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

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

57235 

Vol. 73, No. 192 

Thursday, October 2, 2008 

NUCLEAR REGULATORY 

COMMISSION 

10 CFR Part 50 

RIN 3150–AH76 

[NRC–2007–0003] 

Industry Codes and Standards; 

Amended Requirements; Correction 

AGENCY: Nuclear Regulatory 

Commission. 

ACTION: Final rule; correction. 

SUMMARY: The Nuclear Regulatory 

Commission (NRC) is correcting a final 

rule that appeared in the Federal 

Register on September 10, 2008 (73 FR 

52729). The final rule amended NRC’s 

regulations to incorporate by reference 

the 2004 Edition of Section III, Division 

1, and Section XI, Division 1, of the 

American Society of mechanical 

Engineers (ASME) Boiler and Pressure 

Vessel Code (BPV Code), and the 2004 

Edition of the ASME Code for Operation 

and maintenance of Nuclear Power 

plants (OM Code) to provide updated 

rules for constructing and inspecting 

components and testing pumps, valves, 

and dynamic restraints (snubbers) in 

light-water nuclear power plants. The 

final rule also incorporated by reference 

ASME Code Cases N–722 and N–729–1. 

DATES: Effective October 2, 2008. 

FOR FURTHER INFORMATION CONTACT: L. 

Mark Padovan, Office of Nuclear 

Reactor Regulation, U.S. Nuclear 

Regulatory Commission, Washington, 

DC 20555–0001, telephone 301–415– 

1423, e-mail Mark.Padovan@nrc.gov. 

SUPPLEMENTARY INFORMATION: In FR doc. 

E8–20624 appearing on page 52729 in 

the Federal Register of Wednesday, 

September 10, 2008, the following 

corrections are made: 

■ 1. On page 52734, in the center 

column, third complete paragraph, fifth 

line from the bottom, remove the words 

‘‘or impracticality must be shown under 

10 CFR 50.55a(g)(6)(i).’’ 

§ 50.55a [Corrected] 

■ 2. On page 52749, in the center 

column, in § 50.55a(g)(6)(ii)(D)(1), line 

7, remove ‘‘[insert final date of rule]’’ 

and add in its place ‘‘September 10, 

2008’’. 

■ 3. On page 52749, in the center 

column, in § 50.55a(g)(6)(ii)(D)(4), 

‘‘50.55a(g)(6)(ii)(D)(3)(i)’’ is corrected to 

read ‘‘§ 50.55a(g)(6)(ii)(D)(4)(i),’’ and 

‘‘50.55a(g)(6)(ii)(D)(3)(iv)’’ is corrected 

to read ‘‘§ 50.55a(g)(6)(ii)(D)(4)(iv)’’. 

Dated at Rockville, Maryland, this 26th day 

of September 2008. 

For the Nuclear Regulatory Commission. 

Michael T. Lesar, 

Chief, Rulemaking, Directives, and Editing 

Branch, Division of Administrative Services, 

Office of Administration. 

[FR Doc. E8–23237 Filed 10–1–08; 8:45 am] 

BILLING CODE 7590–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Parts 33 

[Docket No. FAA–2007–28501; Amendment 

No. 33–27] 

RIN 2120–AJ05 

Airworthiness Standards; Aircraft 

Engine Standards for Pressurized 

Engine Static Parts; Correction 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule; correction. 

SUMMARY: This document corrects the 

amendment number to a final rule 

published in the Federal Register of 

Thursday, September 25, 2008, 

regarding requirements for pressurized 

engine static parts. 

DATES: This amendment becomes 

effective November 24, 2008. 

FOR FURTHER INFORMATION CONTACT: Tim 

Mouzakis, Engine and Propeller 

Directorate Standards Staff, ANE–111, 

Federal Aviation Administration, 12 

New England Executive Park, 

Burlington, Massachusetts 01803–5299; 

telephone (781) 238–7114, fax (781) 

238–7199, e-mail 

timoleon.mouzakis@faa.gov. 

Correction 

■ In final rule Aircraft Engine Standards 

for Pressurized Engine Static Parts 

beginning on page 55435 in the Federal 

Register issue of Thursday, September 

25, 2008, (73 FR 55435) make the 

following correction. 

■ 1. On page 55435, in the first column, 

beginning on the fourth line of the 

heading, ‘‘Amendment No. 33–26’’ is 

corrected to read ‘‘Amendment No. 33– 

27.’’ 

Issued in Washington, DC on September 

26, 2008. 

Pamela Hamilton-Powell, 

Director, Office of Rulemaking. 

[FR Doc. E8–23140 Filed 10–1–08; 8:45 am] 

BILLING CODE 4910–13–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 190 

Interpretative Statement Regarding 

Funds Related to Cleared-Only 

Contracts Determined To Be Included 

in a Customer’s Net Equity 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Interpretative statement. 

SUMMARY: This interpretation by the 

Commodity Futures Trading 

Commission (‘‘Commission’’) is issued 

to clarify the appropriate treatment 

under the commodity broker provisions 

of the Bankruptcy Code and Part 190 of 

the Commission’s Regulations of claims 

arising from contracts (‘‘cleared-only 

contracts’’) that, although not executed 

or traded on a Designated Contract 

Market or a Derivatives Transaction 

Execution Facility, are subsequently 

submitted for clearing through a Futures 

Commission Merchant (‘‘FCM’’) to a 

Derivatives Clearing Organization 

(‘‘DCO’’). 

FOR FURTHER INFORMATION CONTACT: 

Robert B. Wasserman, Associate 

Director, rwasserman@cftc.gov, (202) 

418–5092, or Amanda Olear, AttorneyAdvisor, Division of Clearing and 

Intermediary Oversight, aolear@cftc.gov, 

(202) 418–5283, Commodity Futures 

Trading Commission, Three Lafayette 

Centre, 1155 21st Street, NW., 

Washington, DC 20581. 


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57236 Federal Register / Vol. 73, No. 192 / Thursday, October 2, 2008 / Rules and Regulations 

1 7 U.S.C. 24. 

2 11 U.S.C. 761(17). 

3 17 CFR Part 190. 

4 17 CFR 190.07. 

5 11 U.S.C. 761(9) (emphasis added). 

6A similar analysis would apply to a customer of 

a clearing organization (i.e., a clearing member). 

7 11 U.S.C. 761(4). 

8 11 U.S.C. 761(7) and (8). 

9 7 U.S.C. 1a(29)(C). 

10Cf. H.R. REP. NO. 109–31(I) (2005) 

(emphasizing distinction between definitions for 

purposes of Bankruptcy Code and for purposes of 

other statutes). 

11Section 761(9)(A) of the Bankruptcy Code 

provides that an entity holding such a claim is a 

‘‘customer.’’ 11 U.S.C. 761(9)(A). 

Section 20 of the Commodity 

Exchange Act 1 (Act) empowers the 

Commission to provide how the net 

equity of a customer is to be 

determined: 

the Commission may provide, with respect to 

a commodity broker that is a debtor under 

chapter 7 of title 11 of the United States 

Code, by rule or regulation—(1) that certain 

cash, securities, other property, or 

commodity contracts are to be included in or 

excluded from customer property or member 

property; * * * and (5) how the net equity 

of a customer is to be determined. 

Subchapter IV of Chapter 7 of the 

Bankruptcy Code, governing commodity 

brokers, has the same effect, explicitly 

basing the definition of ‘‘net equity’’ on 

‘‘such rules and regulations as the 

Commission promulgates under the 

Act.’’ 2

The Commission has exercised this 

power in promulgating Part 190 of its 

regulations.3 In particular, the term ‘‘net 

equity’’ is defined by Commission 

Regulation 190.07 4 as: 

the total claim of a customer against the 

estate of the debtor based on the commodity 

contracts held by the debtor for or on behalf 

of such customer less any indebtedness of the 

customer to the debtor. 

Therefore, the determination of whether 

claims relating to cleared-only contracts 

in Section 4d accounts are properly 

includable within the meaning of ‘‘net 

equity’’ is dependent upon whether an 

entity holding such claims is properly 

considered a ‘‘customer.’’ This, in turn, 

as discussed below, requires an analysis 

of whether such claims are derived from 

‘‘commodity contracts.’’ 

Cleared-Only Transactions as 

Commodity Contracts 

Commission Regulation 190.01(k) 

defines ‘‘customer’’ through 

incorporation by reference of the 

definition of the term appearing in 

Section 761(9) of the Bankruptcy Code, 

which provides, in relevant part: 

(9) ‘‘Customer’’ means— 

(A) With respect to a futures commission 

merchant— 

(i) Entity for or with whom such futures 

commission merchant deals and holds a 

claim against such futures commission 

merchant on account of a commodity 

contract made, received, acquired, or held by 

or through such futures commission 

merchant in the ordinary course of such 

future commission merchant’s business as a 

futures commission merchant from or for the 

commodity futures account of such entity; or 

(ii) Entity that holds a claim against such 

futures commission merchant arising out of— 

(I) The making, liquidation, or change in 

the value of a commodity contract of a kind 

specified in clause (i) of this subparagraph; 

(II) A deposit or payment of cash, a 

security, or other property with such futures 

commission merchant for the purpose of 

making or margining such a commodity 

contract; or 

(III) The making or taking of delivery on 

such a commodity contract[.] 5

Therefore, for an entity to be considered 

a ‘‘customer’’ of an FCM, such entity’s 

claim must arise out of a ‘‘commodity 

contract.’’ 6

A ‘‘commodity contract,’’ as the term 

appears within the context of Section 

761(9), is defined in Section 761(4) of 

the Bankruptcy Code, which states, in 

pertinent part: 

(4) ‘‘Commodity contract’’ means— 

(A) With respect to a futures commission 

merchant, contract for the purchase or sale of 

a commodity for future delivery on, or 

subject to the rules of, a contract market or 

board of trade[.] 7

This definition contains two elements: 

(1) The nature of the contract; and (2) 

the nature of the venue whose rules 

govern the contract. 

With regard to the first element, overthe-counter contracts that are clearedonly contracts are contracts for the 

purchase or sale of a commodity for 

future delivery within the meaning of 

this section of the Bankruptcy Code. 

When cleared, they are subject to 

performance bond requirements, daily 

variation settlement, the potential for 

offset, and final settlement procedures 

that are substantially similar, and often 

identical, to those applicable to 

exchange-traded products at the same 

clearinghouse. Cf. 11 U.S.C. 761(4)(F). 

Although the creation and trading of 

these products is outside the 

Commission’s jurisdiction, the clearing 

of these products by FCMs and DCOs is 

within the Commission’s jurisdiction. 

With regard to the second element, 

Section 761(7) of the Bankruptcy Code 

states that a ‘‘ ‘contract market’ means a 

registered entity,’’ and Section 761(8), in 

turn, provides that a ‘‘ ‘registered 

entity’ * * * ha[s] the meaning[] 

assigned to [that] term[] in the 

[Commodity Exchange] Act.’’ 8 Section 

1a(29)(C) of the Act defines the term 

‘‘registered entity’’ as including ‘‘a 

derivatives clearing organization 

registered under section 5b’’ of the Act.9

Thus, when a contract is cleared 

through a DCO, such a contract would 

be considered a ‘‘commodity contract’’ 

under Section 761(4) of the Bankruptcy 

Code.10 Therefore, an entity with a 

claim based on a cleared-only contract 

would be a ‘‘customer’’ within the 

meaning of Section 761 of the 

Bankruptcy Code. Further, because Part 

190 of the Commission’s Regulations 

defines ‘‘customer’’ as having the 

meaning set forth in Section 761, such 

entity with a claim based on a clearedonly contract would also be a 

‘‘customer’’ for the purposes of Part 190 

of the Commission’s Regulations. Based 

on the foregoing, such claims arising out 

of cleared-only contracts are properly 

included within the meaning of ‘‘net 

equity’’ for the purposes of Subchapter 

IV of the Bankruptcy Code and Part 190 

of the Commission’s Regulations. 

Portfolio Performance Bond as Net 

Equity 

There is an alternative path to reach 

the same conclusion. In cases where 

cleared-only contracts are held in a 

commodity futures account at an FCM 

and margined as a portfolio with 

exchange-traded futures (i.e., where the 

Commission has issued an order 

pursuant to Section 4d(a)(2) of the 

Commodity Exchange Act), assets 

margining that portfolio are likely to be 

includable within ‘‘net equity’’ even if 

cleared-only contracts were found not to 

be ‘‘commodity contracts’’ within the 

meaning of the Bankruptcy Code and 

Part 190 of the Commission’s 

Regulations. 

Where the assets in an entity’s 

account margin (i.e., collateralize) both 

cleared-only contracts and exchangetraded futures, the entirety of those 

assets serves as performance bond for 

each of the exchange-traded futures and 

the cleared-only contracts. Therefore, (a) 

a claim for those assets constitutes a 

claim ‘‘on account of a commodity 

contract made, received, acquired, or 

held by or through such futures 

commission merchant in the ordinary 

course of such future commission 

merchant’s business as a futures 

commission merchant from or for the 

commodity futures account of such 

entity;’’ 11 (b) the entity qualifies as a 

‘‘customer’’ within the meaning of the 

Bankruptcy Code as a result of that 

claim; and (c) those margin assets are 

properly included within that entity’s 

net equity. 

The dynamics of futures trading 

render it unwise to distinguish between 


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Federal Register / Vol. 73, No. 192 / Thursday, October 2, 2008 / Rules and Regulations 57237 

12See 17 CFR 190.01. 

13See Interpretative Statement Regarding Funds 

Determined To Be Held in the Futures Account 

Type of Customer Account Class, 69 FR 69510 

(Nov. 30, 2004). 

1 17 CFR 229.407. 

2PCAOB Rule 3600T. 

3 ISB No. 1. 

4Rule 3526 also superseded ISB Interpretation 

00–1, The Applicability of ISB Standard No. 1 

When ‘‘Secondary Auditors’’ are Involved in the 

Audit of a Registrant, and ISB Interpretation 00–2, 

The Applicability of ISB Standard No. 1 When 

‘‘Secondary Auditors’’ Are Involved in the Audit of 

a Registrant, An Amendment of Interpretation 

00–1. 

an account that currently is portfolio 

margined and one that was at one time 

or is intended to be so in the future. 

Indeed, Subchapter IV of the 

Bankruptcy Code includes as customers 

entities with certain claims arising out 

of property that is not currently 

margining a commodity contract. 

Specifically, Section 761(9)(A)(ii) 

provides that an entity can qualify as a 

‘‘customer’’ based on claims arising out 

of any of the following: (I) The 

‘‘liquidation, or change in the value of 

a commodity contract;’’ (II) a deposit of 

property ‘‘for the purpose of making or 

margining * * * a commodity 

contract;’’ or (III) ‘‘the making or taking 

of delivery of a commodity contract.’’ 

Accordingly, there is no requirement 

that the customer’s assets be margining 

commodity contracts on the day that the 

bankruptcy petition is filed. Therefore, 

all assets contained in such an account 

are properly included within the 

customer’s net equity. 

Account Classes 

Part 190 of the Commission’s 

Regulations divides accounts into 

several classes, specifically: Futures 

accounts, foreign futures accounts, 

leverage accounts, commodity option 

accounts, and delivery accounts.12

In October 2004, the Commission 

issued an interpretation regarding the 

appropriate account class for funds 

attributable to contracts traded on nondomestic boards of trade, and the assets 

margining such contracts, that are 

included in accounts segregated in 

accordance with Section 4d of the Act 

pursuant to Commission Order.13 In that 

context, the Commission concluded that 

the claim is properly against the Section 

4d account class because customers 

whose assets are deposited in such an 

account pursuant to Commission Order 

should benefit from that pool of assets. 

The same rationale supports the 

Commission’s conclusion that a claim 

arising out of a cleared-only contract, or 

the property margining such a contract, 

would be includable in the futures 

account class where, pursuant to 

Commission Order, the contract or 

property is included in an account 

segregated in accordance with Section 

4d of the Act. 

Issued in Washington, DC, on September 

26, 2008, by the Commodity Futures Trading 

Commission. 

David Stawick, 

Secretary of the Commission. 

Concurrence of Commission Michael V. 

Dunn CBOT Request for an Order 

Under Section 4d of the Commodity 

Exchange Act Related to the Clearing of 

OTC Ethanol Products 

I concur with granting 4d relief to the 

Chicago Board of Trade (CBOT) related to the 

clearing of OTC ethanol products while 

reserving judgment as to whether the 

Commission in the future should revisit the 

determination as to whether ethanol should 

be considered an agricultural commodity. 

Ethanol markets clearly impact agricultural 

markets as we all realize. Even though I 

recognize that arguments can be made that 

ethanol is an energy commodity because it is 

primarily used as a source of energy, I don’t 

think that should necessarily be the deciding 

factor. 

Ethanol is clearly an important part of our 

agricultural economy. At some point, I think 

we may need to reconsider carefully whether 

ethanol should be considered an agricultural 

commodity so that it would be subject to the 

highest level of Commission jurisdiction 

rather than the lesser jurisdiction that attends 

energy commodities. 

Despite this, I believe the order should be 

approved because the conditions attending 

the 4d order will bring greater transparency 

and accountability to the CBOT’s ethanol 

swaps market than currently exist. 

[FR Doc. E8–23277 Filed 10–1–08; 8:45 am] 

BILLING CODE 6351–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Part 229 

[Release Nos. 33–8961; 34–58656] 

Technical Amendment to Item 407 of 

Regulation S–K 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Final rule; technical 

amendment. 

SUMMARY: The Securities and Exchange 

Commission (‘‘Commission’’) is making 

a technical amendment to Item 407 of 

Regulation S–K. The technical 

amendment updates a reference to 

Independence Standards Board 

Standard No. 1 (‘‘ISB No. 1’’), which 

was previously adopted by the Public 

Company Accounting Oversight Board 

(‘‘PCAOB’’) as an interim standard but 

has been superseded by the PCAOB’s 

newly adopted Ethics and 

Independence Rule 3526, 

Communication with Audit Committees 

Concerning Independence. The 

reference is being updated to refer to the 

‘‘applicable requirements of the Public 

Company Accounting Oversight Board 

regarding the independent accountant’s 

communications with the audit 

committee concerning independence.’’ 

DATES: Effective Date: September 30, 

2008. 

FOR FURTHER INFORMATION CONTACT: 

Melanie Jacobsen, Special Counsel, at 

202–551–5300, Office of the Chief 

Accountant, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–5041. 

SUPPLEMENTARY INFORMATION: 

I. Background 

We are amending Item 407 of 

Regulation S–K 1 to update a reference 

as a result of the adoption of a new 

Public Company Accounting Oversight 

Board (‘‘PCAOB’’) rule. Item 407 is 

being amended to update the following 

reference: 

Old Reference: 

‘‘Independence Standards Board 

Standard No. 1 (Independence 

Standards Board Standard No. 1, 

Independence Discussions with Audit 

Committees), as adopted by the Public 

Company Accounting Oversight Board 

in Rule 3600T’’ 

New Reference: 

‘‘applicable requirements of the 

Public Company Accounting Oversight 

Board regarding the independent 

accountant’s communications with the 

audit committee concerning 

independence’’ 

Independence Standards Board 

Standard No. 1 (‘‘ISB No. 1’’) was part 

of the interim standards previously 

adopted by the PCAOB on April 16, 

2003.2 It required an auditor annually to 

discuss with the audit committee its 

independence and to provide written 

disclosures of all relationships between 

the auditor and the company that may 

reasonably be thought to bear on 

independence and a letter confirming 

the auditor’s independence.3

Effective on September 30, 2008, 

PCAOB Rule 3526 supersedes ISB No. 1 

regarding the annual discussion and 

disclosure the auditor must make to the 

audit committee.4 Rule 3526 was 

adopted by the PCAOB on April 22, 


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