[Federal Register Volume 88, Number 25 (Tuesday, February 7, 2023)]
[Notices]
[Pages 8013-8018]
[FR Doc No: 2023-02509]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96786; File No. SR-NSCC-2022-005]

Self-Regulatory Organizations; National Securities Clearing
Corporation; Order Approving Proposed Rule Change, as Modified by
Amendment Nos. 1, 2, and 3, To Revise the Excess Capital Premium Charge

February 1, 2023.

I. Introduction

    On May 20, 2022, National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') proposed rule change SR-NSCC-2022-005 pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\
and Rule 19b-4 thereunder.\2\ The proposed rule change was published
for comment in the Federal Register on June 8, 2022,\3\ and the
Commission has received comments regarding the proposed rule change.\4\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 95026 (June 2, 2022), 87
FR 34913 (June 8, 2022) (``Notice''). The Notice referred to an
incorrect filing date of May 30, 2022; however, the proposal was
filed on May 20, 2022, as indicated here. Moreover, the Notice
reflected the filing of Amendment No. 1, which made a correction to
Exhibit 5 of the filing, specifically, to insert an additional
cross-reference into a proposed definition that had been omitted.
    \4\ Comments are available at https://www.sec.gov/comments/sr-nscc-2022-005/srnscc2022005.htm.
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    On July 11, 2022, pursuant to Section 19(b)(2) of the Act,\5\ the
Commission designated a longer period within which to approve,
disapprove, or institute proceedings to determine whether to disapprove
the proposed rule change.\6\ On September 1, 2022, the Commission
instituted proceedings, pursuant to Section 19(b)(2)(B) of the Act,\7\
to determine whether to approve or disapprove the proposed rule
change.\8\
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    \5\ 15 U.S.C. 78s(b)(2).
    \6\ Securities Exchange Act Release No. 95245 (July 11, 2022),
87 FR 42523 (July 15, 2022).
    \7\ 15 U.S.C. 78s(b)(2)(B).
    \8\ Securities Exchange Act Release No. 95656 (Sept. 1, 2022),
87 FR 55058 (Sept. 8, 2022).
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    On July 6, 2022, NSCC filed a partial amendment (``Amendment No.
2'') to modify the proposed rule change.\9\ On November 28, 2022, NSCC
filed another amendment (``Amendment No. 3'') to modify the proposed
rule change.\10\ On December 1, 2022, the Commission published notice
of filing of Amendment Nos. 2 and 3 and of an extension to the action
date for the proposed rule change.\11\
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    \9\ Amendment No. 2 partially amended the proposed rule change
to update the description of the impact of the proposal. In
Amendment No. 2, NSCC also provided a revised version of the
confidential impact study that it included as Exhibit 3a to the
proposed rule change.
    \10\ Amendment No. 3 amended and replaced the proposed rule
change in its entirety. Specifically, it clarified the particular
circumstances in which NSCC would retain the ability to waive the
excess capital premium charge, rather than remove NSCC's discretion
to waive or reduce the charge as was initially proposed in the
proposed rule change.
    \11\ Securities Exchange Act Release No. 96426 (Dec. 1, 2022),
87 FR 75105 (Dec. 7, 2022) (``Amended Notice'').
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    For the reasons discussed below, the Commission is approving the
proposed rule change, as modified by Amendment Nos. 1, 2 and 3
(hereinafter, ``proposed rule change'').

II. Description of the Proposed Rule Change 12
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    \12\ Capitalized terms not defined herein are defined in NSCC's
Rules and Procedures (``Rules''), available at http://dtcc.com/~/
media/Files/Downloads/legal/rules/nscc_rules.pdf.
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    NSCC provides clearing, settlement, risk management, central
counterparty services, and a guarantee of completion for virtually all
broker-to-broker trades involving equity securities, corporate and
municipal debt securities, and unit investment trust transactions in
the U.S. markets. A key tool that NSCC uses to manage its credit
exposure to its members is collecting an appropriate Required Fund
Deposit (i.e., margin) from each member.\13\ A member's margin is
designed to mitigate potential losses to NSCC associated with
liquidation of the member's portfolio in the event of that member's
default.\14\ The aggregate of all NSCC members' margin deposits
(together with certain other deposits required under the Rules)
constitutes NSCC's Clearing Fund, which NSCC would access should a
member default and that member's margin, upon liquidation, be
insufficient to satisfy NSCC's losses.\15\
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    \13\ See Rule 4 (Clearing Fund) and Procedure XV (Clearing Fund
Formula and Other Matters) of the Rules, supra note 12.
    \14\ Under NSCC's Rules, a default would generally be referred
to as a ``cease to act'' and could encompass a number of
circumstances, such as a member's failure to make a margin deposit
in a timely fashion. See Rule 46 (Restrictions on Access to
Services), supra note 12.
    \15\ See id.
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    A member's margin consists of a number of applicable components,
each of which addresses specific risks faced by NSCC.\16\ Many of those
components are designed to measure risks presented by the net unsettled
positions a member submits to NSCC to be cleared and settled; however,
certain components, often referred to as margin ``add-ons,'' measure
and mitigate other risks that NSCC may face, such as credit risks.
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    \16\ See Procedure XV, supra note 12.
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    NSCC's excess capital premium (``ECP'') is one such add-on that
makes up part of the margin that a member must pay to NSCC. The purpose
of this charge is to mitigate the heightened default risk a member
could pose to NSCC if it operates with lower capital levels relative to
its margin requirements.\17\ Put another way, the ECP charge operates
to collect additional margin if a member's exposure to NSCC based on
its clearing activity is out of proportion to its capital.
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    \17\ See Securities Exchange Act Release No. 54457 (Sept. 15,
2006), 71 FR 55239 (Sept. 21, 2006) (SR-FICC-2006-03 and SR-NSCC-
2006-03) (approving the ECP charge as a new component of the margin
methodology).
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    As described in more detail below, the ECP charge applies when a
specified portion of a member's required margin exceeds its capital by
a ratio of more than 1.0 (defined in the Rules as the ``Excess Capital
Ratio'').\18\ When the charge applies, NSCC determines its amount by
multiplying the member's capital by this ratio, with the resulting
amount serving as the add-on charge.
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    \18\ See Section I(B)(2) of Procedure XV, supra note 12.
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    NSCC's proposal would change both the calculation methodology and
governance of the ECP charge in its Rules. With respect to the
calculation of the charge, NSCC proposes to: (1) use the volatility
charge of a member's margin requirement to compare a member's
applicable capital amounts, as opposed to the current methodology which
uses a specific ``calculated amount'' identified in the Rules; (2) when
calculating the ECP charge, for members that are broker-dealers, use
net capital amounts rather than excess net capital, and for all other
members, use equity capital in the calculation of the ECP charge; and
(3) establish a cap of 2.0 for the Excess Capital Ratio that is used in
calculating a member's ECP charge. With respect to governance, NSCC
proposes to: (1) identify the particular circumstances in which NSCC
has the ability to waive the charge, including the information that
NSCC would review in deciding whether to waive the ECP charge as well
as the governance around the application of such waiver; and (2)
provide that NSCC may calculate the charge based on updated capital
information.
    NSCC has estimated the potential impacts of the proposal during the
period of June 1, 2020 through December 31, 2021. The study showed that
the proposal would have had no impact to NSCC's overall or member-level
margin coverage, that is, that

NSCC would continue to collect margin that would cover its credit
exposures to its members under the proposal. Further, the study showed
that the proposal would have reduced the number of ECP charges that
would have been triggered by the calculation by 65 percent, from 347
ECP charges triggered for 19 members to 122 ECP charges triggered for
14 members. The total aggregate amount that would have been triggered
by the proposed calculation if the proposal was effective during that
time would have been reduced from $51.31 billion (the actual total
amount of ECP charges triggered by the current calculation during that
period) to approximately $17.44 billion (the total amount of ECP
charges that would have been triggered during that time by the proposed
calculation), with the average amount per member reducing from $147.9
million to approximately $143.0 million.\19\
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    \19\ See Amended Notice, supra note 11, 87 FR 75111. NSCC also
submitted more detailed results of the impact study as confidential
Exhibit 3 to the proposed rule change. NSCC requested confidential
treatment of Exhibit 3 pursuant to 17 CFR 240.24b-2.
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A. Current Calculation and Governance of the ECP Charge

    NSCC's current methodology for determining applicability of the ECP
charge is as follows. First, NSCC determines the member's ``Calculated
Amount,'' pursuant to the Rules. The Calculated Amount is designed to
represent the member's margin requirements to NSCC resulting from its
unsettled positions, and it is made up of a number of the components of
a member's margin.\20\ NSCC then divides the member's Calculated Amount
by its current capital amount, which is the amount reported to NSCC
pursuant to its ongoing membership standards.\21\
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    \20\ Specifically, the Rules define the Calculated Amount as a
member's Required Fund Deposit excluding any applicable special
charge, margin requirement differential charge, coverage component
charge or margin liquidity adjustment charge, plus any additional
amounts the member is required to deposit to the Clearing Fund
either due to being placed on the Watch List or as an assurance of
financial responsibility or operational capability. These various
margin components and other concepts are described in the NSCC
Rules. See Procedure XV, Sections I(A)(1)(c) and (2)(c) (special
charge), I(A)(1)(e) and (2)(d) (margin requirement differential),
I(A)(1)(f) and (2)(e) (coverage component), and I(A)(1)(g) and
(2)(f) (margin liquidity adjustment charge), supra note 12; see also
Rule 15, Section 2b(iv), supra note 12 (setting forth NSCC's
authority to require adequate assurances of a member's financial
responsibility).
    \21\ Members that are broker-dealers are required to maintain a
certain level of excess net capital, and bank members are required
to maintain a certain level of equity capital as a requirement for
continued membership with NSCC. See Addendum B, supra note 12.
Members are required to provide NSCC with financial information,
including information regarding members' current capital amounts, on
a regular basis, and NSCC uses these reported capital amounts in the
calculation of the ECP charge. See Rule 2B, Section 2, supra note
12.
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    Next, if the member's Calculated Amount divided by the applicable
capital amount (referred to as the member's Excess Capital Ratio) is
greater than 1.0, NSCC may require that member to make an ECP
charge.\22\ The applicable ECP charge is the product of (1) the amount
by which a member's Calculated Amount exceeds its applicable capital
amount, multiplied by (2) the member's Excess Capital Ratio. However,
NSCC has the authority to collect a lower ECP charge than the amount
calculated pursuant to the Rules or to determine not to collect the ECP
charge from a member at all, and it may return all or a portion of a
collected ECP charge if it believes the imposition or maintenance of
the ECP charge is not necessary or appropriate.\23\
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    \22\ Section I(B)(2) of Procedure XV, supra note 12.
    \23\ Id.
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    The Rules describe some circumstances when NSCC may determine not
to collect an ECP charge from a member, which includes, for example,
when an ECP charge results from trading activity for which the member
submits later offsetting activity that lowers its Required Fund
Deposit.\24\ The discretion to adjust, waive or return an ECP charge
was designed to allow NSCC to determine when a calculated ECP charge
may not be necessary or appropriate to mitigate the risks it was
designed to address.\25\
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    \24\ See footnote 7 of Procedure XV, supra note 12.
    \25\ See note 17 supra.
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B. Amendments to the Calculation of the ECP Charge

    Use Members' Volatility Component Instead of the Calculated Amount.
NSCC proposes to replace the Calculated Amount with the amount
collected as that member's volatility component of its margin for
purposes of determining the applicability of the ECP charge. The
volatility component measures the market price volatility of a member's
portfolio,\26\ and it usually comprises the largest portion of a
member's margin.
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    \26\ See Sections I(A)(1)(a)(i)-(iii) and (2)(a)(i)-(iii) of
Procedure XV of the Rules, supra note 12. NSCC has two methodologies
for calculating the volatility component--a model-based volatility-
at-risk, or VaR, charge, and a haircut-based calculation, for
certain positions that are excluded from the VaR charge calculation.
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    Currently, determining a member's Calculated Amount requires a more
complicated calculation, as it uses a member's margin, but excludes
certain components and includes other deposits. The proposal would
simplify this calculation by using only the volatility component. NSCC
states that one of the tools it provides to its members is a calculator
that allows them to determine their potential volatility charge based
on trading activity, and that, therefore, this proposed change would
make the calculation of the ECP charge both clearer and more
predictable for members.\27\
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    \27\ Amended Notice, supra note 11, 87 FR at 75108.
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    Use Net Capital for Broker-Dealer Members and Equity Capital for
All Other Members in the Calculation of the ECP Charge.\28\ NSCC is
proposing to use net capital, rather than excess net capital, for
broker-dealer members when calculating the ECP charge. NSCC states that
this revision would align the capital measures used for broker-dealer
members and other members, which would result in more consistent
calculations of the ECP charge across different types of members.\29\
NSCC also states that using net capital rather than excess net capital
would provide NSCC with a better measure of the increased default risks
presented when a broker-dealer member operates at low net capital
levels relative to its margin requirements.\30\
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    \28\ To effectuate these changes, NSCC proposes to adopt revised
and new defined terms. Specifically, NSCC would include a new
defined term for ``Equity Capital'' and revise a defined term for
``Net Capital.'' The proposal would also revise the Rules describing
the calculation of the ECP charge and identifying membership
qualifications, to use the new and/or revised defined terms, as
appropriate. In addition, NSCC would identify the reporting
requirements that NSCC relies on to obtain the capital information
for members.
    \29\ Amended Notice, supra note 11, 87 FR at 75108.
    \30\ See id. NSCC states that this approach would be consistent
with the rationale for the Commission's amendments to Rule 15c3-1
under the Act, which were designed to promote a broker-dealer's
capital quality and require the maintenance of ``net capital''
(i.e., capital in excess of liabilities) in specified amounts as
determined by the type of business conducted. Id. (citing 17 CFR
240.15c3-1; Securities Exchange Act Release No. 70072 (July 30,
2013), 78 FR 51823 (Aug. 21, 2013) (File No. S7-08-07)). NSCC
believes that Rule 15c3-1 provides an effective process of
separating liquid and illiquid assets and computing a broker-
dealer's regulatory net capital that should replace NSCC's existing
practice of using excess net capital in the calculation of the ECP
charge. Id.
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    In addition, NSCC is proposing to provide that, for all members
that are not broker-dealers, it would use equity capital in calculating
the ECP charge, rather than the capital amount set forth in NSCC's
membership standards.\31\

Currently, for all members that are not banks, non-bank trusts or
broker-dealers (which generally include, for example, exchanges and
registered clearing agencies), NSCC uses those members' reported equity
capital in the calculation of the ECP charge. Therefore, in practice,
the ECP charge is calculated for the majority of members that are not
broker-dealers using their equity capital, and this proposed change is
not expected to have a material impact on the collection of ECP
charges.\32\ NSCC states that the proposal would simplify the
calculation of the ECP charge for members that are not broker-dealers
by providing that NSCC would use equity capital rather than use
different measures that are based on other membership requirements, and
that it would also create consistency across members.\33\
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    \31\ NSCC's Rules identify the applicable capital measures as
follows: for bank members, equity capital; for members that are
trust companies and not banks, consolidated capital; and for other
legal entities that are members, an amount determined by NSCC. See
Section 1.B of Addendum B, supra note 12.
    \32\ Amended Notice, supra note 11, 87 FR at 75108.
    \33\ Id. at 75109.
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    Establish a Cap for the Excess Capital Ratio. NSCC is proposing to
set a maximum amount of the Excess Capital Ratio that is used in
calculating members' ECP charge of 2.0. Specifically, the Excess
Capital Ratio is the multiplier that is applied to the difference
between a member's volatility charge and its applicable capital
measure. Currently, the Rules do not include any cap on the Excess
Capital Ratio.
    NSCC states that capping the multiplier would allow it to address
the risks it faces without imposing an overly burdensome ECP
charge.\34\ NSCC further states that, historically, the Excess Capital
Ratio has rarely exceeded 2.0 in the calculation of members' ECP
charges, and in cases when 2.0 was exceeded NSCC typically exercised
the discretion provided to it in the Rules to reduce the applicable
charge, which was appropriate because NSCC believes it is able to
mitigate the risks presented to it by a member's lower capital levels
by collecting an ECP charge calculated with an Excess Capital Ratio
that is at or below 2.0.\35\ NSCC also states that this proposed change
would provide members with more clarity and transparency, by allowing
them to predict and estimate the maximum amount of their potential ECP
charge.\36\
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    \34\ Id.
    \35\ Id.
    \36\ Id.
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C. Changes Regarding Governance of the ECP Charge

    NSCC's Ability to Waive the ECP Charge. NSCC would also revise its
Rules to specify particular circumstances in which NSCC retains the
ability to waive the ECP charge. NSCC states that the proposed changes
to the calculation of the ECP charge would, taken together, eliminate
most circumstances in which NSCC would have exercised this discretion.
For example, the proposal to cap the Excess Capital Ratio at 2.0 and
the proposal to specify that NSCC may calculate an ECP charge based on
updated capital amounts (as described below), both address the most
common circumstances when NSCC has either waived or reduced the ECP
charge in the past.\37\
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    \37\ Id. at 75109-10.
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    However, NSCC believes that there may still be circumstances when
it may not be necessary or appropriate to collect an ECP charge from a
member, for example, in certain exigent circumstances when NSCC
observes unexpected changes in market volatility or trading
volumes.\38\ Therefore, NSCC is proposing to retain discretion to waive
an ECP charge in certain defined circumstances and to specify the
approval required to apply such discretion.
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    \38\ Id.
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    As proposed, NSCC's Rules would describe the exigent circumstances
in which NSCC would retain the ability to waive an ECP charge as those
when NSCC, in its sole discretion, observes extreme market conditions
or other unexpected changes in factors such as market volatility,
trading volumes or other similar factors. As noted above, NSCC states
that, based on a review of past data, the proposed changes to the
calculation of the ECP charge would otherwise eliminate most prior
instances when an ECP charge was waived.\39\
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    \39\ Specifically, over the impact study period, NSCC waived and
adjusted calculated ECP charges by $38.80 billion. NSCC waived a
total of 33 ECP charges that totaled approximately $26.12 billion.
Under the proposal, however, 14 of these charges would have been
collected from members (although the amount would have been
reduced), totaling $6.46 billion, 14 charges would not have been
triggered as the calculated ECP ratio was below 1.0, and NSCC would
have waived 5 of the ECP charges, mainly following receipt of
updated financial information. NSCC adjusted the amount of 16 ECP
charges by a total of approximately $12.69 billion. Under the
proposal, 7 of these charges would have been still collected,
totaling $6.48 billion, and 9 charges would not have been triggered
as the calculated ECP ratio was below 1.0. See id. at 75111. See
also supra note 17.
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    NSCC also states that there have been instances, particularly in
recent years, when NSCC has waived the ECP charge in circumstances that
would fall within the proposed identification of exigent circumstances,
and that the ECP charge would have been triggered in such
circumstances, even as amended by this proposed rule change. Such
instances occurred multiple times in recent years, including, for
example, during the extreme market volatility experienced in early 2020
related to the global outbreak of the COVID-19 coronavirus and the meme
stock market event in early 2021.\40\ Further, NSCC believes there
remains some ongoing possibility that an unexpected increase in market
volatility, for example, could cause a relative increase in a member's
volatility charge, which may, in turn, trigger an ECP charge, even
under the proposal.\41\
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    \40\ Amended Notice, supra note 11, 87 FR at 75109-10.
    \41\ Id. at 75110.
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    In such circumstances, under the proposal, NSCC would determine if
the ECP charge being triggered at that time is not primarily caused by
the risk presented by a member's capital levels and whether NSCC can
effectively address the risk exposure presented by that member without
the collection of the ECP charge. Alternatively, NSCC may determine,
based on its review of the information available to it, that the ECP
charge was appropriately triggered by a member's capital position or
trading activity and was not driven primarily by the prevailing market
conditions or other exigent circumstances. Therefore, NSCC believes it
is appropriate to retain a certain amount of discretion to review an
ECP charge that is triggered in such circumstances to determine whether
a waiver of the ECP charge may be appropriate.\42\
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    \42\ Id.
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    In addition to defining the circumstances in which NSCC may waive
the ECP charge, the proposed changes would also describe the review
NSCC would conduct in deciding to waive the charge in the exigent
circumstances, the information NSCC would consider in such review, and
the approval required to waive the ECP charge. More specifically, the
proposed rule change provides that NSCC would review all relevant facts
and other information available to it at the time of its decision,
including the degree to which a member's capital position and trading
activity compare or correlate to the prevailing exigent circumstances
and whether NSCC can effectively address the risk exposure presented by
a member without the collection of the ECP charge from that member. For
example, as noted above, if NSCC believes, based on its review of the
relevant circumstances, that the risk exposure presented by a member is
driven by the unexpected increase in

market volatility and not by a member's capital levels, NSCC may
determine that it is appropriate to address such risk through the
collection of a special charge from that member rather than an ECP
charge.\43\
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    \43\ See Section I(A)(1)(c) and (2)(c) of Procedure XV, supra
note 12 (allowing NSCC to collect, as part of margin ``[a]n
additional payment (``special charge'') . . . in view of price
fluctuations in or volatility or lack of liquidity of any
security'').
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    Finally, the proposed rule change would specify the governance
around a decision to waive an ECP charge, by identifying the level of
NSCC officer who would be authorized to apply a waiver and by requiring
that the decision be documented in a written report that is made
available upon request to the affected member.\44\
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    \44\ NSCC also states that it would update its internal
procedures to include waivers of the ECP charge in its regular
updates to the Commission. Amended Notice, supra note 11, 87 FR at
75110 n.37.
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    NSCC's Ability to Consider Updated Capital Information. Under the
proposal, NSCC would provide that it may calculate the ECP charge based
on updated capital information. As described above, NSCC would use the
net capital or equity capital amounts that are reported on members'
most recent financial reporting or financial statements delivered to
NSCC in connection with the ongoing membership reporting requirements.
Under the proposal, if a member's capital amounts change between the
dates when it submits these financial reports, it may provide NSCC with
updated capital information for purposes of calculating the ECP charge.
    NSCC is proposing to retain some discretion in when it would accept
updated capital information for this purpose. For example, NSCC may
require a member to provide documentation of the circumstances that
caused a change in capital information, and if adequate evidence is not
available or NSCC does not believe the evidence sufficiently verifies
that the member's capital position has changed, NSCC would continue to
calculate the ECP charge for that member based on the prior capital
information available to NSCC until the next financial reporting or
financial statements are delivered. NSCC believes it is appropriate to
retain some discretion to allow NSCC to determine if updated capital
information is adequately verified before it agrees to rely on that
information for this calculation.\45\
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    \45\ Id. at 75110.
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III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \46\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that such proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to such organization. After carefully considering the
proposed rule change, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to NSCC. In particular, the
Commission finds that the proposed rule change is consistent with
Section 17A(b)(3)(F) \47\ of the Act and Rules 17Ad-22(e)(6)(i) and
(e)(23)(ii) thereunder.\48\
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    \46\ 15 U.S.C. 78s(b)(2)(C).
    \47\ 15 U.S.C. 78q-1(b)(3)(F).
    \48\ 17 CFR 240.17Ad-22(e)(6)(i) and (e)(23)(ii).
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A. Consistency With Section 17(A)(b)(3)(F) of the Act

    Section 17A(b)(3)(F) of the Act requires, among other things, that
the rules of a clearing agency be designed to, among other things,
promote the prompt and accurate clearance and settlement of securities
transactions, assure the safeguarding of securities and funds which are
in the custody or control of the clearing agency or for which it is
responsible, and protect investors and promote the public interest.\49\
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    \49\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission believes that the proposed changes to the
calculation of the ECP charge described in section II.B above should
allow NSCC to ensure that it continues to collect margin sufficient to
address the heightened default risk presented by a member operating
with lower capital levels relative to its margin requirements. Based on
its review of the proposed rule change, including the detailed impact
analysis submitted as a confidential exhibit,\50\ the Commission
understands that NSCC's margin coverage would not be impacted by this
change and that NSCC would continue to collect sufficient margin to
manage its potential exposure to its members.
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    \50\ See note 19 supra. The confidential analysis identified, on
a member-by-member basis, the number of backtesting deficiencies
during the impact study period.
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    In addition, the Commission believes that the proposed changes to
the calculation of the ECP charge described in section II.B should
result in a simplified and more straight-forward method for calculating
the ECP charge, based on understandable metrics with which NSCC's
members are familiar. For example, using a member's volatility charge,
which is an established aspect of the overall margin requirements
identified in NSCC's Rules, as opposed to the Calculated Amount that
involves both including and excluding various margin components, is
clearer and more predictable while still consistent with the purpose of
the ECP charge. Similarly, using net capital and equity capital for
broker-dealer members and all other members, respectively, in the
calculation of the ECP charge would result in a more consistent
calculation across different types of members.\51\ Moreover, capping
the Excess Capital Ratio at 2.0 would be an appropriate balance between
addressing the heightened default risk without imposing overly
burdensome ECP charges.
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    \51\ One commenter asserted that NSCC should also consider the
member's ability to pay for customer trades by settlement. Letter
from John S. Markle, VP and Deputy General Counsel, Robinhood Inc.,
at 3-4 (Aug. 3, 2022), available at https://www.sec.gov/comments/sr-nscc-2022-005/srnscc2022005-20135431-306323.pdf (``Robinhood
Letter''). However, NSCC does not have access to that information as
part of its normal course. The Commission therefore does not believe
that it would be appropriate for NSCC to include that as part of the
ECP charge calculation. However, this would not prohibit NSCC from
considering that fact as part of its consideration of whether to
waive an ECP charge. Similarly, the commenter asserted that NSCC
should include a member's committed lines of credit in its
determination of the member's capital. Id. at 4. However, the
Commission believes that NSCC's stated desire to align the capital
used for purposes of determining the ECP charge with the existing
capital standards required for members is reasonable because it
allows for consistency between different aspects of the Rules. In
addition, the Commission believes that NSCC could, as part of its
consideration whether to waive an ECP charge, consider such
additional sources of funding if appropriate.
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    Together, by improving the consistency and predictability of the
ECP charge, the proposed enhancements would also improve NSCC's ability
to collect margin amounts that reflect the risks posed by its members
such that, in the event of member default, NSCC's operations would not
be disrupted, and non-defaulting members would not be exposed to losses
they cannot anticipate or control. In this way, the proposed rule
change is designed to promote the prompt and accurate clearance and
settlement of securities transactions and to assure the safeguarding of
securities and funds which are in the custody or control of NSCC or for
which it is responsible, consistent with Section 17A(b)(3)(F) of the
Act.\52\
---------------------------------------------------------------------------

    \52\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The Commission believes that the proposed changes set forth in both

sections II.B and II.C should improve transparency and understanding of
the NSCC's governance and application of the ECP charge. For example,
NSCC's proposal would describe the exigent circumstances in which NSCC
may waive the ECP charge, describe what information NSCC would consider
when determining whether to waive the charge, and specify the approval
necessary to waive the charge.\53\ Moreover, using commonly understood
inputs as the determinants of the ECP charge (i.e., using the
volatility charge instead of the Calculated Amount and using net
capital and equity capital instead of the current standards) and
capping the Excess Capital Ratio at 2.0 should help members better
anticipate and plan for a potential ECP charge. Through its client
portal, NSCC provides regularly updated information to members about
their volatility charges, such that a member should be able to better
calculate and understand its potential ECP charge by using that
information in conjunction with their capital, while also considering
how the proposed cap on the Excess Capital Ratio would affect any
eventual charge.\54\
---------------------------------------------------------------------------

    \53\ The Commission received comments on this aspect of the
proposal as it was initially filed, before Amendment No. 3, which
are no longer relevant in light of the changes set forth in
Amendment No. 3. See Robinhood Letter at 1-3; Letter from William
Capuzzi, Chief Executive Officer, Apex Clearing Corporation, at 2
(Aug. 24, 2022), available at https://www.sec.gov/comments/sr-nscc-2022-005/srnscc2022005-20137445-307938.pdf (``Apex Letter'').
Specifically, the commenters asserted that NSCC did not explain what
would happen to members incurring an ECP charge if NSCC no longer
had the discretion to waive the charge, as NSCC had proposed in the
initial filing before Amendment No. 3. Because Amendment No. 3
reintroduced the ability to waive the ECP charge in specified
exigent circumstances, the Commission believes that these comments
are addressed by the amendment.
    \54\ Commenters also asserted that NSCC should provide a
curative period for members to address any potential application of
the ECP charge, for example, by increasing the available capital or
taking other measures. See Robinhood Letter at 4-5; Apex Letter at
2. However, the Commission disagrees that such a curative period
would be appropriate. The ECP charge is a part of a member's
financial obligation to NSCC, payment of which is governed by NSCC's
Rules, see Procedure XV, Section II(B), supra note 12, and is
directly related to the exposure that the member poses to NSCC.
Therefore, consistency in the timeframes for payment for the overall
margin amount makes sense and helps NSCC to manage its exposure to
its members. The Commission does not believe that the ECP charge
necessitates a specific additional cure period, given that NSCC
would still be obligated to guarantee the transactions of a
defaulting member during the purported curative period.
---------------------------------------------------------------------------

    Taken together, these proposed changes should help NSCC's members
better anticipate their required margin because of the use of
simplified inputs to the calculation of the ECP charge and the
imposition of a cap on the applicable Excess Capital Ratio. This
improved understanding of the potential margin requirements should, in
turn, facilitate prompt and accurate clearance and settlement by
removing potential ambiguity or confusion about a member's obligations
to NSCC. Similarly, the Commission believes that the improved
transparency provided by this proposed rule change both with respect to
a member's margin obligations and the process by which NSCC would
consider waiver of an ECP charge should provide members and the public
with more clarity about the nature and application of the ECP charge
and resolve potential ambiguity about when the ECP charge would or
would not apply, which is consistent with promoting the public
interest.
    For these reasons, the Commission therefore believes that the
proposed changes are consistent with Section 17A(b)(3)(F) of the
Act.\55\
---------------------------------------------------------------------------

    \55\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

B. Consistency With Rule 17Ad-22(e)(6)(i)

    Rule 17Ad-22(e)(6)(i) under the Act requires that NSCC establish,
implement, maintain and enforce written policies and procedures
reasonably designed to cover its credit exposures to its participants
by establishing a risk-based margin system that, at a minimum,
considers, and produces margin levels commensurate with, the risks and
particular attributes of each relevant product, portfolio, and
market.\56\
---------------------------------------------------------------------------

    \56\ 17 CFR 240.17Ad-22(e)(6)(i).
---------------------------------------------------------------------------

    The Required Fund Deposits are made up of risk-based components (as
margin) that are calculated and assessed daily to limit NSCC's
exposures to members. NSCC's proposed changes to use the volatility
charge rather than the Calculated Amount, and to use net capital and
equity capital, as appropriate, in the calculation of the ECP charge
would collectively make the calculation clearer and more predictable to
members, while continuing to apply an appropriate risk-based charge
designed to mitigate the risks presented to NSCC. Similarly, the
proposal to cap the Excess Capital Ratio at 2.0 would allow NSCC to
appropriately address the risks it faces without imposing an overly
burdensome ECP charge and would reduce the circumstances in which NSCC
may waive the charge, resulting in a more transparent margining
methodology.\57\ Finally, the proposed rule change would clarify the
exigent circumstances when NSCC may determine that it is appropriate to
waive the ECP charge. Overall, these proposed changes would improve the
effectiveness of the calculation of the ECP charge and, therefore,
allow NSCC to more effectively address the increased default risks
presented by members that operate with lower capital levels relative to
their margin requirements.
---------------------------------------------------------------------------

    \57\ One commenter asserted that NSCC should provide further
support for capping the Excess Capital Ratio at 2.0, as opposed to a
different figure such as 1.5. Robinhood Letter at 5. The commenter
referenced statements that NSCC made in the proposed rule change, to
argue that the ratio was not supported and that further analysis
would be appropriate. Id. However, the Commission also reviewed the
underlying impact analysis, submitted confidentially as part of the
proposed rule change, see note 19 supra, which allows for a more
detailed understanding of what the Excess Capital Ratio would have
been under the proposal in each instance in which the ECP charge
applied over the impact study period and, therefore, an
understanding of how often the ratio would be, for example, between
1.5 and 2.0. Based on the confidential data submitted, there is very
limited incidence of members having an Excess Capital Ratio between
1.5 and 2.0; using a ratio of 1.5 as suggested by the commenter,
therefore, generally would not have a significant effect on the
costs presented to members. The Commission therefore believes that
the determination to use 2.0 is reasonable and represents an
appropriate balance of addressing the risk presented and not being
overly burdensome.
---------------------------------------------------------------------------

    Taken together, the proposed changes enhance the ability of the ECP
charge to produce margin levels commensurate with the risks NSCC faces
related to its members' operating capital levels. Therefore, the
Commission believes that the proposed rule change is consistent with
Rule 17Ad-22(e)(6)(i) under the Act.\58\
---------------------------------------------------------------------------

    \58\ Id.
---------------------------------------------------------------------------

C. Consistency With Rule 17Ad-22(e)(23)(ii)

    Rule 17Ad-22(e)(23)(ii) under the Act requires that NSCC establish,
implement, maintain and enforce written policies and procedures
reasonably designed to provide for providing sufficient information to
enable participants to identify and evaluate the risks, fees, and other
material costs they incur by participating in NSCC.\59\
---------------------------------------------------------------------------

    \59\ 17 CFR 240.17Ad-22(e)(23)(ii).
---------------------------------------------------------------------------

    As discussed above in section III.A, the Commission believes that
the proposed changes set forth in both sections II.B and II.C should
improve NSCC's members' ability to understand and estimate the
potential magnitude of any ECP charge and to better anticipate when
such a charge would apply and in what exigent circumstances NSCC would
be able to waive the charge. The proposal would do this in several
ways, including by simplifying and clarifying the inputs to the
calculation of the ECP

charge, capping the Excess Capital Ratio at 2.0, and by providing
additional information regarding NSCC's ability to waive the charge.
    Therefore, the Commission believes that these changes are
consistent with Rule 17Ad-22(e)(23)(ii) under the Act.\60\
---------------------------------------------------------------------------

    \60\ Id.
---------------------------------------------------------------------------

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposed rule change, as modified by Amendment Nos. 1, 2, and 3, is
consistent with the requirements of the Act, and in particular, the
requirements of Section 17A of the Act \61\ and the rules and
regulations thereunder.
---------------------------------------------------------------------------

    \61\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) \62\ of the
Act, that the proposed rule change (SR-NSCC-2022-005), as modified by
Amendment Nos. 1, 2, and 3, be, and hereby is, approved.
---------------------------------------------------------------------------

    \62\ 15 U.S.C. 78s(b)(2)(C).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\63\
---------------------------------------------------------------------------

    \63\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-02509 Filed 2-6-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 208 (Thursday, October 27, 2011)]
[Rules and Regulations]
[Pages 66617-66618]
[FR Doc No: 2011-27775]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2010-0909; Directorate Identifier 2010-SW-026-AD;
Amendment 39-16835; AD 2011-21-12]
RIN 2120-AA64

Airworthiness Directives; Erickson Air-Crane Incorporated Model
S-64F Helicopters

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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

SUMMARY: We are adopting a new airworthiness directive (AD) for the
Erickson Air-Crane (Erickson Air-Crane) Model S-64F helicopters. The
amendment requires, at specified intervals, certain inspections of the
rotating swashplate assembly (swashplate) for a crack. If a crack is
found, this AD also requires, before further flight, replacing the
swashplate with an airworthy swashplate. This AD is prompted by a
report from the manufacturer of a swashplate cracking during fatigue
testing. We are issuing this AD to prevent loss of a swashplate due to
a fatigue crack, loss of control of the main rotor system, and
subsequent loss of control of the helicopter.

DATES: Effective December 1, 2011.
    The Director of the Federal Register approved the incorporation by
reference of certain publications listed in the AD as of December 1,
2011.

ADDRESSES: For service information identified in this AD, contact
Erickson Air-Crane Incorporated, 3100 Willow Springs Road, P.O. Box
3247, Central Point, OR 97502, telephone<PHONE_NUMBER>, fax (541) 664-
2312.
    Examining the AD Docket: You may examine the AD docket, any
comments, and other information in person at the Docket Operations
office between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays. The Docket Operations office (telephone<PHONE_NUMBER>) is
located in Room W12-140 on the ground floor of the West Building at
1200 New Jersey Avenue, SE., Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Michael Kohner, ASW-170, Aviation
Safety Engineer, Rotorcraft Directorate, Rotorcraft Certification
Office, Fort Worth, Texas 76137, telephone<PHONE_NUMBER>, fax (817)
222-5783.

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 Erickson Air-Crane Model
S-64F helicopters on September 3, 2010. That NPRM was published in the
Federal Register on September 16, 2010 (75 FR 56487). That NPRM
proposed to require, at specified intervals, certain visual inspections
of the swashplate for a crack. Also, the AD proposed, at specified
intervals a fluorescent-penetrant inspection (FPI) of the swashplate
for a crack. If a crack is found, that NPRM proposed, before further
flight, replacing the swashplate with an airworthy swashplate.

Comments

    We gave the public an opportunity to participate in developing this
AD. We received no comment on the NPRM or on our determination of the
cost to the public. Therefore, based on our review and evaluation of
the available data, we have determined that air safety and the public
interest require adopting the AD as proposed.

Costs of Compliance

    We estimate that this AD will affect 7 helicopters of U.S. registry
and will take about:
     .5 hour for the visual inspection;
     1 hour for the 10-power or higher magnifying glass
inspection;
     35 hours for the 1,000-hour FPI; and
     32 hours to replace a swashplate at an average labor rate
of $85 per work hour.
    Required parts will cost about $25,000 per helicopter. Based on
these figures, we estimate the cost of this AD on U.S. operators is
$229,145, assuming 40 15-hour visual inspections; 4 150-hour 10-power
magnifying glass inspections; 1 1000-hour FPI and 1 swashplate
replacement for each helicopter for the entire fleet of S-64F
helicopters for each year.

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 have 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 the regulation:
    1. Is not a ``significant regulatory action'' under Executive Order
12866;
    2. Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979); and
    3. Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

    Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration amends part 39 of
the Federal Aviation Regulations (14 CFR part 39) as follows:

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new airworthiness
directive (AD):

2011-21-12 Erickson Air-Crane Incorporated: Amendment 39-16835;
Docket No. FAA-2010-0909; Directorate Identifier 2010-SW-026-AD.

    Applicability: Model S-64F helicopters, with rotating swashplate
assembly (swashplate), part number (P/N) 65104-11001-051, installed,
certificated in any category.
    Compliance: Required as indicated.
    To prevent loss of a swashplate due to a fatigue crack, loss of
control of the main rotor system, and subsequent loss of control of
the helicopter, do the following:
    (a) Within 15 hours time-in-service (TIS), unless accomplished
previously, and thereafter at intervals not to exceed 15 hours TIS,
clean and visually inspect the swashplate for a crack in areas A
through F as depicted in Figure 1 of Erickson Air-Crane Service
Bulletin 64B10-10, Revision 2, dated April 1, 2008 (SB).
    (b) Within 150 hours TIS, unless accomplished previously, and
thereafter at intervals not to exceed 150 hours TIS, clean the
swashplate and, using a 10-power or higher magnifying glass,
visually inspect for a crack in areas A through F as depicted in
Figure 1 of the SB.
    (c) Within 1,000 hours TIS since the last fluorescent-penetrant
inspection (FPI) and thereafter at intervals not to exceed 1,000
hours TIS, remove the swashplate from the rotor head, disassemble
and remove the paint from the swashplate, and FPI the swashplate for
a crack in accordance with ATSM E1417, Type I, Methods A or C.
    (d) If a crack is found in the swashplate, before further
flight, replace the swashplate with an airworthy swashplate.
    (e) To request a different method of compliance or a different
compliance time for this AD, follow the procedures in 14 CFR 39.19.
Contact the Manager, Rotorcraft Certification Office, Rotorcraft
Directorate, ATTN: DOT/FAA Southwest Region, Michael Kohner, ASW-
170, Aviation Safety Engineer, Fort Worth, Texas 76137, telephone
(817) 222-5170, fax<PHONE_NUMBER>, for information about previously
approved alternative methods of compliance.
    (f) The Joint Aircraft System/Component (JASC) Code is 6230:
Main Rotor Mast/Swashplate.
    (g) The inspections shall be done in accordance with the
specified portions of Erickson Air-Crane Service Bulletin 64B10-10,
Revision 2, dated April 1, 2008. The Director of the Federal
Register approved this incorporation by reference in accordance with
5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from
Erickson Air-Crane Incorporated, 3100 Willow Springs Road, P. O. Box
3247, Central Point, OR 97502, telephone<PHONE_NUMBER>, fax (541)
664-2312. Copies may be inspected at the FAA, Office of the Regional
Counsel, Southwest Region, 2601 Meacham Blvd., Room 663, Fort Worth,
Texas, or 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/code_of_federal_regulations/ibr_locations.html.
    (h) This amendment becomes effective on December 1, 2011.

    Issued in Fort Worth, Texas, on September 29, 2011.
Kim Smith,
Manager, Rotorcraft Directorate, Aircraft Certification Service.
[FR Doc. 2011-27775 Filed 10-26-11; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 80, Number 177 (Monday, September 14, 2015)]
[Notices]
[Pages 55109-55110]
[FR Doc No: 2015-23013]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RM98-1-000]

Records Governing Off-the-Record Communications; Public Notice

    This constitutes notice, in accordance with 18 CFR 385.2201(b), of
the receipt of prohibited and exempt off-the-record communications.
    Order No. 607 (64 FR 51222, September 22, 1999) requires Commission
decisional employees, who make or receive a prohibited or exempt off-
the-record communication relevant to the merits of a contested
proceeding, to deliver to the Secretary of the Commission, a copy of
the communication, if written, or a summary of the substance of any
oral communication.
    Prohibited communications are included in a public, non-decisional
file associated with, but not a part of, the decisional record of the
proceeding. Unless the Commission determines that the prohibited
communication and any responses thereto should become a part of the
decisional record, the prohibited off-the-record communication will not
be considered by the Commission in reaching its decision. Parties to a
proceeding may seek the opportunity to respond to any facts or
contentions made in a prohibited off-the-record communication, and may
request that the Commission place the prohibited communication and
responses thereto in the decisional record. The Commission will grant
such a request only when it determines that fairness so requires. Any
person identified below as having made a prohibited off-the-record
communication shall serve the document on all parties listed on the
official service list for the applicable

proceeding in accordance with Rule 2010, 18 CFR 385.2010.
    Exempt off-the-record communications are included in the decisional
record of the proceeding, unless the communication was with a
cooperating agency as described by 40 CFR 1501.6, made under 18 CFR
385.2201(e)(1)(v).
    The following is a list of off-the-record communications recently
received by the Secretary of the Commission. The communications listed
are grouped by docket numbers in ascending order. These filings are
available for electronic review at the Commission in the Public
Reference Room 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 field to access
the document. For assistance, please contact FERC Online Support at
<EMAIL_ADDRESS>or toll free at<PHONE_NUMBER>, or for TTY,
contact<PHONE_NUMBER>.

------------------------------------------------------------------------
           Docket No.              File date:     Presenter or requester
------------------------------------------------------------------------
Prohibited:
    1. P-803-087...............         8-27-15  California Water Board.
Exempt:
    1. P-1494-000..............         8-17-15  Mayor Dewey F.
                                                  Bartlett, Jr. City of
                                                  Tulsa, OK.
    2. CP14-96-000.............         8-17-15  Members of New York
                                                  Assembly.\1\
    3. CP14-96-000.............         8-17-15  New York State Senator
                                                  George Latimer.
    4. CP14-96-000.............         8-17-15  New York Assemblyman
                                                  Steven Otis.
    5. CP14-96-000.............         8-20-15  Westchester County
                                                  Board of
                                                  Legislators.\2\
    6. CP14-96-000.............         8-21-15  Town of Cortlandt, NY.
    7. CP13-483-000............         8-24-15  FERC Staff.\3\
    CP13-492-000...............
    8. CP13-483-000............         8-24-15  FERC Staff.\4\
    CP13-492-000...............
    9. CP14-96-000.............         8-24-15  New York State Senator
                                                  Liz Krueger.
    10. CP14-96-000............         8-31-15  New York Assemblymember
                                                  Shelley Mayer.
    11. CP14-96-000............         8-31-15  New York State Senator
                                                  Andrea Stewart-
                                                  Cousins.
    12. CP14-503-000...........          9-1-15  FERC Staff.\5\
    13. CP14-529-000...........          9-1-15  FERC Staff.\6\
    14. CP14-529-000...........          9-1-15  FERC Staff.\7\
------------------------------------------------------------------------
\1\ Sandy Galef and David Buchwald.
\2\ Alan Cole, Michael Kaplowitz, Benjamin Boykin, Catherine Parker,
  Alfreda Williams, Catherine Borgia, Mary Jane Shimsky, Lyndon
  Williams, Ken Jenkins.
\3\ Notes from 8-20-15 telephone conference call with federal
  cooperating agencies regarding production of the final environmental
  impact statement.
\4\ Letter dated 8-18-15 from the US Environmental Protection Agency.
\5\ Record of 7-1-15 telephone call with Oklahoma Department of
  Environmental Quality.
\6\ Record of 7-30-15 telephone call with USFWS New England Field
  Office.
\7\ Record of 8-24-15 telephone call with USACE New England District.

    Dated: September 8, 2015.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2015-23013 Filed 9-11-15; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 76, Number 131 (Friday, July 8, 2011)]
[Proposed Rules]
[Pages 40303-40306]
[FR Doc No: 2011-17262]

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

 ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2011-0396; FRL-9432-2]

Revisions to the California State Implementation Plan, South
Coast Air Quality Management District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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

SUMMARY: EPA is proposing a limited approval and limited disapproval of
revisions to the South Coast Air Quality Management District (SCAQMD)
portion of the California State Implementation Plan (SIP). These
revisions concern oxides of nitrogen (NOX) emissions from
boiler, steam generators and process heaters larger than 2 MMBtu/hour
that are not subject to RECLAIM. We are proposing action on local rules
that regulate these emission sources under the Clean Air Act as amended
in 1990 (CAA or the Act). We are taking comments on this proposal and
plan to follow with a final action.

DATES: Any comments must arrive by August 8, 2011.

ADDRESSES: Submit comments, identified by docket number EPA-R09-OAR-
2011-0396, by one of the following methods:
    1. Federal eRulemaking Portal: http://www.regulations.gov. Follow
the on-line instructions.
    2. E-mail<EMAIL_ADDRESS>    3. Mail or deliver: Andrew Steckel (Air-4), U.S. Environmental
Protection Agency Region IX, 75 Hawthorne Street, San Francisco, CA
94105-3901.
    Instructions: All comments will be included in the public docket
without change and may be made available online at http://www.regulations.gov, including any personal information provided,
unless the comment includes Confidential Business Information (CBI) or
other information whose disclosure is restricted by statute.
Information that you consider CBI or otherwise protected should be
clearly identified as such and should not be submitted through http://www.regulations.gov or e-mail. http://www.regulations.gov is an
``anonymous access'' system, and EPA will not know your identity or
contact information unless you provide it in the body of your comment.
If you send e-mail directly to EPA, your e-mail address will be
automatically captured and included as part of the public comment. If
EPA cannot read your comment due to technical difficulties and cannot
contact you for clarification, EPA may not be able to consider your
comment.
    Docket: Generally, documents in the docket for this action are
available electronically at http://www.regulations.gov and in hard copy
at EPA Region IX, 75 Hawthorne Street, San Francisco, California. While
all documents in the docket are listed at http://www.regulations.gov,
some information may be publicly available only at the hard copy
location (e.g., copyrighted material, large maps), and some may not be
publicly available in either location (e.g., CBI). To inspect the hard
copy materials, please schedule an appointment during normal business
hours with the contact listed in the FOR FURTHER INFORMATION CONTACT
section.

FOR FURTHER INFORMATION CONTACT: Idalia Perez, EPA Region IX, (415)
972-3248<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document, ``we,'' ``us'' and
``our'' refer to EPA.

Table of Contents

I. The State's Submittal
    A. What rules did the State submit?
    B. Are there other versions of these rules?
    C. What is the purpose of the submitted rule revisions?
II. EPA's Evaluation and Action
    A. How is EPA evaluating the rules?
    B. Do the rules meet the evaluation criteria?
    C. What are the rule deficiencies?
    D. EPA Recommendations to further Improve the Rules
    E. Proposed Action and Public Comment
III. Statutory and Executive Order Reviews

I. The State's Submittal

A. What rules did the State submit?

    Table 1 lists the rules addressed by this proposal with the dates
that they were adopted by the local air agency and submitted by the
California Air Resources Board (CARB).

                                            Table 1--Submitted Rules
----------------------------------------------------------------------------------------------------------------
            Local agency                   Rule No.                Rule title             Adopted     Submitted
----------------------------------------------------------------------------------------------------------------
SCAQMD..............................  1146                Emissions of Oxides of           09/05/08     07/20/10
                                                           Nitrogen from Industrial,
                                                           Institutional, and
                                                           Commercial Boilers, Steam
                                                           Generators and Process
                                                           Heaters.
SCAQMD..............................  1146.1              Emissions of Oxides of           09/05/08     07/20/10
                                                           Nitrogen from Small
                                                           Industrial, Institutional,
                                                           and Commercial Boilers,
                                                           Steam Generators and
                                                           Process Heaters.
----------------------------------------------------------------------------------------------------------------

    On August 25, 2010, the submittal for SCAQMD Rules 1146 and 1146.1
was found to meet the completeness criteria in 40 CFR part 51 appendix
V, which must be met before formal EPA review.

B. Are there other versions of these rules?

    We approved an earlier version of Rule 1146 into the SIP on April
8, 2008 (67 FR 16640) and of Rule 1146.1 on September 6, 1995 (60 FR
46220).

C. What is the purpose of the submitted rule revisions?

    NOX helps produce ground-level ozone, smog and
particulate matter, which harm human health and the environment.
Section 110(a) of the CAA requires States to submit regulations that
control NOX emissions. Rule 1146 limits NOX and
carbon monoxide (CO) emissions from boilers, steam generators and
process heaters with a total rated heat input larger than 5 MMBtu/hour.
Rule 1146.1 limits NOX and CO emissions from boilers, steam
generators and process heaters with a total rated heat input larger
than 2 MMBtu/hour and less than 5 MMBtu/hour. EPA's technical support
documents (TSD) have more information about these rules.

II. EPA's Evaluation and Action

A. How is EPA evaluating the rules?

    Generally, SIP rules must be enforceable (see section 110(a) of the
Act), must require Reasonably Available Control Technology (RACT) for
each category of sources covered by a Control Techniques Guidelines
(CTG) document as well as each major source in certain ozone
nonattainment areas (see sections 182(b)(2) and 182(f)), must not
interfere with any applicable requirements concerning attainment and
reasonable further progress (RFP) or any other applicable requirement
of the Act (CAA 110(l)) or modify, in a nonattainment area, any SIP-
approved control requirement in effect before November 15, 1990 (CAA
193). Section 172(c)(1) of the Act also requires implementation of all
reasonably available control measures (RACM) as expeditiously as
practicable in nonattainment areas. Because the area regulated by
SCAQMD is designated nonattainment for the fine particulate matter
(PM2.5) National Ambient Air Quality Standards (NAAQS) and designated
and classified as extreme nonattainment for the ozone NAAQS (see 40 CFR
81.305), Rules 1146 and 1146.1 must ensure RACT. Additionally, the RACM
requirement in CAA section 172(c)(1) applies to this area.
    Guidance and policy documents that we use to evaluate
enforceability, RACT and RACM requirements consistently include the
following:
    1. ``State Implementation Plans; Nitrogen Oxides Supplement to the
General Preamble; Clean Air Act Amendments of 1990 Implementation of
Title I; Proposed Rule,'' (the NOX Supplement), 57 FR 55620,
November 25, 1992.
    2. ``Issues Relating to VOC Regulation Cutpoints, Deficiencies, and
Deviations,'' EPA, May 25, 1988 (the Bluebook).
    3. ``Guidance Document for Correcting Common VOC & Other Rule
Deficiencies,'' EPA Region 9, August 21, 2001 (the Little Bluebook).
    4. ``Clean Air Fine Particle Implementation Rule,'' 72 FR 20586,
April 25, 2007.
    5. ``Credible Evidence Revisions; Final Rule,'' 62 FR 8314,
February 24, 1997.
    6. ``Determination of Reasonably Available Control Technology and
Best Available Retrofit Control Technology for Industrial,
Institutional, and Commercial Boilers, Steam Generators, and Process
Heaters,'' CARB, July 18, 1991.
    7. ``Alternative Control Techniques Document--NOX
Emissions from Industrial/Commercial/Institutional (ICI) Boilers'',
U.S. EPA, March 1994.
    8. ``Alternative Control Techniques Document--NOX
Emissions from Utility Boilers'', U.S. EPA, March 1994.
    9. ``Review of State Implementation Plans and Revisions for
Enforceability and Legal Sufficiency'', Memorandum from J. Craig
Potter, Thomas L. Adams Jr., Francis S. Blake, U.S. EPA, September 23,
1987.
    10. ``State Implementation Plans (SIPs): Policy Regarding Excess
Emissions During Malfunctions, Startup and Shutdown'', Memorandum from
Steven A. Herman, Assistant Administrator for Enforcement and
Compliance Assurance, and Robert Perciasepe, Assistant Administrator
for Air and Radiation, September 20, 1999.

B. Do the rules meet the evaluation criteria?

    Rules 1146 and 1146.1 improve the SIP by establishing more
stringent emission limits. The rules are largely consistent with the
relevant policy and guidance regarding enforceability, RACT and SIP
relaxations. We believe that in implementing RACT for NOX,
the submitted rules also satisfy RACM requirements for NOX
as a PM2.5 precursor. Rule provisions which do not meet the
evaluation criteria are summarized below and discussed further in the
TSD.

C. What are the rule deficiencies?

    These provisions in Rule 1146 conflict with section 110 and part D
of the Act and prevent full approval of the SIP revision. Section
(d)(8) and Section (d)(10) preclude the use of both source test data
and portable analyzers test results from being used to prove a
violation of the emission standard. This

contradicts CAA requirements for enforceability and the national
credible evidence rule from 1997 (62 FR 8314).
    These provisions in Rule 1146.1 conflict with section 110 and part
D of the Act and prevent full approval of the SIP revision. Section
(d)(7) and Section (d)(9) preclude the use of both source test data and
portable analyzers test results from being used to prove a violation of
the emission standard. This contradicts CAA requirements for
enforceability and the national credible evidence rule from 1997 (62 FR
8314).

D. EPA Recommendations To Further Improve the Rules

    The TSDs describe additional rule revisions that we recommend for
the next time the local agency modifies the rules.

E. Proposed Action and Public Comment

    As authorized in sections 110(k)(3) and 301(a) of the Act, EPA is
proposing a limited approval of the submitted rules to improve the SIP.
If finalized, this action would incorporate the submitted rules into
the SIP, including those provisions identified as deficient. This
approval is limited because EPA is simultaneously proposing a limited
disapproval of the rules under sections 110(k)(3) and 301(a). The South
Coast AQMD has included these rules in the demonstration, required by
CAA section 172(c)(1), that its SIP provides for the implementation of
RACM as necessary to attain the 8-hour ozone and PM2.5 NAAQS
as expeditiously as practicable. While we are proposing to find that
the rules provide RACM level controls, we are also proposing to find
that certain provisions of the rules raise enforcement concerns.
Because of these concerns and the District's inclusion of these rules
in its CAA-required RACM demonstration, if this disapproval is
finalized, sanctions will be imposed under section 179 of the Act
unless EPA approves subsequent SIP revisions that correct the rule
deficiencies within 18 months of the disapproval. These sanctions would
be imposed according to 40 CFR 52.31. A final disapproval would also
trigger the 2-year clock for the Federal implementation plan (FIP)
requirement under section 110(c). Note that the submitted rules have
been adopted by the SCAQMD, and EPA's final limited disapproval would
not prevent the local agency from enforcing them. The limited
disapproval also would not prevent any portion of the rules from being
incorporated by reference into the Federally enforceable SIP as
discussed in a July 9, 1992 EPA memo found at: http://www.epa.gov/nsr/ttnnsr01/gen/pdf/memo-s.pdf.
    We will accept comments from the public on the proposed limited
approval and limited disapproval for the next 30 days.

III. Statutory and Executive Order Reviews

A. Executive Order 12866, Regulatory Planning and Review

    The Office of Management and Budget (OMB) has exempted this
regulatory action from Executive Order 12866, entitled ``Regulatory
Planning and Review.''

B. Paperwork Reduction Act

    This action does not impose an information collection burden under
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
Burden is defined at 5 CFR 1320.3(b).

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency
to conduct a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements unless the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities. Small entities include small
businesses, small not-for-profit enterprises, and small governmental
jurisdictions.
    This rule will not have a significant impact on a substantial
number of small entities because SIP approvals or disapprovals under
section 110 and subchapter I, part D of the Clean Air Act do not create
any new requirements but simply approve or disapprove requirements that
the State is already imposing. Therefore, because the proposed Federal
SIP limited approval/limited disapproval does not create any new
requirements, I certify that this action will not have a significant
economic impact on a substantial number of small entities.
    Moreover, due to the nature of the Federal-State relationship under
the Clean Air Act, preparation of flexibility analysis would constitute
Federal inquiry into the economic reasonableness of state action. The
Clean Air Act forbids EPA to base its actions concerning SIPs on such
grounds. Union Electric Co., v. U.S. EPA, 427 U.S. 246, 255-66 (1976);
42 U.S.C. 7410(a)(2).

D. Unfunded Mandates Reform Act

    Under sections 202 of the Unfunded Mandates Reform Act of 1995
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA
must prepare a budgetary impact statement to accompany any proposed or
final rule that includes a Federal mandate that may result in estimated
costs to State, local, or Tribal governments in the aggregate; or to
the private sector, of $100 million or more. Under section 205, EPA
must select the most cost-effective and least burdensome alternative
that achieves the objectives of the rule and is consistent with
statutory requirements. Section 203 requires EPA to establish a plan
for informing and advising any small governments that may be
significantly or uniquely impacted by the rule.
    EPA has determined that the limited approval/limited disapproval
action proposed does not include a Federal mandate that may result in
estimated costs of $100 million or more to either State, local, or
Tribal governments in the aggregate, or to the private sector. This
Federal action proposes to approve and disapprove pre-existing
requirements under State or local law, and imposes no new requirements.
Accordingly, no additional costs to State, local, or Tribal
governments, or to the private sector, result from this action.

E. Executive Order 13132, Federalism

    Federalism (64 FR 43255, August 10, 1999) revokes and replaces
Executive Orders 12612 (Federalism) and 12875 (Enhancing the
Intergovernmental Partnership). Executive Order 13132 requires EPA to
develop an accountable process to ensure ``meaningful and timely input
by State and local officials in the development of regulatory policies
that have federalism implications.'' ``Policies that have federalism
implications'' is defined in the Executive Order to include regulations
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.'' Under Executive Order 13132, EPA may not issue a
regulation that has federalism implications, that imposes substantial
direct compliance costs, and that is not required by statute, unless
the Federal government provides the funds necessary to pay the direct
compliance costs incurred by State and local governments, or EPA
consults with State and local officials early in the process of
developing the proposed regulation. EPA also may not issue a regulation
that has federalism implications and that preempts State law unless the
Agency consults with State and local officials early in the process of
developing the proposed regulation.

    This rule will not 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, as specified in Executive Order 13132, because it
merely proposes to approve or disapprove State rules implementing a
Federal standard, and does not alter the relationship or the
distribution of power and responsibilities established in the Clean Air
Act. Thus, the requirements of section 6 of the Executive Order do not
apply to this rule.

F. Executive Order 13175, Coordination With Indian Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by Tribal officials in the development of regulatory
policies that have Tribal implications.'' This proposed rule does not
have Tribal implications, as specified in Executive Order 13175. It
will not have substantial direct effects on Tribal governments, on the
relationship between the Federal government and Indian Tribes, or on
the distribution of power and responsibilities between the Federal
government and Indian Tribes. Thus, Executive Order 13175 does not
apply to this rule.
    EPA specifically solicits additional comment on this proposed rule
from Tribal officials.

G. Executive Order 13045, Protection of Children From Environmental
Health Risks and Safety Risks

    EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997)
as applying only to those regulatory actions that concern health or
safety risks, such that the analysis required under section 5-501 of
the Executive Order has the potential to influence the regulation. This
rule is not subject to Executive Order 13045, because it approves state
rules implementing a Federal standard.

H. Executive Order 13211, Actions That Significantly Affect Energy
Supply, Distribution, or Use

    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.

I. National Technology Transfer and Advancement Act

    Section 12 of the National Technology Transfer and Advancement Act
(NTTAA) of 1995 requires Federal agencies to evaluate existing
technical standards when developing a new regulation. To comply with
NTTAA, EPA must consider and use ``voluntary consensus standards''
(VCS) if available and applicable when developing programs and policies
unless doing so would be inconsistent with applicable law or otherwise
impractical.
    The EPA believes that VCS are inapplicable to this action. Today's
action does not require the public to perform activities conducive to
the use of VCS.

J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Population

    Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes
Federal executive policy on environmental justice. Its main provision
directs Federal agencies, to the greatest extent practicable and
permitted by law, to make environmental justice part of their mission
by identifying and addressing, as appropriate, disproportionately high
and adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the United States.
    EPA lacks the discretionary authority to address environmental
justice in this rulemaking.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Intergovernmental
relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and
recordkeeping requirements.

    Authority:  42 U.S.C. 7401 et seq.

    Dated: June 21, 2011.
Jared Blumenfeld,
Regional Administrator, Region IX.
[FR Doc. 2011-17262 Filed 7-7-11; 8:45 am]
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[Federal Register Volume 84, Number 136 (Tuesday, July 16, 2019)]
[Notices]
[Page 34040]
[FR Doc No: 2019-15029]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86348; File No. SR-CboeBZX-2019-044]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Designation of a Longer Period for Commission Action on a Proposed Rule
Change To Allow the JPMorgan Core Plus Bond ETF of the J.P. Morgan
Exchange-Traded Fund Trust To Hold Certain Instruments in a Manner That
May Not Comply With Rule 14.11(i), Managed Fund Shares

July 10, 2019.
    On May 15, 2019, Cboe BZX Exchange, Inc. (``BZX'') filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\
and Rule 19b-4 thereunder,\2\ a proposed rule change to allow the
JPMorgan Core Plus Bond ETF of the J.P. Morgan Exchange-Traded Fund
Trust to hold certain instruments in a manner that may not comply with
BZX Rule 14.11(i), Managed Fund Shares. The proposed rule change was
published for comment in the Federal Register on June 3, 2019.\3\ The
Commission has received no comment letters on the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 85948 (May 28,
2019), 84 FR 25579.
---------------------------------------------------------------------------

    Section 19(b)(2) of the Act \4\ provides that, within 45 days of
the publication of notice of the filing of a proposed rule change, or
within such longer period up to 90 days as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or as to which the self-regulatory organization
consents, the Commission shall either approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether the proposed rule change should be disapproved. The
45th day after publication of the notice for this proposed rule change
is July 18, 2019. The Commission is extending this 45-day time period.
---------------------------------------------------------------------------

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

    The Commission finds that it is appropriate to designate a longer
period within which to take action on the proposed rule change so that
it has sufficient time to consider the proposed rule change.
Accordingly, the Commission, pursuant to Section 19(b)(2) of the
Act,\5\ designates September 1, 2019, as the date by which the
Commission shall either approve or disapprove or institute proceedings
to determine whether to disapprove the proposed rule change (File
Number SR-CboeBZX-2019-044).
---------------------------------------------------------------------------

    \5\ Id.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
---------------------------------------------------------------------------

    \6\ 17 CFR 200.30-3(a)(31).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-15029 Filed 7-15-19; 8:45 am]
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[Federal Register Volume 78, Number 246 (Monday, December 23, 2013)]
[Proposed Rules]
[Pages 77382-77384]
[FR Doc No: 2013-30489]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2013-0884; Directorate Identifier 2013-NE-31-AD]
RIN 2120-AA64

Airworthiness Directives; Rolls-Royce Deutschland Ltd & Co KG
Turbofan Engines

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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

SUMMARY: We propose to adopt a new airworthiness directive (AD) for all
Rolls-Royce Deutschland Ltd & Co KG (RRD) BR700-715A1-30, BR700-715B1-
30, and BR700-715C1-30 turbofan engines. This proposed AD was prompted
by a report of a partial de-bonding of the low pressure compressor
(LPC) case ice impact panels during an engine shop visit. This proposed
AD would require replacement of the LPC case ice impact panels. We are
proposing this AD to prevent failure of the LPC case ice impact panels,
which could result in damage to the engine and loss of control of the
airplane.

DATES: We must receive comments on this proposed AD by February 21,
2014.

ADDRESSES: You may send comments by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and follow the instructions for sending your
comments electronically.
     Mail: Docket Management Facility, U.S. Department of
Transportation, 1200 New Jersey Avenue SE., West Building Ground Floor,
Room W12-140, Washington, DC 20590-0001.
     Hand Delivery: Deliver to Mail address above between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
     Fax:<PHONE_NUMBER>.
    For service information identified in this AD, contact, contact
Rolls-Royce Deutschland Ltd & Co KG, Eschenweg 11, Dahlewitz, 15827
Blankenfelde-Mahlow, Germany; phone: 49 0 33-7086-1883; fax: 49 0 33-
7086-3276. You may view this service information at the FAA, Engine &
Propeller Directorate, 12 New England Executive Park, Burlington, MA.
For information on the availability of this material at the FAA, call
781-238-7125.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://

www.regulations.gov by searching for and locating Docket No. FAA-2013-
0884; or in person at the Docket Operations office between 9 a.m. and 5
p.m., Monday through Friday, except Federal holidays. The AD docket
contains this proposed AD, the mandatory continuing airworthiness
information (MCAI), the regulatory evaluation, any comments received,
and other information. The street address for the Docket Operations
office (phone:<PHONE_NUMBER>) is the same as the Mail address provided
in the ADDRESSES section. Comments will be available in the AD docket
shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Frederick Zink, Aerospace Engineer,
Engine Certification Office, FAA, Engine & Propeller Directorate, 12
New England Executive Park, Burlington, MA 01803; phone:<PHONE_NUMBER>;
fax:<PHONE_NUMBER>; email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to send any written relevant data, views, or
arguments about this proposed AD. Send your comments to an address
listed under the ADDRESSES section. Include ``Docket No. FAA-2013-0884;
Directorate Identifier 2013-NE-31-AD'' at the beginning of your
comments. We specifically invite comments on the overall regulatory,
economic, environmental, and energy aspects of this proposed AD. We
will consider all comments received by the closing date and may amend
this proposed AD based on those comments.
    We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact
with FAA personnel concerning this proposed AD. Using the search
function of the Web site, anyone can find and read the comments in any
of our dockets, including, if provided, the name of the individual who
sent the comment (or signed the comment on behalf of an association,
business, labor union, etc.). You may review the DOT's complete Privacy
Act Statement in the Federal Register published on April 11, 2000 (65
FR 19477-78).

Discussion

    The European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Community, has issued EASA
AD 2013-0231, dated September 24, 2013 (referred to hereinafter as
``the MCAI''), to correct an unsafe condition for the specified
products. The MCAI states:

    Partial de-bonding of the Low Pressure Compressor (LPC) Case Ice
Impact Panels was reported during engine shop visit.
    This condition, if not corrected, could lead to Ice Impact Panel
de-bonding, resulting, in case of an impact event and release of
particles, in blockage of the Outlet Guide Vane and consequent
potential loss of thrust or reduced fan flutter margin.

You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating it in Docket No. FAA-
2013-0884.

Relevant Service Information

    RRD has issued Alert Non-Modification Service Bulletin No. ALERT
SB-BR700-72-A900281, dated July 1, 2013. The service information
describes procedures for replacement of the LPC case ice impact panels.

FAA's Determination and Requirements of This Proposed AD

    This product has been approved by the aviation authority of
Germany, and is approved for operation in the United States. Pursuant
to our bilateral agreement with the European Community, EASA has
notified us of the unsafe condition described in the MCAI and service
information referenced above. We are proposing this AD because we
evaluated all information provided by EASA and determined the unsafe
condition exists and is likely to exist or develop on other products of
the same type design. This proposed AD would require replacement of the
LPC case ice impact panels.

Costs of Compliance

    We estimate that this proposed AD affects 232 RRD turbofan engines
installed on aircraft of U.S. registry. We also estimate that it would
take about 24 hours per engine to comply with this proposed AD. The
average labor rate is $85 per hour. Required parts cost about $9,268
per product. Based on these figures, we estimate the cost of this
proposed AD on U.S. operators to be $2,623,456.

Authority for This Rulemaking

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

Regulatory Findings

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

List of Subjects in 14 CFR Part 39

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

The Proposed Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new airworthiness
directive (AD):

Rolls-Royce Deutschland Ltd & Co KG (Formerly Rolls-Royce
Deutschland GmbH, formerly BMW Rolls-Royce GmbH): Docket No. FAA-
2013-0884; Directorate Identifier 2013-NE-31-AD.

(a) Comments Due Date

    We must receive comments by February 21, 2014.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to all Rolls-Royce Deutschland Ltd & Co KG (RRD)
BR700-715A1-30, BR700-715B1-30, and BR700-715C1-30 turbofan engines.

(d) Reason

    This AD was prompted by a report of a partial de-bonding of the
low pressure compressor (LPC) case ice impact panels during an
engine shop visit. We are issuing this AD to prevent failure of the
LPC case ice impact panels, which could result in damage to the
engine and loss of control of the airplane.

(e) Actions and Compliance

    Unless already done, after the effective date of this AD, at the
next engine shop visit or within 12,500 engine flight cycles since
the last shop visit, whichever occurs first, replace the four LPC
ice impact panels with panels eligible for installation.

(f) Definition

    (1) For the purposes of this AD, an ``engine shop visit'' is the
induction of an engine into the shop for maintenance involving the
separation of pairs of major mating engine flanges. The separation
of engine flanges solely for the purpose of transportation without
subsequent engine maintenance does not constitute an engine shop
visit.
    (2) For the purposes of this AD, a panel that is ``eligible for
installation'' is a new LPC impact panel or one that has been
repaired using RRD Alert Non-Modification Service Bulletin (NMSB)
No. ALERT SB-BR700-72-A900281, dated July 1, 2013.

(g) Alternative Methods of Compliance (AMOCs)

    The Manager, Engine Certification Office, FAA, may approve AMOCs
to this AD. Use the procedures found in 14 CFR 39.19 to make your
request.

(h) Related Information

    (1) For more information about this AD, contact Frederick Zink,
Aerospace Engineer, Engine Certification Office, FAA, Engine &
Propeller Directorate, 12 New England Executive Park, Burlington, MA
01803; phone:<PHONE_NUMBER>; fax:<PHONE_NUMBER>; email:
<EMAIL_ADDRESS>    (2) Refer to European Aviation Safety Agency AD 2013-0231, dated
September 24, 2013, for more information. You may examine the MCAI
in the AD docket on the Internet at http://www.regulations.gov by
searching for and locating it in Docket No. FAA-2013-0884.
    (3) RRD Alert NMSB No. ALERT SB-BR700-72-A900281, dated July 1,
2013, which is not incorporated by reference in this AD, can be
obtained from RRD using the contact information in paragraph (h)(4)
of this AD.
    (4) For service information identified in this AD, contact
Rolls-Royce Deutschland Ltd & Co KG, Eschenweg 11, Dahlewitz, 15827
Blankenfelde-Mahlow, Germany; phone: 49 0 33-7086-1944; fax: 49 0
33-7086-3276.
    (5) You may view this service information at the FAA, Engine &
Propeller Directorate, 12 New England Executive Park, Burlington,
MA. For information on the availability of this material at the FAA,
call<PHONE_NUMBER>.

    Issued in Burlington, Massachusetts, on December 11, 2013.
Robert J. Ganley,
Acting Assistant Directorate Manager, Engine & Propeller Directorate,
Aircraft Certification Service.
[FR Doc. 2013-30489 Filed 12-20-13; 8:45 am]
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