ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 35

[EPA-HQ-OW-2006-0765; FRL-XXXX-X]

[RIN 20XX-XXXX]

NPDES Permit Fee Incentive for Clean Water Act Section 106 Grants;
Allotment Formula

AGENCY:  Environmental Protection Agency (EPA).

ACTION: Final Rule

SUMMARY:  This final rule revises the allotment formula contained in
EPA’s Clean Water Act (CWA) Section 106 Water Pollution Control grant
regulations to include a financial incentive for States to collect
adequate National Pollutant Discharge Elimination System (NPDES) permit
fees.  EPA is amending its existing CWA Section 106 grant allotment
regulation (40 CFR 35.162).  This amendment provides the Agency with the
flexibility to allot separately an amount up to three percent of the FY
2007 base funds annually appropriated by Congress for CWA Section 106
grants to States, beginning in FY 2009.   The incentive will be
set-aside for allotment in this manner only if funds allotted to the
States under 40 CFR 35.162(b) are greater than the amount allotted in FY
2007.

DATES: This rule is effective on [insert date of publication in the
Federal Register].

ADDRESSES:  EPA has established a docket for this action under Docket ID
No. EPA-HQ-OW-2006-0765.  All documents in the docket are listed in the
 HYPERLINK "http://www.regulations.gov"  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, is
publicly available only in hard copy.  Publicly available docket
materials are available either electronically through   HYPERLINK
"http://www.regulations.gov"  www.regulations.gov  or in hard copy at
the Water Docket, EPA/DC, EPA West, Room 3334, 1301 Constitution Ave.,
NW, Washington, DC.  The Public Reading Room is open from 8:30 a.m. to
4:30 p.m., Monday through Friday, excluding legal holidays.  The
telephone number for the Public Reading Room is<PHONE_NUMBER>, and the
telephone number for the Water Docket is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT:  Lena Ferris, Office of Water, Office
of Wastewater Management, 4201M, Environmental Protection Agency, 1200
Pennsylvania Avenue, N.W., Washington, D.C.  20460; telephone number:
(202) 564-8831; fax number:<PHONE_NUMBER>; email address:   HYPERLINK
<EMAIL_ADDRESS><EMAIL_ADDRESS>.

SUPPLEMENTARY INFORMATION:

I.   GENERAL INFORMATION

AFFECTED ENTITIES:  State Agencies that are eligible to receive grants
under Section 106 of the Clean Water Act (CWA).

II.   BACKGROUND

Section 106 of the CWA authorizes the EPA to provide grants to State and
interstate agencies to administer programs for the prevention,
reduction, and elimination of water pollution, including the development
and implementation of groundwater protection strategies.  Section 106(b)
of the CWA directs the EPA Administrator to make allotments “in
accordance with regulations promulgated by him on the basis of the
extent of the pollution problem in the respective States.”  EPA’s
regulations implementing Section 106 can be found at 40 CFR 35.160 et
seq.  EPA’s current allotment formula for Section 106 grants includes
an allotment ratio for each State based on six components selected to
reflect the extent of the water pollution problem in the respective
States.  These six components are surface water area, ground water use,
water quality impairment, potential point sources, nonpoint sources, and
the population of urbanized areas.  (40 CFR 35.162 (b)(1)(i).  By
including a component related to point sources, EPA recognizes the
important role they play in determining the extent of pollution in a
State.

EPA proposed this rule amending the CWA Section 106 allotment formula on
January 4, 2007 (72 FR 293) and requested comments from interested
parties.  EPA received 717 comments on the proposed rule.  A summary of
the significant public comments and the Agency’s responses are
included in this preamble in Section III below.  This preamble also
summarizes the two changes to the final rule which EPA determined
necessary.  These changes involve delaying implementation of this rule
until FY 2009 and changing the base fiscal year which the Agency will
use to determine if an allotment for this purpose should be made.
EPA’s responses to all comments received on this rulemaking are
included in the docket described above.

This final rule amends the State allotment formula to incorporate
financial incentives for States to implement adequate NPDES fee
programs.  The Clean Water Act prohibits the discharge of any pollutant
except in compliance with other provisions of the statute. 33 U.S.C. §
1311(a). One of these provisions is CWA Section 402, under which
pollutant discharges can be authorized by an NPDES permit. 33 U.S.C. §
1342(a). The U.S. Environmental Protection Agency (EPA) oversees the
NPDES program and also approves applications from States to administer
and enforce the NPDES program in that State.  Currently, 45 States are
authorized by EPA to administer all or some parts of the NPDES program.

State water quality programs are funded with a mixture of State and
federal dollars.  The growing complexity of water quality issues has
prompted more States to implement NPDES permit fee programs.  An
estimated 41 States currently have permit fee programs in place, with
such fees paying for all or a portion of the cost of the State’s
permit program.

A number of States still operate their permit programs with little or no
reliance on permit fees.  States can address permit program budget
shortfalls through the implementation of permit fee programs that
collect funds to cover the cost of issuing and administering permits.
Funding permit programs with the support of permit fees allows States to
use CWA Section 106 funds for other critical water quality programs.

EPA is committed to making our State surface water protection programs
more sustainable through better resource management.  As State Agencies
carry out most of the day-to-day aspects of water quality functions,
their responsibilities are expanding while they are simultaneously
facing increasingly severe funding constraints.  As a nation, billions
of federal funds under the Water Pollution Control grants, together with
State resources, have been spent to establish and maintain adequate
measures for the prevention and control of surface and groundwater
resources.  Federal and State governments cannot carry out this
responsibility alone.  EPA is committed to finding effective and
efficient solutions to maintaining sustainable State water pollution
control programs that continue to provide this nation with clean and
protected water.  All levels of government and the private sector must
share in this commitment.

The purpose of this rule is to encourage States to voluntarily collect
NPDES permit fees adequate to meet their program costs while protecting
the core 106 funding for those States that currently do not, or choose
not to, qualify for the incentive.  This amendment to the allotment
formula is designed to provide an incentive for States to move toward
greater sustainability in the way they manage and budget for
environmental programs and to shift part of the financial burden to
those who benefit from NPDES permits.  No State is required to collect
permit fees under this rule.  To ensure that no States receive a
reduction from their current allotment amount, no funds will be set
aside for this permit fee incentive unless funds designated for
distribution under 40 CFR 35.162(b) are greater than funds set aside in
FY 2007.

The amount of any permit fee incentive allotment set-aside would be
limited to three percent of the funds allotted under 40 CFR 35.162(b) in
FY 2007.  And, in order to ensure that the incentive to each qualifying
State is modest, the rule caps the maximum share of the incentive at 50%
of the amount a State received under 40 CFR 35.162(b) in the previous
year.  Total funds allotted under 40 CFR 35.162(b) in FY 2007 were
approximately $173.9 million.  As a result of this rule, beginning in FY
2009, EPA would allot the State and interstate CWA 106 grant funds in
the following order:  2.6 percent will be set-aside for allotment to the
eligible interstate agencies  in accordance with the existing interstate
allotment formula in 40 CFR 35.162(c); next, funds may be allotted for
specific water pollution control elements under 40 CFR 35.162 (d); next,
funds may be allotted to States in accordance with the permit fee
incentive allotment formula under 40 CFR 35.162(e); and finally, the
balance will be allotted to the States in accordance with the existing
allotment formula under 40 CFR 35.162(b).

The only States which will be eligible for this set-aside are those
States which have been authorized by EPA to implement the NPDES program
by the first day of the fiscal year, October 1, for which funds are
appropriated by Congress.  Under this rule, these States must also
submit annually, by October 1, a certification to EPA which meets the
following two requirements.  First, the certification must include the
total percentage of NPDES program costs recovered by the State through
permit fee collections during the most recently completed State fiscal
year, and a statement that the amount of permit fees collected is used
by the State to defray NPDES program costs.  This rule defines NPDES
program costs as all activities relating to permitting, enforcement, and
compliance.  Second, the certification must include a statement that
State recurrent expenditures for water quality programs have not
decreased from the previous State fiscal year, or indicate that a
decrease in such expenditures is attributable to a non-selective
reduction of the programs of all executive branch agencies of the State
government.  The concept of non-selective reduction is derived from the
statutory requirements related to maintenance of effort from Clean Air
Act Section 105 grants and EPA’s implementing regulations found at 40
CFR 35.146.  Under the Clean Air Act, EPA is prohibited from awarding
grants to air pollution control agencies if State recurrent expenditures
are not at least equal to such expenditures during the preceding State
fiscal year.  EPA can still award a grant even if there are decreases in
such expenditures if EPA determines that the reduction is attributable
to a non-selective reduction of all State programs.  This situation
would occur, for example, when a State legislature enacts budget cuts
across all State agencies and does not target the air program.  EPA is
adopting a similar approach in this rulemaking.

After EPA determines the number of eligible States which have met the
certification requirements, each State will be able to receive up to a
full share of the set-aside amount.  EPA will determine the amount of a
full share by dividing the set-aside amount by the number of eligible
States which have met the certification requirements.  A full share will
be the same amount for each State.  The percent of a full share that
each State will receive, however, will be determined by the following
formula, based on the certification information described above.

(A)  A State will receive 25 percent of a full share if that State has
collected permit fees which equal or exceed 75 percent of total State
NPDES program costs; or

(B) A State will receive 50 percent of a full share if that State has
collected permit fees which equal or exceed 90 percent of total State
NPDES program costs; or

(C)  A State will receive a full share if that State has collected
permit fees which equal 100 percent of total State NPDES program costs.

In other words, in its certification, a State must inform EPA of its
total NPDES program costs and the percentage of which are recovered
through permit fees.  EPA would use the information from this
certification to determine any additional amount a State would receive
in its Section 106 grant based on this financial incentive allotment
formula.  If, for example, a State’s total NPDES program costs are $1
million, and the State collected $750,000 in NPDES permit fees, a State
would receive 25% of a full share in addition to the grant amount
allotted to it under the current CWA Section 106 allotment formula.

III.  RESPONSE TO COMMENTS

A. EPA’s Authority to Issue this Rule

Multiple commenters questioned the Agency’s authority to create the
incentive program for various reasons.  The Agency maintains that it
clearly has the legal authority to establish conditions for the
distribution of grant funding consistent with the approach reflected in
the rule.  Section 106(b) of the CWA states:  “From the sums
appropriated in any fiscal year, the Administrator shall make allotments
to the several States and interstate agencies in accordance with
regulations promulgated by him on the basis of the extent of the
pollution problem in the respective States.”  33 U.S.C. 1256(b).  EPA
complies with this statutory requirement and makes allotments on the
basis of the extent of the pollution problem in the States.  EPA has
codified this basis at 40 CFR 35.162(b)(1), which list six components
the agency takes into account to determine this allotment:  surface
water area, ground water use, water quality impairment, potential point
sources, nonpoint sources, and population of urbanized areas.  We also
list associated elements, sub elements, and supporting data for each
component.  This is not, however, the only basis the agency uses to make
allotments to the States, and we do not read the above statutory
provision as requiring that the extent of pollution be the only basis
for the allotment process.  Section 106(b) does not state that
allotments shall be made only on the basis of the extent of pollution.
Thus, we do not read this language to prohibit other bases for the
overall allotment of Section 106 grant funds.  Further, the statutory
language includes the phrase "[f]rom the sums appropriated, the
Administrator shall make allotments [emphasis added]…", implying that
not all of the funds appropriated must be allotted on this basis.

In fact, EPA has promulgated other bases for allotting 106 funds.  For
example, our regulation at 40 CFR 35.162(b)(2) imposes a funding floor;
40 CFR 35.162(b)(4) includes an inflation adjustment; 40 CFR
35.162(b)(5) imposes a cap on funding increases; and 40 CFR 35.162(b)(6)
imposes a cap on the component ratio of the six elements.  In addition,
we allot to the interstate agencies based on a percentage of funds
appropriated for Section 106 purposes (40 CFR 35.162(c)).  Finally, we
also have the ability to use an alternative allotment formula when the
appropriations process indicates that some of the Section 106 funds
should be used for specific water pollution control elements.  40 CFR
35.162(d).

Other language in Section 106 also lends support to our interpretation
of our authority.  Section 106(c) authorizes the Administrator to pay
States for their water quality programs two different ways, whichever is
the lesser:  either the allotment under 106(b) or "the reasonable costs
as determined by the Administrator of developing and carrying out a
[State] pollution program...."  Section 106(g) allows EPA to reallot any
sums allotted under 106(b) when funds originally allotted are not paid
to the State.  This reallotment is not required to be conducted in
accordance with 106(b).  Both of these provisions indicate to EPA that
Congress gave the Agency flexibility to allot to the States and
interstates not only on the basis of the extent of pollution in the
States but also on the basis of other factors.  Further, because the
permit fee rule is related to fees charged to dischargers, it does, in
fact, fit within the extent of pollution basis used in the current
allotment formula.  Under the current allotment formula found at 40 CFR
162(b), one of the six components evaluated is the number of potential
point sources.  Similarly, the incentive allotment is based in part on
evaluating the number of point sources in a State and collection of fees
from dischargers.  Finally, no State has challenged the allotment
formulae summarized above that have been implemented by EPA for several
years.

Two commenters, citing 40 CFR 35.162(d), stated that EPA lacks the
authority to engage in the rulemaking absent Congressional authorization
and that we failed to consult with States as required under this
provision.  We disagree.  No Congressional action is required to execute
this rulemaking (see discussion above).  The President’s FY 2007
Budget Request for EPA did include language directing EPA to promulgate
this rule, but that language was never enacted into statute.  As stated
above, EPA has the statutory authority to promulgate this rule under
Section 106 of the Clean Water Act.  In addition, EPA will submit the
final rule to Congress in accordance with the Congressional Review Act.

Regarding the applicability of 40 CFR 35.162(d), this rule does not fall
within the scope of that provision because this rule does not allot a
portion of the funds for a specific water pollution control element,
such as assessment of impaired water bodies.  (See, Table 1 of 40 CFR
35.162, Formula Component No. 3).  The provision at 40 CFR 35.162(d) was
promulgated to address a situation like that which occurred in FY 2006
in which the both the President’s Budget Request and EPA’s
Appropriation targeted Section 106 grants funds to support enhanced
water quality monitoring efforts.  As EPA stated when it promulgated 40
CFR 35.162(d), the application of 35.162(d) is limited to “situations
where the appropriations process has indicated that funds should be used
for a specific purpose” (71 FR 17 (January 3, 2006)).  Because this
rule does not fall within this situation, any consultation requirement
is not applicable.

B.  EPA’s Rulemaking Process

Commenters also questioned whether the Agency complied with all
applicable statutory and executive order reviews relating to the
rulemaking process.  EPA maintains we met all of our obligations and
have even gone beyond that which is required.

Some commenters asserted that EPA did not adequately consult with the
states on the details of the rulemaking as required in Executive Order
(EO) 13132, “Federalism”.  We disagree that this rule has federalism
implications that would trigger the requirements of Executive Order
13132.  Actions that have “federalism implications” are defined in
the Executive Order to include regulations and regulatory policies that
have “substantial direct effects 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.”
 This rule is a voluntary incentive that does not have substantial
direct compliance costs on States.  Nor will this rule substantially
impact the relationship between the national government and the States
or the distribution of power between the national government and the
States, as contemplated under the Executive Order.

These commenters also suggested that EPA failed to consult under EO
13132.  Although this EO is not applicable, EPA, in fact, took several
steps to ensure that input from the States was solicited and considered.
 State representatives nominated by the Association of State and
Interstate Water Pollution Control Administrators (ASIWPCA) and the
Environmental Council of the States were provided an opportunity to
provide input at the outset of rule development.  EPA held a series of
work group teleconferences in 2006 and discussed the proposed rule with
attendees at the 2006 annual ASIWPCA meeting.  EPA carefully considered
feedback received during work group meetings prior to the publication of
the proposed rule.  As a result of the comments received from the States
and other entities prior to publication of the proposed rule, the
proposal was modified significantly.

Some commenters asserted that EPA did not comply with Executive Order
12866, as amended by Executive Order 13258 and Executive Order 13422.
We disagree.  The rule does not constitute a “significant regulatory
action” under Executive Order 12866.  EPA disagrees with assertions
that the rule will have an annual effect on the economy of $100 million
or more or adversely affect in a material way the economy, a sector of
the economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or communities.

Additionally, some commenters asserted that this rule does not meet the
“compelling public need” test included in Executive Order 12866.
EPA disagrees that Executive Order 12866 contains a test that mandates
Agency rules have a compelling public need.  The requirements of the
Executive Order are clearly distinct from the “Statement of Regulatory
Philosophy and Principles” that contains the compelling public need
language.  Further, as explained above, this rule is not a
“significant regulatory action” that would trigger the requirements
of Executive Order 12866.

A few commenters contended that EPA has not complied with the Unfunded
Mandates Reform Act (UMRA) and the Regulatory Flexibility Act (RFA), as
amended by the Small Business Regulatory Enforcement Act (SBREFA).  We
disagree.  By their terms, UMRA and the RFA apply to rulemakings as
defined in 5 U.S.C. 553(b).  Grant rules are expressly excluded from the
coverage of 5 U.S.C. 553(b) by the provisions of 5 U.S.C. 553(a).
Because this is a grant rule, by definition this rule is not subject to
the RFA or Sections 202 and 205 of UMRA.  Additionally, UMRA generally
excludes from the definition of “Federal intergovernmental mandate”
duties that arise from participation in a voluntary federal program,
such as the fee incentive program established by this rule.

C. Financial Impact of Proposed Rule

Many commenters expressed concerns regarding the potential financial
impact of the proposed rule.  Commenters’ concerns included: that the
costs of working to qualify for the incentive would exceed the value of
the incentive, that increased permit fees would adversely impact small
communities and businesses, and that States may see a decline in general
revenue funding from their legislatures if they begin collecting permit
fees.  Many of the comments drew conclusions based on the premise that
EPA was requiring States to impose permit fees on point
source-dischargers.

The incentive program is voluntary.  It is designed to encourage States
to consider establishing or expanding permit fee programs. However,
States are under no obligation to apply for these funds.  Each State
should continue to make their permit fee decisions based on sound
economic and programmatic information.

As a result of comments received during the development of the proposed
rule, EPA did make changes prior to the proposal of the rule to promote
responsible decision making regarding permit fees and participation in
the incentive program.   EPA established the pool at a modest amount (no
more than three percent of FY 2007 core program funding).  The Agency
considers the incentive pool to be sufficient to generate State interest
but not large enough to significantly impact the amount of core Section
106 funding available. The incentive pool will not be taken from
existing core program funding but will only be created from State grant
increases above FY 2007 levels.  No State will receive reduced funding
as a result of this rule.  The total incentive will never exceed
approximately $5.2 million.  Future increases in Section 106 funding
above FY 2007 levels may be distributed through the current distribution
mechanism using the allotment formula found at 40 CFR 35.162.

Some comments also focused on the challenges that States may potentially
encounter in attempting to comply with the rule, including collection
and reporting of cost information to EPA in a timely manner.  EPA will
work with the States to provide assistance in applying for a share of
the incentive.  As necessary, EPA will provide any clarifications on the
application process, including guidance and Q&A documents.  The Agency
postponed rule implementation until FY 2009 year to provide States
additional time to establish new or expand existing permit fee programs.

Multiple commenters objected to the use of grant “set-asides.”  The
comments suggested that designating funds for specific purposes
eliminates State flexibility to use the funding to address the highest
State priorities.  As use of approximately 85 percent of State grant
funding is still at the discretion of the States (with EPA approval),
EPA has ensured that States continue to have wide latitude in targeting
funding according to State priorities.  EPA has designated the remaining
funding to address Administration priorities and to ensure that the
funds are used as Congress intended.

D. State Discretion and the Role of State Legislatures and General Funds

Commenters provided information regarding how States fund their NPDES
programs, and the restrictions that some States face in implementing or
expanding permit fee programs.  Some noted that their NPDES permits are
funded through States’ general revenue.  Some commenters expressed
concerns that the proposed rule would interfere with State discretion
regarding how States manage and fund State water quality programs.
Commenters also noted that it may be difficult or even impossible to
receive legislative approval for implementation of a permit fee system
or increases in existing fees.

EPA emphasizes that the incentive program is voluntary.  The incentive
program promotes the use of permit fees as a mechanism for funding water
quality activities.  EPA recognizes that there are a number of revenue
streams that States may employ to support State water quality programs,
including federal support, State general funds, and revenue from those
who benefit from the activity (permit fees).  EPA also recognizes that
there may currently be limitations in place that prevent States from
increasing permit fees or implementing permit fee programs in time to
qualify for the incentive in FY 2009.

Ultimately, States have the option to collect fees and apply for the
incentive funds or to choose other mechanisms for funding their
activities.  States that do not qualify for the incentive during the
first year that it is available will not be precluded from receiving a
share of the incentive in future years.

Recovering permit program costs through fees will make resources
available for other water quality program activities, creating a net
increase in the amount of funds that States can devote to addressing
their water quality priorities.  A State may choose not to apply for
funds if State officials decide that meeting the qualifying threshold is
not in the best interest of the State.  EPA intentionally limited the
size of the incentive pool to protect core funding for all States, in
recognition of the fact that not every State will qualify or attempt to
qualify for the incentive program.

E. Objective and Intent of Proposed Rule

Many commenters stated that EPA has not clearly articulated the
objective of the rule or demonstrated that the incentive will serve the
intended purpose of shifting more of the financial burden for program
operation to NPDES permit holders.  As stated above, the purpose of this
rule is to encourage States to voluntarily collect NPDES permit fees
adequate to meet their program costs.  This rule is designed to provide
an incentive for States to move toward greater sustainability in the way
they manage and budget for environmental programs and to shift part of
the financial burden to those who benefit from NPDES permits.

F. Promoting Water Quality Protection

Some commenters contended that the creation of an incentive pool would
limit funding to State water quality programs, thereby potentially
adversely impacting a State’s ability to protect and improve water
quality.  These comments were based on the belief that the incentive
pool represents a reduction in 106 funding and may signal EPA’s intent
to eliminate all federal funding for State water quality programs in the
future.  EPA has ensured that the rule creates an incentive that is
sufficient to encourage States to increase or maintain the
sustainability of their water quality programs while protecting core 106
funding for those States that currently do not, or choose not to,
qualify for the incentive. The incentive pool will be created only from
program funding increases above FY 2007 funding levels (up to three
percent of FY 2007 core program funding) and can only be applied to
support Section 106 eligible activities.  In addition, following
distribution of incentives to qualifying States, all remaining incentive
funds will be distributed to all States through the existing formula (40
CFR 35.162(b)).

Some commenters also stated that EPA has failed to demonstrate that the
incentive program will have a positive environmental impact.  EPA
acknowledges that States which fail to qualify for the incentive will
receive fewer grant dollars than if all of the funds were distributed
through the existing formula.  However, EPA does not believe that this
will negatively impact a State’s ability to protect water quality or
unfairly penalize those States that are currently unable to qualify for
the incentive.  Ultimately, the Agency believes that the new fee revenue
that States will generate, coupled with the incentive, may significantly
increase the available funding for water quality programs, justifying
EPA’s decision to set aside a modest portion of 106 funding.  EPA also
believes that this increase in available funding will allow States to
build more sustainable water quality programs that are better equipped
to address water quality problems.

G. Impact on Non-Authorized States

Some commenters expressed concern regarding the impact of the proposed
rule on non-authorized States.  EPA reiterates that base grant funding
for State water quality programs is protected under this rule.  The
incentive pool will be created only from future State Section 106
increases greater than FY 2007 funding.  The total incentive will never
exceed approximately $5.2 million.  Therefore, the amount of funding
diverted from any one State as a consequence of this rule will be
relatively modest, should not adversely impact a State’s ability to
effectively implement their water quality program, and should not be a
pivotal factor in any State delegation decision.

H. Permit Fees for EPA-Regulated Dischargers

Some commenters noted that the rule does not apply to federal
facilities, tribal lands, and other EPA-regulated dischargers in
non-authorized States.  EPA reiterates that this rule is not solely
intended to collect fees.  It is intended to support the implementation
of high quality NPDES programs in authorized States while at the same
time build more sustainable State water programs.  EPA does not collect
user fees in non-authorized States.  In addition, the distribution of
permit program responsibilities among the non-authorized States and EPA
varies by State.  While none of the non-authorized States issue permits,
many carry out a number of permit program-related activities.

I. Resources Needs Gap

A few commenters were concerned that EPA’s focus on permit fees
detracts from efforts to address the resources needs gap identified in
the State Water Quality Management Resource Analysis Task Force’s
Interim 2002 report.  EPA agrees that action needs to be taken to
address the resource needs gap and believes that this rule responds
directly to the State Resource Analysis Report.  The Agency asserts that
if States establish or expand permit fee programs to qualify for the
incentive funds established under this rule, they will ultimately
realize a net increase in the amount of funding available for their
water quality programs.  EPA also believes that recovering all or most
of program costs through permit fees represents a more sustainable
approach to program management and budgeting.

J.  Measuring the Success of NPDES Programs

A few commenters stated that the success of NPDES programs should be
measured by improvements in water quality, rather than the amount of
permit fees a State generates.  EPA agrees with this position and does
not consider the criteria set forth in today’s rule regarding permit
program costs recovered to be an environmental measure of NPDES program
success or a measure of NPDES program adequacy.  The purpose of this
rule is to encourage States to voluntarily collect NPDES permit fees
adequate to meet their program costs.

K. Self-Certification and Reporting Requirements

Many commenters stated that the proposed rule would impose a significant
administrative burden on the States.  Additionally, some commenters
indicated that the incentive would not be sufficient to justify the
expenses necessary to meet the certification requirements of the
proposed rule.  In addition to ensuring the integrity of the incentive
program, EPA believes the reporting required under the incentive program
will help States to understand and document program costs and identify
more opportunities to ensure program sustainability.

The rule provides for a modest incentive to further encourage States to
establish or expand their permit fee programs.  EPA anticipates that the
additional revenue streams created from both the extra fees and the
incentive awards will provide sufficient revenue to generate interest
among States and cover the costs of creating or expanding a permit fee
program and meeting all accounting and reporting requirements outlined
in this rule.  Since this rule establishes a voluntary incentive
program, EPA advises States to carefully analyze all options before
pursuing any fee strategy.

L.  Defining NPDES Activities

Some commenters requested clarification and definitions for several
terms used in the proposed rule, including “NPDES program” and an
“adequate” NPDES fee program.  As necessary, EPA will provide
additional guidance regarding those activities the Agency considers to
be included in the program’s scope.

M.  Current Status of State NPDES Programs

Some commenters provided information regarding the current status and
structure of, and funding mechanisms for State NPDES programs.  This
information is included in the comments which can be founded in the
public docket, available at www.regulations.gov.

N. Alternatives to Proposed Incentive

Some commenters suggested alternatives to the proposed rule.  While the
Agency has determined that some of these suggestions are not viable,
others are not mutually exclusive of the rule we are finalizing today.
EPA commits to continue to work with the States on these ideas.

Conclusion

After careful evaluation of the comments received, the Agency has
decided to finalize this rule with only two minor modifications: 1)
changing the implementation date of the rule from FY 2008 to FY 2009
(e.g., beginning October 1, 2008) and 2) changing the base fiscal year
the Agency will use to determine if a permit fee allotment is made from
FY 2006 to FY 2007.

IV.   STATUTORY AND EXECUTIVE ORDER REVIEWS:  Under Executive Order
12866 (58 FR 51735, October 4, 1993), this rule is not a “significant
regulatory action” and is therefore not subject to OMB review.
Because this rule is not subject to notice and comment requirements
under the Administrative Procedures Act or any other statute, it is not
subject to the Regulatory Flexibility Act (5 U.S.C. Section 601 et.) or
Sections 202 and 205 of the Unfunded Mandates Reform Act of 1999 (UMRA)
(Pub.L. 104-4).  In addition, this rule does not significantly or
uniquely affect small governments.  Although this rule proposes to
create new binding legal requirements, such requirements do not
substantially and directly affect Indian Tribes under Executive Order
13175 (63 FR 67249, November 9, 2000).  This rule will not have
federalism implications, as specified in Executive Order 13132 (64 FR
43255, August 10, 1999).  This rule is not subject to Executive Order
13211, “Actions Concerning Regulations that Significantly Affect
Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001),
because it is not a significant regulatory action under Executive Order
12866.  This rule does not involve technical standards; thus, the
requirements of Section 12(d) of the National Technology Transfer and
Advancement Act of 1995 (15 U.S.C. Section 272 note) do not apply.  This
rule does not impose an additional information collection burden under
the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. Section
3501 et seq.).  The Congressional Review Act, 5 U.S.C. Section 801 et
seq., generally provides that before certain actions may take effect,
the agency promulgating the action must submit a report, which includes
a copy of the action, to each House of the Congress and to the
Comptroller General of the United States.  EPA will submit a report
containing this rule and other required information to the U.S. Senate,
the U.S. House of Representatives, and the Comptroller General of the
United States prior to publication of the rule in the Federal Register.
A major rule cannot take effect until 60 days after it is published in
the Federal Register.  This action is not a “major rule” as defined
by 5 U.S.C. 804(2).  This rule will be effective on [insert date of
publication in the Federal Register].

LIST OF SUBJECTS IN 40 CFR PART 35

	Environmental protection, Administrative practices and procedures,
Environmental program grants, Water pollution control.

 Dated:

Benjamin H. Grumbles,

Assistant Administrator, Office of Water.

EPA amends 40 CFR Part 35 as follows:

1.  The authority for citation for part 35, Subpart A continues to read
as follows:

AUTHORITY:  42 U.S.C. 7401 et seq.; 33 U.S.C. 1251 et seq; 42 U.S.C.
300f et seq; 42 U.S.C. 6901 et seq; 7 U.S.C. 136 et seq; 15 U.S.C. 2601
et seq; 42 U.S.C. 13101 et seq; Pub.L 104-134, 110 Stat. 1321, 1321-299
(1966); Pub.L. 105-65, 111 Stat. 1344, 1373 (1997).

2.  Section 35.162 is amended by adding paragraph (e) to read as
follows:

§ 35.162 Basis for allotment.

* * * * *

(e)  Permit fee incentive allotment formula.  If there is an increase
above the FY 2007 level in the total amount of funds allotted to States
under subsection (b), EPA may award this increase as the permit fee
incentive allotment to eligible States in accordance with this section.
The amount of this annual allotment shall not be greater than three
percent of the funds allotted under paragraph (b) of this section in FY
2007, and any funds above this amount shall be allotted to States under
paragraph (b) of this section.

(1)  Each eligible State may receive up to a full share of this
allotment, as determined by the following formula.  A full share is the
allotment amount divided by the number of eligible States:

(i)  A State will receive 25 percent of a full share if that State has
collected permit fees which equal or exceed 75 percent of total State
NPDES program costs; or

(ii) A State will receive 50 percent of a full share if that State has
collected permit fees which equal or exceed 90 percent of total State
NPDES program costs; or

(iii)  A State will receive a full share if that State has collected
permit fees which equal 100 percent of total State NPDES program costs.

(2)  The maximum share to any State under this subsection shall not
exceed 50 percent of the State’s previous year’s total Section 106
allotment determined under paragraph (b) of this section.

(3)  Any funds left remaining after all shares have been allotted under
this subsection will be re-allotted to the States under paragraph (b) of
this section.

(4)  In order for a State to be eligible for this incentive, a State
must:  be authorized by EPA to implement the NPDES program by the first
day of the federal fiscal year, October 1, for which the funds have been
appropriated; and submit to EPA a certification meeting the requirements
of paragraph (e)(5) of this section.

(5)  The certification required under paragraph (e)(4) of this section
must meet the following requirements:

(i)  The certification must be submitted annually to EPA by October 1;
and

(ii)  The certification must include the total percentage of NPDES
program costs, as defined in paragraph (e)(6) of this section, recovered
by the State through permit fee collections during the most recently
completed State fiscal year, and a statement that the amount of permit
fees collected is used by the State to defray NPDES program costs; and

(iii)  The certification must include a statement that State recurrent
expenditures for water quality programs have not decreased from the
previous State fiscal year or indicate that a decrease in such
expenditures is attributable to a non-selective reduction of the
programs of all executive branch agencies of the State government.

(6)  NPDES program costs are defined as all permitting, enforcement, and
compliance costs.

 CWA Sections 106 and 518 authorize EPA to award such grants to eligible
Indian Tribes, but this rule does not affect those grants.

 PAGE

 PAGE   17

 PAGE


[Federal Register: June 18, 2008 (Volume 73, Number 118)]
[Notices]
[Page 34724]
[DOCID:fr18jn08-53]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. CP08-416-000]

Equitrans, L.P.; Notice of Request Under Blanket Authorization

June 11, 2008.
    Take notice that on June 2, 2008, Equitrans, L.P. (Equitrans), 225
North Shore Drive, Pittsburgh, Pennsylvania 15212, filed in Docket No.
CP08-416-000, an application pursuant to sections 157.205 and 157.216
of the Commission's Regulations under the Natural Gas Act (NGA) as
amended, to abandon four storage injection/withdrawal wells in its
Logansport Storage Reservoir in Marion County, WV, under Equitrans'
blanket certificate issued in Docket No. CP96-532-000, all as more
fully set forth in the application which is on file with the Commission
and open to the public for inspection.
    Equitrans proposes to abandon four injection/withdrawal wells in
its Logansport Storage Reservoir \1\ as part of an April 10, 2008,
settlement agreement with the Consolidation Coal Company (Consol), who
owns and operates a longwall coal mining operation (the Robinson Run
Mine) in Marion County, WV, which is in close proximity to Equitrans'
Logansport Storage Field. Equitrans states that the four injection/
withdrawal well bores are in the projected path of Consol's mining
operations. Equitrans further states that in order to avoid damage to
both Equitrans' wells and Consol's mining equipment, the wells would
need to be abandoned and the well casings removed. Equitrans also
states that it would cost approximately $261,756 to abandon the four
injection/withdrawal wells.
---------------------------------------------------------------------------

    \1\ Equitrans has also proposed in a concurrent filing in Docket
No. CP08-417-000 to replace the four abandoned wells with two
horizontal storage injection/withdrawal wells.
---------------------------------------------------------------------------

    Any questions concerning this application may be directed to Andrew
L. Murphy, Vice President, Equitrans, L.P., 225 North Shore Drive,
Pittsburgh, Pennsylvania 15212, or telephone<PHONE_NUMBER> or facsimile
412-395-3166.
    This filing is available for review at the Commission or may be
viewed on the Commission's Web site at http://www.ferc.gov, using the
``eLibrary'' link. Enter the docket number excluding the last three
digits in the docket number filed to access the document. For
assistance, please contact FERC Online Support at FERC
<EMAIL_ADDRESS>or call toll-free at<PHONE_NUMBER>, or, for
TTY, contact<PHONE_NUMBER>. Comments, protests and interventions may
be filed electronically via the Internet in lieu of paper. See, 18 CFR
385.2001(a)(1)(iii) and the instructions on the Commission's Web site
under the ``e-Filing'' link. The Commission strongly encourages
intervenors to file electronically.
    Any person or the Commission's staff may, within 60 days after
issuance of the instant notice by the Commission, file pursuant to Rule
214 of the Commission's Procedural Rules (18 CFR 385.214) a motion to
intervene or notice of intervention and pursuant to section 157.205 of
the regulations under the NGA (18 CFR 157.205), a protest to the
request. If no protest is filed within the time allowed therefore, the
proposed activity shall be deemed to be authorized effective the day
after the time allowed for filing a protest. If a protest is filed and
not withdrawn within 30 days after the allowed time for filing a
protest, the instant request shall be treated as an application for
authorization pursuant to section 7 of the NGA.

Kimberly D. Bose,
Secretary.
 [FR Doc. E8-13686 Filed 6-17-08; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register Volume 87, Number 133 (Wednesday, July 13, 2022)]
[Notices]
[Pages 41846-41851]
[FR Doc No: 2022-14881]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95208; File No. SR-MSRB-2022-05]

Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of a Proposed Rule Change Consisting of
Amendments to MSRB Rule G-34 To Better Align the CUSIP Requirements for
Underwriters and Municipal Advisors With Current Market Practices

July 7, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on July 1, 2022 the Municipal Securities
Rulemaking Board (``MSRB'' or ``Board'') filed with the Securities and
Exchange Commission (``SEC'' or ``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the MSRB. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

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

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

    The MSRB filed with the Commission a proposed rule change
consisting of amendments to MSRB Rule G-34, on CUSIP numbers, new
issue, and market information requirements (the ``proposed rule
change''). The proposed rule change would make minor amendments to
better align Rule G-34's requirements for obtaining CUSIP numbers with
the process followed by market participants and facilitate compliance
with MSRB Rule G-34 by streamlining the rule text.
    If the Commission approves the proposed rule change, the MSRB will
publish a Notice announcing the effective date of the proposed rule
change no later than 10 days following Commission approval. The
effective date will be no later than 30 days following Commission
approval.
    The text of the proposed rule change is available on the MSRB's
website at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2022-Filings.aspx, at the MSRB's principal office, and at the Commission's
Public Reference Room.

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

    In its filing with the Commission, the MSRB included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The MSRB 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
    Among other things, MSRB Rule G-34 on CUSIP numbers, new issue, and
market information requirements establishes requirements relating to
CUSIP numbers for brokers, dealers and municipal securities dealers
(collectively and individually ``dealers'') acting as underwriters and
for municipal advisors (dealers and municipal advisors together,
``regulated entities''). In particular, Rule G-34(a)(i)(A) requires
dealers acting as underwriters and municipal advisors advising the
issuer with respect to a competitive sale of a new issue of municipal
securities to apply for a CUSIP number or numbers based on eight
specified items of information about the new issue.\3\ MSRB Rule G-
34(a)(i)(A)(5) addresses the obligations to update application
information that has changed. The rule further stipulates details on
how these regulated entities must apply for CUSIP numbers in detail
that includes specific data points to be included in the application
for obtaining CUSIP numbers.
---------------------------------------------------------------------------

    \3\ These eight items are set forth in current MSRB Rule G-
34(a)(i)(A)(4)(a) through (h).
---------------------------------------------------------------------------

    In 2019, the MSRB announced priority rules to be considered as part
of its ongoing retrospective rule review. The goal of the review was to
help ensure that: MSRB rules and interpretive guidance are effective in
their principal goal of protecting investors, issuers and the public
interest; not overly burdensome; clear; harmonized with the rules of
other regulators, as appropriate; and reflective of current market
practices.\4\ In this announcement, the MSRB listed MSRB Rule G-34 as a
rule to be prioritized for

review.\5\ The MSRB sought comment in 2019 on MSRB Rule G-34, but the
following year determined to maintain the obligations under the rule
with respect to the responsible party for obtaining a CUSIP number in
new issues.\6\
---------------------------------------------------------------------------

    \4\ See MSRB Notice 2019-04, MSRB Identifies Priority Rules for
Retrospective Rule Review (February 5, 2019).
    \5\ Id. at 3.
    \6\ See MSRB Notice 2019-08, Request for Comment on MSRB Rule G-
34 Obligation of Municipal Advisors to Apply for CUSIP Numbers When
Advising on Competitive Sales (February 27, 2019). Comments
submitted in response to Regulatory Notice 2019-08 are available
here: https://msrb.org/Rules-and-Interpretations/Regulatory-Notices/2019/2019-08?c=1.
---------------------------------------------------------------------------

    In recent years, the MSRB has heard from industry members through
stakeholder engagement that MSRB Rule G-34's requirements on obtaining
CUSIP numbers, in its current form, do not accurately reflect the
actual process that an underwriter or municipal advisor must go through
when obtaining a CUSIP number. This discrepancy further complicates
efforts when a municipal advisor or underwriter creates written
supervisory procedures that are mapped to the rule text but do not
accurately reflect the actual or logistical process that they must
undertake for appropriately obtaining a CUSIP number. After reviewing
rule requirements relating to obtaining a CUSIP number, the MSRB is
submitting this proposed rule change to: modernize the rule to better
align with the realities of obtaining a CUSIP number; provide
flexibility in the rule; and clear up areas of confusion for
underwriters and municipal advisors attempting to comply with the rule.
    In summary, the proposed rule change:
     specifies that CUSIP applications must be made to the
Board's designee (and not the Board itself);
     removes the obligation for municipal advisors providing
advice with respect to a competitive offering to apply for the CUSIP
number by no later than one business day after dissemination of a
notice of sale in favor of a more flexible standard that still
obligates the application to be made within sufficient time to ensure
timely CUSIP number assignment;
     removes language dictating the precise content of a CUSIP
number application that the Board feels would more appropriately be
left to the Board's designee for receiving and reviewing such
applications; and
     explicitly provides that certain obligations set forth in
the rule do not apply when CUSIP numbers have been preassigned.
Designee of the Board
    MSRB Rule G-34(a)(i)(A) currently requires an underwriter or
municipal advisor to obtain CUSIP numbers through an application in
writing to the Board or its designee. The proposed rule change amends
this language by providing that underwriters and municipal advisors
must apply to the Board's designee and removing the language in the
rule text that makes reference to the Board in that requirement.\7\
This revised language is designed to avoid the potential for confusion
associated with the current rule text and to more clearly convey the
MSRB's expectations with respect to the process of obtaining a CUSIP
number. The Board does not currently assign CUSIP numbers to municipal
securities; underwriters and municipal advisors may only obtain one by
application to the only entity that provides these identifiers, CUSIP
Global Services. The Board's current designee is CUSIP Global
Services.\8\ This designation would remain unchanged by the proposed
rule change and would be reflected in new Supplementary Material .01.
If CUSIP numbers become available from another source or another
identifier for municipal securities becomes market practice at some
point in the future, the MSRB would notify the market of a decision to
modify the designee via publication of an MSRB regulatory notice.
---------------------------------------------------------------------------

    \7\ The proposed rule change also makes similar amendments to
Rule G-34(a)(i)(A)(5) and G-34(a)(i)(D) to remove references to the
Board and make clear that the CUSIP number application discussed in
those paragraphs must be made to the Board's designee.
    \8\ In 1983, the Board designated the CUSIP Service Bureau as
its designee to assign CUSIP numbers to new issues of municipal
securities. See MSRB Reports, Vol. 3, No. 3 at 11 (May 1983),
available at https://msrb.org/-/media/Files/MSRB-Reports/1983/
May1983-Volume3--Number3.ashx. The CUSIP Service Bureau has since
changed its name to CUSIP Global Services. Pursuant to a contract
between the CUSIP Service Bureau and the MSRB, all references to the
CUSIP Service Bureau were amended to read CUSIP Global Services.
Accordingly, CUSIP Global Services (formerly known as the CUSIP
Service Bureau) remains the MSRB's designee.
---------------------------------------------------------------------------

    In addition, as it is the Board's designee, and not the Board, that
controls the CUSIP number application process, the Board proposes to
remove the in-writing requirement for the application made for
obtaining CUSIP numbers. Because the Board does not receive or review
CUSIP applications, it believes that the manner in which an applicant
applies for CUSIP numbers is best left to the entity that reviews
applications and assigns the CUSIP number (i.e., the Board's designee).
One Business Day Obligation
    MSRB Rule G-34(a)(i)(A)(3) states that a municipal advisor advising
the issuer with respect to a competitive sale of a new issue of
municipal securities shall make an application by no later than one
business day after dissemination of a notice of sale or other such
request for bids. The proposed rule change removes the obligation to
make such application by no later than one business day since it is not
always practical for municipal advisors to comply given the realities
of the marketplace and therefore may place an undue burden on municipal
advisors. The rule already obligates the application to be made at a
time sufficient to ensure final CUSIP number assignment occurs prior to
the award of the issue. The MSRB believes that this language is
sufficient to ensure that any such application is timely without
dictating a more burdensome approach of requiring a specific numeric
time obligation. Additionally, the MSRB understands that, from an
operational perspective, it may be impracticable for municipal advisors
to apply for a CUSIP number within one business day after dissemination
of a notice of sale, as currently required by Rule G-34(a)(i)(A)(3).\9\
Accordingly, removal of this language would better align the rule text
with the operational process followed by municipal advisors in
connection with their CUSIP applications.
---------------------------------------------------------------------------

    \9\ See Letter from Susan Gaffney, Executive Director, NAMA,
dated May 28, 2019 available at: https://www.msrb.org/rfc/2019-08/gaffney.pdf (stating that there is an inherent timing inconsistency
with respect to Rule G-34(a)(i)(A)(3) as it requires application for
CUSIP numbers no later than one business day after the Notice of
Sale, which will almost always be before the identity of the
investors are known, and therefore the [municipal advisor] could not
reasonably obtain the investors' written representations) (``NAMA
Letter'').
---------------------------------------------------------------------------

Information To Be Provided When Applying for CUSIP Numbers
    MSRB Rule G-34(a)(i)(A)(4) lists specific data points that must be
provided when applying for CUSIP numbers. These data points include the
complete name of issue and series designation, if any; interest rate(s)
and maturity date(s) (provided, however, that, if the interest rate is
not established at the time of application, it may be provided at such
time as it becomes available); dated date; type of issue (e.g., general
obligation, limited tax or revenue); type of revenue, if the issue is a
revenue issue; details of all redemption provisions; the name of any
company or other person in addition to the issuer obligated, directly
or indirectly, with respect to the debt

service on all or part of the issue (and, if part of the issue, an
indication of which part); and any distinction(s) in the security or
source of payment of the debt service on the issue, and an indication
of the part(s) of the issue to which such distinction(s) relate.
    The proposed rule change removes these data points from the rule
and instead provides that underwriters and municipal advisors shall
provide the information required by the Board's designee in connection
with their CUSIP application. The proposed rule change also makes a
similar amendment to Rule G-34(a)(i)(D), removing from the rule text
the three specified pieces of information that must be included in an
application to obtain a CUSIP number in connection with certain new
issuances that refund part of an outstanding issuance. The MSRB
believes that Rule G-34 should not contain specific data points to be
provided to its designee, as the MSRB does not control the specifics of
the application process, nor does it make a determination on the
sufficiency of an application to receive CUSIP numbers. The MSRB
believes that the entity providing CUSIP numbers, the Board's designee,
is the appropriate entity to dictate what individual data points must
be provided with an application for CUSIP numbers in order to
sufficiently evaluate an application. The MSRB believes that this
flexibility will help create a rule that is less likely to become stale
over time.
CUSIP Pre-Assignment
    The proposed rule change specifies that the Rule G-34(a)(i)(A)(3)
obligation to apply for a CUSIP number only applies where no CUSIP
numbers have been pre-assigned. The Board believes that this aligns
with the common understanding among market participants that there is
no obligation to seek a CUSIP number where one has already been pre-
assigned. A similar amendment to Rule G-34(a)(i)(C) provides that the
provisions of Rule G-34(a)(i) regarding the assignment and affixture of
CUSIP numbers do not apply with respect to any new issue of municipal
securities on which CUSIP numbers have been preassigned.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2) of the Exchange Act,\10\ which provides that the
Board shall propose and adopt rules to effect the purposes of this
title with respect to transactions in municipal securities effected by
brokers, dealers, and municipal securities dealers and advice provided
to or on behalf of municipal entities or obligated persons by brokers,
dealers, municipal securities dealers, and municipal advisors with
respect to municipal financial products, the issuance of municipal
securities, and solicitations of municipal entities or obligated
persons undertaken by brokers, dealers, municipal securities dealers,
and municipal advisors.
---------------------------------------------------------------------------

    \10\ 15.U.S.C. 78o-4(b)(2).
---------------------------------------------------------------------------

    Section 15B(b)(2)(C) of the Exchange Act \11\ provides that the
MSRB's rules shall be designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
to foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect to,
and facilitating transactions in municipal securities and municipal
financial products, to remove impediments to and perfect the mechanism
of a free and open market in municipal securities and municipal
financial products, and, in general, to protect investors, municipal
entities, obligated persons, and the public interest.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78o-4(b)(2)(C).
---------------------------------------------------------------------------

    The MSRB believes the proposed rule change is consistent with
Section 15B(b)(2)(C) of the Exchange Act \12\ because the proposed rule
change would foster cooperation and coordination with persons engaged
in regulating, processing information with respect to and facilitating
transactions in municipal securities. It does so by modernizing the
rule to align with the realities of the process followed by
underwriters and municipal advisors in obtaining a CUSIP number,
allowing the Board's designee to dictate the details of the CUSIP
application process without the distraction of the rule text describing
the application process that may not necessarily reflect the designee's
process, and creating a more efficient CUSIP application process more
generally. Specifically, the MSRB believes that by removing potential
ambiguities as to the identity of the entity to whom CUSIP applications
should be sent, specifying directly in the rule that such application
should be sent to CUSIP Global Services, and allowing CUSIP Global
Services to dictate the details of the CUSIP application process, the
MSRB is fostering coordination with those processing information with
respect to municipal securities and fostering cooperation with
underwriters and municipal advisors by facilitating compliance with a
clearer rule.
---------------------------------------------------------------------------

    \12\ Id.
---------------------------------------------------------------------------

    The MSRB believes that the proposed rule change also will remove
impediments to a free and open municipal securities market because it
will align MSRB Rule G-34's obligations associated with obtaining CUSIP
numbers with the actual process an underwriter or municipal advisor
must undertake when obtaining CUSIP numbers for new issues of municipal
securities. It would do so by removing burdens on underwriters and
municipal advisors that result in no appreciable benefit for the market
and promoting clarity of the rule and compliance expectations. The MSRB
believes that removal of these burdens may facilitate better and more
timely compliance with the rule. For example, in some cases, the
proposed rule change may facilitate more timely applications for CUSIP
numbers. By removing potential ambiguities as to the identity of the
entity to whom CUSIP number applications should be made, underwriters
and municipal advisors are less likely to spend time trying to learn to
whom such applications should be made and potentially are more likely
to make their applications in a timely manner.
    Additionally, the Board sees no benefit to requiring municipal
advisors to apply for a CUSIP number within a specific numerical time
frame--particularly in circumstances where it may be impractical or
impossible to do so--where the rule already requires that the
application must be made within sufficient time to obtain a CUSIP
number. By removing this burden and by specifying that CUSIP
applications are not necessary for any new issue on which CUSIP numbers
have been preassigned, the proposed rule change would reduce compliance
burdens and permit municipal advisors to spend the time that would have
been spent trying to comply with those burdens in service of their
municipal entity and obligated person clients instead. The MSRB again
believes that removal of these obligations does not negatively impact
investors, issuers or the public interest, but does facilitate
compliance and the establishment of more practical written supervisory
procedures for underwriters and municipal advisors that reflect the
actual process followed in connection with the process to obtain CUSIP
numbers.
    The MSRB also believes that the proposed rule change will remove
impediments to a free and open municipal securities market because it
would create a rule that is less likely to become stale over time. As
market practices evolve, rule text that specifies detailed information
that must be

included in a CUSIP application or that otherwise governs the details
of the CUSIP application process may become impediments to an efficient
CUSIP application process, instead of facilitating that very process.
The MSRB believes that the proposed rule change provides the
appropriate degree of flexibility in the rule text.
    Section 15B(b)(2)(L)(iv) of the Exchange Act \13\ requires that
rules adopted by the Board not impose a regulatory burden on small
municipal advisors that is not necessary or appropriate in the public
interest and for the protection of investors, municipal entities, and
obligated persons, provided that there is robust protection of
investors against fraud. The MSRB believes that the proposed rule
change is consistent with Section 15B(b)(2)(L)(iv) of the Exchange Act
\14\ because the proposed rule change would relieve all municipal
advisors, including small municipal advisors of the same compliance
burdens and would not impose any new compliance burdens on municipal
advisors.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78o-4(b)(2)(L)(iv).
    \14\ Id.
---------------------------------------------------------------------------

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

    The MSRB believes that the proposed rule change does not impose a
burden on competition. Section 15B(b)(2)(C) of the Act \15\ requires
that MSRB rules not be designed to impose any burden on competition not
necessary or appropriate in furtherance of the purposes of the Act. The
MSRB has considered the economic impact associated with the proposed
rule change, including a comparison to reasonable alternative
regulatory approaches, relative to the baseline.\16\ The MSRB believes
that the proposed rule change would lessen the compliance burden for
underwriters and municipal advisors, and encourage fair competition by
reducing confusion and ensuring compliance with existing CUSIP number
requirements. Furthermore, the proposed rule change would apply equally
to all MSRB regulated entities. The MSRB believes the proposed rule
change would relieve a burden on competition without any erosion of
protection for issuers and investors. Therefore, the MSRB believes the
proposed rule change would not impose any burden on competition that is
not necessary or appropriate in furtherance of the purposes of the
Exchange Act.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78o-4(b)(2)(C).
    \16\ See Policy on the Use of Economic Analysis in MSRB
Rulemaking, available at http://msrb.org/Rules-and-Interpretations/Economic-Analysis-Policy.aspx. In evaluating whether there was a
burden on competition, the Board was guided by its principles that
required the Board to consider costs and benefits of a rule change,
its impact on capital formation and the main reasonable alternative
regulatory approach.
---------------------------------------------------------------------------

    The purpose of amending Rule G-34 is to better align the CUSIP
requirements for underwriters and municipal advisors with current
market practices, clarify the identity of the Board's designee for
CUSIP number applications, and modernize Rule G-34 by reducing
prescriptive requirements on how applicants obtain CUSIP numbers. The
proposed rule change would accurately reflect that the MSRB does not
assign CUSIP numbers. The proposed rule change would also reflect the
Board's designee as CUSIP Global Services. Additionally, the proposed
amendments would remove eight currently identified data fields for
CUSIP number application and instead require regulated entities to
provide the information required by the Board's designee, CUSIP Global
Services, to determine the appropriate information that an applicant
shall provide when applying to receive CUSIP numbers.\17\ Finally, the
proposed rule change would eliminate the no later than one business day
after the dissemination of a notice of sale or other such request for
bids time limit requirement for obtaining CUSIP numbers by municipal
advisors, though it would continue to require municipal advisors to
obtain CUISP numbers at a time sufficient to ensure final CUSIP number
assignment occurs prior to the award of the issue. As the MSRB is not,
and never was, involved in assigning CUSIP numbers to applicants,
amending the rule text to specify that the Board's designee assigns
CUSIP numbers should not affect the practical implementation of Rule G-
34. The remainder of the MSRB's statement on burden on competition
mostly focuses on the removal of eight data points and the time limit
required for CUSIP registration.
---------------------------------------------------------------------------

    \17\ The current obligations require CUSIP number applicants to
provide (a) complete name of issue and series designation, if any;
(b) interest rate(s) and maturity date(s); (c) dated date; (d) type
of issue (e.g., general obligation, limited tax or revenue); (e)
type of revenue, if the issue is a revenue issue; (f) details of all
redemption provisions; (g) the name of any company or other person
in addition to the issuer obligated, directly or indirectly, with
respect to the debt service on all or part of the issue; and (h) any
distinction(s) in the security or source of payment of the debt
service on the issue.
---------------------------------------------------------------------------

    For this filing, the current iteration of Rule G-34, where MSRB-
registered underwriters and municipal advisors are required to obtain
CUSIP numbers for competitive sales, is used as the baseline to
evaluate the costs and benefits for the proposed amendments, as well as
other reasonable regulatory alternatives.
    The MSRB considered and assessed a couple of reasonable regulatory
alternatives but determined the proposed rule change is superior to
these alternatives. One alternative would be to modify the data fields
requirements for CUSIP number applicants to be consistent with what the
Board's designee, CUSIP Global Services requires. There are currently
eight data elements proscribed in the rule.\18\ However, CUSIP Global
Services, as an independent entity from the MSRB, may amend the
requirements periodically in the future. In this alternative, the MSRB
would have to amend Rule G-34 whenever there is a change initiated by
CUSIP Global Services. This would be an unpredictable alternative which
may require the MSRB to revise Rule G-34 on a regular basis; in
addition, it would create inconsistency for a period of time before the
MSRB is able to revise Rule G-34.
---------------------------------------------------------------------------

    \18\ The eight data elements are listed in footnote 17.
---------------------------------------------------------------------------

    Another alternative the MSRB considered was to keep a numeric time
limit requirement for municipal advisors applying for CUSIP numbers in
place but expand the time limit from no later than one business day to
more than one business day to provide applicants more flexibility.
However, since the MSRB is not involved in any aspect of the CUSIP
number application process, the MSRB would not be able to determine
what the ideal application time limit would be other than being prior
to the award of an issue. As a result, the MSRB determined that
eliminating the no later than one business day time limit requirement
would be an even better option than simply extending the time limit.
Benefits and Costs
    The MSRB believes the proposed amendments to Rule G-34, on
aggregate, would reduce the burden for underwriters and municipal
advisors by providing more clarity and aligning CUSIP number
applicants' responsibility with the real-world practice, without any
erosion of protection for issuers and investors.
Benefits
    The proposed rule change to Rule G-34 would reduce the uncertainty
and challenge in collecting multiple data points by CUSIP number
applicants which may not be necessary for, or helpful to, the Board's
designee at the time of CUSIP obtainment. As it is

currently written, all underwriters and municipal advisors, as part of
a competitive sale, are required to provide security level information
such as revenue source, redemption provisions and any obligor related
information. This information may not be in line with the information
required by the entity providing CUSIP numbers. The proposed rule
change would reduce the need to source each data point by removing the
list of information that must be given to the Board's designee and
simply replacing it with the obligation to provide the Board's designee
with the information which the Board's designee requires to obtain a
CUSIP number. Additionally, if the Board's designee pre[hyphen]assigns
CUSIP numbers to an issuance, the regulated entity would not need to
specify the eight data fields simply to evidence its compliance with
Rule G-34 requirements.
    The proposed rule change also would remove uncertainty by
explicitly identifying CUSIP Global Services as the Board's designee
and reduce the burden on municipal advisors by eliminating the time
limit for CUSIP number application, which may not be practical in the
real world.
Costs
    The MSRB believes the changes to Rule G-34 would have minimal costs
associated with the amendments. One potential upfront cost would be for
underwriters and municipal advisors to update their policies and
procedures. The MSRB believes the revisions would be straightforward
and should not take much time and effort to implement. The ongoing
compliance costs also would be reduced, as the proposed rule change is
intended to reduce the compliance burden on underwriters and municipal
advisors.
    In addition, there is a possibility that the proposed rule change
may lead to more usage of express requests for CUSIP numbers with CUSIP
Global Services than the current state, if municipal advisors delay
their CUSIP number applications until shortly before the competitive
bidding process. For example, it currently takes CUSIP Global Services
approximately one to two business days to process a standard CUSIP
request,\19\ which costs $192 for the first maturity, plus $27 for each
additional maturity or class per series in the same application/
offering document in 2022.\20\ The express request is more expensive,
with a 50% surcharge, but will result in a CUSIP number produced within
one hour of the request. While the MSRB does not have the information
to estimate the future usage of express requests,\21\ there is a chance
that eliminating the no later than one business day time limit required
to obtain a CUSIP number may result in more CUSIP numbers being
obtained using the express request process, which would be 50% more
expensive than the standard process. The MSRB believes, however, with
the current CUSIP number application process in place since June 2018,
most municipal advisors are unlikely to change the timing of obtaining
CUSIP numbers.
---------------------------------------------------------------------------

    \19\ Internal analysis conducted by the MSRB using data on CUSIP
issuance obtained from CUSIP Global Services for select months in
2018, 2019, 2020 and 2021.
    \20\ See https://www.cusip.com/pdf/FeesforCUSIPAssignment.pdf.
    \21\ As of January 2021, less than 9% of all CUSIP numbers were
obtained via the express request process, based on internal analysis
conducted by the MSRB using data on CUSIP issuance obtained from
CUSIP Global Services.
---------------------------------------------------------------------------

Effect on Competition, Efficiency and Capital Formation
    At present, the MSRB is unable to quantitatively evaluate the
magnitude of efficiency gains or losses, or the impact on capital
formation but believes that the benefits outweigh the costs. The MSRB
believes that the proposed rule change may improve the operational
efficiency of the municipal securities market by aligning the
requirements with the real-world practice, promoting consistency, and
reducing potentially misaligned requirements. Additionally, the MSRB
believes the proposed rule change would encourage fair competition by
reducing confusion and ensuring compliance with existing CUSIP number
requirements. Furthermore, a smooth and efficient process for CUSIP
number applications also helps ensure a successful onset of secondary
market trading, which would benefit investors seeking to change their
positions in newly issued municipal securities. This would in turn
benefit issuers by potentially lowering an issuance's liquidity risk
premium, which would also benefit the capital formation process.
Finally, the proposed rule change would apply equally to all MSRB
regulated entities. Accordingly, the MSRB believes the proposed rule
change would relieve a burden on competition without any erosion of
protection for issuers and investors.

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

    The Board did not specifically solicit comments on the proposed
rule change to MSRB Rule G-34. However, as previously referenced, the
Board did seek comment on MSRB Rule G-34 more generally as part of its
retrospective rule review initiative in 2017 \22\ and 2019.\23\
---------------------------------------------------------------------------

    \22\ See MSRB Notice 2017-05, Request for Comment on Draft
Amendments to Clarifications of MSRB Rule G-34, on Obtaining CUSIP
Numbers (March 1, 2017). Comments submitted in response to
Regulatory Notice 2017-05 are available here: https://msrb.org/Rules-and-Interpretations/Regulatory-Notices/2017/2017-05?c=1. See
MSRB Notice 2017-11, Second Request for Comment on Draft Amendments
to and Clarifications of MSRB Rule G-34, on Obtaining CUSIP Numbers
(June 1, 2017). Comments submitted in response to Regulatory Notice
2017-11 are available here: https://msrb.org/Rules-and-Interpretations/Regulatory-Notices/2017/2017-11?c=1.
    \23\ See MSRB Notice 2019-08, Request for Comment on MSRB Rule
G-34 Obligation of Municipal Advisors to Apply for CUSIP Numbers
When Advising on Competitive Sales (February 27, 2019). Comments
submitted in response to MSRB Notice 2019-08 are available here:
https://msrb.org/Rules-and-Interpretations/Regulatory-Notices/2019/2019-08?c=1.
---------------------------------------------------------------------------

    In response to the 2019 request for comment, NAMA was of the view
that Rule G-34(a)(i)(A)(3) presents a timing inconsistency insofar as
that section of the rule requires application for CUSIP numbers no
later than one business day after the Notice of Sale. NAMA noted that
this will almost always be before the identity of the investors are
known, and therefore before a municipal advisor could reasonably obtain
written representations from investors.\24\ The MSRB believes that the
proposed rule change's removal of the one business day requirement
would remove the timing inconsistency raised by NAMA. The MSRB does not
believe that the remaining comments received in response to the 2017 or
2019 requests for comment are applicable to the proposed rule change.
---------------------------------------------------------------------------

    \24\ NAMA Letter at 3.
---------------------------------------------------------------------------

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period of up to 90 days (i) as
the Commission may designate 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 or disapprove 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 email to [email protected]. Please include
File Number SR-MSRB-2022-05 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MSRB-2022-05. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the MSRB. All comments received
will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MSRB-2022-05 and should be submitted on
or before August 3, 2022.
---------------------------------------------------------------------------

    \25\ 17 CFR 200.30-3(a)(12).

    For the Commission, pursuant to delegated authority.\25\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-14881 Filed 7-12-22; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 218 (Friday, November 9, 2012)]
[Rules and Regulations]
[Pages 67267-67269]
[FR Doc No: 2012-26961]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2012-0679; Directorate Identifier 2012-NM-063-AD;
Amendment 39-17246; AD 2012-22-10]
RIN 2120-AA64

Airworthiness Directives; Bombardier, Inc. Airplanes

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

ACTION: Final rule.

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

SUMMARY: We are adopting a new airworthiness directive (AD) for certain
Bombardier, Inc. Model CL-600-2C10 (Regional Jet Series 700, 701, &
702) airplanes, Model CL-600-2D15 (Regional Jet Series 705) airplanes,
Model CL-600-2D24 (Regional Jet Series 900) airplanes, and Model CL-
600-2E25 (Regional Jet Series 1000) airplanes. This AD was prompted by
a report that certain wing-to-fuselage attachment nuts do not conform
to the certification design requirements for dual locking features.
This AD requires repetitive inspections to determine that cotter pins
are installed at affected wing-to-fuselage attachment joints and
replacement if necessary. We are issuing this AD to prevent loss of
wing-to-fuselage attachment joints, which could result in the loss of
the wing.

DATES: This AD becomes effective December 14, 2012.
    The Director of the Federal Register approved the incorporation by
reference of a certain publication listed in this AD as of December 14,
2012.

ADDRESSES: You may examine the AD docket on the Internet at http://www.regulations.gov or in person at the U.S. Department of
Transportation, Docket Operations, M-30, West Building Ground Floor,
Room W12-140, 1200 New Jersey Avenue SE., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Jeffrey Zimmer, Aerospace Engineer,
Airframe & Mechanical Systems Branch, ANE-171, New York Aircraft
Certification Office (ACO), FAA, 1600 Stewart Avenue, Suite 410,
Westbury, New York 11590; telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR
part 39 to include an AD that would apply to the specified products.
That NPRM was published in the Federal Register on July 11, 2012 (77 FR
40826). That NPRM proposed to correct an unsafe condition for the
specified products. The Mandatory Continuing Airworthiness Information
(MCAI) states:

The manufacturer has determined that wing-to-fuselage attachment
nuts, part number (P/N) SH670-35635-1, SH670-35440-951, SH670-35440-
3, SH670-35635-1 and 95136D-2412, installed at six attachment joint
locations, do not conform to the certification design requirements
for dual locking features. The nuts are not of the self-locking type
as required and do not provide the frictional thread interference
required to prevent the nut from backing off the bolt. As a result,
only a single locking device, the cotter pin, is provided at these
critical joints. In the case where a nut becomes loose, in
combination with a missing or broken cotter pin, the attachment bolt
at the wing-to-fuselage joint could migrate and fall out. Loss of
two attachment joints could potentially result in the loss of the
wing.

This [Transport Canada Civil Aviation] Airworthiness Directive (AD)
mandates a [repetitive] detailed visual inspection (DVI) of each
affected wing-to-fuselage attachment joint to ensure that a cotter
pin is installed.

The required actions also include replacing any missing cotter pin. You
may obtain further information by examining the MCAI in the AD docket.

Comments

    We gave the public the opportunity to participate in developing
this AD. We have considered the comment received.

Request for Credit for Previous Actions

    Mesa Airlines requested that paragraph (i) of the NPRM (77 FR
40826, July 11, 2012), regarding credit for the previous actions, be
revised to include credit for Bombardier Maintenance Review Board
Report 57-10-305, Task 000-53-170-501, Detailed Inspection of the Wing-
to-Fuselage Attachment Fittings--FS708.00, FS752.00, and FS797.00 at
LBL45.0 and RBL45.0, as compliance for the initial inspection specified
in paragraph (g) of the NPRM.
    We disagree with the request to give credit for the initial
inspection by accomplishing the task specified by the commenter. The
intent of this AD is to ensure cotter pin installation, and while Task
000-53-170-501 inspects for corrosion and general condition of the wing
attachment fittings, it does not specify inspecting the cotter pins.
Therefore, the cotter pins could be missed during the inspection in
Task 000-53-170-501. We have not changed the AD in this regard.

Conclusion

    We reviewed the available data, including the comment received, and
determined that air safety and the public interest require adopting the
AD as proposed, except for minor editorial changes. We have determined
that these minor changes:
     Are consistent with the intent that was proposed in the
NPRM (77 FR 40826, July 11, 2012) for correcting the unsafe condition;
and
     Do not add any additional burden upon the public than was
already proposed in the NPRM (77 FR 40826, July 11, 2012).

Costs of Compliance

    We estimate that this AD will affect 366 products of U.S. registry.
We also estimate that it will take about 5 work-hours per product to
comply with the basic requirements of this AD. The average labor rate
is $85 per work-hour. Based on these figures, we estimate the cost of
this AD to the U.S. operators to be $155,550, or $425 per product.
    We have received no definitive data that would enable us to provide
cost estimates for the on-condition actions specified in this AD. We
have no way of determining the number of products that may need these
actions.

Authority for This Rulemaking

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

Regulatory Findings

    We determined that this AD will not have federalism implications
under Executive Order 13132. This AD will not have a substantial direct
effect on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.
    For the reasons discussed above, I certify that this AD:
    1. Is not a ``significant regulatory action'' under Executive Order
12866;
    2. Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979);
    3. Will not affect intrastate aviation in Alaska; and
    4. Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.
    We prepared a regulatory evaluation of the estimated costs to
comply with this AD and placed it in the AD docket.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov; or in person at the Docket Operations office
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays. The AD docket contains the NPRM (77 FR 40826, July 11, 2012),
the regulatory evaluation, any comments received, and other
information. The street address for the Docket Operations office
(telephone<PHONE_NUMBER>) is in the ADDRESSES section. Comments will
be available in the AD docket shortly after receipt.

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

    Accordingly, under the authority delegated to me by the
Administrator,

the FAA amends 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new AD:

2012-22-10 Bombardier, Inc.: Amendment 39-17246. Docket No. FAA-
2012-0679; Directorate Identifier 2012-NM-063-AD.

(a) Effective Date

    This airworthiness directive (AD) becomes effective December 14,
2012.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to Bombardier, Inc. Model CL-600-2C10 (Regional
Jet Series 700, 701, & 702) airplanes, serial numbers 10002 through
10999 inclusive; Model CL-600-2D15 (Regional Jet Series 705) and CL-
600-2D24 (Regional Jet Series 900) airplanes, serial numbers 15001
through 15990 inclusive; and Model CL-600-2E25 (Regional Jet Series
1000) airplanes, serial numbers 19001 through 19990 inclusive;
certificated in any category.

(d) Subject

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

(e) Reason

    This AD was prompted by a report that certain wing-to-fuselage
attachment nuts do not conform to the certification design
requirements for dual locking features. We are issuing this AD to
prevent loss of wing-to-fuselage attachment joints, which could
result in the loss of the wing.

(f) Compliance

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

(g) Repetitive Detailed Inspection

    Within 3,000 flight hours or 18 months after the effective date
of this AD, whichever occurs first: Perform a detailed inspection of
each affected wing-to-fuselage attachment joint, in accordance with
the Accomplishment Instructions of Bombardier Service Bulletin
670BA-53-042, Revision A, dated April 27, 2012. Repeat the
inspection thereafter at intervals not to exceed 6,600 flight hours.

    Note 1 to paragraph (g) of this AD: The compliance time in this
AD differs from the recommended compliance time specified in
Bombardier Service Bulletin 670BA-53-042, Revision A, dated April
27, 2012.

(h) Corrective Action

    If any cotter pin is found missing during any inspection
required by paragraph (g) of this AD: Before further flight, replace
any missing cotter pin using a method approved by either the
Manager, New York Aircraft Certification Office (ACO), ANE-170, FAA;
or Transport Canada Civil Aviation (or its delegated agent).

(i) Credit for Previous Actions

    This paragraph provides credit for the actions required by
paragraph (g) of this AD, if those actions were performed before the
effective date of this AD using Bombardier Service Bulletin 670BA-
53-042, dated December 21, 2011, which is not incorporated by
reference in this AD.

(j) Other FAA AD Provisions

    The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager, New
York ACO, ANE-170, FAA, has the authority to approve AMOCs for this
AD, if requested using the procedures found in 14 CFR 39.19. In
accordance with 14 CFR 39.19, send your request to your principal
inspector or local Flight Standards District Office, as appropriate.
If sending information directly to the manager of the ACO, send it
to ATTN: Program Manager, Continuing Operational Safety, FAA, New
York ACO, 1600 Stewart Avenue, Suite 410, Westbury, New York 11590;
telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>. Before using any
approved AMOC, notify your appropriate principal inspector, or
lacking a principal inspector, the manager of the local flight
standards district office/certificate holding district office. The
AMOC approval letter must specifically reference this AD.
    (2) Airworthy Product: For any requirement in this AD to obtain
corrective actions from a manufacturer or other source, use these
actions if they are FAA-approved. Corrective actions are considered
FAA-approved if they are approved by the State of Design Authority
(or their delegated agent). You are required to assure the product
is airworthy before it is returned to service.

(k) Related Information

    (1) Refer to MCAI Canadian Airworthiness Directive CF-2012-10,
dated March 12, 2012; and Bombardier Service Bulletin 670BA-53-042,
Revision A, dated April 27, 2012; for related information.
    (2) For Bombardier service information identified in this AD,
contact Bombardier, Inc., 400 C[ocirc]te-Vertu Road West, Dorval,
Qu[eacute]bec H4S 1Y9, Canada; telephone<PHONE_NUMBER>; fax 514-855-
7401; email<EMAIL_ADDRESS>Internet http://www.bombardier.com.

(l) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the
incorporation by reference (IBR) of the service information listed
in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
    (2) You must use this service information as applicable to do
the actions required by this AD, unless the AD specifies otherwise.
    (i) Bombardier Service Bulletin 670BA-53-042, Revision A, dated
April 27, 2012.
    (ii) Reserved.
    (3) For service information identified in this AD, contact
Bombardier, Inc., 400 C[ocirc]te-Vertu Road West, Dorval,
Qu[eacute]bec H4S 1Y9, Canada; telephone<PHONE_NUMBER>; fax 514-855-
7401; email<EMAIL_ADDRESS>Internet http://www.bombardier.com.
    (4) You may review copies of the service information at the FAA,
Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA.
For information on the availability of this material at the FAA,
call<PHONE_NUMBER>.
    (5) You may view this service information that is incorporated
by reference at the National Archives and Records Administration
(NARA). For information on the availability of this material at
NARA, call<PHONE_NUMBER>, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Renton, Washington, on October 24, 2012.
Kalene C. Yanamura,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 2012-26961 Filed 11-8-12; 8:45 am]
BILLING CODE 4910-13-P