[Federal Register: August 13, 2007 (Volume 72, Number 155)]
[Notices]
[Page 45284-45287]
[DOCID:fr13au07-109]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56207; File No. SR-NASD-2007-044]

Self-Regulatory Organizations; National Association of Securities
Dealers, Inc. (n/k/a Financial Industry Regulatory Authority, Inc.);
Notice of Filing of Proposed Rule Change To Expand the Class of
Entities Permitted To Use the Delta Hedging Exemption From Equity
Options Position Limits

August 6, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 29, 2007, the National Association of Securities Dealers, Inc.
(``NASD'') (n/k/a Financial Industry Regulatory Authority, Inc.) filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been substantially prepared by FINRA.\3\ The

Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On July 26, 2007, the Commission approved a proposed rule
change filed by NASD to amend NASD's Certificate of Incorporation to
reflect its name change to Financial Industry Regulatory Authority
Inc., or FINRA, in connection with the consolidation of the member
firm regulatory functions of NASD and NYSE Regulation, Inc. See
Securities Exchange Act Release No. 56146 (July 26, 2007), 72 FR
42190 (August 1, 2007).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FINRA proposes to amend Rule 2860 to expand the class of entities
permitted to use the delta hedging exemption from equity options
position limits. The text of the proposed rule change is available on
FINRA's Web site (http://www.finra.org), at FINRA, and at the Commission's

Public Reference Room.

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

    In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in Sections A,
B, and C below, of the most significant aspects of such statements.

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

1. Purpose
Background
    Over the past several years, FINRA has increased in absolute terms
the size of the options position and exercise limits as well as the
size and scope of available exemptions for ``hedged'' positions.\4\ The
exemptions for hedged positions generally required a one-to-one hedge,
i.e., one stock option contract must be hedged by the number of shares
covered by the options contract, typically 100 shares. In practice,
however, many firms do not hedge their options positions in this way.
Rather, these firms engage in what is known as ``delta hedging,'' which
varies the number of shares of stock used to hedge an options position
based upon the relative sensitivity of the value of the option contract
to a change in the price of the underlying stock.\5\ FINRA believes
that delta hedging is widely accepted for net capital and risk
management purposes.
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    \4\ See Securities Exchange Act Release Nos. 47307 (February 3,
2003), 68 FR 6977 (February 11, 2003) (SR-NASD-2002-134); 40932
(January 11, 1999), 64 FR 2930 (January 19, 1999) (SR-NASD-98-92);
40087 (June 12, 1998), 63 FR 33746 (June 19, 1998) (SR-NASD-98-23);
and 39771 (March 19, 1998), 63 FR 14743 (March 26, 1998) (SR-NASD-
98-15).
    \5\ For example, an option with a delta of .5 will move $0.50
for every $1.00 move in the underlying stock.
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    In 2004, the Commission approved amendments to Rule 2860 that
provide a delta hedging exemption from stock options position and
exercise limits \6\ for positions held by affiliates of NASD members
approved by the Commission as ``OTC Derivatives Dealers.'' \7\ At that
time, the Commission reiterated its ``support for recognizing options
positions hedged on a delta neutral basis as properly exempted from
position limits.'' \8\
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    \6\ The proposed rule change does not expressly amend FINRA's
options exercise limits in Rule 2860(b)(4) because such exercise
limits apply only to the extent Rule 2860(b)(3) imposes position
limits. Thus, as delta neutral positions would be exempt from
position limits under the proposed rule change, such positions also
would be exempt from exercise limits. See NASD Notice to Members 94-
46 (June 1994) at 2 (``* * * exercise limits correspond to position
limits, such that investors in options classes on the same side of
the market are allowed to exercise * * * only the number of options
contracts set forth as the applicable position limit for those
options classes.''). Similarly, for positions held that are not
delta neutral, only the option contract equivalent of the net delta
of such positions would be subject to exercise limits.
    \7\ See Securities Exchange Act Release No. 50748 (November 29,
2004), 69 FR 70485 (December 6, 2004) (SR-NASD-2004-153).
    \8\ Id. at 70486.
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Broadening the Scope of FINRA's Delta Hedging Exemption
    In the proposed rule change, FINRA is expanding the delta hedging
exemption beyond OTC Derivatives Dealers to include broker-dealers and
certain other financial institutions (``Exemption''). Specifically, the
proposed rule change would permit any member, or non-member affiliate
permitted to rely on new proposed subparagraph (B) or (C) of Rule
2860(b)(3)(A)(vii)b.1. (described below),\9\ to apply the delta model
developed by the Options Clearing Corporation.
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    \9\ See infra notes 11 and 12 and accompanying text.
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    In addition, certain other broker-dealers and affiliated entities,
described below, would be permitted to use a proprietary model(s) to
calculate options position net deltas provided that the use of such
models were in accordance with the entity's internal risk management
control systems. The options contract equivalent of the net delta \10\
of a hedged options position still would be subject to the position
limits in Rule 2860 (subject to the availability of any other position
limit exemptions).
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    \10\ ``Net delta'' would be defined in Rule 2860(b)(2)(GG) to
mean ``the number of shares that must be maintained (either long or
short) to offset the risk that the value of an equity options
position will change with incremental changes in the price of the
security underlying the options position.''
    Options Contract Equivalent of the Net Delta'' would be defined
in proposed Rule 2860(b)(2)(LL) to mean the net delta divided by the
number of shares underlying the options contract.
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    For example, if a member is short 20,000 call contracts (each
representing 100 shares of stock) with a delta of .5, the member would
need to be long 1,000,000 shares of stock to hedge that position.
Assume that the member was long 600,000 shares and had another
permitted offset (e.g., a swap or futures contract) representing
another 200,000 shares of stock. In that case, the net delta of that
position would be 200,000 shares (1,000,000--600,000 long shares--
200,000 swap or future); and the number of contracts attributable to
that position would be 2,000 contracts (200,000 shares / 100 shares per
contract) on the short side of the market.
    ``Permitted Pricing Models'' for purposes of the Exemption would be
pricing models used by: (1) A member or its affiliate subject to
consolidated supervision by the Commission pursuant to Appendix E of
Rule 15c3-1 under the Act; \11\ (2) a financial holding company
(``FHC'') or a company treated as an FHC under the Bank Holding Company
Act of 1956, or its affiliate subject to consolidated holding company
group supervision; \12\ (3) an SEC registered OTC derivatives

dealer; \13\ (4) a national bank under the National Bank Act; \14\ and,
as previously noted, (5) a member, or non-member affiliate (as
permitted by subparagraph (B) or (C) of proposed Rule
2860(b)(3)(A)(vii)b.1.), using a pricing model maintained and operated
by the Options Clearing Corporation.
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    \11\ Use of such pricing model would be required to be
consistent with the requirements of Appendices E or G, as
applicable, to Rules 15c3-1 and 15c3-4 under the Act in connection
with the calculation of risk-based deductions from capital or
capital allowances for market risk thereunder. See subparagraph (B)
of proposed Rule 2860(b)(3)(A)(vii)b.1.
    \12\ An FHC's affiliate that is part of the FHC's consolidated
supervised holding company group would be eligible to use this part
of the Exemption. An FHC's (or an affiliate's) use of a proprietary
model would have to be consistent with either: (i) The requirements
of the Board of Governors of the Federal Reserve System, as amended
from time to time, in connection with the calculation of risk-based
adjustments to capital for market risk under capital requirements of
the Board of Governors of the Federal Reserve System; or (ii) the
standards published by the Basel Committee on Banking Supervision,
as amended from time to time and as implemented by such company's
principal regulator, in connection with the calculation of risk-
based deductions or adjustments to or allowances for the market risk
capital requirements of such principal regulator applicable to such
company--where ``principal regulator'' means a member of the Basel
Committee on Banking Supervision that is the home country
consolidated supervisor of such company. See subparagraph (C) of
proposed Rule 2860(b)(3)(A)(vii)b.1.
    It is important to note that the U.S. activities of entities
subject to the Basel standards still are overseen by the Federal
Reserve Board, and FINRA would be relying upon that oversight in
extending exemptive relief to such entities.
    \13\ This part of the Exemption would replace in its entirety
current Rule 2860(b)(3)(a)vii.b. An OTC Derivative Dealer's use of a
proprietary model would be required to be consistent with the
requirements of Appendix F to Rule 15c3-1 and Rule 15c3-4 under the
Act, as amended from time to time, in connection with the
calculation of risk-based deductions from capital for market risk
thereunder. Only an OTC Derivatives Dealer and no other affiliated
entity (including a member) would be able to rely upon this
particular part of the Exemption. See subparagraph (D) of proposed
new Rule 2860(b)(3)(A)(vii)b.1.
    \14\ The use of a proprietary model by a national bank would be
required to be consistent with the requirements of the Office of the
Comptroller of the Currency, as amended from time to time, in
connection with the calculation of risk-based adjustments to capital
for market risk under capital requirements of the Office of the
Comptroller of the Currency. An affiliate of a national bank
(including a FINRA member) would not be permitted to rely on this
part of the Exemption. See subparagraph (E) of proposed Rule
2860(b)(3)(A)(vii)b.1.
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    Irrespective of the features of any proprietary pricing model, only
financial instruments relating to the security underlying an equity
options position would be permitted to be included in any determination
of an equity options position's net delta or whether the options
position is delta neutral. For example, a short position in XYZ calls
could be hedged with a long position in XYZ warrants. However, a short
position in XYZ calls would not be permitted to be hedged with any
financial instrument relating to a security other than XYZ stock. In
addition, firms would not be permitted to use the same equity or other
financial instrument position in connection with more than one hedge
exemption. Thus, a stock position used as part of a delta hedge would
not be permitted also to serve as the basis for any other equity option
hedge exemption.
Obligations of Members and Affiliates
    A member that intends to employ, or whose non-member affiliate
intends to employ, the Exemption would be required to provide a written
certification to FINRA stating that the member and/or its affiliate
will use a Permitted Pricing Model as described above and defined in
the Rule, and that if an affiliate ceases to hedge stock options
positions in accordance with such systems and models, it will provide
immediate written notice to the member.
    In addition, the options positions of a non-member relying on the
Exemption would be required to be carried by a member with which it is
affiliated.
    Any options position that is not delta neutral would remain subject
to position and exercise limits (subject, however, to the availability
of other exemptions). While delta hedging generally is employed as part
of an overall risk management program, firms do not necessarily hedge
every position to be delta neutral, i.e., having a net delta of zero.
In such cases, only the options contract equivalent of the net delta of
any such options position would be subject to position limits.
Impact on ``Aggregation'' Guidance
    FINRA recently issued guidance on when certain options accounts may
be ``disaggregated.'' \15\ The proposed rule change would impact this
guidance in the following way: Generally, an entity that relies on the
proposed rule change would be required to ensure that a Permitted
Pricing Model is applied to all positions in or relating to the
security underlying the relevant options position that are owned or
controlled by the entity, or its affiliates. However, the net delta of
an options position held by an entity entitled to rely on this
Exemption, or by a separate and distinct trading unit of such entity,
would be permitted to be calculated without regard to positions in or
relating to the security underlying the option held by an affiliated
entity or by another trading unit within the same entity, provided
that: (1) The entity demonstrates to FINRA's satisfaction that no
control relationship, as defined in Notice to Members 07-03, exists
between such affiliates or trading units; and (2) the entity has
provided FINRA written notice in advance that it intends to be
considered separate and distinct from any affiliate, or, as applicable,
which trading units within the entity are to be considered separate and
distinct from each other for purposes of this Exemption.\16\
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    \15\ See NASD Notice to Members 07-03 (January 2007).
    \16\ See proposed subparagraph (A)(vii)b.2 of Rule 2860(b)(3).
FINRA has set forth, in Notice to Members 07-03, the conditions
under which it will deem no control relationship to exist between
affiliates and between separate and distinct trading units within
the same entity.
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Position Reporting
    Today, under paragraph (b)(5) of Rule 2860, a broker-dealer must
report any options position in which the member has an interest, and
each customer, non-member broker or non-member dealer account, which
has established an aggregate position of 200 or more options contracts
(whether long or short) of the put class and the call class on the same
side of the market. Under the proposed rule change, FINRA would retain
these reporting thresholds even with respect to options positions of
any member or designated aggregation unit that are delta neutral. In
addition, however, each member, or designated aggregation unit pursuant
to proposed subparagraph (b)(3)(A)(vii)b.2., also shall report the
options equivalent of the net delta of a position if such position
represents 200 or more contracts (whether long or short) on the same
side of the market covering the same underlying stock that are effected
by the member. Referring to the example above, a member who is short
20,000 call contracts with a delta of .5 and long 600,000 shares of
stock and long 200,000 shares through a SWAP or futures contract, would
report: (a) Its options position as short 20,000 contracts and (b) its
options equivalent of the net delta as short 2,000 contracts.
    FINRA and other self-regulatory organizations are working on
modifying the Large Options Position Reporting system and/or the
Options Clearing Corporation reports to allow a member to indicate that
an equity options position is being delta hedged.
Reliance on Federal Oversight
    FINRA notes that when it provided exemptive relief for OTC
Derivatives Dealers in 2004, NASD indicated that it believed that the
rigor of the Commission's OTC Derivatives Dealer approval process and
the ongoing oversight by the Commission staff provided an appropriate
basis for exempting delta neutral positions in options held by such
entities from position and exercise limits.\17\ The proposed rule
change's extension of exemptive relief to additional users of
proprietary models similarly relies upon the rigorous approval
processes and ongoing oversight of a federal financial regulator.
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    \17\ See Securities Exchange Act Release No. 50539 (October 19,
2004), 69 FR 61884, 61885 (October 21, 2004)(SR-NASD-2004-153).
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    In an effort to leverage the existing federal oversight in this
area, FINRA has developed procedures to monitor members' compliance
with the proposed delta hedging position limit rules. Specifically,
FINRA would employ a narrowly circumscribed program around the
employment of delta hedging by eligible broker-dealers. FINRA would
examine to the extent of: (1) Reviewing that the eligible broker-
dealers have policies and procedures to determine their net positions
in ascertaining any option holdings in

respect of position limits including the reduction from any such net
positions any positions subject to delta hedging or allowable equity
option hedges; and (2) determining that the eligible broker-dealers
represent that they have made any reduction from such net option
positions pursuant to and in accordance with a model, or the processes
that develop a model, for delta hedging that have been approved by an
applicable federal regulator. It is important to note that FINRA is not
under any obligation to test: (1) The integrity of a model, its
processes or methodology; or (2) the employment of such models by
eligible broker-dealers as to any data inputs, calculations or any
other utilization of the model.
    FINRA will announce the effective date of the proposed rule change
in a Notice to Members to be published no later than 60 days following
Commission approval. The effective date will be no later than 30 days
following publication of the Notice to Members announcing Commission
approval.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\18\ which requires, among
other things, that FINRA rules be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that it is appropriate, subject to
certain conditions, to exempt options positions of entities subject to
an extensive regulatory framework of a federal financial regulator from
position limits and require that only the option contract equivalent of
the net delta of a stock options position be subject to position
limits.
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    \18\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change would result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

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

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) As the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number SR-NASD-2007-044 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASD-2007-044. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all

written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, on official business
days between the hours of 10 am and 3 pm. Copies of such filing also
will be available for inspection and copying at the principal office of
FINRA. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
NASD-2007-044 and should be submitted on or before September 4, 2007.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-15723 Filed 8-10-07; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register: June 17, 2010 (Volume 75, Number 116)]
[Notices]
[Page 34445-34448]
[DOCID:fr17jn10-62]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-R06-OAR-2010-0510; FRL-9163-7]

Audit Program for Texas Flexible Permit Holders

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of Clean Air Act voluntary compliance audit program for
flexible permit holders in the State of Texas; request for public
comment.

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SUMMARY: EPA is offering holders of Texas flexible air permits an
opportunity to participate in a voluntary compliance audit program
(hereinafter ``Audit Program'') that is intended to expeditiously
identify the Federally-enforceable Clean Air Act (CAA) unit specific
emission limitations, operating parameter requirements, and monitoring,
reporting, and recordkeeping (MMR) requirements for determining
compliance for all units covered by a facility's flexible permit. EPA
believes that the program will generate environmental benefits for the
public in Texas as well as a measure of regulatory stability for
holders of Texas flexible permits. EPA is requesting informal comment
on the Audit Program. EPA will respond generally to comments received
and reserves its right to make modifications to implementation of the
Audit Program at its discretion, as warranted.

DATES: All comments should be submitted by July 2, 2010. Executed audit
agreements may be submitted no later than October 15, 2010.

ADDRESSES: Submit comments on the Audit Program, identified by Docket
ID No. EPA-R06-OAR-2010-0510, by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the on-line instructions for submitting comments.
     U.S. EPA Region 6 ``Contact Us'' Web site: http://epa.gov/
region6/r6coment.htm. Please click on ``6EN'' (Enforcement) and select
``CAA Enforcement'' before submitting comments.
     E-mail: Mr. John Jones at<EMAIL_ADDRESS>     Fax.: Mr. John Jones, Air Enforcement Section (6EN-AA), at
fax number<PHONE_NUMBER>.
     Mail: Mr. John Jones, Air Enforcement Section (6EN-AA),
Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas,
Texas 75202-2733.
     Hand or Courier Delivery: Mr. John Jones, Air Enforcement
Section (6EN-AA), Environmental Protection Agency, 1445 Ross Avenue,
Suite 1200, Dallas, Texas 75202-2733. Such deliveries are accepted only
between the hours of 8:00 a.m. and 4:00 p.m. weekdays, except for legal
holidays.
    Instructions: Direct comments to Docket ID No. EPA-R06-OAR-2010-
0510.
    All comments received will be included in the public docket without
change and may be made available online at http://www.regulations.gov,
including any personal information provided, unless comment includes
information claimed to be Confidential Business Information (CBI) or
other information whose disclosure is restricted by statute. Do not
submit information that you consider to be CBI or otherwise protected
through http://www.regulations.gov or e-mail. The http://
www.regulations.gov Web site is an ``anonymous access'' system, which
means EPA will not know your identity or contact information unless you
provide it in the body of your submittal. In an effort to consolidate
comments received, EPA prefers that information be submitted via http:/
/www.regulations.gov. If you send a submittal by e-mail directly to EPA
without going through http://www.regulations.gov, your e-mail address
will be automatically captured and included as part of the submittal
that is placed in the public docket and made available on the Internet.
Electronic files should avoid the use of special characters, any form
of encryption, and be free of any defects or viruses. For additional
information about EPA's public docket, visit the EPA Docket Center
homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the docket are listed in the http://
www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
at http://www.regulations.gov or in hard copy at the Air Enforcement
Section (6EN-AA), Environmental Protection Agency, 1445 Ross Avenue,
Suite 700, Dallas, Texas 75202-2733. The file will be made available by
appointment for public inspection in the Region 6 FOIA Review Room
between the hours of 8:30 a.m. and 4:30 p.m. weekdays except for legal
holidays. Contact the person listed in the paragraph below to make an
appointment. If possible, please make the appointment at least two
working days in advance of your visit. There will be a 15 cent per page
fee for making photocopies of documents. On the day of the visit,
please check in at the EPA Region 6 reception area at 1445 Ross Avenue,
Suite 700, Dallas, Texas, 75202-2733.

FOR FURTHER INFORMATION CONTACT: For information on the Audit Program
for Texas flexible permit holders, please contact Mr. John Jones, Air
Enforcement

Section (6EN-AA), Environmental Protection Agency, Region 6, 1445 Ross
Avenue, Suite 700, Dallas, Texas 75202-2733, telephone<PHONE_NUMBER>;
fax number<PHONE_NUMBER>; e-mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Audit Program Overview

    Texas flexible permits have never been incorporated into the
Federally approved State Implementation Plan (``SIP''), and thus, only
contain applicable State permit requirements. Flexible permits are not
the appropriate mechanisms for embodying Federal requirements, and are
not independently Federally-enforceable. On September 25, 2007, EPA
sent notice letters to all facilities that were issued a flexible
permit informing them that flexible permits were pertinent only to
Texas State air permit requirements and that facilities were
``obligated to comply with the Federal requirements applicable to
(their) plant, in addition to any particular requirements of (their)
flexible permit.'' Moreover, on September 23, 2009, EPA proposed the
disapproval of the Texas flexible permit program as an amendment to the
Texas SIP because it does not meet Federal Nonattainment New Source
Review or Prevention of Significant Deterioration (hereafter
collectively referred to as ``NSR'') requirements. EPA followed that
proposal with several objections to Title V permits that relied on
flexible permits to encompass Federal NSR requirements because the
terms of the Texas flexible permit are not incorporated into the
Federally approved Texas SIP.
    Under the Audit Program, participants would need to commission a
comprehensive third-party audit to determine all Federally applicable
unit-specific limitations and requirements and to evaluate the Federal
CAA compliance status of emission units covered under the facility's
Texas flexible permit.
    The third-party auditor would identify for each emission unit
regulated under the source's flexible permit all current Federally
applicable CAA requirements, including: (1) Emission limitations/
standards; (2) operational limitations/special conditions; (3) MRR
requirements; and (4) specific references for all Federal requirements
identified (e.g., permit number, specific Maximum Achievable Control
Technology, State Implementation Plan citation). The auditor will also
need to review and assess the adequacy of the current flexible permit
MRR requirements to evaluate compliance with Federally enforceable
unit-specific emission limitations. Where deficiencies exist, the
auditor will provide recommendations for more effective or supplemental
MRR.
    To the extent that it is determined that a source is not in
compliance with NSR requirements with respect to a particular emission
unit, the auditor will include an evaluation of the current (2010)
Lowest Achievable Emissions Rate or Best Available Control Technology
(hereinafter collectively referred to as ``LAER/BACT'') for that
emissions unit and will recommend an applicable LAER/BACT limit for
that emissions unit. Identification of non-compliance with NSR
requirements through the Audit Program may require further discussion
with EPA regarding a path forward for bringing that emission unit into
permanent, consistent compliance with the CAA and appropriate
resolution of civil penalties.
    The primary deliverable from the third-party audit will be a
detailed audit report that describes the audit process and its
conclusions, including clearly organized summary tables of all
applicable CAA requirements for each emissions unit that will provide
the basis for necessary permitting revisions by the Texas Commission on
Environmental Quality (TCEQ). In addition to identifying all applicable
unit specific emission limitations, special conditions, operating
parameters, and MMR requirements, the auditor will evaluate the CAA
compliance status of the emissions units included under the Texas
flexible permit.
    The audit participant will then have an opportunity to comment on
the results of the third-party audit, and to propose to EPA alternative
emission unit requirements. The parties may elect to negotiate emission
unit requirements in the post-audit period.
    The emission unit requirements agreed upon during the post-audit
negotiation with EPA would be memorialized in a Consent Agreement and
Final Order (``CAFO'') with EPA. The CAFO would set forth the agreed
upon emission unit requirements and would require their inclusion in an
amended Title V permit and appropriate Federally-enforceable non-Title
V permits (e.g., NSR, Texas SIP permits).
    As part of the Audit Program, the audit participant will also agree
to work with its surrounding community to develop community project(s)
focused on improving, protecting, mitigating, and/or reducing community
risks to public health or the environment that could have been caused
by potential violations by the audit participant. The details of the
community projects will be fully described in the CAFO memorializing
the results of the audit.
    Participation in the Audit Program is purely voluntary, and this is
not a rulemaking by the Agency. Interested parties are required to
submit an executed audit agreement to enroll in this program.
Participants choosing to enroll in the Audit Program will be required
to meet the specific requirements of the third-party audit set forth in
this Notice and memorialized in an audit agreement signed by the audit
participant and EPA. It is important to emphasize that although
participation in this Audit Program is voluntary, participants who
successfully complete the program will receive appropriate covenants in
resolution of non-compliance.
    Persons who have not secured independently Federally-enforceable
construction and/or operating permits for all CAA applicable
requirements, through participation in this program or through other
appropriate mechanisms, may be the subject of Federal enforcement
action. Nothing in this notice should be read to preclude EPA from
taking enforcement action where it determines such action is
appropriate to address non-compliance.

Texas Flexible Permit Program History

    In the period from 1996 through 2002, the State of Texas proposed a
series of modifications to its Federal CAA SIP intended to make its
flexible permit program part of the SIP. The flexible permit program,
currently codified at 30 TAC 116.710, allows groups of emission sources
to be clustered together and issued permit limitations as if they were
a single emission source.
    EPA has never approved the Texas flexible permit program for
inclusion in the SIP. On September 25, 2007, EPA issued a letter to all
flexible permit holders making the following points:
     Permits issued under the Texas flexible permit rules
reflect Texas State requirements and not necessarily the Federally-
applicable requirements.
     Texas flexible permit holders are obligated to comply with
the applicable Federal requirements (e.g., New Source Performance
Standards (NSPS), National Emission Standards for Hazardous Air
Pollutants (NESHAP), Prevention of Significant Deterioration (PSD), and
Non-attainment New Source Review (NNSR), terms and conditions of
permits approved under the Federally approved Texas SIP).
     EPA would consider enforcement against sources for failure
to comply with applicable Federal requirements on a case-by-case basis,
including against emission sources that were modified or

constructed without the issuance of a Federally-enforceable permit.
    As of the date of this notice, EPA has yet to issue a final
approval or disapproval of the Texas flexible permit program.
Nonetheless, we offer the Audit Program at this time as a vehicle for
flexible permit holders wishing to proactively address the status of
emission units operating under the Texas flexible permit program. The
Audit Program is entirely voluntary and does not pre-judge the ongoing
EPA review of the Texas flexible permit program.

Audit Program Implementation

    Participants in the Audit Program shall conduct an independent
third-party audit of all emission units covered by the source's Texas
flexible permit to identify each emission unit's CAA compliance status,
and to identify/re-establish all of an emission unit's Federally
applicable requirements as discussed under the Audit Program Overview.
The final CAFO will require that the facility submit applications for
Title V and appropriate Federally-enforceable non-Title V permits to
the State of Texas in order to memorialize the requirements derived
from the audit process for each emission unit.
    The Audit Program shall be implemented in the following steps:
    (1) Submittal of an executed audit agreement by the audit
participant. This agreement will memorialize the specific requirements
of the independent third-party audit, as well as the company's
commitment to work with its community to develop a community
project(s). EPA will have 15 days to object to the third-party auditor
selected by an audit participant. Any EPA objections shall be based on
concerns regarding the independence of the auditor. Executed audit
agreements under the Audit Program will be received for a period of 120
days after publication in the Federal Register.
    (2) Audit participant and community development of significant
community project(s). During the performance of the audit, the audit
participant shall work with the community surrounding the facility to
develop community projects(s). Within 180 days of signing the audit
agreement, the audit participant will submit to EPA a final community
project proposal for approval. The community project proposal shall
include a detailed description of the project(s) and a schedule for
project(s) implementation (projects must be completed within one year
of the CAFO date), a clear discussion of air nexus, and a discussion of
the community involvement and outreach conducted as the project was
developed.
    (3) Completion of audit report. No later than, 160 days after the
effective date of the audit agreement, the independent third-party
auditor shall submit an audit report to the audit participant and EPA.
This report will include an analysis of the CAA compliance status of
all emission units covered by the audit participant's Texas flexible
permit as well as a table containing all of the applicable emission
unit requirements for each unit. For the purpose of providing
transparency to the community on the audit process, the Auditor will
work with the audit participant to prepare a version of the audit
report with any CBI removed. The non-CBI versions of the audit reports
will be made available to the public by EPA.
    (4) Audit participant's comments regarding the audit report. Not
later than 250 days after the effective date of the audit agreement,
the audit participant shall submit its comments, if any, regarding the
audit report to EPA. The audit participant may specifically address its
concerns regarding the CAA compliance determinations and the emission
unit requirements identified in the audit report. For purposes of
providing transparency to the community on the audit process, the audit
participant will also prepare a version of the comments on the audit
report with any CBI removed. The audit participant's comments regarding
the audit reports will be made available to the public by EPA.
    (5) Resolution of NSR non-compliance. One of the major objectives
of the third-party auditor will be the evaluation of the changes and
modifications made during the period of the Texas flexible permit for
compliance with applicable Federal NSR requirements. Identification of
non-compliance with the NSR program may require the installation of
LAER/BACT and will require further discussion with EPA regarding a path
forward for bringing non-compliant emission units into permanent,
consistent compliance and appropriate resolution of civil penalties.
    (6) Filing of a Consent Agreement and Final Order (CAFO) with the
Region 6 Judicial Officer. The CAFO would memorialize the audit
participant's commitment to seek the inclusion of agreed upon emission
unit requirements in its Title V permit and appropriate Federally-
enforceable non-Title V permits. No later than 30 days after the
effective date of the CAFO, the audit participant will apply to the
appropriate permitting authority for a modification of its existing
Title V permit to include emission unit requirements (as defined in the
model audit agreement below), a compliance plan, a compliance
certification, and, if warranted, a compliance schedule as outlined in
30 TAC 122 Sec.  132(e)(4). In addition, the audit participant shall
apply for modifications or for new non-Title V permits memorializing
the emission unit requirements set forth in the CAFO. The resolution of
emission unit requirements for some flexible permit emission units, but
not all, will not be allowed under this program. For agreeing to
evaluate and address (where necessary) non-compliance at all emission
units covered by its flexible permit, a source will receive a covenant-
not-to-sue regarding civil liability for possible past violations of
the CAA provided that CAA compliant emission unit specific requirements
are incorporate into a Federally-enforceable permit. The audit
participant may be subject to civil penalties where it is determined
that there was non-compliance with NSR.
    The proposed CAFO shall be made available for public comment for a
period of 30 days. EPA will consider any public comments, and as
appropriate seek to work with the audit participant to revise the CAFO
based on such public comments. After the end of the CAFO public comment
period and after any revisions are made, EPA will seek finalization of
the CAFO by the Region 6 Judicial Officer. The Agency reserves its
right to modify the CAFO. The offering of the CAFO for public comment
does not explicitly create an obligation for EPA response or inclusion
of such comments in the final CAFO or elsewhere, nor does this create
any rights for public objection to the final CAFO.
    The required text of the audit agreement is available for download
in either a Word version file or as a portable document format (pdf)
file at http://www.regulations.gov. The text of the audit agreement is
not subject to negotiation. However, EPA may refine the text of the
audit agreement upon receiving feedback during public comment and
provide an updated agreement in the docket within 45 days following the
close of public comment. Entities wishing to participate shall submit:
An executed copy of the audit agreement with specific site details
filled into the provided blanks; a list of emission units covered under
its Texas flexible permit; a copy of its current Texas flexible permit,
and all permits that applied to the facility prior to the issuance of
the Texas flexible permit.

    Conclusion: The above represents a short summary of the Audit
Program. The Texas Flexible Permit Audit Agreement is available in the
public docket for this notice at http://www.regulations.gov, and
represents the full requirements of the program.
    EPA is proposing the Audit Program to ensure that Texas flexible
permit holders have a path forward to secure compliance with the
requirements of the CAA. As EPA has stated that Texas flexible permits
are not independently Federally-enforceable permits, industry
representatives have expressed concern regarding the legal
ramifications of operating facilities and making facility changes at
facilities that do not have independently Federally-enforceable
permits. Representatives of citizens living in areas near facilities
regulated under flexible permits are concerned that in some instances
flexible permits allow facilities to emit more harmful pollution than
would be allowed under Federal law. We believe the Audit Program has
the potential to result in beneficial reductions in the levels of air
pollutants being emitted by flexible permit holders as well as
providing industry a regulatory framework for continuing operations
until independently Federally-enforceable permitting authorizations can
be obtained.

    Dated: June 10, 2010.
Al Armendariz,
Regional Administrator, Region 6.
[FR Doc. 2010-14653 Filed 6-16-10; 8:45 am]
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[Federal Register: April 21, 2010 (Volume 75, Number 76)]
[Proposed Rules]
[Page 20792-20794]
[DOCID:fr21ap10-16]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2010-0383; Directorate Identifier 2009-NM-214-AD]
RIN 2120-AA64

Airworthiness Directives; The Boeing Company Model 747-100, 747-
100B, 747-100B SUD, 747-200B, 747-200C, 747-200F, 747-300, 747-400,
747SR, and 747SP Series Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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

SUMMARY: We propose to adopt a new airworthiness directive (AD) for
certain Model 747-100, 747-100B, 747-100B SUD, 747-200B, 747-200C, 747-
200F, 747-300, 747-400, 747SR, and 747SP series airplanes. This
proposed AD would require repetitive detailed inspections of certain
overwing intercostal webs, and related investigative and corrective
actions if necessary. This proposed AD results from reports of cracks
in overwing intercostal webs. We are proposing this AD to detect and
correct such cracking, which could grow and result in a severed
intercostal. If an intercostal is severed, cracks could develop in the
adjacent frame structure and skin, resulting in a rapid loss of cabin
pressure.

DATES: We must receive comments on this proposed AD by June 7, 2010.

ADDRESSES: You may send comments by any of the following methods:
     Federal eRulemaking Portal: Go to http://
www.regulations.gov. Follow the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue, SE., Washington, DC 20590.
     Hand Delivery: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays.
    For service information identified in this proposed AD, contact
Boeing Commercial Airplanes, Attention: Data & Services Management,
P.O. Box 3707, MC 2H-65, Seattle, Washington 98124-2207; telephone 206-
544-5000, extension 1; fax<PHONE_NUMBER>; e-mail<EMAIL_ADDRESS>
Internet https://www.myboeingfleet.com. You may review copies of the
referenced service information at the FAA, Transport Airplane
Directorate, 1601 Lind Avenue, SW., Renton, Washington. For information
on the availability of this material at the FAA, call<PHONE_NUMBER>.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://
www.regulations.gov; or in person at the Docket Management Facility
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays. The AD docket contains this proposed AD, the regulatory
evaluation, any comments received, and other information. The street
address for the Docket Office (telephone<PHONE_NUMBER>) is in the
ADDRESSES section. Comments will be available in the AD docket shortly
after receipt.

FOR FURTHER INFORMATION CONTACT: Ivan Li, Aerospace Engineer, Airframe
Branch, ANM-120S, FAA, Seattle Aircraft Certification Office (ACO),
1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone (425)
917-6437; fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to send any written relevant data, views, or
arguments about this proposed AD. Send your comments to an address
listed under the ADDRESSES section. Include ``Docket No. FAA-2010-0383;
Directorate Identifier 2009-NM-214-AD'' at the beginning of your
comments. We specifically invite comments on the overall regulatory,
economic, environmental, and energy aspects of this proposed AD. We
will consider all comments received by the closing date and may amend
this proposed AD because of those comments.
    We will post all comments we receive, without change, to http://
www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact we
receive about this proposed AD.

Discussion

    We have received several reports of cracks in overwing intercostal
webs between station (STA) 1160 and STA 1220. Most of the cracks were
found near the intercostal lower chord and a few cracks were found near
the intercostal upper chord. The cracks ranged from 0.2 inch to 3.5
inches long. The cracks are caused by cyclic buckling of the web from
normal flight loads. The earliest report of a web crack occurred on an
airplane with 3,697 flight cycles; however, no cracks have been
reported in the upper or lower chord of the overwing intercostals. This
condition, if not corrected, could result in crack growth and a severed
intercostal. If an intercostal is severed, cracks could develop in the
adjacent frame structure and skin, resulting in rapid loss of cabin
pressure.

Relevant Service Information

    We have reviewed Boeing Alert Service Bulletin 747-53A2750, dated
August 27, 2009. Boeing Alert Service Bulletin 747-53A2750, dated
August 27, 2009, describes procedures for doing a repetitive detailed
inspection for cracking of the left-side and right-side overwing
intercostal webs at STAs 1160, 1180, 1200, and 1220, and related
investigative and corrective actions if necessary. The related
investigative action is doing a detailed inspection for cracking of the
upper chord, lower chord, and stiffener of the intercostal and adjacent
frame assembly structure if a crack is found in the web of an overwing
intercostal. Depending on findings, the corrective actions are
replacing any cracked overwing intercostal web (the replacement of the
overwing intercostal web includes doing an open-hole HFEC inspection
for cracking of the fastener holes common to the replacement); and
contacting Boeing for repair instructions of any cracked intercostal
upper chord, lower chord, stiffener, or adjacent frame assembly
structure, and of any crack found during any open-hole HFEC
inspections, and doing the repair.
    For any airplane having a STA 1160, 1180, 1200, or 1220 overwing
intercostal web that has been replaced in accordance with this service
bulletin, Boeing Alert Service Bulletin 747-53A2750, dated August 27,
2009, specifies procedures for doing repetitive detailed inspections
for cracking of the replaced web, and related investigative and
corrective actions if necessary. Related investigative actions include
doing a detailed inspection for cracking of the upper chord, lower
chord, and stiffener of the intercostal, and adjacent frame assembly
structure. Corrective actions include replacing any cracked overwing
intercostal web; and contacting Boeing for repair instructions of any
cracked intercostal upper chord, lower chord, stiffener, or adjacent
frame assembly structure, and of any crack found during any open-hole
HFEC inspections, and doing the repair.

FAA's Determination and Requirements of This Proposed AD

    We are proposing this AD because we evaluated all relevant
information and determined the unsafe condition described previously is
likely to exist or develop in other products of the same type design.
This proposed AD would require accomplishing the actions specified in
the service information described previously, except as discussed under
``Differences Between the Proposed Rule and Service Bulletin.''

Differences Between the Proposed Rule and Service Bulletin

    Boeing Alert Service Bulletin 747-53A2750, dated August 27, 2009,
specifies to contact the manufacturer for instructions on how to repair
certain conditions, but this proposed AD would require repairing those
conditions in one of the following ways:
     Using a method that we approve; or
     Using data that meet the certification basis of the
airplane, and that have been approved by the Boeing Commercial
Airplanes Organization Designation Authorization (ODA) whom we have
authorized to make those findings.

Costs of Compliance

    We estimate that this proposed AD would affect 86 airplanes of U.S.
registry. The following table provides the estimated costs for U.S.
operators to comply with this proposed AD.

                                                                 Table--Estimated costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Number of U.S.-
              Action                  Work hours     Average labor           Parts             Cost per product      registered          Fleet cost
                                                     rate per hour                                                    airplanes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Inspection........................               4             $85  None..................  $340 per inspection                86  $29,240 per
                                                                                cycle                                  inspection cycle
--------------------------------------------------------------------------------------------------------------------------------------------------------

Authority for This Rulemaking

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

products identified in this rulemaking action.

Regulatory Findings

    We determined that this proposed AD would not have federalism
implications under Executive Order 13132. This proposed AD 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.
    For the reasons discussed above, I certify this proposed
regulation:
    1. Is not a ``significant regulatory action'' under Executive Order
12866,
    2. Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979), and
    3. Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.
    You can find our regulatory evaluation and the estimated costs of
compliance in the AD Docket.

List of Subjects in 14 CFR Part 39

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

The Proposed Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

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

The Boeing Company: Docket No. FAA-2010-0383; Directorate Identifier
2009-NM-214-AD.

Comments Due Date

    (a) We must receive comments by June 7, 2010.

Affected ADs

    (b) None.

Applicability

    (c) This AD applies to The Boeing Company Model 747-100, 747-
100B, 747-100B SUD, 747-200B, 747-200C, 747-200F, 747-300, 747-400,
747SR, and 747SP series airplanes, certificated in any category; as
identified in Boeing Alert Service Bulletin 747-53A2750, dated
August 27, 2009.

Subject

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

Unsafe Condition

    (e) This AD results from reports of cracks in overwing
intercostal webs between station (STA) 1160 and STA 1220. The
Federal Aviation Administration is issuing this AD to detect and
correct such cracking, which could grow and result in a severed
intercostal. If an intercostal is severed, cracks could develop in
the adjacent frame structure and skin, resulting in a rapid loss of
cabin pressure.

Compliance

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

Repetitive Inspections of the Overwing Intercostal Web

    (g) Before the accumulation of 8,000 total flight cycles, or
within 1,500 flight cycles after the effective date of this AD,
whichever occurs later: Do a detailed inspection of the left-side
and right-side STAs 1160, 1180, 1200, and 1220 overwing intercostal
webs, and all applicable related investigative and corrective
actions, in accordance with the Accomplishment Instructions of
Boeing Alert Service Bulletin 747-53A2750, dated August 27, 2009,
except as required by paragraph (i) of this AD. Do all applicable
related investigative and corrective actions before further flight.
If no cracking is found during any detailed inspection, repeat the
inspection thereafter at intervals not to exceed 3,000 flight
cycles.
    (h) For any airplane with an overwing intercostal web replaced
in accordance with Boeing Alert Service Bulletin 747-53A2750, dated
August 27, 2009: Within 6,000 flight cycles after the web was
replaced, do a detailed inspection of the replacement overwing
intercostal web, and do all applicable related investigative and
corrective actions, in accordance with the Accomplishment
Instructions of Boeing Alert Service Bulletin 747-53A2750, dated
August 27, 2009, except as required by paragraph (i) of this AD. Do
all applicable related investigative and corrective actions before
further flight. If no cracking is found during any detailed
inspection, repeat the inspection thereafter at intervals not to
exceed 3,000 flight cycles.

Exception to Service Bulletin

    (i) If any cracking is found during any inspection required by
this AD, and Boeing Alert Service Bulletin 747-53A2750, dated August
27, 2009, specifies contacting Boeing for appropriate action: Before
further flight, repair the cracking using a method approved in
accordance with the procedures provided in paragraph (j) of this AD.

Alternative Methods of Compliance (AMOCs)

    (j)(1) The Manager, Seattle Aircraft Certification Office (ACO),
FAA, has the authority to approve AMOCs for this AD, if requested
using the procedures found in 14 CFR 39.19. Send information to
ATTN: Ivan Li, Aerospace Engineer, Airframe Branch, ANM-120S, FAA,
Seattle Aircraft Certification Office (ACO), 1601 Lind Avenue, SW.,
Renton, Washington 98057-3356; telephone<PHONE_NUMBER>; fax (425)
917-6590. Information may be e-mailed to: 9-ANM-Seattle-ACO-AMOC-
<EMAIL_ADDRESS>    (2) To request a different method of compliance or a different
compliance time for this AD, follow the procedures in 14 CFR 39.19.
Before using any approved AMOC on any airplane to which the AMOC
applies, notify your principal maintenance inspector (PMI) or
principal avionics inspector (PAI), as appropriate, or lacking a
principal inspector, your local Flight Standards District Office.
The AMOC approval letter must specifically reference this AD.
    (3) An AMOC that provides an acceptable level of safety may be
used for any repair required by this AD if it is approved by the
Boeing Commercial Airplanes Organization Designation Authorization
that has been authorized by the Manager, Seattle ACO, to make those
findings. For a repair method to be approved, the repair must meet
the certification basis of the airplane, and the approval must
specifically refer to this AD.

    Issued in Renton, Washington, on April 9, 2010.
Ali Bahrami,
Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 2010-9112 Filed 4-20-10; 8:45 am]
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