43926 Federal Register / Vol. 62, No. 159 / Monday, August 18, 1997 / Rules and Regulations

AFM revisions required by this AD on

U.S. operators is estimated to be $600,

or $60 per airplane.

The cost impact figures discussed

above are based on assumptions that no

operator has yet accomplished any of

the requirements of this AD action, and

that no operator would accomplish

those actions in the future if this AD

were not adopted.

Regulatory Impact

The regulations adopted herein 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. Therefore, in

accordance with Executive Order 12612,

it is determined that this final rule does

not have sufficient federalism

implications to warrant the preparation

of a Federalism Assessment.

For the reasons discussed above, I

certify that this action (1) is not a

‘‘significant regulatory action’’ under

Executive Order 12866; (2) is not a

‘‘significant rule’’ under 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. A final evaluation has

been prepared for this action and it is

contained in the Rules Docket. A copy

of it may be obtained from the Rules

Docket at the location provided under

the caption ADDRESSES.

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

1. The authority citation for part 39

continues to read as follows:

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

§ 39.13 [Amended]

2. Section 39.13 is amended by

adding the following new airworthiness

directive:

97–16–09 British Aerospace Regional

Aircraft (Formerly, Jetstream Aircraft

Limited; British Aerospace (Commercial

Aircraft) Limited]: Amendment 39–10101.

Docket 96–NM–178–AD.

Applicability: BAe Model ATP airplanes,

having constructor’s numbers 2002 through

2063 inclusive; on which Jetstream

Modification 10303A (Jetstream Service

Bulletin ATP 32–41) has been installed;

certificated in any category.

Note 1: This AD applies to each airplane

identified in the preceding applicability

provision, regardless of whether it has been

otherwise modified, altered, or repaired in

the area subject to the requirements of this

AD. For airplanes that have been modified,

altered, or repaired so that the performance

of the requirements of this AD is affected, the

owner/operator must request approval for an

alternative method of compliance in

accordance with paragraph (b) of this AD.

The request should include an assessment of

the effect of the modification, alteration, or

repair on the unsafe condition addressed by

this AD; and, if the unsafe condition has not

been eliminated, the request should include

specific proposed actions to address it.

Compliance: Required as indicated, unless

accomplished previously.

To prevent uncommanded application of

the brakes during landing, accomplish the

following:

(a) Within 60 days of the effective date of

this AD, accomplish paragraphs (a)(1) and

(a)(2) of this AD in accordance with Jetstream

Service Bulletin ATP–29–12, dated

September 9, 1995.

(1) Modify the hydraulic system; and

(2) Revise the Emergency and Abnormal

Procedures Sections of the FAA-approved

Airplane Flight Manual (AFM) to include the

information specified in Temporary Revision

No. T/52, Issue 1, dated August 16, 1995,

which introduces revised procedures for

lowering the landing gear, as specified in the

temporary revision; and operate the airplane

in accordance with those limitations and

procedures.

Note 2: Paragraph 1.K. of Jetstream Service

Bulletin ATP–29–12, dated September 9,

1995, references Temporary Revision No. T/

52 as an additional source of service

information for revising the AFM.

Note 3: This may be accomplished by

inserting a copy of Temporary Revision No.

T/52 in the AFM. When this temporary

revision has been incorporated into general

revisions of the AFM, the general revisions

may be inserted in the AFM, provided the

information contained in the general

revisions is identical to that specified in

Temporary Revision No. T/52.

(b) An alternative method of compliance or

adjustment of the compliance time that

provides an acceptable level of safety may be

used if approved by the Manager,

Standardization Branch, ANM–113, FAA,

Transport Airplane Directorate. Operators

shall submit their requests through an

appropriate FAA Principal Maintenance

Inspector, who may add comments and then

send it to the Manager, Standardization

Branch, ANM–113.

Note 4: Information concerning the

existence of approved alternative methods of

compliance with this AD, if any, may be

obtained from the Standardization Branch,

ANM–113.

(c) Special flight permits may be issued in

accordance with sections 21.197 and 21.199

of the Federal Aviation Regulations (14 CFR

21.197 and 21.199) to operate the airplane to

a location where the requirements of this AD

can be accomplished.

(d) The actions shall be done in accordance

with Jetstream Service Bulletin ATP–29–12,

dated September 9, 1995; and Temporary

Revision No. T/52, Issue 1, dated August 16,

1995. This incorporation by reference was

approved by the Director of the Federal

Register in accordance with 5 U.S.C. 552(a)

and 1 CFR part 51. Copies may be obtained

from Jetstream Aircraft, Inc., P.O. Box 16029,

Dulles International Airport, Washington, DC

20041–6029. Copies may be inspected at the

FAA, Transport Airplane Directorate, 1601

Lind Avenue, SW., Renton, Washington, or at

the Office of the Federal Register, 800 North

Capitol Street, NW., suite 700, Washington,

DC.

(e) This amendment becomes effective on

September 22, 1997.

Issued in Renton, Washington, on July 29,

1997.

Darrell M. Pederson,

Acting Manager, Transport Airplane

Directorate, Aircraft Certification Service.

[FR Doc. 97–21740 Filed 8–15–97; 8:45 am]

BILLING CODE 4910–13–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 97–CE–65–AD; Amendment 39–

10105; AD 97–17–03]

RIN 2120–AA64

Airworthiness Directives; Ayres

Corporation S2R Series Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule; request for

comments.

SUMMARY: This amendment supersedes

Airworthiness Directive (AD) 97–13–11,

which currently requires inspecting the

1⁄4-inch and 5⁄16-inch bolt hole areas on

the lower spar caps for fatigue cracking

on Ayres S2R series airplanes, and

replacing any lower spar cap if fatigue

cracking is found. That AD resulted

from an accident on an Ayres S2R series

airplane where the wing separated from

the airplane in flight. AD 97–13–11

incorrectly references the Ayres Model

S2R-R1340 airplanes as Model S2R–

1340R. This AD requires the same

actions as AD 97–13–11, but corrects the

designation of the Model S2R-R1340

airplanes. The actions specified by this

AD are intended to detect fatigue

cracking of the lower spar caps, which,

if not corrected, could result in the wing

separating from the airplane with
Federal Register / Vol. 62, No. 159 / Monday, August 18, 1997 / Rules and Regulations 43927

consequent loss of control of the

airplane.

DATES: Effective September 5, 1997.

The incorporation by reference of

certain publications listed in the

regulations was previously approved by

the Director of the Federal Register as of

July 10, 1997 (62 FR 36978).

Comments for inclusion in the Rules

Docket must be received on or before

October 17, 1997.

ADDRESSES: Submit comments in

triplicate to the Federal Aviation

Administration (FAA), Central Region,

Office of the Assistant Chief Counsel,

Attention: Rules Docket 97-CE–65-AD,

Room 1558, 601 E. 12th Street, Kansas

City, Missouri 64106.

Service information that applies to

this AD may be obtained from the Ayres

Corporation, P.O. Box 3090, One

Rockwell Avenue, Albany, Georgia

31706–3090. This information may also

be examined at the Federal Aviation

Administration (FAA), Central Region,

Office of the Assistant Chief Counsel,

Attention: Rules Docket 97-CE–65-AD,

Room 1558, 601 E. 12th Street, Kansas

City, Missouri 64106; or at the Office of

the Federal Register, 800 North Capitol

Street, NW., suite 700, Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Cindy Lorenzen, Aerospace Engineer,

FAA, Atlanta Aircraft Certification

Office, Campus Building, 1701

Columbia Avenue, suite 2-160, College

Park, Georgia 30337–2748; telephone

(404) 305–7357; facsimile (404) 305–

7348.

SUPPLEMENTARY INFORMATION:

Discussion

AD 97–13–11, Amendment 39–10071

(62 FR 36978, July 10, 1997), currently

requires the following on Ayres S2R

series airplanes: inspecting the 1⁄4-inch

and 5⁄16-inch bolt hole areas on the

lower spar caps for fatigue cracking, and

replacing any lower spar cap if fatigue

cracking is found. Accomplishment of

the inspection is in accordance with

Ayres Service Bulletin No. SB-AG–39,

dated September 17, 1996. This

inspection utilizes magnetic particle

procedures and must follow American

Society for Testing Materials (ASTM)

E1444–94A, using wet particles meeting

the requirements of the Society for

Automotive Engineers (SAE) AMS 3046.

This inspection is to be accomplished

by a Level 2 or Level 3 inspector

certified using the guidelines

established by the American Society for

Nondestructive Testing or MIL-STD–

410.

That AD resulted from an accident on

an Ayres S2R series airplane where the

wing separated from the airplane in

flight. Investigation of all resources

available to the FAA shows nine

occurrences of fatigue cracking in the

lower spar caps of Ayres S2R airplanes,

specifically emanating from the 1⁄4-inch

and 5⁄16-inch bolt holes. Although the

investigation of the above-referenced

accident is not complete, the FAA

believes that the cause can be attributed

to fatigue cracks emanating from the 1⁄4-

inch and 5⁄16-inch bolt holes in the left

lower spar cap.

Data accumulated by the FAA

indicates that the fatigue cracks on these

Ayres S2R series airplanes become

detectable at different times based upon

the type of engines and design of the

airplane. With this in mind, the FAA

has categorized these airplanes into

three groups:

—Group 1 airplanes have steel spar caps

with aluminum webs. These airplanes

are capable of carrying heavier loads

and data indicates that inspections in

the affected areas of the lower spar

caps should begin upon the

accumulation of 2,700 hours time-inservice (TIS);

—Group 2 airplanes have steel spar caps

with steel webs. Because of the steel

webs as opposed to aluminum, data

indicates that inspections in the

affected areas of the lower spar caps

should begin upon the accumulation

of 4,300 hours TIS; and

—Group 3 airplanes, which are the ones

manufactured first, have steel spars

with aluminum webs and low

horsepower radial engines, and thus

do not have the ability to carry as

much weight as airplanes in the other

two groups. Data indicates that

inspections in the affected areas of the

lower spar caps should begin upon

the accumulation of 9,000 hours TIS.

Manufacture of the affected airplanes

began in 1965 with the airplanes

incorporating the lower horsepower

radial engines. Many of the airplane

models referenced in this AD are still

currently in production. These airplanes

are used in agricultural operations and

average 500 hours TIS annually. With

this in mind, some of the earlier

manufactured airplanes could have as

many as 16,000 hours total TIS.

Actions Since Issuance of the Previous

Rule

Since issuance of AD 97–13–11, the

FAA realizes that it inadvertently

referenced Ayres Model S2R–R1340

airplanes as Model S2R–1340R

airplanes. Although the FAA believes

that most affected operators will realize

the intent of this airplane model

designation, a few may either choose

not to comply because legally they are

not required to or they may not realize

that the intent was to include the Model

S2R–R1340 airplanes in the

Applicability of AD 97–13–11.

The FAA’s Determination

After examining the circumstances

and reviewing all available information

related to the incidents described above,

the FAA has determined that AD action

should be taken in order to detect

fatigue cracking of the lower spar caps,

which, if not corrected, could result in

the wing separating from the airplane

with consequent loss of control of the

airplane.

Explanation of the Provisions of This

AD

Since an unsafe condition has been

identified that is likely to exist or

develop in other Ayres S2R airplanes of

the same type design, this AD

supersedes AD 97–13–11 with a new

AD. This AD retains the requirements

from AD 97–13–11 of inspecting the 1⁄4-

inch and 5⁄16-inch bolt hole areas on the

lower spar caps for fatigue cracking, and

replacing any lower spar cap where

fatigue cracking is found; and changes

the designation of the Ayres Model

S2R–1340R airplanes to Ayres Model

S2R–R1340 airplanes. Accomplishment

of the inspection continues to be in

accordance with Ayres Service Bulletin

No. SB–AG–39, dated September 17,

1996. This inspection utilizes magnetic

particle procedures and must follow

American Society for Testing Materials

(ASTM) E1444–94A, using wet particles

meeting the requirements of the Society

for Automotive Engineers (SAE) AMS

3046. This inspection is to be

accomplished by a Level 2 or Level 3

inspector certified using the guidelines

established by the American Society for

Nondestructive Testing or MIL–STD–

410.

Determination of the Effective Date of

the AD

Since a situation exists (possible wing

separation from the airplane) that

requires the immediate adoption of this

regulation, it is found that notice and

opportunity for public prior comment

hereon are impracticable, and that good

cause exists for making this amendment

effective in less than 30 days.

Comments Invited

Although this action is in the form of

a final rule that involves requirements

affecting immediate flight safety and,

thus, was not preceded by notice and

opportunity to comment, comments are

invited on this rule. Interested persons

are invited to comment on this rule by

submitting such written data, views, or
43928 Federal Register / Vol. 62, No. 159 / Monday, August 18, 1997 / Rules and Regulations

arguments as they may desire.

Communications should identify the

Rules Docket number and be submitted

in triplicate to the address specified

above. All communications received on

or before the closing date for comments

will be considered, and this rule may be

amended in light of the comments

received. Factual information that

supports the commenter’s ideas and

suggestions is extremely helpful in

evaluating the effectiveness of the AD

action and determining whether

additional rulemaking action would be

needed.

Comments are specifically invited on

the overall regulatory, economic,

environmental, and energy aspects of

the rule that might suggest a need to

modify the rule. All comments

submitted will be available, both before

and after the closing date for comments,

in the Rules Docket for examination by

interested persons. A report that

summarizes each FAA-public contact

concerned with the substance of this AD

will be filed in the Rules Docket.

Commenters wishing the FAA to

acknowledge receipt of their comments

submitted in response to this rule must

submit a self-addressed, stamped

postcard on which the following

statement is made: ‘‘Comments to

Docket No. 97–CE–65–AD.’’ The

postcard will be date stamped and

returned to the commenter.

Regulatory Impact

The regulations adopted herein 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. Therefore, in

accordance with Executive Order 12612,

it is determined that this final rule does

not have sufficient federalism

implications to warrant the preparation

of a Federalism Assessment.

The FAA has determined that this

regulation is an emergency regulation

that must be issued immediately to

correct an unsafe condition in aircraft,

and is not a ‘‘significant regulatory

action’’ under Executive Order 12866. It

has been determined further that this

action involves an emergency regulation

under DOT Regulatory Policies and

Procedures (44 FR 11034, February 26,

1979). If it is determined that this

emergency regulation otherwise would

be significant under DOT Regulatory

Policies and Procedures, a final

regulatory evaluation will be prepared

and placed in the Rules Docket

(otherwise, an evaluation is not

required). A copy of it, if filed, may be

obtained from the Rules Docket.

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

1. The authority citation for part 39

continues to read as follows:

Authority: 49 USC 106(g), 40113, 44701.

§ 39.13 [Amended]

2. Section 39.13 is amended by

removing AD 97–13–11, Amendment

39–10071 (62 FR 36978, July 10, 1997),

and by adding a new airworthiness

directive (AD) to read as follows:

97–17–03 Ayres Corporation: Amendment

39–10105; Docket No. 97–CE–65–AD.

Supersedes AD 97–13–11; Amendment

39–10071.

Applicability: Airplanes with the following

model and serial number designations with

or without a –DC suffix, certificated in any

category:

GROUP 1 AIRPLANES

Model Serial Nos.

S–2R ........................................................................................................................................... 5000R through 5099R.

S2R–R1340 ................................................................................................................................. R1340–011, R1340–012, R1340–019, R1340–

020, R1340–024, R1340–025, and R1340–027.

S2R–R1820 ................................................................................................................................. R1820–001 through 1820–035.

S2R–T34 ..................................................................................................................................... 6000R through 6049R, T34–001 through T34–

143, T34–145, T34–147 through T34–167,

T34–171, T34–180, and T34–181.1

S2R–T15 ..................................................................................................................................... T15–001 through T15–033.2

S2R–T11 ..................................................................................................................................... T11–001 through T11–005.

S2R–G1 ...................................................................................................................................... G1–101 through G1–108.

1The serial numbers of the Model S2R–T34 airplanes could incorporate T34–xxx, T36–xxx, T41–xxx, or T42–xxx. This AD applies to all of

these serial number designations as they are all Model S2R–T34 airplanes. 2The serial numbers of the Model S2R–T15 airplanes could incorporate T15–xx and T27–xx. This AD applies to both of these serial number

designations as they are both Model S2R–T15 airplanes.

GROUP 2 AIRPLANES

Model Serial Nos.

S2R–R1340 ................................................................................................................................. R1340–028 through R1340–035.

S2R–R1820 ................................................................................................................................. R1820–036.

S2R–T65 ..................................................................................................................................... T65–001 through T65–017.

S2RHG–T65 ................................................................................................................................ T65–002 through T65–017.

S2R–T34 ..................................................................................................................................... T34–144, T34–146, T34–168, T34–169, T34–172

through T34–179, and T34–189 through T34–

226.1

S2R–T45 ..................................................................................................................................... T45–001 through T45–014.

S2R–G6 ...................................................................................................................................... G6–101 through G6–146.

S2R–G10 .................................................................................................................................... G10–101 through G10–138.
Federal Register / Vol. 62, No. 159 / Monday, August 18, 1997 / Rules and Regulations 43929

GROUP 2 AIRPLANES—Continued

Model Serial Nos.

S2R–G5 ...................................................................................................................................... G5–101 through G5–105.

1The serial numbers of the Model S2R–T34 airplanes could incorporate T34–xxx, T36–xxx, T41–xxx, or T42–xxx. This AD applies to all of

these serial number designations as they are all Model S2R–T34 airplanes.

GROUP 3 AIRPLANES 1

Model Serial Nos.

600 S2D ...................................................................................................................................... All serial numbers beginning with 600–1311D.

S–2R ........................................................................................................................................... 1380R and 1416R through 4999R.

S2R–R1340 ................................................................................................................................. R1340–001 through R1340–010, R1340–013

through R1340–018, R1340–021 through

R1340–023, and R1340–026.

S2R–R3S .................................................................................................................................... R3S–001 through R3S–011.

1Any Group 3 airplane that has been modified with a hopper of a capacity over 400 gallons, a piston engine greater than 600 horsepower, or

any gas turbine engine makes the airplane a Group 1 airplane for the purposes of this AD. The owner/operator must inspect the airplane at the

Group 1 compliance time specified in the Compliance section of this AD.

Note 1: This AD applies to each airplane

identified in the preceding applicability

provision, regardless of whether it has been

modified, altered, or repaired in the area

subject to the requirements of this AD. For

airplanes that have been modified, altered, or

repaired so that the performance of the

requirements of this AD is affected, the

owner/operator must request approval for an

alternative method of compliance in

accordance with paragraph (e) of this AD.

The request should include an assessment of

the effect of the modification, alteration, or

repair on the unsafe condition addressed by

this AD; and, if the unsafe condition has not

been eliminated, the request should include

specific proposed actions to address it.

Compliance: Inspections required as

indicated below and any necessary

replacement required prior to further flight as

indicated in the body of this AD, unless

already accomplished in accordance with AD

97–13–11 (superseded by this AD):

—Group 1 Airplanes: Required upon the

accumulation of 2,700 hours time-inservice (TIS) on each lower spar cap or

prior to further flight after the effective

date of this AD, whichever occurs later.

—Group 2 Airplanes: Required upon the

accumulation of 4,300 hours TIS on each

lower spar cap or prior to further flight

after the effective date of this AD,

whichever occurs later.

—Group 3 Airplanes: Required upon the

accumulation of 9,000 hours TIS on each

lower spar cap or prior to further flight

after the effective date of this AD,

whichever occurs later.

To detect fatigue cracking of the lower spar

caps, which, if not corrected, could result in

the wing separating from the airplane with

consequent loss of control of the airplane,

accomplish the following:

(a) Inspect, using magnetic particle

procedures, the 1⁄4-inch and 5⁄16-inch bolt

hole areas on each lower spar cap for fatigue

cracking. Accomplishment of the inspection

is in accordance with Ayres Service Bulletin

No. SB–AG–39, dated September 17, 1996.

(1) The magnetic particle inspection must

follow American Society for Testing

Materials (ASTM) E1444–94A, using wet

particles meeting the requirements of the

Society for Automotive Engineers (SAE) AMS

3046.

(2) This inspection is to be accomplished

by a Level 2 or Level 3 inspector certified

using the guidelines established by the

American Society for Nondestructive Testing

or MIL–STD–410.

(b) If any cracking is found during the

inspection required by this AD, prior to

further flight, replace the affected lower spar

cap in accordance with the affected

maintenance manual. Upon replacement,

total hours TIS starts over for that particular

lower spar cap. Use the compliance time

specified in the Compliance section of this

AD to determine when the inspection is

required.

(c) If any cracking is found during the

inspection required by this AD, submit a

report of inspection findings to the Manager,

Atlanta Aircraft Certification Office (ACO),

Campus Building, 1701 Columbia Avenue,

Suite 2–160, College Park, Georgia 30337–

2748; facsimile (404) 305–7348; at the

applicable time specified in paragraph (c)(1)

or (c)(2) of this AD. The report must include

a description of any cracking found, the

airplane serial number, and the total number

of flight hours on the lower spar cap found

cracked. Information collection requirements

contained in this regulation have been

approved by the Office of Management and

Budget (OMB) under the provisions of the

Paperwork Reduction Act of 1980 (44 U.S.C.

3501 et seq.) and have been assigned OMB

Control Number 2120–0056.

(1) For airplanes on which the inspection

is accomplished after the effective date of

this AD: Submit the report within 10 days

after performing the inspection required by

paragraph (a) of this AD.

(2) For airplanes on which the inspection

has been accomplished in accordance with

AD 97–13–11 (superseded by this AD):

Submit the report within 10 days after the

effective date of this AD, unless already

accomplished.

(d) Special flight permits may be issued in

accordance with sections 21.197 and 21.199

of the Federal Aviation Regulations (14 CFR

21.197 and 21.199) to operate the airplane to

a location to accomplish the modification

requirements of this AD provided the

following is followed:

(1) The hopper is empty.

(2) Vne is reduced to 126 miles per hour

(109 knots).

(3) Flight into known turbulence is

prohibited.

(e) An alternative method of compliance or

adjustment of the compliance time that

provides an equivalent level of safety may be

approved by the Manager, Atlanta Aircraft

Certification Office (ACO), Campus Building,

1701 Columbia Avenue, Suite 2–160, College

Park, Georgia 30337–2748.

(1) The request shall be forwarded through

an appropriate FAA Maintenance Inspector,

who may add comments and then send it to

the Manager, Atlanta ACO.

(2) Alternative methods of compliance

approved in accordance with AD 97–13–11

(superseded by this action) are considered

approved as alternative methods of

compliance with this AD.

Note 2: Information concerning the

existence of approved alternative methods of

compliance with this AD, if any, may be

obtained from the Atlanta ACO.

(f) The inspection required by this AD shall

be done in accordance with Ayres Service

Bulletin No. SB–AG–39, dated September 17,

1996. This incorporation by reference was

previously approved by the Director of the

Federal Register in accordance with 5 U.S.C.

552(a) and 1 CFR part 51 as of July 10, 1997

(62 FR 36978). Copies may be obtained from

the Ayres Corporation, P.O. Box 3090, One

Rockwell Avenue, Albany, Georgia 31706-

3090. Copies may be inspected at the FAA,

Central Region, Office of the Assistant Chief

Counsel, Room 1558, 601 E. 12th Street,

Kansas City, Missouri, or at the Office of the

Federal Register, 800 North Capitol Street,

NW., suite 700, Washington, DC.

(g) This amendment (39–10105) supersedes

AD 97–13–11, Amendment 39–10071.

(h) This amendment (39–10105) becomes

effective on September 5, 1997.
43930 Federal Register / Vol. 62, No. 159 / Monday, August 18, 1997 / Rules and Regulations

1 7 U.S.C. § 1 et seq. (1994).

2The second sentence of Section 4m(1) provides

that:

The [registration] provisions of this section shall

not apply to any [CTA] who is a (1) dealer,

processor, broker, or seller in cash market

transactions of any commodity specifically set forth

in [S]ection 2(a) of this Act prior to the enactment

of the Commodity Futures Trading Commission Act

of 1974 (or products thereof) or (2) nonprofit,

voluntary membership, general farm organization,

who provides advice on the sale or purchase of any

commodity specifically set forth in [S]ection 2(a) of

this Act prior to the enactment of the Commodity

Futures Trading Commission Act of 1974; if the

advice by the person described in clause (1) or (2)

of this sentence as a [CTA] is solely incidental to

the conduct of that person’s business: Provided,

That such person shall be subject to proceedings

under [S]ection 14 of this Act.

7 U.S.C. § 6m(1) (1994) (emphasis added).

Commission Rules 4.14(a) (1) and (2) also provide

that Cash Dealers are exempt from CTA registration

but make no mention of reparations jurisdiction.

Commission rules referred to herein are found at 17

CFR Ch. I (1997).

This Advisory does not address the scope of the

exemption from CTA registration under Section

4m(1) of the Act or under Rules 4.14(a) (1) and (2).

3Section 14(a)(1) provides, in relevant part, that:

Any person complaining of any violation of any

provision of this Act or any rule, regulation, or

order issued pursuant to this Act by any person

who is registered under this Act may, at any time

within two years after the cause of action accrues,

apply to the Commission for an order awarding—

(A) actual damages proximately caused by such

violation. * * * and (B) in the case of any action

arising from a willful and intentional violation in

the execution of an order on the floor of a contract

market, punitive or exemplary damages equal to no

more than two times the amount of such actual

damages * * *.

7 U.S.C. § 18(a)(1) (1994) (emphasis added). As

amended by the Futures Trading Act of 1978,

Section 14(a) provided that a reparations complaint

could be filed with the Commission by ‘‘[a]ny

person complaining of any violation of any

provision of this Act or any rule, regulation, or

order thereunder by any person who is registered

or required to be registered under [S]ection 4d, 4e,

4k, or 4m of this Act * * *.’’ Pub. L. No. 95–405,

§ 21, 92 Stat. 865, 876–76 (1978) (emphasis added).

The Futures Trading Act of 1982 (‘‘1982 Act’’)

subsequently amended Section 14(a) to eliminate

reparations jurisdiction over persons ‘‘required to

be registered’’ under the Act. Pub. L. No. 97–444,

§ 231, 96 Stat. 2294, 2319 (1983).

4 In 1983, the Commission amended its

reparations rules by promulgating interim

reparations rules to implement the 1982 Act’s

amendment of Section 14(a), which eliminated

reparations jurisdiction over persons ‘‘required to

be registered’’ under the Act. 48 FR 21923 (May 16,

1983). In Rule 12.21 of the interim rules, the

Commission retained reparations jurisdiction over

registrants but eliminated those persons who were

‘‘required to be registered’’ under the Act as

potential reparations respondents. The Commission

also modified Rule 12.21 by adding, for the first

time, persons ‘‘exempt from registration as [CTAs]

by virtue of the second sentence of Section 4m’’ as

a class of potential reparations respondents. Id. at

21924. The Commission explained that under

Section 4m:

Certain dealers, processors, brokers, or sellers in

cash market transactions in agricultural

commodities and non-profit general farm

organizations who provide advice on agricultural

commodities are exempt from having to register as

[CTAs]. Nevertheless Section 4m provides that such

persons are subject to proceedings in reparations.

Nothing in the 1982 amendments has affected this

provision of the Act. Thus, * * * the Commission

will continue to hear reparations claims filed

against persons who, at the time of the violation,

were exempt from registration pursuant to Section

4m of the Act.

Id. (emphasis added).

5The Commission replaced interim Rule 12.21

with Rule 12.13(a) and moved its list of Part 12

definitions to Rule 12.2. 49 FR 6602, 6622–23, 6626

(February 22, 1984).

6 50 FR 15868, 15881 n. 77 (April 23, 1985); see

also 49 FR 4778, 4783 (February 8, 1984) (proposing

the Part 4 amendments).

Issued in Kansas City, Missouri, on August

11, 1997.

Michael Gallagher,

Manager, Small Airplane Directorate, Aircraft

Certification Service.

[FR Doc. 97–21788 Filed 8–15–97; 8:45 am]

BILLING CODE 4910–13–P

COMMODITY FUTURES TRADING

COMMISSION

17 CFR Part 12

Commission’s Reparations

Jurisdiction Over Commodity Trading

Advisors Exempt From Registration

Under Section 4m(1) of the Commodity

Exchange Act

AGENCY: Commodity Futures Trading

Commission.

ACTION: Advisory.

SUMMARY: The Commodity Futures

Trading Commission (‘‘Commission’’) is

clarifying its reparations jurisdiction

over certain commercial agricultural

cash market participations and

nonprofit general farm organizations

referred to in Section 4m(1) of the

Commodity Exchange Act (‘‘Act’’).1

Provided that these persons furnish

commodity trading advice that is solely

incidental to the conduct of their

business, these persons are exempt from

registration as commodity trading

advisors (‘‘CTAs’’) pursuant to Section

4m(1) of the Act, but are subject to

reparations proceedings under Section

14 of the Act.

EFFECTIVE DATE: August 18, 1997.

FOR FURTHER INFORMATION CONTACT:

Natalie A. Markman, Attorney-Advisor,

Division of Trading and Markets,

Commodity Futures Trading

Commission, Three Lafayette Centre,

1155 21st Street, N.W., Washington, DC

20581. Telephone: (202) 418–5450.

SUPPLEMENTARY INFORMATION: Section

4m(1) of the Act provides, among other

things, that dealers, processors, brokers

or sellers in cash market transactions in

the agricultural commodities

enumerated in Section 2 of the Act or

the products thereof as well as certain

nonprofit voluntary membership farm

organizations (collectively, ‘‘Cash

Dealers’’) are exempt from registration

as CTAs but are subject to reparations

proceedings under Section 14 of the

Act.2 Section 14(a)(1) of the Act, which

generally addresses the Commission’s

reparations jurisdiction, provides that

reparations claims may be filed by

persons complaining of any violation of

the Act or Commission rules against

‘‘any person who is registered’’ under

the Act.3 No cross-reference or other

acknowledgment of the Section 4m(1)

reparations provision is made in Section

14. However, the Commission’s

reparations rules, which implement

Section 14 of the Act, expressly include

the Section 4m(1) Cash Dealers as a

category of permissible respondents in

reparations proceedings.4

The Part 12 rules, as promulgated in

1984 and continuing to the present,

provide in Rule 12.13(a) that reparations

complaints may be filed against any

registrant, as defined in Rule 12.2.5 Rule

12.2 defines registrant as any person

who: (1) Was registered at the time of

the alleged violation; (2) is subject to

reparations proceedings by virtue of

Section 4m; or (3) is otherwise subject

to reparations proceedings.

In a 1985 Federal Register release

addressing revisions of Part 4 of the

Commission’s rules, the Commission

stated that it did ‘‘not intend hereafter

to exercise jurisdiction in its reparations

program over persons exempt from CTA

registration under [S]ection 4m(1).’’ 6

The Commission wishes to eliminate

any ambiguity that may have been

created by the 1985 release by clarifying

that, as provided in Section 4m(1),

dealers, processors, brokers or sellers in

cash market transactions in the

agricultural commodities enumerated in

Section 2 of the Act or the products

thereof and certain nonprofit voluntary

membership farm organizations who

provide commodity trading advice in a

manner incidental to their business are

exempt from CTA registration but

subject to reparations proceedings

pursuant to Section 4m(1) and as

provided in Part 12 of the Commission’s

rules.

Issued in Washington, D.C. on August 12,

1997 by the Commission.

Jean A. Webb,

Secretary of the Commission.

[FR Doc. 97–21829 Filed 8–15–97; 8:45 am]

BILLING CODE 6351–-01–M