This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

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new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

7339 

Vol. 75, No. 33 

Friday, February 19, 2010 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 701 

RIN 3133–AD67 

Secondary Capital Accounts 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Interim final rule with request 

for comments. 

SUMMARY: NCUA is amending its rules 

governing secondary capital accounts to 

permit low-income designated credit 

unions to redeem all or part of 

secondary capital accepted from the 

United States Government or any of its 

subdivisions at any time after the 

secondary capital has been on deposit 

for two years. The amendments will also 

allow early redemption, under the same 

terms and conditions, of secondary 

capital accepted as a match to the 

government-funded secondary capital. 

Finally, the amendments change the 

loss distribution provision that applies 

to secondary capital accounts so that 

secondary capital accepted under the 

2010 Community Development Capital 

Program is senior to any required 

matching secondary capital accepted 

from an alternative source. Early 

redemption will continue to require 

approval of the appropriate Regional 

Director. The amended rule will 

accomplish the following: bring NCUA 

regulations into compliance with the 

Community Development Capital 

Program; and allow qualifying lowincome designated credit unions that 

accept secondary capital pursuant to the 

Troubled Asset Relief Program through 

the Community Development Capital 

Program to avoid an accelerated interest 

rate on the secondary capital over the 

last five years to maturation. 

DATES: This rule is effective February 

19, 2010. Comments must be received 

on or before March 22, 2010. 

ADDRESSES: You may submit comments 

by any of the following methods (Please 

send comments by one method only): 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• NCUA Web Site: http:// 

www.ncua.gov/Resources/ 

RegulationsOpinionsLaws/ 

ProposedRegulations.aspx. Follow the 

instructions for submitting comments. 

• E-mail: Address to 

regcomments@ncua.gov. Include ‘‘[Your 

name] Comments on Secondary Capital 

Accounts’’ in the e-mail subject line. 

• Fax: (703) 518–6319. Use the 

subject line described above for e-mail. 

• Mail: Address to Mary Rupp, 

Secretary of the Board, National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, Virginia 22314– 

3428. 

• Hand Delivery/Courier: Same as 

mail address. 

FOR FURTHER INFORMATION CONTACT: 

Kevin Tuininga, Trial Attorney, at the 

above address, or telephone: (703) 518– 

6543. 

SUPPLEMENTARY INFORMATION: 

Public Inspection of Comments: All 

public comments are available on the 

agency’s Web site at http:// 

www.ncua.gov/Resources/ 

RegulationsOpinionsLaws/ 

RegulationComments.aspx as 

submitted, except as may not be 

possible for technical reasons. Public 

comments will not be edited to remove 

any identifying or contact information. 

Paper copies of comments may be 

inspected in NCUA’s law library at 1775 

Duke Street, Alexandria, Virginia 22314, 

by appointment weekdays between 9 

a.m. and 3 p.m. To make an 

appointment, call (703) 518–6546 or 

send an e-mail to OGCMail@ncua.gov. 

A. Background 

1. Secondary Capital 

Pursuant to the Federal Credit Union 

Act, 12 U.S.C. 1751 et seq., the NCUA 

Board (‘‘Board’’) has authority to permit 

credit unions serving predominantly 

low-income members (‘‘LICUs’’) to 

accept payments on shares from nonnatural persons subject to limitations 

the Board prescribes. 12 U.S.C. 1757(6). 

In 1996, the Board exercised this 

authority by permitting LICUs, 

including State-chartered credit unions 

to the extent allowed by State law, to 

accept secondary capital (‘‘SC’’) from 

non-natural person members and 

nonmembers. 61 FR 50696 (Sept. 27, 

1996). The Board intended that SC 

accounts provide LICUs with additional 

means to accumulate capital. 61 FR 

3788 (Feb. 2, 1996); 71 FR 4234 (Jan. 26, 

2006). Accumulated capital could be 

used to expand lending and financial 

services and to absorb losses that might 

otherwise cause or contribute to failure. 

Id. 

The Board also implemented a 

number of measures designed to ensure 

the safety and soundness of LICUs that 

accepted SC. 61 FR at 3788, 3791. As 

part of the safety and soundness 

measures, the original SC rule 

prohibited redemption of any part of a 

SC account prior to maturity. Id. at 

3791. The rule also directed that LICUs 

record the capital value of SC accounts 

with a maturation date of less than five 

years in accordance with an annual 

reduction of 20 percent of the original 

balance. Id. This net-worth reduction 

was designed in large part to avoid 

overreliance on the availability of 

temporary SC accounts and to 

encourage LICUs ‘‘to continually 

replenish their sources of maturing 

secondary capital to the extent such 

funds are needed to support ongoing 

lending programs and other operations.’’ 

Id. at 3789. 

In 2006, the Board amended the rule 

to allow LICUs to redeem discounted SC 

over the five years prior to maturity at 

a maximum annual rate of 20 percent of 

the original balance, subject to the 

approval of the appropriate Regional 

Director. 71 FR at 4239. This 

redemption schedule followed the 

schedule for discounting the net-worth 

value of SC accounts. 70 FR 43790 (July 

29, 2005). The amendment was 

designed to prevent the net worth value 

of SC discounted according to the 

annual reduction from diluting a LICU’s 

net worth ratio calculated pursuant to 

NCUA’s system of prompt corrective 

action. 71 FR at 4235. The final 20- 

percent increment of discounted SC 

could not be redeemed prior to the 

maturation date. Id. 

2. The Troubled Asset Relief Program 

On October 3, 2008, the President 

signed into law the Emergency 

Economic Stabilization Act of 2008 

(‘‘EESA’’). Public Law No. 110–343 

(2008). The EESA authorized the 

Secretary of the Treasury to establish 


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7340 Federal Register / Vol. 75, No. 33 / Friday, February 19, 2010 / Rules and Regulations 

1 Government-funded SC refers only to SC funded 

by the Federal government as opposed to state 

governments or their subdivisions. 

the Troubled Asset Relief Program 

(‘‘TARP’’) with the purpose of restoring 

and sustaining the viability of financial 

institutions. 12 U.S.C. 5211. Pursuant to 

TARP, the United States Department of 

the Treasury (‘‘Treasury’’) has 

announced a Capital Program for 

certified Community Development 

Financial Institutions (‘‘Community 

Development Capital Program’’ or ‘‘CDC 

Program’’). To qualify for participation 

in the CDC Program, credit unions must 

have a low-income designation pursuant 

to 12 CFR 701.34. 

The terms of the CDC Program 

provide that LICUs accepted for 

participation would be eligible to issue 

CDC Senior Securities, or subordinated 

debentures, up to an aggregate principal 

amount of 3.5 percent of the LICU’s total 

assets. The subordinated debentures 

would be purchased by the Treasury, 

would have a 13-year maturity, and 

would pay cumulative interest at an 

annual rate of two percent until the 

eighth anniversary of their date of 

issuance. Over the remaining five years 

to maturity, the subordinated 

debentures would pay cumulative 

interest at an annual rate of nine 

percent. Under certain circumstances, 

the CDC Program may also require 

LICUs to secure matching funds from 

sources other than the Federal 

Government. SC that LICUs accept 

pursuant to the CDC Program (‘‘TARP 

funds’’) would be subject to NCUA’s 

regulation governing secondary capital. 

§ 701.34(b). As an additional condition 

imposed by Treasury, TARP funds 

accepted as SC under the CDC Program 

would be senior to any required 

matching SC from an alternative source 

with respect to covering losses. 

3. Effect on LICUs 

Without this interim final rule, 

NCUA’s regulation prevents a Regional 

Director from approving early 

redemption of SC outside of the 

restrictions of the redemption schedule 

of § 701.34(d)(3). § 701.34(d)(1)–(2). To 

obtain approval, a LICU must 

demonstrate six eligibility requirements 

to the Regional Director’s satisfaction. 

Id. If successful, the Regional Director’s 

authority to approve early redemption 

would remain limited as set forth in the 

schedule of § 701.34(d)(3). Under that 

schedule, a LICU can redeem a 

maximum of 20 percent of the original 

balance of a SC account per year, 

beginning at five years remaining 

maturity. Id. 

Thus, without an amendment, LICUs 

that choose to accept TARP funds in the 

form of SC will be required to hold an 

annually-decreasing percentage of TARP 

funds at nine percent interest over five 

years, a rate potentially higher than 

other rates that would become available 

on SC accounts. A similar concern 

would arise in instances where a LICU 

might accept matching SC for the TARP 

funds at a rate higher than it otherwise 

would in order to benefit from the twopercent rate applicable to TARP funds. 

The pre-amendment rule could 

therefore cause some LICUs to forgo 

application for the CDC Program 

because of the risk of holding a 

considerable portion of TARP funds and 

any match at interest rates significantly 

above market rates. These LICUs would 

lose the opportunity to improve lending 

capability and capital provided by the 

modest two-percent interest rate on 

TARP funds over their first eight years. 

In addition, NCUA’s pre-amendment 

rule would contradict one of the terms 

of Treasury’s CDC Program. The preamendment rule required pro-rata loss 

distribution among all secondary capital 

accounts, contrary to the seniority 

requirement Treasury is imposing. 

B. Modifications to Section 701.34 

The amended rule exempts all SC 

accounts funded by the United States 

Government or any of its subdivisions 

(‘‘government-funded SC’’) 1 from the 

limits of the redemption schedule in 

§ 701.34(d)(3). It also exempts SC 

accepted as a match to the governmentfunded SC. The exception seeks to 

accomplish the following: (1) Remove 

any disincentive for LICUs to accept 

TARP funds; (2) avoid subjecting LICUs 

that do accept TARP funds to the 

stepped-up nine-percent interest rate 

over the last five years to maturity; and 

(3) avoid subjecting LICUs to potentially 

high interest rates on SC accepted as a 

match to TARP funds over an extended 

period. The exemption language is 

broad enough to encompass the early 

redemption of SC accepted under other 

government-funded programs that could 

arise in response to adverse economic 

conditions. 

More narrowly, the amended rule 

changes the loss distribution procedures 

applicable to SC accounts so that SC 

accepted from the United States 

Government or any of its subdivisions 

under the CDC Program is senior to any 

matching SC accepted from an 

alternative source that the CDC Program 

requires. This amendment was 

necessary to conform NCUA regulations 

to the seniority terms on which 

Treasury is offering TARP funds under 

the CDC Program. The amended 

language allows a LICU to choose 

between two different methods of 

subordinating matching SC to SC 

accepted under the CDC Program. 

The first method excludes CDC 

Program SC from the pro-rata loss 

distribution procedures until all of its 

matching SC has been depleted or 

properly redeemed. Under this method, 

the pro-rata loss distribution calculation 

will cause all other SC on deposit at the 

time a loss is realized to be depleted 

before the CDC Program SC covers a 

loss. The first method will be available 

only if its seniority implications are not 

inconsistent with agreements governing 

other SC on deposit at the time a loss 

is realized. 

The second method is available 

regardless of any agreements governing 

other SC and must be followed if a LICU 

cannot apply the first method in light of 

other SC agreements. This method 

combines the CDC Program SC and any 

of its remaining matching SC for 

purposes of the pro-rata loss 

distribution procedure. The pro-rata loss 

apportioned to this combined account is 

first applied to the matching SC portion. 

The CDC Program SC becomes available 

to cover a loss under this method only 

once all of the matching SC has been 

depleted or properly redeemed. In 

effect, this will cause the CDC Program’s 

matching SC to suffer a greater loss in 

the pro-rata calculation than other SC 

on deposit. 

While the possibility an investor 

contributing matching SC might suffer a 

greater loss sooner may make it more 

difficult for some LICUs to recruit 

matching SC if it is required under the 

CDC Program, there may be 

circumstances where this is the only 

option available to ensure the matching 

SC is subordinate to the CDC Program 

SC while also ensuring the 

subordination method does not cause a 

violation of any agreements governing 

other SC on deposit at the time a loss 

is realized. Following one of these two 

methods is necessary because Treasury’s 

terms direct that any matching SC 

required under the Program be 

subordinate to the CDC Program SC. 

These two subordination methods only 

need to be applied to governmentfunded SC accepted under the CDC 

Program of 2010 and not to other 

government-funded SC that does not 

require seniority status. 

All other requirements of § 701.34 

remain unchanged and applicable to 

government-funded SC and its matching 

SC. The interim final rule continues to 

require that the appropriate Regional 

Director approve any request for partial 

or full redemption pursuant to the 

procedures of § 701.34(d)(1) and (2). All 

six eligibility requirements of that 


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Federal Register / Vol. 75, No. 33 / Friday, February 19, 2010 / Rules and Regulations 7341 

2 In some instances, matching SC might be 

eligible for redemption before the governmentfunded SC it is matched with, depending on the 

conditions imposed by the program under which 

the government-funded SC was accepted. 

section must be met to obtain approval, 

including that the LICU must have had 

the SC on deposit for at least two years. 

In fact, the amended language expressly 

incorporates the two-year deposit 

requirement, which is intended to 

facilitate financial stability and 

encourage implementation of strategic 

business plans and budget objectives. 

See 70 FR at 43790. In the case of statechartered LICUs, § 741.204(d) continues 

to require that the LICU obtain the 

approval of its State Supervisory 

Authority with the concurrence of the 

appropriate NCUA Regional Director. 

Clarifying the criteria for approval of 

SC redemption, the amended rule states 

that all government-funded SC is 

eligible for redemption along with its 

matching SC, regardless of whether the 

SC has been discounted pursuant to the 

net worth schedule of § 701.34(c)(2). 

This language seeks to avoid any 

ambiguity that could otherwise arise by 

inclusion of the term ‘‘discounted 

secondary capital’’ in the approval 

procedures of § 701.34(d)(1) and (2). For 

purposes of the approval procedures 

under the amended rule, the SC need 

not have been discounted to be eligible 

for early redemption, as is still required 

for non-government-funded SC that 

does not constitute a match to 

government-funded SC. Nevertheless, a 

LICU that accepts government-funded 

SC must still follow the schedule for 

discounting net worth as set forth in 

§ 701.34(c)(2) if the SC and its match, if 

any, is not redeemed prior to the last 

five years to maturity. 

If government-funded SC and its 

matching SC are redeemed prior to the 

last five years to maturity, LICUs would 

entirely avoid the net worth schedule, 

which resurrects risks the schedule was 

originally designed to hedge against. 

These include the risk that a LICU could 

place overreliance on the availability of 

the SC as it approaches its approved 

early redemption date and the risk that 

the LICU could neglect to plan to 

replenish the SC to the extent needed as 

the early redemption date nears. 61 FR 

at 3789. However, the eligibility criteria 

the LICU is required to demonstrate to 

the Regional Director will continue to 

guard against those risks, particularly 

the requirements that the LICU 

demonstrate it will ‘‘have a postredemption net worth classification of 

‘adequately capitalized’’’ and that the SC 

‘‘will not be needed to cover losses prior 

to the final maturity of the account.’’ 

§ 701.34(d)(1)(i), (iii). Other approval 

eligibility requirements could come into 

play as well, depending on relevant 

circumstances at the time approval is 

requested or any conditions imposed on 

interdependent SC accounts. 

If the eligibility requirements are met, 

the rule would allow redemption of 

matching SC on the same or a different 

schedule or rate than the governmentfunded SC if not otherwise restricted.2

For example, if the matching SC bears 

a more favorable interest rate than its 

paired government-funded SC, a LICU 

may choose to hold the matching SC for 

a longer period. Similarly, a Regional 

Director may disallow an application for 

early redemption of matching SC, 

despite allowing it for governmentfunded SC, if the Regional Director 

determines such would be appropriate 

under the approval criteria. In 

circumstances where the governmentfunded SC has been redeemed, the SC 

originally accepted as a match for the 

government-funded SC, through 

maturity, would remain eligible for 

early redemption pursuant to the 

exception rather than the schedule of 

§ 701.34(d)(3). 

The amended rule is not intended to 

affect in any manner the SC redemption 

procedures for non-government-funded 

SC that is not accepted as a match to 

government-funded SC. 

C. Interim Final Rule and Immediate 

Effective Date 

NCUA is issuing this rulemaking as 

an interim final rule effective upon 

publication. The Administrative 

Procedure Act (APA), 5 U.S.C. 553, 

requires that before a rulemaking can be 

finalized it must first be published as a 

notice of proposed rulemaking with the 

opportunity for public comment, unless 

the agency for good cause finds that 

notice and public comment are 

impracticable, unnecessary, or contrary 

to the public interest. Additionally, the 

APA requires that, once finalized, a 

rulemaking must have a delayed 

effective date of 30 days from the date 

of publication, except for good cause. 

In this regard, NCUA invokes the 

good cause exception to the 

requirements of the APA. NCUA 

believes good cause exists for issuing 

these amendments as an interim final 

rule effective immediately. Due to 

Treasury’s announcement of the CDC 

Program and the short deadline by 

which LICUs must submit applications 

for the Program, it is imperative that 

NCUA immediately remove any 

regulatory disincentive for LICUs to 

apply. An immediate amendment is also 

necessary to avoid the former rule’s 

conflict with Treasury’s SC seniority 

requirement. 

The interim final rule makes clear to 

LICUs that if they apply for TARP funds 

through the CDC Program, they will 

have an opportunity to avoid the 

accelerated nine-percent interest rate as 

the TARP funds approach maturity. The 

rule will provide a similar opportunity 

with respect to any matching funds that 

may be required. Finally, the interim 

rule is limited in scope and does not 

impose any regulatory burden; rather, 

the rule provides greater flexibility for 

LICUs to assist their members. 

For these reasons, NCUA has 

determined that the public notice and 

participation that the APA ordinarily 

requires before a regulation may take 

effect would, in this case, be contrary to 

the public interest and, further, that 

good cause exists for waiving the 

customary 30-day delayed effective 

date. Nevertheless, NCUA would like 

the benefit of public comment before 

adopting a permanent final rule and 

invites interested parties to submit 

comments during a 30-day comment 

period. In adopting the final regulation, 

NCUA will revise the interim rule in 

light of the comments received, if 

appropriate. 

Regulatory Procedures 

Regulatory Flexibility Act 

The Regulatory Flexibility Act 

requires NCUA to prepare an analysis to 

describe any significant economic 

impact a rule may have on a substantial 

number of small entities (primarily 

those under ten million dollars in 

assets). The interim final rule allows 

LICUs to redeem SC accepted from the 

United States Government or any of its 

subdivisions, along with its matching 

SC, at any time after the SC has been on 

deposit for two years, without imposing 

any additional regulatory burden. The 

rule will not have a significant 

economic impact on a substantial 

number of small credit unions. Thus, a 

Regulatory Flexibility Analysis is not 

required. 

Paperwork Reduction Act 

NCUA has determined that this rule 

will not increase paperwork 

requirements under the Paperwork 

Reduction Act of 1995 and regulations 

of the Office of Management and 

Budget. 

Executive Order 13132 

Executive Order 13132 encourages 

independent regulatory agencies to 

consider the impact of their regulatory 

actions on State and local interests. 

NCUA, an independent regulatory 

agency as defined in 44 U.S.C. 3502(5), 

voluntarily adheres to the fundamental 


srobinson on DSKHWCL6B1PROD with RULES
7342 Federal Register / Vol. 75, No. 33 / Friday, February 19, 2010 / Rules and Regulations 

federalism principles addressed by the 

Executive Order. This rule 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. Accordingly, this 

rule does not constitute a policy that has 

federalism implications for purposes of 

the Executive Order. 

Treasury and General Government 

Appropriations Act, 1999 

NCUA has determined that the rule 

will not affect family well-being within 

the meaning of section 654 of the 

Treasury and General Government 

Appropriations Act, 1999, Public Law 

105–277, 112 Stat. 2681 (1998). 

Small Business Regulatory Enforcement 

Fairness Act 

The Small Business Regulatory 

Enforcement Fairness Act of 1996 (Pub. 

L. 104–121) (SBREFA) provides 

generally for congressional review of 

agency rules. A reporting requirement is 

triggered in instances where NCUA 

issues a final rule as defined by Section 

551 of the APA. 5 U.S.C. 551. NCUA 

does not believe this interim final rule 

is a ‘‘major rule’’ within the meaning of 

the relevant sections of SBREFA. NCUA 

has submitted the rule to the Office of 

Management and Budget for its 

determination in that regard. 

List of Subjects in 12 CFR Part 701 

Credit, Credit unions, Mortgages. 

By the National Credit Union 

Administration Board, this 9th day of 

February, 2010. 

Mary F. Rupp, 

Secretary of the Board. 

■ For the reasons discussed above, 12 

CFR part 701 is amended as follows: 

PART 701—ORGANIZATION AND 

OPERATIONS OF FEDERAL CREDIT 

UNIONS 

■ 1. The authority citation for part 701 

continues to read as follows: 

Authority: 12 U.S.C. 1752(5), 1755, 1756, 

1757, 1758, 1759, 1761a, 1761b, 1766, 1767, 

1782, 1784, 1786, 1787, 1789. Section 701.6 

is also authorized by 15 U.S.C. 3717. Section 

701.31 is also authorized by 15 U.S.C. 1601 

et seq.; 42 U.S.C. 1981 and 3601–3610. 

Section 701.35 is also authorized by 42 

U.S.C. 4311–4312. 

■ 2. Amend § 701.34 by adding a 

sentence to the end of paragraph (b)(7) 

introductory text, adding paragraphs 

(b)(7)(i) and (ii), and adding paragraph 

(d)(4) to read as follows: 

§ 701.34 Designation of low income status; 

Acceptance of secondary capital accounts 

by low-income designated credit unions. 

* * * * * 

(b) * * * 

(7) * * * In instances where a LICU 

accepts secondary capital from the 

United States Government or any of its 

subdivisions under the Community 

Development Capital Program of 2010 

(‘‘CDCP secondary capital’’) and 

matching funds are required under the 

Program and are on deposit in the form 

of secondary capital at the time a loss 

is realized, a LICU must apply either of 

the following pro-rata loss distribution 

procedures to the CDCP secondary 

capital and its matching secondary 

capital with respect to the loss: 

(i) If not inconsistent with any 

agreements governing other secondary 

capital on deposit at the time a loss is 

realized, the CDC secondary capital may 

be excluded from the calculation of the 

pro-rata loss distribution until all of its 

matching secondary capital has been 

depleted or properly redeemed, thereby 

causing the CDC secondary capital to be 

held as senior to all other secondary 

capital until its matching secondary 

capital is exhausted. The CDCP 

secondary capital should be included in 

the calculation of the pro-rata loss 

distribution and is available to cover the 

loss only after all of its matching 

secondary capital has been depleted or 

properly redeemed. 

(ii) Regardless of any agreements 

applicable to other secondary capital, 

the CDCP secondary capital and its 

matching secondary capital may be 

considered a single account for 

purposes of determining a pro-rata share 

of the loss and the amount determined 

as the pro-rata share for the combined 

account must first be applied to the 

matching secondary capital account, 

thereby causing the CDCP secondary 

capital to be held as senior to its 

matching secondary capital. The CDCP 

secondary capital is available to cover 

the loss only after all of its matching 

secondary capital has been depleted or 

properly redeemed. 

* * * * * 

(d) * * * 

(4) Early redemption exception. 

Subject to the written approval of the 

appropriate Regional Director obtained 

pursuant to the requirements of 

paragraphs (d)(1) and (2) of this section, 

a LICU can redeem all or part of 

secondary capital accepted from the 

United States Government or any of its 

subdivisions at any time after the 

secondary capital has been on deposit 

for two years. If the secondary capital 

was accepted under conditions that 

required matching secondary capital 

from a source other than the Federal 

Government, the matching secondary 

capital may also be redeemed in the 

manner set forth in the preceding 

sentence. For purposes of obtaining the 

appropriate Regional Director’s 

approval, all secondary capital a LICU 

accepts from the United States 

Government or any of its subdivisions, 

as well as its matching secondary 

capital, if any, is eligible for early 

redemption regardless of whether any 

part of the secondary capital has been 

discounted pursuant to paragraph (c)(2) 

of this section. 

* * * * * 

[FR Doc. 2010–3160 Filed 2–18–10; 8:45 am] 

BILLING CODE 7535–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2010–0126; Directorate 

Identifier 2010–NM–015–AD; Amendment 

39–16209; AD 2010–04–16] 

RIN 2120–AA64 

Airworthiness Directives; SICLI Halon 

1211 Portable Fire Extinguishers as 

Installed on Various Airplanes and 

Rotorcraft 

AGENCY: Federal Aviation 

Administration (FAA), Department of 

Transportation (DOT). 

ACTION: Final rule; request for 

comments. 

SUMMARY: We are adopting a new 

airworthiness directive (AD) for the 

products listed above. This AD results 

from mandatory continuing 

airworthiness information (MCAI) 

originated by an aviation authority of 

another country to identify and correct 

an unsafe condition on an aviation 

product. The MCAI describes the unsafe 

condition as: 

The Civil Aviation Authority of the United 

Kingdom (UK) has informed EASA 

[European Aviation Safety Agency] that 

significant quantities of Halon 1211 gas, 

determined to be outside the required 

specification, have been supplied to the 

aviation industry for use in fire extinguishing 

equipment. * * * 

* * * * * 

* * * This Halon 1211 has subsequently 

been used to fill P/N [part number] 

1708337B4 portable fire extinguishers that 

are now likely to be installed in or carried 

on board aircraft. 

The contaminated nature of this gas, when 

used against a fire, may provide reduced fire 

suppression, endangering the safety of the 

aircraft and its occupants. In addition, 


srobinson on DSKHWCL6B1PROD with RULES