the entire month. Of that total, Market Makers with the maximum amount
of Limited Service MEI Ports generate over 4 billion quotes, and Market
Makers who utilize the two free Limited Service MEI Ports generate
approximately 1.6 billion quotes. Also for November 2022, Market Makers
who utilized 7 to 9 Limited Service MEI ports submitted an average of
1,264,703,600 quotes per day. To achieve a consistent, premium network
performance, the Exchange must build out and maintain a network that
has the capacity to handle the message rate requirements of its most
heavy network consumers. These billions of messages per day consume the
Exchange's resources and significantly contribute to the overall
network connectivity expense for storage and network transport
capabilities. The Exchange must also purchase additional storage
capacity on an ongoing basis to ensure it has sufficient capacity to
store these messages as part of it surveillance program and to satisfy
its record keeping requirements under the Exchange Act.\113\ Thus, as
the number of connections a Market Maker has increases, certain other
costs incurred by the Exchange that are correlated to, though not
directly affected by, connection costs (e.g., storage costs,
surveillance costs, service expenses) also increase. The Exchange
sought to design the proposed tiered-pricing structure to set the
amount of the fees to relate to the number of connections a firm
purchases. The more connections purchased by a Market Maker likely
results in greater expenditure of Exchange resources and increased cost
to the Exchange. With this in mind, the Exchange proposes no fee or
lower fees for those Market Makers who receive fewer Limited Service
MEI Ports since those Market Makers generally tend to send the least
amount of orders and messages over those connections. Given this
difference in network utilization rate, the Exchange believes that it
is reasonable, equitable, and not unfairly discriminatory that Market
Makers who take the most Limited Service MEI Ports pay for the vast
majority of the shared network resources from which all Member and non-
Member users benefit, but is designed and maintained from a capacity
standpoint to specifically handle the message rate and performance
requirements of those Market Makers.
---------------------------------------------------------------------------

    \113\ 17 CFR 240.17a-1 (recordkeeping rule for national
securities exchanges, national securities associations, registered
clearing agencies and the Municipal Securities Rulemaking Board).
---------------------------------------------------------------------------

    To achieve a consistent, premium network performance, the Exchange
must build out and maintain a network that has the capacity to handle
the message rate requirements of its most heavy network consumers.
Billions of messages per day consume the Exchange's resources and
significantly contribute to the overall network connectivity expense
for storage and network transport capabilities. The Exchange must also
purchase additional storage capacity on an ongoing basis to ensure it
has sufficient capacity to store these messages as part of it
surveillance program and to satisfy its record keeping requirements
under the Exchange Act.\114\ Thus, as the number of connections a
Market Maker has increases, the related pull on Exchange resources also
increases. The Exchange sought to design the proposed tiered-pricing
structure to set the amount of the fees to relate to the number of
connections a firm purchases. The more connections purchased by a
Market Maker likely results in greater expenditure of Exchange
resources and increased cost to the Exchange.
---------------------------------------------------------------------------

    \114\ 17 CFR 240.17a-1 (recordkeeping rule for national
securities exchanges, national securities associations, registered
clearing agencies and the Municipal Securities Rulemaking Board).
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
Intra-Market Competition
    The Exchange believes the proposed fees will not result in any
burden on intra-market competition that is not necessary or appropriate
in furtherance of the purposes of the Act because the proposed fees
will allow the Exchange to recoup some of its costs in providing 10Gb
ULL connectivity and Limited Service MEI Ports at below market rates to
market participants since the Exchange launched operations. As
described above, the Exchange operated at a cumulative net annual loss
since its

launch in 2019 \115\ due to providing a low-cost alternative to attract
order flow and encourage market participants to experience the high
determinism and resiliency of the Exchange's trading Systems. To do so,
the Exchange chose to waive the fees for some non-transaction related
services and Exchange products or provide them at a very lower fee,
which was not profitable to the Exchange. This resulted in the Exchange
forgoing revenue it could have generated from assessing any fees or
higher fees. The Exchange could have sought to charge higher fees at
the outset, but that could have served to discourage participation on
the Exchange. Instead, the Exchange chose to provide a low-cost
exchange alternative to the options industry, which resulted in lower
initial revenues. Examples of this are 10Gb ULL connectivity and
Limited Service MEI Ports, for which the Exchange only now seeks to
adopt fees at a level similar to or lower than those of other options
exchanges.
---------------------------------------------------------------------------

    \115\ See supra note 111.
---------------------------------------------------------------------------

    Further, the Exchange does not believe that the proposed fee
increase for the 10Gb ULL connection change would place certain market
participants at the Exchange at a relative disadvantage compared to
other market participants or affect the ability of such market
participants to compete. As is the case with the current proposed flat
fee, the proposed fee would apply uniformly to all market participants
regardless of the number of connections they choose to purchase. The
proposed fee does not favor certain categories of market participants
in a manner that would impose an undue burden on competition.
    The Exchange does not believe that the proposed rule change would
place certain market participants at the Exchange at a relative
disadvantage compared to other market participants or affect the
ability of such market participants to compete. In particular, Exchange
personnel has been informally discussing potential fees for
connectivity services with a diverse group of market participants that
are connected to the Exchange (including large and small firms, firms
with large connectivity service footprints and small connectivity
service footprints, as well as extranets and service bureaus) for
several months leading up to that time. The Exchange does not believe
the proposed fees for connectivity services would negatively impact the
ability of Members, non-Members (extranets or service bureaus), third-
parties that purchase the Exchange's connectivity and resell it, and
customers of those resellers to compete with other market participants
or that they are placed at a disadvantage.
    The Exchange does anticipate, however, that some market
participants may reduce or discontinue use of connectivity services
provided directly by the Exchange in response to the proposed fees. In
fact, as mentioned above, one MIAX Pearl Member will terminate their
MIAX Pearl membership on January 1, 2023 as a direct result of the
similar proposed fee changes by MIAX Pearl. The Exchange does not
believe that the proposed fees for connectivity services place certain
market participants at a relative disadvantage to other market
participants because the proposed connectivity pricing is associated
with relative usage of the Exchange by each market participant and does
not impose a barrier to entry to smaller participants. The Exchange
believes its proposed pricing is reasonable and, when coupled with the
availability of third-party providers that also offer connectivity
solutions, that participation on the Exchange is affordable for all
market participants, including smaller trading firms. As described
above, the connectivity services purchased by market participants
typically increase based on their additional message traffic and/or the
complexity of their operations. The market participants that utilize
more connectivity services typically utilize the most bandwidth, and
those are the participants that consume the most resources from the
network. Accordingly, the proposed fees for connectivity services do
not favor certain categories of market participants in a manner that
would impose a burden on competition; rather, the allocation of the
proposed connectivity fees reflects the network resources consumed by
the various size of market participants and the costs to the Exchange
of providing such connectivity services.
Inter-Market Competition
    The Exchange also does not believe that the proposed rule change
will result in any burden on inter-market competition that is not
necessary or appropriate in furtherance of the purposes of the Act. As
discussed above, options market participants are not forced to connect
to all options exchanges. There is no reason to believe that our
proposed price increase will harm another exchange's ability to
compete. There are other options markets of which market participants
may connect to trade options at higher rates than the Exchange's. There
is also a range of alternative strategies, including routing to the
exchange through another participant or market center or accessing the
Exchange indirectly. Market participants are free to choose which
exchange or reseller to use to satisfy their business needs.
Accordingly, the Exchange does not believe its proposed fee changes
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
* * * * *
    In conclusion, as discussed thoroughly above, the Exchange
regrettably believes that the application of the Revised Review Process
and Staff Guidance has adversely affected inter-market competition
among legacy and non-legacy exchanges by impeding the ability of non-
legacy exchanges to adopt or increase fees for their market data and
access services (including connectivity and port products and services)
that are on parity or commensurate with fee levels previously
established by legacy exchanges. Since the adoption of the Revised
Review Process and Staff Guidance, and even more so recently, it has
become extraordinarily difficult to adopt or increase fees to generate
revenue necessary to invest in systems, provide innovative trading
products and solutions, and improve competitive standing to the benefit
of non-legacy exchanges' market participants. Although the Staff
Guidance served an important policy goal of improving disclosures and
requiring exchanges to justify that their market data and access fee
proposals are fair and reasonable, it has also negatively impacted non-
legacy exchanges in particular in their efforts to adopt or increase
fees that would enable them to more fairly compete with legacy
exchanges, despite providing enhanced disclosures and rationale under
both competitive and cost basis approaches provided for by the Revised
Review Process and Staff Guidance to support their proposed fee
changes.

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

    Written comments were neither solicited nor received.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\116\ and Rule

19b-4(f)(2) \117\ thereunder. At any time within 60 days of the filing
of the proposed rule change, the Commission summarily may temporarily
suspend such rule change if it appears to the Commission that such
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act. If the Commission takes such action, the Commission shall
institute proceedings to determine whether the proposed rule should be
approved or disapproved.
---------------------------------------------------------------------------

    \116\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \117\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-EMERALD-2023-01 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-EMERALD-2023-01. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-EMERALD-2023-01 and should be submitted
on or before February 7, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\118\
---------------------------------------------------------------------------

    \118\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-00659 Filed 1-13-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 152 (Tuesday, August 7, 2018)]
[Notices]
[Pages 38748-38750]
[FR Doc No: 2018-16799]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83757]

Order Granting Applications by Nasdaq BX, Inc., Nasdaq GEMX, LLC,
Nasdaq ISE, LLC, Nasdaq MRX, LLC, and Nasdaq PHLX LLC for Exemption
Pursuant to Section 36(a) of the Exchange Act From the Rule Filing
Requirements of Section 19(b) of the Exchange Act With Respect to
Certain CAT Rules Incorporated by Reference

August 1, 2018.
    Nasdaq BX, Inc. (``BX''), Nasdaq GEMX, LLC (``GEMX''), Nasdaq ISE,
LLC (``ISE''), Nasdaq MRX, LLC (``MRX''), and Nasdaq PHLX LLC
(``Phlx'') (each the ``Exchange'' and collectively, the ``Exchanges'')
have filed with the Securities and Exchange Commission (the
``Commission'') an application for an exemption from the rule filing
requirements of Section 19(b) of the Securities Exchange Act of 1934
(the ``Exchange Act'') \1\ with respect to certain rules of The Nasdaq
Stock Market LLC (the ``Nasdaq Market'') that the Exchanges seek to
incorporate by reference. Section 36(a)(1) of the Exchange Act,\2\
subject to certain limitations, authorizes the Commission to
conditionally or unconditionally exempt any person, security, or
transaction, or any class thereof, from any provision of the Exchange
Act or rule thereunder, if necessary or appropriate in the public
interest and consistent with the protection of investors.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b).
    \2\ 15 U.S.C. 78mm(a)(1).

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

    The Nasdaq Market and the Exchanges are Participants in the
National Market System Plan Governing the Consolidated Audit Trail
(``CAT NMS Plan'' or ``Plan'').\3\ Each Participant in the CAT NMS Plan
is required to enforce compliance by its members with the provisions of
the Plan by adopting a Compliance Rule applicable to its members.\4\ In
2017, pursuant to the CAT NMS Plan, the Nasdaq Market and the Exchanges
each adopted a Compliance Rule.\5\ On April 10, 2018, the Exchanges
filed proposed rule changes with the Commission to delete each
Exchange's Compliance Rule from the rulebook and instead incorporate by
reference, in each respective Exchange's rulebook, the Nasdaq Market's
Compliance Rule (``Nasdaq Market Compliance Rule'').\6\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 79318 (November 15,
2016), 81 FR 84696 (November 23, 2016) (``CAT NMS Plan Approval
Order''). All capitalized terms not otherwise defined herein have
the meaning ascribed to them in the CAT NMS Plan or CAT NMS Plan
Approval Order.
    \4\ Id. at 84945, 84950.
    \5\ See Securities Exchange Act Release No. 80256, 82 FR 14526
(March 21, 2017) (order approving the Compliance Rules for the
Nasdaq Market and the Exchanges). On January 29, 2018, the Nasdaq
Market filed a proposed rule change with the Commission to relocate
the Nasdaq Market Compliance Rule to a new section General 7 in its
rulebook. See Securities Exchange Act Release No. 82604 (January 30,
2018), 83 FR 5154 (February 5, 2018) (SR-NASDAQ-2018-007).
    \6\ See Securities Exchange Act Release Nos. 83077 (April 20,
2018), 83 FR 18358 (April 26, 2018) (SR-Phlx-2018-30); 83081 (April
20, 2018), 83 FR 18371 (April 26, 2018) (SR-BX-2018-015); 83079
(April 20, 2018), 83 FR 18362 (April 26, 2018) (SR-ISE-2018-35);
83083 (April 20, 2018), 83 FR 18384 (April 26, 2018) (SR-GEMX-2018-
13); and 83085 (April 20, 2018), 83 FR 18364 (April 26, 2018) (SR-
MRX-2018-12). Although the proposed rule changes were filed pursuant
to Section 19(b)(3)(A)(iii) of the Exchange Act, and thereby became
effective upon filing with the Commission, the Exchanges stipulated
in their filings that the incorporation by reference would not be
operative until such time as the Commission grants this exemptive
request.
---------------------------------------------------------------------------

    The Exchanges request, pursuant to Rule 0-12 under the Exchange
Act,\7\ that the Commission grant the Exchanges an exemption from the
rule filing requirements of Section 19(b) of the Exchange Act for
changes to each Exchange's rules that are effected solely by virtue of
a change to the Nasdaq Market Compliance Rule. Specifically, the
Exchanges request that they be permitted to incorporate by reference
changes made to the Nasdaq Market Compliance Rule that would be
incorporated by reference in the Exchanges' rulebooks, without the need
for each Exchange to file separately the same proposed rule changes
pursuant to Section 19(b) of the Exchange Act.\8\ By virtue of
incorporating the Nasdaq Market Compliance Rule by reference, members
of each Exchange will be required to comply with the Nasdaq Market
Compliance Rule as though it is fully set forth within each of the
Exchanges' rulebooks.\9\
---------------------------------------------------------------------------

    \7\ 17 CFR 240.0-12.
    \8\ See Letter from Angela S. Dunn, Principal Associate General
Counsel, Nasdaq Inc., to Brent J. Fields, Secretary, Commission,
dated April 10, 2018, at 2-3.
    \9\ Id. at 2.
---------------------------------------------------------------------------

    The Exchanges do not intend to incorporate by reference any trading
rules. Instead, they represent that the Nasdaq Market Compliance Rule
is regulatory in nature. Further, the Exchanges represent that they
will, as a condition of this exemption, provide written notice to their
members whenever the Nasdaq Market proposes a change to the Nasdaq
Market Compliance Rule.\10\ Such notice will alert the members of each
Exchange to the proposed rule change and give them an opportunity to
comment on the proposal. The Exchanges state that they will also inform
members in writing when the Commission approves any such proposed rule
change.\11\
---------------------------------------------------------------------------

    \10\ The Exchanges also state that they will provide such notice
on their websites in the same section they use to post their own
proposed rule change pursuant to Rule 19b-4(l) of the Exchange Act.
In addition, the Exchanges state that their website will include a
link to the Nasdaq Market website where the proposed rule change
would be located. Id.
    \11\ Id.
---------------------------------------------------------------------------

    The Exchanges believe this exemption is appropriate because it will
result in the Exchanges' rules pertaining to CAT NMS Plan compliance to
remain consistent at all times, thus ensuring consistent regulation of
joint members of the Nasdaq Market and Exchanges with respect to the
incorporated rules.\12\
---------------------------------------------------------------------------

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

    The Commission has issued exemptions similar to the Exchanges'
request.\13\ In granting one such exemption in 2010, the Commission
repeated a prior, 2004 Commission statement that it would consider
similar future exemption requests from other self-regulatory
organizations (``SROs''), provided that:
---------------------------------------------------------------------------

    \13\ See, e.g., Securities Exchange Act Release Nos. 80338
(March 29, 2017), 82 FR 16464 (April 4, 2017) (order granting
exemptive request from MIAX PEARL, LLC relating to rules of Miami
International Securities Exchange, LLC incorporated by reference);
72650 (July 22, 2014), 79 FR 44075 (July 29, 2014) (order granting
exemptive requests from NASDAQ OMX BX, Inc. and the NASDAQ Stock
Market LLC relating to rules of NASDAQ OMX PHLX LLC incorporated by
reference); 67256 (June 26, 2012), 77 FR 39277, 39286 (July 2, 2012)
(order approving SR-BX-2012-030 and granting exemptive request
relating to rules incorporated by reference by the BX Options
rules); 61534 (February 18, 2010), 75 FR 8760 (February 25, 2010)
(order granting BATS Exchange, Inc.'s exemptive request relating to
rules incorporated by reference by the BATS Exchange Options Market
rules) (``BATS Options Market Order''); and 57478 (March 12, 2008),
73 FR 14521, 14539-40 (March 18, 2008) (order approving SR-NASDAQ-
2007-004 and SR-NASDAQ-2007-080, and granting exemptive request
relating to rules incorporated by reference by The NASDAQ Options
Market).
---------------------------------------------------------------------------

     An SRO wishing to incorporate rules of another SRO by
reference has submitted a written request for an order exempting it
from the requirement in Section 19(b) of the Exchange Act to file
proposed rule changes relating to the rules incorporated by reference,
has identified the applicable originating SRO(s), together with the
rules it wants to incorporate by reference, and otherwise has complied
with the procedural requirements set forth in the Commission's release
governing procedures for requesting exemptive orders pursuant to Rule
0-12 under the Exchange Act; \14\
---------------------------------------------------------------------------

    \14\ See 17 CFR 240.0-12 and Securities Exchange Act Release No.
39624 (February 5, 1998), 63 FR 8101 (February 18, 1998)
(``Commission Procedures for Filing Applications for Orders for
Exemptive Relief Pursuant to Section 36 of the Exchange Act; Final
Rule'').
---------------------------------------------------------------------------

     The incorporating SRO has requested incorporation of
categories of rules (rather than individual rules within a category)
that are not trading rules (e.g., the SRO has requested incorporation
of rules such as margin, suitability, or arbitration); and
     The incorporating SRO has reasonable procedures in place
to provide written notice to its members each time a change is proposed
to the incorporated rules of another SRO.\15\
---------------------------------------------------------------------------

    \15\ See BATS Options Market Order, supra note 13 (citing
Securities Exchange Act Release No. 49260 (February 17, 2004), 69 FR
8500 (February 24, 2004) (order granting exemptive request relating
to rules incorporated by reference by several SROs) (``2004
Order'')).
---------------------------------------------------------------------------

    The Commission believes that the Exchanges have satisfied each of
these conditions. Further, the Commission also believes that granting
the Exchanges an exemption from the rule filing requirements under
Section 19(b) of the Exchange Act will promote efficient use of the
Commission's and the Exchanges' resources by avoiding duplicative rule
filings based on simultaneous changes to identical rule text sought by
more than one SRO.\16\ The Commission therefore finds it appropriate in
the public interest and consistent with the protection of investors to
exempt the Exchanges from the rule filing requirements under Section
19(b) of the Exchange Act with respect to the above-described rules
they incorporate by reference. This exemption is conditioned upon the
Exchanges promptly providing written notice to their members whenever
the

Nasdaq Market changes a rule that the Exchanges have incorporated by
reference.
---------------------------------------------------------------------------

    \16\ See BATS Options Market Order, supra note 13, 75 FR at
8761; see also 2004 Order, supra note 15, 69 FR at 8502.
---------------------------------------------------------------------------

    Accordingly, it is ordered, pursuant to Section 36 of the Exchange
Act,\17\ that the Exchanges are exempt from the rule filing
requirements of Section 19(b) of the Exchange Act solely with respect
to changes to the rules identified in its request that incorporate by
reference certain Nasdaq Market rules that are the result of changes to
such Nasdaq Market rules, provided that the Exchanges promptly provide
written notice to their members whenever the Nasdaq Market proposes to
change a rule that the Exchanges have incorporated by reference.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78mm.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(76).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2018-16799 Filed 8-6-18; 8:45 am]
 BILLING CODE 8011-01-P


NEMS is a model of U.S. energy economy developed and maintained by the
US Energy Information Administration (EIA) of the US Department of Energy (DOE).
NEMS is used to produce the Annual Energy Outlook, a reference publication
that provides detailed forecasts of the energy economy from the current
year to 2040.  DOE first developed NEMS in the 1980s, and the model has
undergone frequent updates and expansion since.  DOE uses the modeling
system extensively to produce issue reports, legislative analyses, and
respond to Congressional inquiries.

US EPA docketed two 2015 National Energy Modeling System (NEMS) files
that EPA modified in order to use NEMS to estimate the national energy system
impacts of the Final New Source Performance Standards.

These codes are part of the larger set of source codes and input files that constitute NEMS.
Interested parties should contact the US Energy Information for more information
on NEMS or obtaining the complete source code.

The files are:

1. wellcost_docket.txt (source file for the Oil and Gas Supply Module)
2. ngitm_docket.f (source of the Natural Gas Transmission and Distribution Module)

For more detail, the reader should consult Section 6 of the Regulatory Impact
Analysis which is also available in the Docket. This section explains how the
final NSPS was implemented within NEMS.


[Federal Register: June 26, 2008 (Volume 73, Number 124)]
[Proposed Rules]
[Page 36285-36288]
[DOCID:fr26jn08-14]

========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.

========================================================================

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2008-0356; Directorate Identifier 2008-NM-042-AD]
RIN 2120-AA64

Airworthiness Directives; Bombardier Model DHC-8-400 Series
Airplanes

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

ACTION: Supplemental notice of proposed rulemaking (NPRM); reopening of
comment period.

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

SUMMARY: The FAA is revising an earlier NPRM for an airworthiness
directive (AD) that applies to certain Bombardier Model DHC-8-400
series airplanes. The original NPRM would have superseded an existing
AD that currently requires inspecting all barrel nuts to determine if
the barrel nuts have a certain marking, inspecting affected bolts to
determine if the bolts are pre-loaded correctly, and replacing all
hardware if the pre-load is incorrect. For airplanes on which the pre-
load is correct, the existing AD requires doing repetitive visual
inspections for cracking of the barrel nuts and cradles and replacing
all hardware for all cracked barrel nuts. The existing AD also requires
replacement of all hardware for certain affected barrel nuts that do
not have cracking, which would end the repetitive inspections for those
airplanes. The existing AD also provides an optional replacement for
all affected barrel nuts. The original NPRM proposed to require
replacement of all affected barrel nuts. The original NPRM resulted
from reports of cracking in the barrel nuts at the four primary front
spar wing-to-fuselage attachment joints. This new action revises the
original NPRM by adding, for certain airplanes, application of a
certain compound to the affected barrel nuts and bolts. We are
proposing this supplemental NPRM to detect and correct cracking of the
barrel nuts at the wing front spar wing-to-fuselage joints, which could
result in reduced structural integrity of the wing-to-fuselage
attachments and consequent detachment of the wing.

DATES: We must receive comments on this supplemental NPRM by July 21,
2008.

ADDRESSES: You may send comments by any of the following methods:
     Federal eRulemaking Portal: Go to http://
www.regulations.gov. Follow the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue, SE., Washington, DC 20590.
     Hand Delivery: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays.
    For service information identified in this AD, contact Bombardier,
Inc., Bombardier Regional Aircraft Division, 123 Garratt Boulevard,
Downsview, Ontario M3K 1Y5, Canada.

Examining the AD Docket

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

FOR FURTHER INFORMATION CONTACT: Pong Lee, Aerospace Engineer, Airframe
and Propulsion Branch, ANE-171, FAA, New York Aircraft Certification
Office, 1600 Stewart Avenue, Suite 410, Westbury, New York 11590;
telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to send any written relevant data, views, or
arguments about this proposed AD. Send your comments to an address
listed under the ADDRESSES section. Include ``Docket No. FAA-2008-0356;
Directorate Identifier 2008-NM-042-AD'' at the beginning of your
comments. We specifically invite comments on the overall regulatory,
economic, environmental, and energy aspects of this proposed AD. We
will consider all comments received by the closing date and may amend
this proposed AD because of those comments.
    We will post all comments we receive, without change, to http://
www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact we
receive about this proposed AD.

Discussion

    The FAA issued a notice of proposed rulemaking (NPRM) (the
``original NPRM'') to amend 14 CFR part 39 to include an AD that
supersedes AD 2008-04-02, amendment 39-15374 (73 FR 8187, February 13,
2008). The existing AD applies to certain Bombardier Model DHC-8-400
series airplanes. The original NPRM was published in the Federal
Register on March 25, 2008 (73 FR 15682). The original NPRM proposed to
retain the requirements of the existing AD and proposed to require
replacement of all affected barrel nuts.

Relevant Service Information

    Bombardier has issued Alert Service Bulletin A84-57-19, Revision B,
dated March 6, 2008 (we referred to Bombardier Alert Service Bulletin
A84-57-19, Revision A, dated February 6, 2008, as the appropriate
source of service information for doing the actions specified in the
original NPRM). Revision B of the service bulletin contains the same
actions as Revision A, except Revision B adds procedures to apply F13,
Type 2 compound to the affected bolts and barrel nuts. Accomplishing
the actions specified in the service information is intended to
adequately address the unsafe condition.
    We have determined that for airplanes on which the affected bolts
were replaced in accordance with Bombardier Alert Service Bulletin A84-
57-19, dated February 1, 2008; or Revision A, dated February 6, 2008;
operators must apply F13, Type 2 compound to the affected bolts and
barrel nuts. We have added paragraph (l) to the supplemental NPRM

to propose to require application of the compound for these airplanes.
We have coordinated this action with Transport Canada Civil Aviation
(TCCA), which is the aviation authority for Canada. TCCA issued
Canadian airworthiness directive CF-2008-11R1, dated May 9, 2008, to
ensure the continued airworthiness of these airplanes in Canada.
    We have also revised paragraphs (f), (f)(2), (g)(1)(ii),
(g)(1)(iii), (g)(2)(ii), (g)(2)(iii), (g)(3)(ii), (g)(3)(iii), (g)(4),
(g)(5), and (k) of the supplemental NPRM to refer to Bombardier Alert
Service Bulletin A84-57-19, Revision B, dated March 6, 2008, as an
appropriate source of service information for accomplishing the
required actions.

FAA's Determination and Proposed Requirements of the Supplemental NPRM

    The changes discussed above expand the scope of the original NPRM;
therefore, we have determined that it is necessary to reopen the
comment period to provide additional opportunity for public comment on
this supplemental NPRM.

Costs of Compliance

    This proposed AD would affect about 48 airplanes of U.S. registry.
    The actions that are required by AD 2008-04-02 and retained in this
proposed AD take about 3 work hours per airplane, at an average labor
rate of $80 per work hour. Based on these figures, the estimated cost
of the currently required actions is $11,520, or $240 per airplane, per
inspection cycle.
    Replacement of the hardware of a barrel nut, if required, will take
about 12 work hours per airplane, at an average labor rate of $80 per
work hour. Required parts will cost about $800 per airplane. Based on
these figures, we estimate the cost of a replacement to be $1,760 per
barrel nut.
    Application of the compound, if required, will take about 4 work
hours per airplane, at an average labor rate of $80 per work hour.
Based on these figures, we estimate the cost of a replacement to be
$320 per application.

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 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 that the proposed
regulation:
    1. Is not a ``significant regulatory action'' under Executive Order
12866;
    2. Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979); and
    3. Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.
    We prepared a regulatory evaluation of the estimated costs to
comply with this supplemental NPRM and placed it in the AD docket. See
the ADDRESSES section for a location to examine the regulatory
evaluation.

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Safety.

The Proposed Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

    2. The Federal Aviation Administration (FAA) amends Sec.  39.13 by
removing amendment 39-15374 (73 FR 8187, February 13, 2008) and adding
the following new airworthiness directive (AD):

Bombardier, Inc. (Formerly de Havilland, Inc.): Docket No. FAA-2008-
0356; Directorate Identifier 2008-NM-042-AD.

Comments Due Date

    (a) The FAA must receive comments on this AD action by July 21,
2008.

Affected ADs

    (b) This AD supersedes AD 2008-04-02.

Applicability

    (c) This AD applies to Bombardier Model DHC-8-400, DHC-8-401,
and DHC-8-402 airplanes, certificated in any category; serial
numbers 4001 and 4003 through 4176 inclusive.

Unsafe Condition

    (d) This AD results from reports of cracking in the barrel nuts
at the four primary front spar wing-to-fuselage attachment joints.
We are issuing this AD to detect and correct cracking of the barrel
nuts at the wing front spar wing-to-fuselage joints, which could
result in reduced structural integrity of the wing-to-fuselage
attachments and consequent detachment of the wing.

Compliance

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

Restatement of Requirements of AD 2008-04-02 With New Service
Information

Inspections and Corrective Actions

    (f) Within 50 flight hours after February 13, 2008 (the
effective date of AD 2008-04-02), inspect all barrel nuts, part
number DSC228-16, to determine if the barrel nuts are identified
with a marking of LH7940T SPS 01. Inspect in accordance with the
Accomplishment Instructions of Bombardier Alert Service Bulletin
A84-57-19, Revision A, dated February 6, 2008; or Revision B, dated
March 6, 2008. As of the effective date of this AD, Bombardier Alert
Service Bulletin A84-57-19, Revision B, dated March 6, 2008, must be
used.
    (1) If no barrel nuts are identified with a marking of LH7940T
SPS 01, no further actions are required by this paragraph.
    (2) If any barrel nut is found that is identified with a marking
of LH7940T SPS 01, before further flight, inspect the inboard and
outboard bolts to determine if the bolts are pre-loaded correctly.
Inspect in accordance with the Accomplishment Instructions of
Bombardier Alert Service Bulletin A84-57-19, Revision A, dated
February 6, 2008; or Revision B, dated March 6, 2008. As of the
effective date of this AD, Bombardier Alert Service Bulletin A84-57-
19, Revision B, dated March 6, 2008, must be used.
    (i) If the pre-load is incorrect (i.e., the ring can be
rotated), before further flight, replace all hardware at that
location in accordance with the Accomplishment Instructions of the
alert service bulletin.
    (ii) If the pre-load is correct, before further flight, do a
visual inspection for cracking of the barrel nuts and cradles in
accordance with the Accomplishment Instructions of the alert service
bulletin.
    (A) If no cracking of the barrel nut and cradle is found, do the
applicable action required by paragraph (g) of this AD.

    (B) If no cracking of the barrel nut is found and only cracking
of the cradle is found, no action is required by this paragraph
provided that the applicable corrective action specified in
paragraph (g) of this AD is done.
    (C) If any cracking of the barrel nut is found, before next
flight, replace all hardware only at that location in accordance
with the Accomplishment Instructions of the alert service bulletin.
    (g) For any barrel nuts on which no cracking of the barrel nut
was found during the inspection required by paragraph (f)(2)(ii) of
this AD, do the applicable corrective action specified in paragraph
(g)(1), (g)(2), (g)(3), (g)(4), or (g)(5) of this AD at the
compliance time specified in the applicable paragraph.
    (1) If four barrel nuts having no cracking are found, do the
actions specified in paragraphs (g)(1)(i), (g)(1)(ii), and
(g)(1)(iii) of this AD.
    (i) Within 50 flight hours after doing the inspection required
by paragraph (f)(2)(ii) of this AD, repeat the inspection specified
in paragraph (f)(2) of this AD. Thereafter, repeat the inspection at
intervals not to exceed 50 flight hours until the replacement
specified in paragraph (g)(1)(ii) of this AD is done.
    (ii) Within 100 flight hours after doing the inspection required
by paragraph (f)(2)(ii) of this AD, replace all hardware at the
left-hand outboard location and the right-hand outboard location in
accordance with the Accomplishment Instructions of Bombardier Alert
Service Bulletin A84-57-19, Revision A, dated February 6, 2008; or
Revision B, dated March 6, 2008. As of the effective date of this
AD, Bombardier Alert Service Bulletin A84-57-19, Revision B, dated
March 6, 2008, must be used. Replacing the barrel nuts on the
outboard locations terminates the requirement to do the repetitive
inspections specified in paragraph (g)(1)(i) of this AD.
    (iii) Within 100 flight hours after doing the replacement
required by paragraph (g)(1)(ii) of this AD, repeat the inspection
specified in paragraph (f)(2) of this AD for the remaining barrel
nuts identified with a marking of LH7940T SPS 01. Thereafter, repeat
the inspection at intervals not to exceed 100 flight hours until the
replacement of all hardware at those locations is done. Do the
inspection and replacement in accordance with the Accomplishment
Instructions of Bombardier Alert Service Bulletin A84-57-19,
Revision A, dated February 6, 2008; or Revision B, dated March 6,
2008. As of the effective date of this AD, Bombardier Alert Service
Bulletin A84-57-19, Revision B, dated March 6, 2008, must be used.
    (2) If three barrel nuts having no cracking are found, do the
actions specified in paragraphs (g)(2)(i), (g)(2)(ii), and
(g)(2)(iii) of this AD.
    (i) Within 50 flight hours after doing the inspection required
by paragraph (f)(2)(ii) of this AD, repeat the inspection specified
in paragraph (f)(2) of this AD. Thereafter, repeat the inspection at
intervals not to exceed 50 flight hours until the replacement
specified in paragraph (g)(2)(ii) of this AD is done.
    (ii) Within 100 flight hours after doing the inspection required
by paragraph (f)(2)(ii) of this AD, replace all hardware for one
affected barrel nut at the outboard location, on the side with two
affected barrel nuts, in accordance with the Accomplishment
Instructions of Bombardier Alert Service Bulletin A84-57-19,
Revision A, dated February 6, 2008; or Revision B, dated March 6,
2008. As of the effective date of this AD, Bombardier Alert Service
Bulletin A84-57-19, Revision B, dated March 6, 2008, must be used.
Replacing the barrel nut on the outboard location terminates the
requirement to do the repetitive inspections specified in paragraph
(g)(2)(i) of this AD.
    (iii) Within 100 flight hours after doing the replacement
required by paragraph (g)(2)(ii) of this AD, repeat the inspection
specified in paragraph (f)(2) of this AD for the remaining barrel
nuts identified with a marking of LH7940T SPS 01. Thereafter, repeat
the inspection at intervals not to exceed 100 flight hours until the
replacement of all hardware at those locations is done. Do the
inspection and replacement in accordance with the Accomplishment
Instructions of Bombardier Alert Service Bulletin A84-57-19,
Revision A, dated February 6, 2008; or Revision B, dated March 6,
2008. As of the effective date of this AD, Bombardier Alert Service
Bulletin A84-57-19, Revision B, dated March 6, 2008, must be used.
    (3) If two barrel nuts having no cracking are found and both
nuts are on the same side, do the actions specified in paragraphs
(g)(3)(i), (g)(3)(ii), and (g)(3)(iii) of this AD.
    (i) Within 100 flight hours after doing the inspection required
by paragraph (f)(2)(ii) of this AD, repeat the inspection specified
in paragraph (f)(2) of this AD. Thereafter, repeat the inspection at
intervals not to exceed 100 flight hours until the replacement
specified in paragraph (g)(3)(ii) of this AD is done.
    (ii) Within 500 flight hours after doing the inspection required
by paragraph (f)(2)(ii) of this AD, replace all hardware for one
affected barrel nut at the outboard location that has two affected
barrel nuts in accordance with the Accomplishment Instructions of
Bombardier Alert Service Bulletin A84-57-19, Revision A, dated
February 6, 2008; or Revision B, dated March 6, 2008. As of the
effective date of this AD, Bombardier Alert Service Bulletin A84-57-
19, Revision B, dated March 6, 2008, must be used. Replacing the
barrel nut on the outboard location terminates the requirement to do
the repetitive inspections specified in paragraph (g)(3)(i) of this
AD.
    (iii) Within 100 flight hours after doing the replacement
required by paragraph (g)(3)(ii) of this AD, repeat the inspection
specified in paragraph (f)(2) of this AD for the remaining barrel
nut identified with a marking of LH7940T SPS 01. Thereafter, repeat
the inspection at intervals not to exceed 100 flight hours until the
replacement of all hardware at that location is done. Do the
inspection and replacement in accordance with the Accomplishment
Instructions of Bombardier Alert Service Bulletin A84-57-19,
Revision A, dated February 6, 2008; or Revision B, dated March 6,
2008. As of the effective date of this AD, Bombardier Alert Service
Bulletin A84-57-19, Revision B, dated March 6, 2008, must be used.
    (4) If two barrel nuts having no cracking are found and are on
opposite sides, within 100 flight hours after doing the inspection
required by paragraph (f)(2)(ii) of this AD, repeat the inspection
specified in paragraph (f)(2) of this AD. Thereafter, repeat the
inspection at intervals not to exceed 100 flight hours until the
replacement of all hardware at those locations is done. Do the
inspection and replacement in accordance with the Accomplishment
Instructions of Bombardier Alert Service Bulletin A84-57-19,
Revision A, dated February 6, 2008; or Revision B, dated March 6,
2008. As of the effective date of this AD, Bombardier Alert Service
Bulletin A84-57-19, Revision B, dated March 6, 2008, must be used.
    (5) If one barrel nut having no cracking is found, within 100
flight hours after doing the inspection required by paragraph
(f)(2)(ii) of this AD, repeat the inspection specified in paragraph
(f)(2) of this AD. Thereafter, repeat the inspection at intervals
not to exceed 100 flight hours until the replacement of all hardware
at that location is done. Do the inspection and replacement in
accordance with the Accomplishment Instructions of Bombardier Alert
Service Bulletin A84-57-19, Revision A, dated February 6, 2008; or
Revision B, dated March 6, 2008. As of the effective date of this
AD, Bombardier Alert Service Bulletin A84-57-19, Revision B, dated
March 6, 2008, must be used.

Actions Accomplished According to Previous Issue of Alert Service
Bulletin

    (h) Actions accomplished before February 13, 2008, in accordance
with Bombardier Alert Service Bulletin A84-57-19, dated February 1,
2008, are acceptable for compliance with the corresponding actions
specified in this AD.

Actions Accomplished According to Bombardier Alert Service Bulletin
A84-57-18

    (i) For airplanes on which the actions specified in Bombardier
Alert Service Bulletin A84-57-18, dated January 16, 2008, were
accomplished before February 13, 2008, and on which no barrel nuts
were found that were identified with a marking of LH7940T SPS 01: No
further action is required by this AD.

Parts Installation

    (j) As of February 13, 2008, no person may install a barrel nut,
part number DSC228-16, identified with a marking of LH7940T SPS 01,
on any airplane.

New Requirement of This AD

Replacement of All Affected Barrel Nuts

    (k) For airplanes on which barrel nuts are inspected in
accordance with paragraph (g)(1)(iii), (g)(2)(iii), (g)(3)(iii),
(g)(4), or (g)(5) of this AD: Within 3,000 flight hours after the
effective date of this AD, replace all hardware for all remaining
barrel nuts, part number DSC228-16, identified with a marking of
LH7940T SPS 01. Do the replacement in accordance with the
Accomplishment Instructions of Bombardier Alert Service Bulletin
A84-57-19, Revision B, dated March 6, 2008. Replacement of all
hardware for all affected barrel nuts constitutes terminating action
for the repetitive inspections of this AD.
    (l) For airplanes on which hardware for the barrel nut was
replaced in accordance with

Bombardier Alert Service Bulletin A84-57-19, dated February 1, 2008;
or Revision A, dated February 6, 2008: Within 3,000 flight hours
after the effective date of this AD, apply F13, Type 2 corrosion
inhibiting compound to the affected bolts and barrel nuts in
accordance with the Accomplishment Instructions of Bombardier Alert
Service Bulletin A84-57-19, Revision B, dated March 6, 2008; except
if it can be conclusively determined from a review of airplane
maintenance records that F13, Type 2 corrosion inhibiting compound
was applied to the affected bolts and barrel nuts, then no further
action is required by this paragraph.

Special Flight Permit

    (m) Special flight permits, as described in Section 21.197 and
Section 21.199 of the Federal Aviation Regulations (14 CFR 21.197
and 21.199), may be issued to operate the airplane to a location
where the requirements of this AD can be accomplished, but
concurrence by the Manager, New York Aircraft Certification Office,
FAA, is required prior to issuance of the special flight permit.
Before using any approved special flight permits, notify your
appropriate principal inspector (PI) in the FAA Flight Standards
District Office (FSDO), or lacking a PI, your local FSDO. Special
flight permits may be permitted provided that the conditions
specified in paragraphs (m)(1), (m)(2), (m)(3), (m)(4), and (m)(5)
of this AD are met.
    (1) Both the right-hand side and left-hand side of the airplane
must have at least one barrel nut that is not within the suspect
batch (i.e., barrel nut is not identified with a marking of LH7940T
SPS 01). The barrel nuts that are not within the suspect batch must
be in good working condition (i.e., no cracking of the barrel nut).
    (2) No passengers and no cargo are onboard.
    (3) Airplane must operate in fair weather conditions with a low
risk of turbulence.
    (4) Airplane must operate with reduced airspeed. For further
information, contact Bombardier, Q Series 24 Hour Service Customer
Response Center, at: Tel: 1-416-375-4000; Fax: 1-416-375-4539; E-
mail<EMAIL_ADDRESS>    (5) All of the conditions specified in paragraphs (m)(1),
(m)(2), (m)(3), and (m)(4) of this AD are on a case-by-case basis.
Contact your appropriate principal inspector (PI) in the FAA Flight
Standards District Office (FSDO), or lacking a PI, your local FSDO,
for assistance.

Alternative Methods of Compliance (AMOCs)

    (n)(1) The Manager, New York Aircraft Certification Office, FAA,
has the authority to approve AMOCs for this AD, if requested in
accordance with the procedures found in 14 CFR 39.19.
    (2) To request a different method of compliance or a different
compliance time for this AD, follow the procedures in 14 CFR 39.19.
Before using any approved AMOC on any airplane to which the AMOC
applies, notify your appropriate principal inspector (PI) in the FAA
Flight Standards District Office (FSDO), or lacking a PI, your local
FSDO.

Related Information

    (o) Canadian airworthiness directive CF-2008-11R1, dated May 9,
2008.

    Issued in Renton, Washington, on June 13, 2008.
Ali Bahrami,
Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. E8-14482 Filed 6-25-08; 8:45 am]

BILLING CODE 4910-13-P