, a
flightcrew member of the certificate holder, trained and qualified on
that type airplane, may substitute for the flight attendant provided:
    (i) The certificate holder describes in its manual the necessary
functions to be performed by the substitute crewmember and remaining
flight attendants in an emergency or situation requiring emergency
evacuation. The certificate holder must show those functions are
realistic, can be practically accomplished and will meet any reasonably
anticipated emergency.
    (ii) The certificate holder describes in its manual how other
regulatory functions performed by a flight attendant will be
accomplished by the substitute crewmember and the remaining flight
attendants on the airplane.
    (iii) The certificate holder ensures the substitute flightcrew
member is trained in all assigned flight attendant duties.
    (iv) The certificate holder ensures the substitute crewmember is in
possession of all items required for duty.
    (v) The certificate holder ensures the substitute crewmember is
located in the passenger cabin.
    (vi) The certificate holder identifies the substitute crewmember to
the passengers.

    (vii) The certificate holder ensures the time spent conducting
boarding duties applies towards daily duty time limits and is
considered when determining crewmember rest requirements.
    (viii) The certificate holder does not permit the substitution of a
flightcrew member for a flight attendant to interfere with the safe
operation of the flight. If all flightcrew members are required to
perform preflight duties, passenger boarding must not commence until
the flight attendants required by Sec.  121.391(a) are on board the
airplane.
    (ix) The airplane engines are shut down.
    (x) At least one floor-level exit remains open for the deplaning of
passengers.
    (b) During passenger deplaning, on each airplane for which more
than one flight attendant is required by Sec.  121.391(a), the
certificate holder may reduce the number of flight attendants required
by that paragraph provided:
    (1) The airplane engines are shut down;
    (2) At least one floor level exit remains open to provide for the
deplaning of passengers;
    (3) The number of flight attendants on board is at least half the
number required by Sec.  121.391(a), rounded down to the next lower
number in the case of fractions, but never fewer than one.
    (c) If only one flight attendant is on the airplane during
passenger boarding or deplaning, that flight attendant must be located
in accordance with the certificate holder's FAA-approved operating
procedures. If more than one flight attendant is on the airplane during
passenger boarding or deplaning, the flight attendants must be evenly
distributed throughout the airplane cabin, in the vicinity of the
floor-level exits, to provide the most effective assistance in the
event of an emergency.

    Issued in Washington, DC, on January 14, 2009.
John M. Allen,
Director, Flight Standards Service.
[FR Doc. E9-1140 Filed 1-16-09; 8:45 am]

BILLING CODE 4910-13-P


 MEMORANDUM

DATE:08/25/2014 FROM: 		Laura Farris/EPA Region 8 TO:CLEAN Power Plan for Existing Power Plants; Docket Id: OAR - 2013-0602 SUBJECT:	Clean Power Plan Discussion with the State of Montana held on 08/18/2014

SUMMARY   EPA Headquarters and Region 8 staff discussed various questions regarding the proposed Clean Power Plan for Existing Power Plants with the State of Montana on 08/18/2014. The Clean Power Plan for Existing Power Plants was proposed on June 2, 2014.

ATTENDEES EPA HQ:  Brian Fisher, David Solomon, Jeremy Mark, James Critchfield, Nick Swanson, Misha Vakoc, Jim Ketcham-Colwill, Jan Cortelyou, Erica Wilson, Matt Clouse. EPA Region 8: Carl Daly and Laura Farris

State of Montana

Discussion Questions

   1. Setting the standard based on renewable energy generation vs. consumption

Montana exports much of its renewable energy and therefore Montana requires that "creditable" renewables under the rule be based on generation and not just "sales" which occur within the state.  Regardless of where the electricity is consumed, a rule which provides credit for new renewables generated within the state is crucial under a state-only plan for Montana.   In a regional plan, flexibility provided by agreements that the states enter into would also be necessary.             2. 2012 being an outlier year for coal and hydro in Montana and the larger region

       2012 is clearly not a typical year for electric output from affected EGUs in Montana.  Output in that year was substantially lower than the average for the previous decade.  Therefore, using 2012 as a baseline will present challenges for Montana for meeting its goal.

   3. Legacy dam upgrades which provide additional capacity upgrades which have come on-line after 2012 base year, need to be creditable under the proposed rule and count as renewable.  Specifically, a turbine upgrade from 35 MW to 60 MW at the Rainbow dam should be approvable in Montana's state plan.  Additionally, any other brand new hydro projects should be fully creditable at any time from Year 2013 forward.

   4. Montana has used the following assumptions in our mass based approach and presume that our growth assumption under this approach would be approvable.                The first assumption that is made is that the "total generation" by Montana grows by a percentage increase annually.  This is the total of in-state demand and that which is exported. For 2012, this total generation amount was 27,915,145 MWh.  This amount is increased each year by the % growth rate the user chooses.  To calculate the contribution that must come from EGUs in a given year, it is calculated by subtracting the EE, the RE, all other non-EGU electrical output, all hydro (including base hydro) from the total generation until the only thing remaining is what must be provided by coal fired affected EGUs.  Under this scenario, Montana is currently assuming a generation increase of  0.7358%.  This shows that Montana affected EGU MWh can actually increase when the growth rate is assumed high enough. This percentage is based on our expectation based on historical information and expectations about EE in other states beginning to reduce electrical consumption which is provided by power exported from Montana.  The graph below clearly shows total generation in Montana has increased and that excluding exports neglects the complexities of the market.

   5. Montana wants to be sure that renewable energy development and demand side energy savings are treated such that a MWh in each of these areas is equivalent to a MWh reduction that might occur at an EGU.  There should be no reason to calculate reduced emissions associated with RE and EE.  EPA must use the same approach that they used in calculating the goals that the states will use in calculating the actual results versus the goal.


[Federal Register Volume 81, Number 70 (Tuesday, April 12, 2016)]
[Notices]
[Pages 21626-21631]
[FR Doc No: 2016-08307]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77548; File No. SR-NASDAQ-2015-161]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Granting Approval of Proposed Rule Change, as Modified by Amendment
Nos. 1, 2, and 3 Thereto, Relating to the Listing and Trading of the
Shares of the First Trust RiverFront Dynamic Europe ETF, First Trust
RiverFront Dynamic Asia Pacific ETF, First Trust RiverFront Dynamic
Emerging Markets ETF, and First Trust RiverFront Dynamic Developed
International ETF of First Trust Exchange-Traded Fund III

April 6, 2016.

I. Introduction

    On December 22, 2015, The NASDAQ Stock Market LLC (``Exchange'' or
``Nasdaq'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'' or Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to list and trade the shares of
the First Trust RiverFront Dynamic Europe ETF (``Europe Fund''); First
Trust RiverFront Dynamic Asia Pacific ETF (``Asia Pacific Fund'');
First Trust RiverFront Dynamic Emerging Markets ETF (``Emerging Markets
Fund''); and First Trust RiverFront Dynamic Developed International ETF
(``Developed International Fund''). The proposed rule change was
published for comment in the Federal Register on January 8, 2016.\3\ On
January 8, 2016, the Exchange filed Amendment No. 1 to the proposed
rule change.\4\ On February 18, 2016, the Exchange filed Amendment No.
2 to the proposed rule change.\5\ On February 19, 2016, pursuant to
Section 19(b)(2) of the Act,\6\ the Commission designated a longer
period within which to approve the proposed rule change, disapprove the
proposed rule change, or institute proceedings to determine whether to
disapprove the proposed rule change.\7\ On April 5, 2016, the Exchange
filed Amendment No. 3 to the proposed rule change.\8\ The Commission
received no comments on the proposed rule change. This order grants
approval of the proposed rule change, as modified by Amendment Nos. 1,
2, and 3 thereto.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 76817 (January 4,
2016), 81 FR 978 (``Notice'').
    \4\ In Amendment No. 1, the Exchange clarified the proposed rule
change by providing additional information regarding the currencies,
and instruments that provide exposure to such currencies, in which
each Fund will invest. Because Amendment No. 1 to the proposed rule
change does not materially alter the substance of the proposed rule
change or raise novel regulatory issues, Amendment No. 1 is not
subject to notice and comment (Amendment No. 1 is available at:
http:// www.sec.gov/comments/sr-nasdaq-2015-161/nasdaq2015161-1.pdf).
    \5\ In Amendment No. 2, the Exchange expanded the application of
the Alternative Criteria (as discussed below) so that they will
apply on a continual basis. Because Amendment No. 2 does not
materially alter the substance of the proposed rule change or raise
novel regulatory issues, Amendment No. 2 is not subject to notice
and comment (Amendment No. 2 is available at: http: //www.sec.gov/comments/sr-nasdaq-2015-161/nasdaq2015161-2.pdf).
    \6\ 15 U.S.C. 78s(b)(2).
    \7\ See Securities Exchange Act Release No. 77192, 81 FR 9575
(February 25, 2016).
    \8\ In Amendment No. 3 to the proposed rule change, the Exchange
clarified that: (a) All statements and representations made in the
proposal regarding the description of the portfolios, limitations on
portfolio holdings or reference assets, or the applicability of
Exchange rules and surveillance procedures shall constitute
continued listing requirements for listing the Shares on the
Exchange; (b) the issuer will advise the Exchange of any failure by
the Funds to comply with the continued listing requirements; (c)
pursuant to its obligations under Section 19(g)(1) of the Act, the
Exchange will monitor for compliance with the continued listing
requirements; and (d) if a Fund is not in compliance with the
applicable listing requirements, the Exchange will commence
delisting procedures under the Nasdaq 5800 Series. Because Amendment
No. 3 to the proposed rule change does not materially alter the
substance of the proposed rule change or raise unique or novel
regulatory issues, Amendment No. 3 is not subject to notice and
comment (Amendment No. 3 is available at: http://www.sec.gov/comments/sr-nasdaq-2015-161/nasdaq2015161-3.pdf).
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II. Exchange's Description of the Proposal

    The Exchange proposes to list and trade the shares (``Shares'') of
the Europe Fund, Asia Pacific Fund, Emerging Markets Fund, and
Developed International Fund (individually, ``Fund,'' and collectively,
``Funds'') under Nasdaq Rule 5735, which governs the listing and
trading of Managed Fund Shares on the Exchange. Each Fund, which will
be a series of First Trust Exchange-Traded Fund III (``Trust''), will
be an actively managed exchange-traded fund (``ETF''). The Shares will
be offered by the Trust,\9\ which was established as a Massachusetts
business trust on January 9, 2008. The Trust is registered with the
Commission as an investment company and has filed a registration
statement on Form N-1A with the Commission.\10\
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    \9\ According to the Exchange, the Trust has obtained certain
exemptive relief under the Investment Company Act of 1940 (``1940
Act''). See Investment Company Act Release No. 28468 (October 27,
2008) (File No. 812-13477).
    \10\ See Post-Effective Amendment No. 29 to Registration
Statement on Form N-1A for the Trust, dated November 19, 2015 (File
Nos. 333-176976 and 811-22245) (``Registration Statement'').
---------------------------------------------------------------------------

    First Trust Advisors L.P. will be the investment adviser
(``Adviser'') to the

Funds. RiverFront Investment Group, LLC will serve as investment sub-
adviser (``Sub-Adviser'') to the Funds and provide day-to-day portfolio
management. First Trust Portfolios L.P. (``Distributor'') will be the
principal underwriter and distributor of each Fund's Shares. Brown
Brothers Harriman & Co. will act as the administrator, accounting
agent, custodian, and transfer agent to the Funds. According to the
Exchange, neither the Adviser nor the Sub-Adviser is a broker-dealer,
although the Adviser is affiliated with the Distributor, a broker-
dealer, and the Sub-Adviser is affiliated with Robert W. Baird & Co.
Incorporated, a broker-dealer. Each of the Adviser and Sub-Adviser has
implemented a fire wall with respect to its respective broker-dealer
affiliate regarding access to information concerning the composition or
changes to a portfolio.\11\
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    \11\ In the event (a) the Adviser or the Sub-Adviser registers
as a broker-dealer, or becomes newly affiliated with a broker-
dealer, or (b) any new adviser or sub-adviser is a registered
broker-dealer or becomes affiliated with another broker-dealer, it
will implement a fire wall with respect to its relevant personnel
and/or such broker-dealer affiliate, as applicable, regarding access
to information concerning the composition of, and/or changes to, a
portfolio and will be subject to procedures designed to prevent the
use and dissemination of material, non-public information regarding
such portfolio.
---------------------------------------------------------------------------

    The Exchange has made the following representations and statements
describing the Funds and the Funds' investment strategies, including
the Funds' portfolio holdings and investment restrictions.\12\
---------------------------------------------------------------------------

    \12\ Additional information regarding the Funds, the Trust, and
the Shares, including investment strategies, risks, creation and
redemption procedures, fees, portfolio holdings disclosure policies,
calculation of net asset value (``NAV''), distributions, and taxes,
among other things, can be found in the Notice, the amendments, and
the Registration Statement, as applicable. See Notice, Amendment
Nos. 1-3, and Registration Statement, supra notes 3, 4, 5, 8, and
10, respectively.
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A. Exchange's Description of Principal Investment Strategies Applicable
to Each Fund

    Each Fund's investment objective will be to provide capital
appreciation. Under normal market conditions,\13\ each Fund will seek
to achieve its investment objective by investing at least 80% of its
net assets (including investment borrowings) in a combination of: (i)
``Principal Fund Equity Securities'' (as defined below); (ii) forward
currency contracts and non-deliverable forward currency contracts
(collectively, ``Forward Contracts''); and (iii) currency transactions
on a spot (i.e., cash) basis.\14\
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    \13\ The term ``under normal market conditions'' as used herein
includes, but is not limited to, the absence of adverse market,
economic, political or other conditions, including extreme
volatility or trading halts in the securities markets or the
financial markets generally; operational issues causing
dissemination of inaccurate market information; or force majeure
type events such as systems failure, natural or man-made disaster,
act of God, armed conflict, act of terrorism, riot or labor
disruption, or any similar intervening circumstance. On a temporary
basis, including for defensive purposes, during the initial invest-
up period and during periods of high cash inflows or outflows, a
Fund may depart from its principal investment strategies; for
example, it may hold a higher than normal proportion of its assets
in cash. During such periods, a Fund may not be able to achieve its
investment objective. A Fund may adopt a defensive strategy when the
Adviser and/or the Sub-Adviser believes securities in which such
Fund normally invests have elevated risks due to political or
economic factors and in other extraordinary circumstances.
    \14\ A Fund would enter into Forward Contracts and/or currency
spot transactions for hedging purposes.
---------------------------------------------------------------------------

    For each Fund, (a) ``Principal Equity Securities'' will consist of
the following U.S. and non-U.S. exchange-listed securities: (i) Common
stocks; (ii) common and preferred shares of real estate investment
trusts (``REITs''); and (iii) American Depositary Receipts (``ADRs''),
European Depositary Receipts (``EDRs''), and Global Depositary Receipts
(``GDRs'' and, together with ADRs and EDRs, collectively, ``Depositary
Receipts''),\15\ and (b) ``Principal Fund Equity Securities'' will
consist of Principal Equity Securities that are suggested by such
Fund's name.\16\ Accordingly:
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    \15\ The Funds will not invest in any unsponsored Depositary
Receipts.
    \16\ With respect to Depositary Receipts, whether such Principal
Equity Securities are Principal Fund Equity Securities is based on
the underlying securities, the ownership of which is represented by
the Depositary Receipts (i.e., whether, as described below, the
relevant underlying security is a security of a European company, an
Asian Pacific company, an emerging market company, or a developed
market company, as applicable).
---------------------------------------------------------------------------

    (1) For the Europe Fund, Principal Fund Equity Securities will be
Principal Equity Securities of European companies; \17\
---------------------------------------------------------------------------

    \17\ European companies are those companies (i) whose securities
are traded principally on a stock exchange in a European country,
(ii) that are organized under the laws of or have a principal office
in a European country, or (iii) that have at least 50% of their
assets in, or derive at least 50% of their revenues or profits from,
a European country.
---------------------------------------------------------------------------

    (2) for the Asia Pacific Fund, Principal Fund Equity Securities
will be Principal Equity Securities of Asian Pacific companies; \18\
---------------------------------------------------------------------------

    \18\ Asian Pacific companies are those companies (i) whose
securities are traded principally on a stock exchange in an Asian
Pacific country, (ii) that are organized under the laws of or have a
principal office in an Asian Pacific country, or (iii) that have at
least 50% of their assets in, or derive at least 50% of their
revenues or profits from, an Asian Pacific country.
---------------------------------------------------------------------------

    (3) for the Emerging Markets Fund, Principal Fund Equity Securities
will be Principal Equity Securities of emerging market companies; \19\
and
---------------------------------------------------------------------------

    \19\ An emerging market company is one (i) domiciled or with a
principal place of business or primary securities trading market in
an emerging market country, or (ii) that derives a substantial
portion of its total revenues or profits from emerging market
countries.
---------------------------------------------------------------------------

    (4) for the Developed International Fund, Principal Fund Equity
Securities will be Principal Equity Securities of developed market
companies.\20\
---------------------------------------------------------------------------

    \20\ Developed market companies are those companies (i) whose
securities are traded principally on a stock exchange in a developed
market country, (ii) that are organized under the laws of or have a
principal office in a developed market country, or (iii) that have
at least 50% of their assets in, or derive at least 50% of their
revenues or profits from, a developed market country.
---------------------------------------------------------------------------

    In selecting securities for a Fund, the Sub-Adviser will score
individual securities from a portfolio of eligible securities according
to several core attributes, using multiple proprietary factors within
each core attribute. The Sub-Adviser will then rank each qualifying
security based on its core attribute score, and the highest scoring
securities will be considered for inclusion in the Fund's portfolio.
The Sub-Adviser will utilize its proprietary optimization process to
maximize the percentage of high-scoring securities included in each
Fund's portfolio.
    In addition, for each Fund, by entering into Forward Contracts and
currency spot transactions, the Sub-Adviser will deploy a dynamic
currency hedge (hedging up to 100% of such Fund's foreign currency
exposure) based on its proprietary hedging methodology. The Sub-
Adviser's hedging methodology will be constructed from a combination of
quantitative measures and qualitative measures. Each Fund will only
enter into transactions in Forward Contracts with counterparties that
the Adviser and/or the Sub-Adviser reasonably believe are capable of
performing under the applicable Forward Contract.\21\
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    \21\ According to the Exchange, each Fund will seek, where
possible, to use counterparties, as applicable, whose financial
status is such that the risk of default is reduced; however, the
risk of losses resulting from default is still possible. The Adviser
and/or the Sub-Adviser will evaluate the creditworthiness of
counterparties on an ongoing basis. In addition to information
provided by credit agencies, the Adviser's and/or Sub-Adviser's
analysis will evaluate each approved counterparty using various
methods of analysis and may consider the Adviser's and/or Sub-
Adviser's past experience with the counterparty, its known
disciplinary history, and its share of market participation.
---------------------------------------------------------------------------

B. Exchange's Description of Other Investments for the Funds

    According to the Exchange, each Fund may invest (in the aggregate)
up to 20% of its net assets in the following securities and
instruments.

    Each Fund may invest in the following U.S. and non-U.S. exchange-
listed securities (other than Principal Fund Equity Securities): (i)
Common stocks; (ii) common and preferred shares of REITs; (iii)
Depositary Receipts; and (iv) equity securities of business development
companies (collectively, ``Other Equity Securities'').\22\
---------------------------------------------------------------------------

    \22\ For each Fund, Other Equity Securities and Principal Fund
Equity Securities are referred to collectively as ``Equity
Securities.''
---------------------------------------------------------------------------

    Each Fund may invest in short-term debt securities and other short-
term debt instruments (described below), as well as cash equivalents,
or it may hold cash. The percentage of each Fund invested in such
holdings or held in cash will vary and will depend on several factors,
including market conditions. Each Fund may invest in the following
short-term debt instruments: \23\ (1) Fixed rate and floating rate U.S.
government securities, including bills, notes, and bonds differing as
to maturity and rates of interest, which are either issued or
guaranteed by the U.S. Treasury or by U.S. government agencies or
instrumentalities; (2) certificates of deposit issued against funds
deposited in a bank or savings and loan association; (3) bankers'
acceptances, which are short-term credit instruments used to finance
commercial transactions; (4) repurchase agreements,\24\ which involve
purchases of debt securities; (5) bank time deposits, which are monies
kept on deposit with banks or savings and loan associations for a
stated period of time at a fixed rate of interest; (6) commercial
paper, which is short-term unsecured promissory notes; \25\ and (7)
short-term debt obligations issued or guaranteed by non-U.S.
governments or by their agencies or instrumentalities.
---------------------------------------------------------------------------

    \23\ The Exchange represents that short-term debt instruments
will be issued by issuers having a long-term debt rating of at least
A by Standard & Poor's Ratings Services (``S&P Ratings''), Moody's
Investors Service, Inc. (``Moody's''), or Fitch Ratings (``Fitch''),
and have a maturity of one year or less.
    \24\ According to the Exchange, each Fund intends to enter into
repurchase agreements only with financial institutions and dealers
believed by the Adviser and/or the Sub-Adviser to present minimal
credit risks in accordance with criteria approved by the Board of
Trustees of the Trust. The Adviser and/or the Sub-Adviser will
review and monitor the creditworthiness of such institutions. The
Adviser and/or the Sub-Adviser will monitor the value of the
collateral at the time the transaction is entered into and at all
times during the term of the repurchase agreement. The Funds will
not enter into reverse repurchase agreements.
    \25\ Each Fund may only invest in commercial paper rated A-1 or
higher by S&P Ratings, Prime-1 or higher by Moody's, or F1 or higher
by Fitch.
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    Each Fund may invest (but only up to 5% of its net assets) in
exchange-listed equity index futures contracts.

C. Exchange's Description of the Funds' Equity Securities

    According to the Exchange, under normal market conditions, each
Fund will invest in at least 20 Equity Securities. Each Fund will
satisfy the ``ISG Criteria'' (as described below) and/or the
``Alternative Criteria'' (as described below).
    A Fund will satisfy the ISG Criteria if at least 90% of such Fund's
net assets that are invested (in the aggregate) in Equity Securities
will be invested in Equity Securities that trade in markets that are
members of the Intermarket Surveillance Group (``ISG'') \26\ or are
parties to a comprehensive surveillance sharing agreement with the
Exchange.
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    \26\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all components of the
Disclosed Portfolio for a Fund may trade on markets that are members
of ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement.
---------------------------------------------------------------------------

    A Fund will satisfy the Alternative Criteria if, under normal
market conditions, its Equity Securities meet the following criteria at
the time of purchase and on a continuous basis: (1) Non-U.S. Equity
Securities \27\ each shall have a minimum market value of at least $100
million; (2) non-U.S. Equity Securities each shall have a minimum
global monthly trading volume of 250,000 shares, or minimum global
notional volume traded per month of $25,000,000, averaged over the last
six months; (3) the most heavily weighted non-U.S. Equity Security
shall not exceed 25% of the weight of the Fund's entire portfolio and,
to the extent applicable, the five most heavily weighted non-U.S.
Equity Securities shall not exceed 60% of the weight of the Fund's
entire portfolio; (4) each non-U.S. Equity Security shall be listed and
traded on an exchange that has last-sale reporting; and (5) all of such
Fund's net assets that are invested (in the aggregate) in Equity
Securities other than non-U.S. Equity Securities shall be invested in
Equity Securities that trade in markets that are members of ISG or are
parties to a comprehensive surveillance sharing agreement with the
Exchange.
---------------------------------------------------------------------------

    \27\ For purposes of this filing, the term ``non-U.S. Equity
Securities'' means Equity Securities that are not listed on a U.S.
exchange.
---------------------------------------------------------------------------

D. Exchange's Description of the Funds' Transactions in Forward
Contracts and Exchange-Listed Equity Index Futures Contracts

    According to the Exchange, each Fund's transactions in Forward
Contracts and exchange-listed equity index futures contracts will be
consistent with its investment objective and the 1940 Act and will not
be used to seek to achieve a multiple or inverse multiple of an index.
Each Fund will comply with the regulatory requirements of the
Commission with respect to coverage in connection with its transactions
in Forward Contracts and exchange-listed equity index futures
contracts. If the applicable guidelines prescribed under the 1940 Act
so require, a Fund will earmark cash, U.S. government securities and/or
other liquid assets permitted by the Commission in the amount
prescribed.

E. Exchange's Description of the Funds' Investment Restrictions

    Each Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid assets (calculated at the time of investment),
deemed illiquid by the Adviser and/or the Sub-Adviser.\28\ Each Fund
will monitor its portfolio liquidity on an ongoing basis to determine
whether, in light of current circumstances, an adequate level of
liquidity is being maintained, and will consider taking appropriate
steps in order to maintain adequate liquidity if, through a change in
values, net assets, or other circumstances, more than 15% of such
Fund's net assets are held in illiquid assets. Illiquid assets include
securities subject to contractual or other restrictions on resale and
other instruments that lack readily available markets as determined in
accordance with Commission staff guidance.
---------------------------------------------------------------------------

    \28\ According to the Exchange, in determining the liquidity of
the Funds' investments, the Adviser and/or the Sub-Adviser may
consider the following factors: (i) The frequency of trades and
quotes for the security or other instrument; (ii) the number of
dealers wishing to purchase or sell the security or other instrument
and the number of other potential purchasers; (iii) dealer
undertakings to make a market in the security or other instrument;
and (iv) the nature of the security or other instrument and the
nature of the marketplace in which it trades (e.g., the time needed
to dispose of the security or other instrument, the method of
soliciting offers and the mechanics of transfer).
---------------------------------------------------------------------------

    The Funds may not invest 25% or more of the value of their
respective total assets in securities of issuers in any one industry.
This restriction does not apply to (a) obligations issued or guaranteed
by the U.S. government, its agencies or instrumentalities, or (b)
securities of other investment companies.
    Each Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Internal Revenue Code.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the Exchange's
proposal is consistent with the Exchange Act and the rules and
regulations thereunder

applicable to a national securities exchange.\29\ In particular, the
Commission finds that the proposed rule change, as modified by
Amendment Nos. 1, 2, and 3 thereto, is consistent with Section 6(b)(5)
of the Exchange Act,\30\ which requires, among other things, that the
Exchange's rules be 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.
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    \29\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \30\ 15 U.S.C. 78f(b)(5).
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    The Commission also finds that the proposal is consistent with
Section 11A(a)(1)(C)(iii) of the Exchange Act,\31\ which sets forth
Congress's finding that it is in the public interest and appropriate
for the protection of investors and the maintenance of fair and orderly
markets to assure the availability to brokers, dealers, and investors
of information with respect to quotations for, and transactions in,
securities.
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    \31\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    Quotation and last-sale information for the Shares will be
available via Nasdaq proprietary quote and trade services, as well as
in accordance with the Unlisted Trading Privileges and the Consolidated
Tape Association (``CTA'') plans for the Shares. On each business day,
before commencement of trading in Shares in the Regular Market Session
\32\ on the Exchange, each Fund will disclose on its Web site the
Disclosed Portfolio held by such Fund that will form the basis for such
Fund's calculation of NAV at the end of the business day.\33\ The NAV
of each Fund's Shares generally will be calculated once daily Monday
through Friday as of the close of regular trading on the New York Stock
Exchange, generally 4:00 p.m., Eastern Time.\34\
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    \32\ See Nasdaq Rule 4120(b)(4) (describing the three trading
sessions on the Exchange: (1) Pre-Market Session from 4:00 a.m. to
9:30 a.m., Eastern Time; (2) Regular Market Session from 9:30 a.m.
to 4:00 p.m. or 4:15 p.m., Eastern Time; and (3) Post-Market Session
from 4:00 p.m. or 4:15 p.m. to 8:00 p.m., Eastern Time).
    \33\ Nasdaq Rule 5735(c)(2) defines the term ``Disclosed
Portfolio.'' According to the Exchange, each Fund's disclosure of
derivative positions in the Disclosed Portfolio will include
sufficient information for market participants to use to value these
positions intraday. On a daily basis, each Fund will also disclose
on its Web site the following information regarding each portfolio
holding, as applicable to the type of holding: ticker symbol, CUSIP
number or other identifier, if any; a description of the holding
(including the type of holding); the identity of the security,
index, or other asset or instrument underlying the holding, if any;
quantity held (as measured by, for example, par value, notional
value, or number of shares, contracts, or units); maturity date, if
any; coupon rate, if any; effective date, if any; market value of
the holding; and percentage weighting of the holding in the Fund's
portfolio. The Web site information will be publicly available at no
charge.
    \34\ According to the Exchange, the Funds' investments will be
valued daily. The following investments will typically be valued
using information provided by a third-party pricing service
(``Pricing Service''): (a) Except as provided below, short term U.S.
government securities, commercial paper, bankers' acceptances, and
short-term debt obligations issued or guaranteed by non-U.S.
governments or by their agencies or instrumentalities (collectively,
``Short Term Debt Instruments''); and (b) currency spot
transactions. Debt instruments may be valued at evaluated mean
prices, as provided by Pricing Services. Short Term Debt Instruments
having a remaining maturity of 60 days or less when purchased will
typically be valued at cost adjusted for amortization of premiums
and accretion of discounts, provided the pricing committee of the
Adviser (``Pricing Committee'') has determined that the use of
amortized cost is an appropriate reflection of value given market
and issuer specific conditions existing at the time of the
determination. Overnight repurchase agreements will be valued at
amortized cost when it represents the best estimate of value. Term
repurchase agreements (i.e., those whose maturity exceeds seven
days) will be valued at the average of the bid quotations obtained
daily from at least two recognized dealers. Certificates of deposit
and bank time deposits will typically be valued at cost. Equity
Securities that are listed on any exchange other than the Exchange
and the London Stock Exchange Alternative Investment Market
(``AIM'') will typically be valued at the last-sale price on the
exchange on which they are principally traded on the business day as
of which such value is being determined. Equity Securities listed on
the Exchange or the AIM will typically be valued at the official
closing price on the business day as of which such value is being
determined. If there has been no sale on such day, or no official
closing price in the case of securities traded on the Exchange or
the AIM, such securities will typically be valued using fair value
pricing. Equity Securities traded on more than one securities
exchange will be valued at the last sale price or official closing
price, as applicable, on the business day as of which such value is
being determined at the close of the exchange representing the
principal market for such securities. Exchange-listed equity index
futures contracts will typically be valued at the closing price in
the market where such instruments are principally traded. Forward
Contracts will typically be valued at the current day's interpolated
foreign exchange rate, as calculated using the current day's spot
rate, and the thirty, sixty, ninety, and one-hundred-eighty day
forward rates provided by a Pricing Service or by certain
independent dealers in such contracts. Assets denominated in foreign
currencies will be translated into U.S. dollars at the exchange rate
of such currencies against the U.S. dollar as provided by a Pricing
Service. The value of assets denominated in foreign currencies will
be converted into U.S. dollars at the exchange rates in effect at
the time of valuation.
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    In addition, the Intraday Indicative Value \35\ for each Fund,
available on the NASDAQ OMX Information LLC proprietary index data
service, will be based upon the current value for the components of the
Disclosed Portfolio and will be updated and widely disseminated by one
or more major market data vendors and broadly displayed at least every
15 seconds during the Regular Market Session. The Intraday Indicative
Value will be based on quotes and closing prices from the securities'
local market and may not reflect events that occur subsequent to the
local market's close.
---------------------------------------------------------------------------

    \35\ Nasdaq Rule 5735(c)(3) defines the term ``Intraday
Indicative Value.''
---------------------------------------------------------------------------

    Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding the previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers. Quotation and last-sale information for the
Equity Securities (to the extent traded on a U.S. exchange) will be
available from the exchanges on which they are traded as well as in
accordance with any applicable CTA plans. Pricing information for
Short-Term Debt Instruments, repurchase agreements, Forward Contracts,
bank time deposits, certificates of deposit, and currency spot
transactions will be available from major broker-dealer firms and/or
major market data vendors and/or Pricing Services. Pricing information
for exchange-listed equity index futures contracts and non-U.S. Equity
Securities will be available from the applicable listing exchange and
from major market data vendors. In addition, the Exchange notes that
the Funds' Web site will include a form of the prospectus for the Funds
and additional data relating to NAV and other applicable quantitative
information.
    The Commission also believes that the proposal to list and trade
the Shares is reasonably designed to promote fair disclosure of
information that may be necessary to price the Shares appropriately and
to prevent trading when a reasonable degree of transparency cannot be
assured. The Exchange states that it will obtain a representation from
the issuer of the Shares that the NAV per Share will be calculated
daily and that the NAV and the Disclosed Portfolio will be made
available to all market participants at the same time. The Exchange
also represents that it may consider all relevant factors in exercising
its discretion to halt or suspend trading in the Shares of a Fund. The
Exchange will halt trading in the Shares under the conditions specified
in Nasdaq Rules 4120 and 4121, including the trading pauses under
Nasdaq Rules 4120(a)(11) and (12). Trading may be halted because of
market conditions or for reasons that, in the view of the Exchange,
make

trading in the Shares inadvisable.\36\ Trading in the Shares also will
be subject to Rule 5735(d)(2)(D), which sets forth circumstances under
which Shares of a Fund may be halted.
---------------------------------------------------------------------------

    \36\ These may include: (1) The extent to which trading is not
occurring in the securities and/or the other assets constituting the
Disclosed Portfolio of a Fund; or (2) whether other unusual
conditions or circumstances detrimental to the maintenance of a fair
and orderly market are present.
---------------------------------------------------------------------------

    The Exchange states that it has a general policy prohibiting the
distribution of material, non-public information by its employees. The
Exchange further states that neither the Adviser nor the Sub-Adviser is
a broker-dealer, but each is affiliated with a broker-dealer, and that
the Adviser and Sub-Adviser has each implemented a fire wall with
respect to its respective broker-dealer affiliate regarding access to
information concerning the composition of, and changes to, each Fund's
portfolio.\37\ Further, the Commission notes that the Reporting
Authority \38\ that provides the Disclosed Portfolio must implement and
maintain, or be subject to, procedures designed to prevent the use and
dissemination of material, non-public information regarding the actual
components of the portfolio.\39\ The Exchange represents that trading
in the Shares will be subject to the existing trading surveillances,
administered by both Nasdaq and also the Financial Industry Regulatory
Authority (``FINRA'') on behalf of the Exchange, which are designed to
detect violations of Exchange rules and applicable federal securities
laws.\40\
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    \37\ See supra note 11 and accompanying text. The Exchange
further represents that an investment adviser to an open-end fund is
required to be registered under the Investment Advisers Act of 1940
(``Advisers Act''). As a result, the Adviser, the Sub-Adviser, and
their related personnel are subject to the provisions of Rule 204A-1
under the Advisers Act relating to codes of ethics. This Rule
requires investment advisers to adopt a code of ethics that reflects
the fiduciary nature of the relationship to clients as well as
compliance with other applicable securities laws. Accordingly,
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under
the Advisers Act makes it unlawful for an investment adviser to
provide investment advice to clients unless such investment adviser
has (i) adopted and implemented written policies and procedures
reasonably designed to prevent violation, by the investment adviser
and its supervised persons, of the Advisers Act and the Commission
rules adopted thereunder; (ii) implemented, at a minimum, an annual
review regarding the adequacy of the policies and procedures
established pursuant to subparagraph (i) above and the effectiveness
of their implementation; and (iii) designated an individual (who is
a supervised person) responsible for administering the policies and
procedures adopted under subparagraph (i) above.
    \38\ Nasdaq Rule 5735(c)(4) defines ``Reporting Authority.''
    \39\ See Nasdaq Rule 5735(d)(2)(B)(ii).
    \40\ The Exchange represents that FINRA surveils trading on the
Exchange pursuant to a regulatory services agreement and that the
Exchange is responsible for FINRA's performance under this
regulatory services agreement.
---------------------------------------------------------------------------

    Nasdaq deems the Shares to be equity securities, thus rendering
trading in the Shares subject to Nasdaq's existing rules governing the
trading of equity securities. In support of this proposal, the Exchange
represented that:
    (1) The Shares will be subject to Nasdaq Rule 5735, which sets
forth the initial and continued listing criteria applicable to Managed
Fund Shares.
    (2) Trading in the Shares will be subject to the existing trading
surveillances, administered by both Nasdaq and FINRA on behalf of the
Exchange, which are designed to detect violations of Exchange rules and
applicable federal securities laws. The Exchange represents that these
procedures are adequate to properly monitor Exchange trading of the
Shares in all trading sessions and to deter and detect violations of
Exchange rules and applicable federal securities laws.
    (3) FINRA, on behalf of the Exchange, will communicate as needed
regarding trading in the Shares and certain of the Equity Securities
and exchange-listed equity index futures contracts held by the Funds
with other markets and other entities that are members of ISG, and
FINRA may obtain trading information regarding trading in the Shares
and such securities and instruments held by the Funds from such markets
and other entities. In addition, the Exchange may obtain information
regarding trading in the Shares and certain of the Equity Securities
and exchange-listed equity index futures contracts held by the Funds
from markets and other entities that are members of ISG, which includes
securities and futures exchanges, or with which the Exchange has in
place a comprehensive surveillance sharing agreement. Moreover, FINRA,
on behalf of the Exchange, will be able to access, as needed, trade
information for certain fixed income securities held by the Funds
reported to FINRA's Trade Reporting and Compliance Engine (``TRACE'').
    (4) For each Fund, at least 90% of such Fund's net assets that are
invested (in the aggregate) in exchange-listed equity index futures
contracts will be invested in instruments that trade in markets that
are members of ISG or are parties to a comprehensive surveillance
sharing agreement with the Exchange.
    (5) The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions.
    (6) Prior to the commencement of trading, the Exchange will inform
its members in an Information Circular of the special characteristics
and risks associated with trading the Shares. Specifically, the
Information Circular for each Fund will discuss the following: (a) The
procedures for purchases and redemptions of Shares in Creation Units
(and that Shares are not individually redeemable); (b) Nasdaq Rule
2111A, which imposes suitability obligations on Nasdaq members with
respect to recommending transactions in the Shares to customers; (c)
how information regarding the Intraday Indicative Value and the
Disclosed Portfolio is disseminated; (d) the risks involved in trading
the Shares during the Pre-Market and Post-Market Sessions when an
updated Intraday Indicative Value will not be calculated or publicly
disseminated; (e) the requirement that members deliver a prospectus to
investors purchasing newly issued Shares prior to or concurrently with
the confirmation of a transaction; and (f) trading information.
    (7) For initial and continued listing, the Funds must be in
compliance with Rule 10A-3 under the Act.\41\
---------------------------------------------------------------------------

    \41\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

    (8) Each Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid assets.
    (9) The Pricing Committee will be subject to procedures designed to
prevent the use and dissemination of material non-public information
regarding each Fund's portfolio.
    (10) Each Fund will satisfy: (a) The ISG Criteria; and/or (b) the
Alternative Criteria at the time of purchase and on a continuous basis.
    (11) A minimum of 100,000 Shares will be outstanding at the
commencement of trading on the Exchange.
    The Exchange represents that all statements and representations
made in the filing regarding (a) the description of the portfolios, (b)
limitations on portfolio holdings or reference assets, or (c) the
applicability of Exchange rules and surveillance procedures shall
constitute continued listing requirements for listing the Shares on the
Exchange. In addition, the issuer has represented to the Exchange that
it will advise the Exchange of any failure by the Funds to comply with
the continued listing requirements, and, pursuant to its obligations
under Section 19(g)(1) of the Act, the Exchange will monitor for
compliance with the continued listing requirements.\42\ If a Fund is
not in

compliance with the applicable listing requirements, the Exchange will
commence delisting procedures under the Nasdaq 5800 Series. This
approval order is based on all of the Exchange's representations,
including those set forth above, in the Notice, and in Amendment Nos.
1, 2, and 3 to the proposed rule change. The Commission notes that the
Funds and the Shares must comply with the requirements of Nasdaq Rule
5735, including those set forth in this proposed rule change, as
modified by Amendment Nos. 1, 2, and 3 thereto, to be listed and traded
on the Exchange on an initial and continuing basis.
---------------------------------------------------------------------------

    \42\ The Commission notes that certain other proposals for the
listing and trading of Managed Fund Shares include a representation
that the exchange will ``surveil'' for compliance with the continued
listing requirements. See, e.g., Amendment No. 2 to SR-BATS-2016-04,
available at: http://www.sec.gov/comments/sr-bats-2016-04/bats201604-2.pdf. In the context of this representation, it is the
Commission's view that ``monitor'' and ``surveil'' both mean ongoing
oversight of the Fund's compliance with the continued listing
requirements. Therefore, the Commission does not view ``monitor'' as
a more or less stringent obligation than ``surveil'' with respect to
the continued listing requirements.
---------------------------------------------------------------------------

    For the foregoing reasons, the Commission finds that the proposed
rule change, as modified by Amendment Nos. 1, 2, and 3 thereto, is
consistent with Section 6(b)(5) of the Act \43\ and the rules and
regulations thereunder applicable to a national securities exchange.
---------------------------------------------------------------------------

    \43\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\44\ that the proposed rule change (SR-NASDAQ-2015-161),
as modified by Amendment Nos. 1, 2, and 3 thereto, be, and it hereby
is, approved.
---------------------------------------------------------------------------

    \44\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\45\
---------------------------------------------------------------------------

    \45\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-08307 Filed 4-11-16; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 133 (Tuesday, July 12, 2011)]
[Notices]
[Pages 40921-40922]
[FR Doc No: 2011-17352]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2011-D-0476]

Draft Guidance for Industry and Food and Drug Administration
Staff; Enforcement Policy for Premarket Notification Requirements for
Certain In Vitro Diagnostic and Radiology Devices; Availability

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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

SUMMARY: The Food and Drug Administration (FDA) is announcing the
availability of the draft guidance entitled ``Enforcement Policy for
Premarket Notification Requirements for Certain In Vitro Diagnostic and
Radiology Devices.'' This document describes FDA's intent with regard
to enforcement of premarket notification (510(k)) requirements for
certain in vitro diagnostic and radiology devices under the
regulations. This draft guidance is not final nor is it in effect at
this time.

DATES: Although you can comment on any guidance at any time (see 21 CFR
10.115(g)(5)), to ensure that the Agency considers your comment on this
draft guidance before it begins work on the final version of the
guidance, submit either electronic or written comments on the draft
guidance by October 11, 2011.

ADDRESSES: Submit written requests for single copies of the draft
guidance document entitled ``Enforcement Policy for Premarket
Notification Requirements for Certain In Vitro Diagnostic and Radiology
Devices'' to the Division of Small Manufacturers, International, and
Consumer Assistance, Center for Devices and Radiological Health, Food
and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, rm. 4613,
Silver Spring, MD 20993-0002. Send one self-addressed adhesive label to
assist that office in processing your request, or fax your request to
301-847-8149. See the SUPPLEMENTARY INFORMATION section for information
on electronic access to the guidance.
    Submit electronic comments on the draft guidance to http://www.regulations.gov. Submit written comments to the Division of Dockets
Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane,
rm. 1061, Rockville, MD 20852. Identify comments with the docket number
found in brackets in the heading of this document.

FOR FURTHER INFORMATION CONTACT: Scott McFarland, Center for Devices
and Radiological Health, Food and Drug Administration, 10903 New
Hampshire Ave., Bldg. 66, rm. 5543, Silver Spring, MD 20993-0002, 301-
796-6217.

SUPPLEMENTARY INFORMATION:

I. Background

    FDA has identified certain Class I and Class II in vitro diagnostic
and radiology devices that have established safety and effectiveness
profiles and for which it believes 510(k) review is not necessary to
assure safety and effectiveness. While FDA intends to exempt these
devices from the 510(k) requirement through rulemaking that would
reclassify the Class II devices and amend the classification
regulations of the Class I devices, FDA no longer believes it is
necessary to review premarket notification (510(k)) submissions for
these devices before they enter the market. FDA is issuing a draft
guidance concerning a policy of exercising enforcement discretion with
regard to the 510(k) requirement for such devices. The draft guidance
lists the devices for which, when the guidance is finalized, FDA
intends to exercise enforcement discretion with regard to premarket
notification requirements, subject to the limitations to the exemption
criteria found in 21 CFR 862.9, 21 CFR 864.9, 21 CFR 866.9, and 21 CFR
892.9. FDA intends to continue to enforce all other applicable
requirements under the FD&C Act, including, but not limited to:
Registration and listing (21 CFR part 807); labeling (21 CFR part 801
and 21 CFR 809.10); good manufacturing practice requirements as set
forth in the Quality System regulation (21 CFR part 820); and Medical
Device Reporting requirements (21 CFR part 803).

II. Significance of Guidance

    This draft guidance is being issued consistent with FDA's good
guidance practices regulation (21 CFR 10.115). The draft guidance, when
finalized, will represent the Agency's current thinking on
``Enforcement Policy for Premarket Notification Requirements for
Certain In Vitro Diagnostic and Radiology Devices.'' It does not create
or confer any rights for or on any person and does not operate to bind
FDA or the public. An alternative approach may be used if such approach
satisfies the requirements of the applicable statute and regulations.

III. Electronic Access

    Persons interested in obtaining a copy of the draft guidance may do
so by using the Internet. A search capability for all CDRH guidance
documents is available at http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/default.htm. Guidance
documents are also available at http://www.regulations.gov. To receive
``Premarket Notification Enforcement Discretion for Certain In Vitro
Diagnostic and Radiology Devices,'' you may either send an e-mail
request to<EMAIL_ADDRESS>to receive an electronic copy of the
document or send a fax request to<PHONE_NUMBER> to receive a hard copy.
Please use the document number 1752 to identify the guidance you are
requesting.

IV. Paperwork Reduction Act of 1995

    This draft guidance refers to previously approved collections of
information found in FDA regulations and guidance documents. These
collections of information are subject to review by the Office of
Management and Budget (OMB) under the Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3520). The collections of information in 21 CFR part
807, subpart E have been approved under OMB control number 0910-0120;
the collections of information in 21 CFR part 807, subparts B and C
have been approved under OMB control number 0910-0387; the collections
of information in 21 CFR part 820 have been approved under OMB control
number 0910-0073; the collections of information in 21 CFR part 801 and
21 CFR 809.10 have been approved under OMB control number 0910-0485;
and the collections of information in 21 CFR part 803 have been
approved under OMB control number 0910-0437.

V. Comments

    Interested persons may submit to the Division of Dockets Management
(see ADDRESSES), either electronic or written comments regarding this
document. It is only necessary to send one set of comments. It is no
longer necessary to send two copies of mailed comments. Identify
comments with the docket number found in brackets in the heading of
this document. Received comments may be seen in the Division of Dockets
Management between 9 a.m. and 4 p.m., Monday through Friday.

    Dated: July 6, 2011.
Nancy K. Stade,
 Deputy Director for Policy, Center for Devices and Radiological
Health.
[FR Doc. 2011-17352 Filed 7-11-11; 8:45 am]
BILLING CODE 4160-01-P